Value-based performance arrangements for chronic conditions: an economic simulation of Medicaid Drug Rebate Program reforms.

OBJECTIVE: Changes to the Medicaid Drug Rebate Program (MDRP) determination of Medicaid Best Price (MBP) enables Value-based purchasing arrangements (VBPAs) to address financial uncertainty. This study estimates the likely effectiveness of MDRP-enabled VBPAs for chronically dosed medicines. METHODS: Monte Carlo simulations examined: Multiple Best Prices and Bundled Sales MBP approaches authorized under MDRP and a third National Pooling approach using payment misalignment; needed payer size for practical participation; and the resulting potential number of covered lives under a VBPA as evaluation metrics. RESULTS: Both Multiple Best Prices and National Pooling enable VBPAs for 95% of scenarios (including all 5i chronic products with ≥1,000 treated patients per year), with 75% of those with payment misalignment ≤9%. National pooling for retail drugs has less participation and worse misalignment (5i: 95% contracted, 75% ≤9% misalignment; retail: 71%, 66%). Bundled Sales performed worst (5i: 40%, 75% ≤9%; retail: 31%, 88%) due to rebate volatility risk of breaking best price and Average Manufacturer Price impact. Medicaid sees worse misalignment for the 60% drug performance scenarios because of comparison to the statutory rebate (23.1%). CONCLUSION: The Multiple Best Prices approach has the lowest misalignment and could be applied to most chronic therapies, even rare ones.

Durable cell and gene therapy potential patient and financial impact: US projections of product approvals, patients treated, and product revenues.

Durable cell and gene therapies potentially transform patient lives, but payers fear unsustainable costs arising from the more than 1000 therapies in the development pipeline. A novel multi-module Markov chain Monte Carlo-based model projects product-indication approvals, treated patients, and product revenues. We estimate a mean 63.5 (54-74 5th to 95th percentile range) cumulative US product-indication approvals through 2030, with a mean 93000 patients treated in 2030 generating a mean US$24.4 billion (US$17.0B-35.0B, US$73.0B extreme) list price product revenues not including ancillary medical costs or cost offsets. Thus, the likely dozens of durable cell and gene therapies developed through 2030 are unlikely to threaten US health system financial sustainability.

Biosimilars And Follow-On Products In The United States: Adoption, Prices, And Users.

Biologic drugs account for a disproportionate share of the increase in pharmaceutical spending in the US and worldwide. Against this backdrop, many look to the expanding market for biosimilars-follow-on products to biologic drugs-as a vehicle for controlling pharmaceutical spending. This study explores the early years of entry of biosimilars and related follow-on products in the US. Using monthly sales data from the period 2005-19 for ten drug classes, we examine how quickly biosimilars/follow-on products gained market share and the subsequent trajectory of prevailing (national average invoice) prices. Our analysis suggests that although uptake has been slower than what is typically seen in generic drug markets, the most recent entrants have captured market share more rapidly than comparable earlier biosimilars/follow-on products. We also document that from biosimilar/follow-on products' time of entry, their lower prices help offset the overall trend in average annual reference-product price increases. Our findings can provide insight into future policy reforms aimed at increasing competition and use of biosimilars, leading to expanded patient access and significant cost savings.

The clinical benefits, ethics, and economics of stratified medicine and companion diagnostics.

The stratified medicine companion diagnostic (CDx) cut-off decision integrates scientific, clinical, ethical, and commercial considerations, and determines its value to developers, providers, payers, and patients. Competition already sharpens these issues in oncology, and might soon do the same for emerging stratified medicines in autoimmune, cardiovascular, neurodegenerative, respiratory, and other conditions. Of 53 oncology targets with a launched therapeutic, 44 have competing therapeutics. Only 12 of 141 Phase III candidates addressing new targets face no competition. CDx choices might alter competitive positions and reimbursement. Under current diagnostic incentives, payers see novel stratified medicines that improve public health and increase costs, but do not observe companion diagnostics for legacy treatments that would reduce costs. It would be in the interests of payers to rediscover their heritage of direct investment in diagnostic development.

