Have we passed peak health care disruption?

By |2019-07-08T21:03:06+00:00July 8th, 2019|Health Care Trends, Health Reform, Innovation, Uncategorized|

Have we passed peak health care disruption?

Disrupting health care has been a hot topic the past few years, but it seems to me we have passed peak health care disruption and firms are now having to roll up their sleeves to do the boring, difficult work of creating incremental change.

The high point of disruption in health care (see chart below) looks to be the announcement January 30, 2018 from Amazon, Berkshire Hathaway, and JPMorgan Chase & Co. of a health care joint venture to “address healthcare for their U.S. employees.

What has happened related to that partnership in the last 18 months is the naming of the entity (Haven), some prominent hires (Dr. Atul Gawande), and some key staff departures (Jack Stoddard).

But there have been some notable smaller steps from two of the three Haven entities that signal feasibility and immediate impact are stronger drivers than disruption. While policy types may be interested in wholesale transformation, the business of digital health is concentrated on more immediate change.

Right after the Haven announcement, Amazon bought PillPack, an online pharmacy and platform that helps manage patient data. Last month, JPMorgan Chase & Co. bought InstaMed, adding health care payment services to the bank’s existing service offerings in wholesale payments. Knowing more about your customer and serving them better, just like in any other business, seems to be where health care companies are focused.

These kinds of digital health deals may be the wave of the future, according to RockHealth’s 2019 Midyear Digital Health Market Update. Their report (see chart below) shows a steady amount of digital health investing year-over-year, but an increasing average deal amount.

Perhaps more importantly, acquisition by non-health care companies is proving to be an increasingly likely exit ramp for digital health investors, as the PillPack and InstaMed deals exemplify. Providers and non-health care companies are stepping up their acquisitions of digital health ventures, as the chart below shows.

The next step in health care might be smaller than the word “disruption” implies. Over the past few years, health care has proven to be more complex than many tech companies and policymakers have thought. RockHealth quotes David Kim, Managing Director of DigiTx Partners, as saying: Big tech companies “are likely to acquire technologies and companies with expertise and domain knowledge that allow them to take that next step to health care without just diving in blindly headfirst.”

If disruption equates to diving in blindly headfirst, I agree. Health care change going forward is going to be data-fixated, consumer-focused, and incremental.

Small Step Service Design Thinking – The Case of the Nurse Practitioner in the Fire Department

By |2019-03-22T14:05:22+00:00March 20th, 2019|Health Care Trends, Innovation, Providers, Uncategorized|

Small Step Service Design Thinking – The Case of the Nurse Practitioner in the Fire Department

As we blogged a couple weeks ago, M2 authored a chapter entitled “Using Small Step Service Design Thinking to Create and Implement Services that Improve Patient Care,” in Service Design and Service Thinking in Healthcare and Hospital Management published by Springer. Today we share highlights from the second case study we feature in the chapter.

Fire department or health care provider?

When most of us think of health care organizations, we tend to think of our own experience, perhaps our physician’s office building, or a Kaiser-like integrated health system campus. But the fragmented U.S. health care system also relies on a “safety net” that includes community clinics, public hospitals, local health departments, and the emergency medical system (EMS).

As in the rest of the nation, in Los Angeles, (the second largest city in the U.S with 4+ million people) the 9-1-1 system serves as a safety net for health and social issues in the community. Perhaps surprisingly, the Los Angeles Fire Department (LAFD) is a key component of the city’s health care safety net. “The LAFD is the largest provider of acute, unscheduled medical care in Los Angeles,” and of the more than 425,000 annual calls for service, 85% are for medical services, not fire.

What would fire response look like if you put the patient first?

In 2016, Dr. Marc Eckstein, medical director of the LAFD, led the development and launch of the nurse practitioner response unit (NPRU) pilot project. A great example of using small step service design thinking, the creation of the NPRU was driven by a deep understanding of the people the LAFD serves. Leaders of the NPRU explained their thinking in creating the healthcare innovation: “This challenge naturally summons the need to better understand who our clients really are, and how we can work with other community partners to more collectively match our collective response to each client.”

