Australian currency (photo from Flickr)
Dr. Chih Wei Teng is Chief Operating Officer for CCRM Australia and wrote this blog with colleagues Alex Barrington and Dr. Emma Gallaher. To subscribe to the CCRM Australia newsletter: Click here
As stem cell therapies move through clinical trials and get closer to the clinic, they are giving rise to new challenges, primarily around costs and the likelihood of reimbursement. Innovative curative treatments are surpassing their now older counterparts, both in efficacy and price. However, these treatments, in turn, push the limits of the government’s finite reimbursement purse. This pressing issue brings to light the growing concerns surrounding the reimbursement of cell therapies in Australia and around the world.
The phrase ‘valley of death’ is uncannily apt when describing the perilous, long and expensive journey from the lab bench to the clinic for cell therapy. There is a significant scientific and funding challenge to navigate in successfully delivering the key clinical phases (I, II and III) in the clinical translation pathway.
The good news is that despite this, more and more novel cell therapies are beginning to emerge from later stage trials and approach the registration and reimbursement negotiation stage. Here, these innovative treatments are forcing bureaucrats to address the difficult question, how much are we willing to pay for a curative therapy? (Ed: the Alliance for Regenerative Medicine reports 1,066 ongoing worldwide clinical trials as of December 2019, with 94 in Phase III.)
Illustrating this problem is the case of the hepatitis C treatments ledipasvir and sofosbuvir – the most expensive drugs in Australia. In just four months, these two treatments have cost the Australian government $4 billion on the PBS (for 43,000 prescriptions). The new generation of curative drugs is placing a considerable amount of additional pressure on the health-care system and inadvertently, on the wider biopharma research and development environment. (Ed: the most expensive gene therapy is Zolgensma.)
The delicate reimbursement negotiation underway in many government offices around the world demonstrates the push-pull relationship between innovative research and affordable health care. Are governments able to carry the financial burden to reimburse new curative treatments at the same level as they have done in the past for long-term therapies?
The most significant question going forward is: Will PBS budgets force the limitation of R&D investment because we simply can’t afford the therapies? If so, what can developers of new therapies do about it? As previously mentioned, the government has a finite purse and subsequently, a finite PBS list. A list that is already filled with older model treatments that are not wholly curative, but are far less expensive and reasonably effective and well tolerated.
Considering the upward trajectory of the development of cell therapies, the pricing and reimbursement for cell therapies needs to change. Governments cannot afford to turn their backs on promising novel treatments that could cure a multitude of chronic and costly diseases and illnesses. The process of this undertaking, however, is complicated and not simply remedied by increasing the budget. Implementing change in our reimbursement framework and budget requires us all to consider many stakeholders. This includes our researchers, investors, insurers, health care providers, consumers as well as government.
Australians love choice. They want innovative medicines and therapies but they also want universal health care. Unfortunately, with the current status quo, we will not be able to afford to accommodate all of these at the level that our community expects. Some therapies will not attract the reimbursement that developers and investors expect. Some therapies will attract far higher co-payments than patients can afford.
Tough questions need to be asked when considering the changing cost of health care and research. What can be done to fast-track and reduce the cost of cell therapy development? (Ed: closing and automating manufacturing will help.) How much can co-payments increase in response to expensive treatments? Should there be a cap on the number of novel treatments approved per year?
In recent months, there have been a number of proposed solutions by academics, health care professionals, commentators and organizations such as Price Waterhouse Coopers to redefine what value is, and how newly defined value can be calculated to inform new models of reimbursement.
Some suggestions include outcomes-based funding or pay-for-performance, where contracts stipulate that providers are paid only if predetermined outcomes are met. Other models are more prudent where there is a fear of relapse, pundits have called for an amortized model where payments for the treatment are reimbursed over time.
Noted that reimbursement models are also likely to be different between the major health-care systems, it is also important to consider supporting technology platforms. New assays that determine the patient’s likelihood to a positive clinical outcome and predisposition to known side effects of the therapy may be necessary to maximize return when faced with pay-for-performance models. Models that favour an amortized model would require long-term patient follow-ups and even systems that collect and validate patient reported outcomes because patients shift addresses and change doctors.
The selection of hospitals may also play a part in the reimbursement process as innovative therapies require a “just in case” approach to delivery, observation and countermeasures for adverse events and other unknowns. As a result, the so-called advanced treatment centres or other similar designations should look inwards to determine the bundling of allied services and setting up of new billing codes to understand the true cost of the therapy to ensure that no one is underpaid.
Only through a better understanding of reimbursement strategies and the expectations of consumers and governments will we be able to make educated decisions and initiate a focused dialogue around reducing the cost of development, the ability and appetite to fund clinical solutions and the health care needs of the community to prevent looming problems in the future.
CCRM Australia
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