Uncertain prognosis for high-quality diagnostics: clinical challenges, economic barriers and needed reforms.

Quality healthcare, as measured by outcomes and costs, needs high-quality diagnostics whose use governs the evidence-based flow of patients from screening to treatment to outcomes monitoring. The current patent, regulatory and reimbursement environment may be inadequate to spur their development, thereby placing in jeopardy the goals of healthcare reform and the aspirations of personalized medicine. Policy actions to ensure consistent quality standards and to increase development incentives through research support, reimbursement reform, increased intellectual property protection and market-making activities may be required to obtain the well-characterized, clinically proven diagnostics that US healthcare requires.

Comparison of Stakeholder Metrics for Traditional and Adaptive Development and Licensing Approaches to Drug Development.

This study evaluates whether an adaptive development and licensing approach to drug development, compared with approaches widely used today, might have tangible advantages across stakeholder groups, thereby facilitating the future adoption. Details involving actual and modeled clinical development and licensing programs for 3 case studies were used as inputs into a discounted cash flow spreadsheet model. Outputs included net present value and expected net present value, which are metrics considered as key incentives for pharmaceutical developers, and change in patient access over the product life and numbers of appropriately and inappropriately treated patients, which are metrics considered as key incentives for regulators, patients, and prescribers. Actual and modeled development programs were compared using an "adaptiveness" scoring algorithm. Generally, the more adaptive programs correlated with more favorable stakeholder outcomes. However, favorable outcomes may be overwhelmed in some cases, and the causative conditions and stakeholder reactions need to be defined.

Economic challenges and possible policy actions to advance stratified medicine.

In this article, we present a simple economic model to illustrate the economic challenges facing an oncology stratified medicine developer when scientific discoveries lead to ever smaller, targeted patient populations.We provide preliminary empirical evidence suggesting that at least some developers and their investors are retreating. We then examine the armamentarium of policy actions beyond higher reimbursement that may be employed to enhance the economic incentives for developing stratified medicines. In the absence of significant pricing and total oncology outlay flexibility by payers, our analysis suggests that private sector investment in small oncology segments, and in stratified medicine generally, may not prove economically sustainable, thus endangering the translation of scientific advances into bedside medicines. Beyond increasing reimbursement, decreasing development cycle time and costs, or both, would most directly improve the economic incentives facing developers. By contrast, extending exclusivity periods, or initiating advance market commitments and awarding prizes would likely have less impact and involve greater implementation challenges.

Quantifying factors for the success of stratified medicine.

Co-developing a drug with a diagnostic to create a stratified medicine - a therapy that is targeted to a specific patient population on the basis of a clinical characteristic such as a biomarker that predicts treatment response - presents challenges for product developers, regulators, payers and physicians. With the aim of developing a shared framework and tools for addressing these challenges, here we present an analysis using data from case studies in oncology and Alzheimer's disease, coupled with integrated computational modelling of clinical outcomes and developer economic value, to quantify the effects of decisions related to key issues such as the design of clinical trials. This illustrates how such analyses can aid the coordination of diagnostic and drug development, and the selection of optimal development and commercialization strategies. It also illustrates the impact of the interplay of these factors on the economic feasibility of stratified medicine, which has important implications for public policy makers.

Stratified medicine: strategic and economic implications of combining drugs and clinical biomarkers.

The potential to use biomarkers for identifying patients that are more likely to benefit or experience an adverse reaction in response to a given therapy, and thereby better match patients with therapies, is anticipated to have a major effect on both clinical practice and the development of new drugs and diagnostics. In this article, we consider current and emerging examples in which therapies are matched with specific patient population characteristics using clinical biomarkers - which we call stratified medicine - and discuss the implications of this approach to future product development strategies and market structures.