What the team understood from years in the field talking and working with residents of Los Angeles County was that community members trusted the LAFD and that is why they called. Further, the team recognized, “for those with lower socioeconomic status, the fire department is their only means of access to healthcare, and has been for a number of years.” Additionally, Terrance Ito, DNP, FNP-BC, the LAFD EMS Nurse Practitioner supervisor explained, “many of them lacked health insurance for a number of years—and having recently become insured, we’ve found that they’re having difficulty with healthcare navigation.”

Meeting patients where they are – literally and figuratively

The NPRU model is designed to intervene with patients as early as possible in the course of emergency care, in part by focusing on what are called “prehospital” encounters. In a report prepared for the California HealthCare Foundation and California Emergency Medical Services Authority by Dr. Kenneth Kizer and his colleagues, prehospital services can include transporting patients who don’t need emergency care to non-emergency department (ED) locations, refer or release individuals at the scene of emergency response, and/or addressing the needs of frequent 9-1-1 callers (or ED visitors) “by helping them access primary care and other social services.”

The NPRU is a converted ambulance that is staffed by a range of emergency professionals including firefighters, paramedics, and nurse practitioners. The missions of the NPRU include providing mobile urgent care at the scene of an emergency call, and comprehensively assessing frequent users of emergency services, then connecting them to care or social services, as necessary.

A small step service design change, the NPRU allows patients to be served where the ambulance goes – often to a person’s home after he or she has called 9-1-1, instead of transporting the patient with little thought to where the patient can best be served. Notably, in February 2019, the Centers for Medicare and Medicaid Innovation announced a new payment model that will support exactly this kind of health service innovation. The Emergency Triage, Treat and Transport (ET3) Model will allow providers serving Medicare beneficiaries to be reimbursed not only for ambulance services to hospitals, but also for transport to lower level sites of care, for example a physician’s office or urgent care clinic. The ET3 Model would also allow reimbursement for models such as the LAFD NPRU that treat “in place with a qualified health care practitioner, either on the scene or connected using telehealth.”

Our book chapter on using small step service design thinking in health care used two case studies to highlight not just theories, but models that have been tested and proven effective in improving patient care. These models mirror what we hear from patients in our client work – ask us what we think would improve patient care and create policy accordingly. This simple idea drives our work every day. We hope you will consider it in your health care policy work as well.

Here’s a health policy idea, let’s listen to patients

By |2019-01-24T15:19:50+00:00January 23rd, 2019|Health Care Trends, Innovation, Uncategorized, What do we pay for and why|

Here’s a health policy idea, let’s listen to patients

Earlier this month I was a presenter and leader of a panel session at the Washington State of Reform Health Policy Conference in Seattle titled, “A Policy Framework for New Medicine.” The other two panelists and I were asked to present our points-of-view about policy related to “personalized medicine, miracle drugs, and genome-specific therapies.” The other two panelists were gene therapy patients. Ashanthi DeSilva is the first person in the world to undergo an approved gene therapy, which she did at the age of 4 in 1990. Toby Willis was “the first adult to undergo the first gene therapy approved in the U.S. for treatment of an inherited disease,” in March 2018.

Gene therapy is a topic of particular interest to me, naturally because of the work that I do, but also because I wrote my thesis to complete an M.A. in Philosophy at Boston College on the ethical use of gene therapy, in 1994. Those were the early days of gene therapy as a practical treatment, and I encountered a great deal of resistance for my thesis proposal from the hallowed halls of the esteemed Jesuit institution. My advisors were just not convinced there was any real-world application for gene therapy, and therefore they didn’t see the value in developing a framework for navigating the ethical considerations that I was sure were on the cusp of driving innovative patient care. What an incredible experience for me, then, to meet the woman who had undergone the world’s first gene therapy trial as a young child in roughly the same time period that I was pushing for approval from the chair of the philosophy department to start a conversation on how to decide who should receive (and for what reasons) gene therapies.

Both Ms. DeSilva and Mr. Willis are remarkable people and they were able to shine a light on the policy problems that still exist decades after gene therapy was first used to treat a patient. For example, Ms. DeSilva must still argue with her insurance company to have her ancillary medications approved because they are subject to prior authorization requirements despite the fact that she needs them because of her primary diagnosis – and will likely need them for the rest of her life. Mr. Willis’s policy story focused on the core questions before the group: Should we pay for innovative treatment? For whom? Under what circumstances? And, of course, who should pay? Individuals? Employers? Insurers? Taxpayers?

These sessions can sometimes be dry presentations where speakers do their thing without any regard for the audience. What happened at this session was different. It was a free flowing discussion that used the panelists as touchpoints, but drew out the expertise and ideas of audience members – including a health plan, a specialist provider, a policymaker, and pharmaceutical manufacturer. Some policy concepts offered were easily agreed upon, for example, trying to spread risk across a broader pool of people or spreading the costs of treatments over time. But I was the most impressed with the policy ideas offered by the patients in the room who were recipients of life-changing treatment. The ideas were at once simple, and nearly impossible. To close the session I asked the other panelists to give one recommendation for people in the audience to do when they left the room.

Ms. De Silva recommended that when thinking about health care policy, we should all try to think of someone besides ourselves.

Mr. Willis, who claimed not to be a policy expert, deftly explained what seems to be the core of the problem with the U.S health care system today. He said, “the system treats health plans as the customer, but I think patients should be the customer.”

So, as we begin an already busy health care policy 2019, I will be trying to heed this great advice. Maybe policymakers will, too.

Are $59 Virtual Visits at CVS Health a Play for Women?

By |2018-08-23T13:49:46+00:00August 22nd, 2018|Health Care Trends, Innovation, Retail Health, telehealth, Uncategorized|

Are $59 Virtual Visits at CVS Health a Play for Women?

Last week we wrote about how CVS Health offering $59 telehealth video visits through the company’s retail medical clinic, MinuteClinic, would significantly change the health insurance market. This week, we are going a step further to consider the specific effects of the CVS Health offering for women.

As covered previously, CVS Health is looking to serve people with routine health needs who are shopping for lower costs. Who is doing that shopping? Primarily women. Women make “80% of the health care decisions for their families.” If the woman is a mother, surveys show more than 75% of the time, she is responsible for choosing a child’s health care provider and taking the child to health care appointments. Women who aren’t mothers are also often caregivers – nearly 50% of women without kids make health care decisions for a family member.

The combination of increasing deductibles – more than half of cost-sharing payments were in the form of a deductible for the first time in 2016 – and increasing need for health care at convenient times has already driven women to be the most likely users of retail clinics.

According to FAIR Health, in 2016, women accounted for a higher percentage of retail visits covered by insurance than men in nearly every age group. For people between the ages of 19 and 30 who visited a retail clinic, nearly 70% of visits were by women, as the chart below shows.

CVS Health, no doubt, already knows women are the primary users of their in-person MinuteClinics. Converting women MinuteClinic visitors to $59 telehealth visits shouldn’t be too difficult since women are the primary health care decision makers, and the virtual visits are cheaper and more convenient than going in-person to a CVS store.

Will other health care organizations follow CVS Health’s lead and start to cater more to women as health care consumers? Theirs seems like a data-driven strategy that other entities might be wise to emulate. Just as the $59 virtual visit will disrupt the health insurance market, the new CVS Health offering could also change the way the health care system meets the needs of the primary health care decision-maker in the U.S. – women.

CVS Health Just Upended the U.S. Health Insurance Market

By |2018-08-15T13:38:07+00:00August 14th, 2018|Health care spending, Health Care Trends, Health Plans, Health Reform, Innovation, Insurance, Out-of-pocket spending, Retail Health, telehealth, Uncategorized|

CVS Health Just Upended the U.S. Health Insurance Market

For $59, CVS Health will now offer telehealth video visits through the company’s retail medical clinic, MinuteClinic. The video visits will be available through the CVS Pharmacy App to anyone interested who lives in Arizona, California, Florida, Idaho, Maine, Maryland, Mississippi, New Hampshire, and Virginia – and Washington D.C.

This move will significantly change the health insurance market, and CVS’s merger with giant insurer Aetna isn’t even final, though reportedly, the “Justice Department’s antitrust division hasn’t turned up vertical competition concerns from the merger,” increasing the odds significantly that the deal closes before the end of the year.

What does CVS Health see that is driving this strategy? A shifting private health insurance market that requires people to pay up front for routine care, making consumers more sensitive to costs and less obligated to use a provider that is “in-network.” In the olden days (2006!), as the chart below shows, patients paid the majority of their cost-sharing payments in the form of copayments or coinsurance, that is, payments to providers who had an agreement with a health insurer. In 2016, for the first time, more than half of cost-sharing payments were in the form of a deductible, as the chart below from the Peterson-Kaiser Health System Tracker shows.

MinuteClinic video visits for $59 (paid for directly by the consumer) capitalize on three ongoing trends: 1) Patients have to pay more, before insurance starts to pay for claims, making consumers more sensitive to cost; 2) Patients want more convenience and CVS can deliver it more cheaply, in no small part because there are no insurance forms or administrative costs; and 3) Payers are reluctant to pay for virtual visits.

First, CVS Health is looking to serve people with routine health needs who are shopping for lower costs.

According to FAIR Health, the median charge for a new patient office visit at a retail clinic in 2016 was $109, compared to $294 in an office setting. The average charges and allowed amounts for the most typical retail clinic visits are shown in the chart below from the FH Healthcare Indicators™ and FH Medical Price Index.™

Simply put, the video visits will be cheaper than retail clinic visits. And, even if a patient is referred from the MinuteClinic video visit to one of the 1,100 MinuteClinic physical locations, that patient is likely to save more than $100 for the visit compared to going to a physician visit.

Second, CVS is looking to leverage the steep rise of people seeking care in retail clinics, by offering a clear value proposition to use a MinuteClinic virtually because it’s cheaper and more convenient. As the chart from FH Healthcare Indicators™ and FH Medical Price Index™ below shows, retail clinic visits increased by 847% from 2011 to 2016 with growth in rural areas increasing by 704% and in urban areas by 865%.

Clearly, CVS Health knows their potential customer well. A survey of 5,000 virtual visit users published by the Advisory Board in April shows more than 33% of people who had a virtual visit lived in a city, compared to 9% who lived in the suburbs or rural areas. Virtual visit users are also high earners – 52% “make more than $71,000 a year,” and are more likely to have private insurance.

Third, CVS Health sees that getting insurance companies to pay for virtual visits is hard. Forbes recently touted telehealth in article titled, Lower Cost Higher Quality Health Care Is Right At Our Fingertips but the author was blunt in his explanation of what is holding telehealth back:

“The biggest obstacles? Government. Insurance companies. Employers. They pay the bills. Not only have they been slow to take advantage of telemedicine, they are refusing to pay for most of it…”

Getting a virtual visit via the free CVS/pharmacy app for just $59 means a person can go around his or her insurance company – and CVS avoids that hassle, too. Here are just a few ways that CVS Health’s approach differs from regular health insurance: You don’t need a referral. You don’t need to wait days for an appointment. You probably don’t have to take time off work because the virtual visits are available 24 hours a day, 7 days a week.

If you are one of the 40% of people who has employer-sponsored insurance but is enrolled in a high deductible health plan (HDHP), you probably love the idea of a cheaper alternative to a retail clinic since you are accustomed to paying out-of-pocket for your basic care now. Even if you have insurance, it doesn’t matter, because the virtual visits can only be paid for with a credit or debit card (CVS Health said they will add insurance coverage and national coverage by the end of the year).

Insurers have been offering limited products, in limited geographies, with limited providers, their “network,” for years. The launch of MinuteClinic video visits will be trumpeted as a huge value for consumers. That is only half the story. How will health care providers convince people who are mostly healthy that they have to wait for appointments between 10am and 3pm at a complex, integrated health system where they have to pay to park? How will insurers convince people to continue to buy the expensive, comprehensive coverage on offer today? This move will start to change the way people think about what insurance is even for. Now THAT is disruptive.

More on social determinants of health: What are they, why are we talking about them so much, what’s happening now?

By |2018-06-15T19:32:48+00:00June 15th, 2018|Health Care Trends, Health Disparities, Health Information Technology, Health Reform, Innovation, Public Health, Social Determinants of Health, Uncategorized|

More on social determinants of health: What are they, why are we talking about them so much, what’s happening now?

Here at M2, we spend a lot of time thinking about the social determinants of health (SDH), or the nonmedical factors that can affect a person’s overall health and health outcomes. We have blogged recently about this issue, here and here. The issue is gaining momentum and we are seeing more articles and studies addressing how to better incorporate SDH into programs and technologies; for example, former CMS administrator Andy Slavitt recently announced his new venture capital firm will focus on companies in this area. Another recent article highlights the opportunities for technology entrepreneurs as adoption rates for SDH technologies are projected to increase over the next ten years. Today we are taking a close look at a recent position paper from the American College of Physicians (ACP).

SDH are defined as “the conditions in which people are born, grow, work, live, age, and the wider set of forces and systems shaping the conditions of daily life”. In other words, “where a person is born and the social conditions they are born into can affect their risk factors for premature death and their life expectancy,” the ACP notes in its recent paper.

SDH are “responsible for most health inequalities,” the ACP says; the paper examines the complex issues involved and provides recommendations on “better integration of social determinants into the health care system while highlighting the need to address systemic issues hindering health equity.”

The paper was drafted by the ACP’s Health and Public Policy Committee, and the ACP notes that it is charged with addressing “issues that affect the health care of the U.S. public and the practice of internal medicine and its subspecialties.”

“Understanding and addressing social factors that affect health outcomes is a pressing issue for physicians and medical professionals,” the ACP says. The group is issuing a set of recommendations “to empower stakeholders to advocate for policies aimed at eliminating disparities and establishing health equity among all persons.”

The paper features nine policy recommendations. Most notably, these include: integrating SDH into medical education at all levels; adequately funding federal, state, tribal, and local agencies in their efforts to address social determinants of health; developing best practices for utilizing electronic health record (EHR) systems as a tool to improve health without adding to the administrative burden on physicians; and adjusting quality payment models and performance measurement assessments to reflect the “increased risk associated with caring for disadvantaged patient populations.”

Expanding on one of the recommendations above – the importance of EHRs and collecting data – the paper notes that in 2014, a National Academies of Science committee identified 12 social determinants to be included in EHRs as part of meaningful use stage 3, and issued recommendations on standardizing collection of measures of these social determinants. Several behavioral and social domains are currently collected: tobacco use; alcohol use; race/ethnicity; and residential address, which is geocoded.

The report says that in terms of racism and health equity, the ACP’s policy on racial and ethnic health disparities “acknowledges that addressing social determinants of health is a key component to increasing health equity among racial and ethnic populations.”

Social determinants “can exacerbate health care disparities among racial or ethnic groups,” the paper says. “Socioeconomic status, race, and ethnicity are connected in a complex, multidimensional way and may affect a person’s health independently or in combination.” As an example, the ACP notes that Latina women experience a greater incidence of cervical cancer and higher mortality rates than non–Latina women. Access to care for Latina women is also affected, as they are more likely to lack health insurance than white non-Latina women.

SDH has been a bit of a buzzword for a while in public health circles, but it may finally be time for SDH to influence policy, as seen by ACP’s efforts. “Why now?” many are wondering. As proof points pile up, and more people gain an understanding of what SDH are, the concept is gaining momentum and being included in more discussions.

For example, it’s interesting that one of the largest physician groups has developed policy positions on SDH. This may be an indication that physicians in general are realizing the significant role that SDH play in individuals’ health. Incorporating an understanding of SDH into not only the practice of medicine, but also into the tools and incentives that drive patient care, would be welcome steps in helping to reduce the negative health outcomes related to SDH.

Nearly Every State Engaged in Value-Based Payment Models

By |2018-03-14T17:37:20+00:00March 14th, 2018|Health Care Trends, Health Reform, Innovation, Medicaid, State Health Initiatives, Uncategorized|

Nearly Every State Engaged in Value-Based Payment Models

Value-based payment is not just for Medicare and private payers, states are also engaged in a multitude of value-based payment initiatives. While variation exists in the scope, leadership commitment, and resources devoted to these efforts, “more than 40 states have a state-initiated plan or strategy” to move toward value-based payment instead of fee-for-service (FFS) payment, and “almost half of those initiatives are multi-payer in scope,” according to the report by Change Healthcare, based on a national study of  publicly available information compiled from May through October 2017.

Of note:

  • Of the states engaged in VBP, nearly all are using patient-centered medical homes (PCMH) or health homes (HH).
  • For the most part, these tests are being tried in Medicaid; 31 states are testing one of these value-based approaches in Medicaid alone. In three states, they are testing at least one of the two in Medicaid and with their state employees: Oklahoma, Tennessee, and Washington. Thirteen states have multi-payer efforts: Arkansas, Colorado, Connecticut, Delaware, Idaho, Iowa, Maryland, Michigan, New York, Ohio, Pennsylvania, Rhode Island, and Vermont.
  • Fourteen states have chosen the ACO model: seven in Medicaid (Illinois, Maine, Massachusetts, Minnesota, New Hampshire, New Jersey, Oregon), two in Medicaid and with state employees (Oklahoma, Washington), and five in multi-payer arrangements (Colorado, Iowa, New York, Rhode Island, Vermont).
  • Episodes of care (EOC) is another approach being used; currently in 12 states though some are considering it and some only use EOC in a single service area: Colorado, Maine, and South Carolina are considering EOC; New York is using it only in maternity and chronic care; Washington is using it only for total joint episodes of care.
  • Pay for performance is also being tried in the following 12 states: California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Iowa, Maryland, Missouri, New Hampshire, Texas, and Wisconsin.
  • Seven states have “little to no activity around value-based payment” (Georgia, Indiana, Louisiana, Mississippi, North Dakota, South Dakota, Wyoming).

The following map (created by M2 based on data in the Change Healthcare report) shows the details of each state’s initiatives in this area:

For a few states, testing alternative payment models is not new. Some states have been engaged in these efforts for nearly a decade. Minnesota was the first state to engage in a value-based payment approach of some sort, in 2008. Colorado and Maryland began their efforts in 2011; Oregon in 2012, Arkansas and Vermont in 2013.

States are often the leaders in testing new ideas. Alternative payment models for health care are no different. As health care costs continue to rise, and most states need to balance their budgets every year, it makes sense that finding different ways to pay for Medicaid and state employees’ health care is something nearly every state is focused on.

VBP is not dead, as evidenced by nearly all states are taking action to transition from a FFS approach to one that is focused on value. To slow health care costs, we have to stop paying for what doesn’t work. The more we can reward outcomes in health care, the more likely it is that providers and patients will make decisions based improvements in care, rather than adverse financial incentives for low-value care.

Innovation Series, Part 2: App for Substance Abuse Disorders

By |2018-01-10T22:28:15+00:00January 10th, 2018|Health Care Trends, Innovation, Uncategorized, What do we pay for and why|

Scientific Breakthroughs: From Gene Therapy to Creative New Approaches to Cancer Surgery, Patients Stand to Benefit Dramatically, But How Will We Pay For This Innovation?

Innovation Series, Part 2: App for Substance Abuse Disorders

From gene therapy to a “pen” that can detect cancerous tissue in 10 seconds, we live in a time of amazing scientific breakthroughs. Advances in technology and our understanding of the genetic basis of disease are resulting in a range of innovations that hold the promise of improving our approaches to treatment – including things like new treatment options for rare diseases and innovations that are more consumer friendly.

Last year, for example, the U.S. Food and Drug Administration (FDA) approved for marketing the first mobile application to help treat substance use disorders. Yes, there’s an app for that! Cognitive behavioral therapy (CBT) is a kind of talk therapy that is a proven treatment for a number of mental health and substance abuse disorders. The newly approved app, developed by Pear Therapeutics, essentially makes CBT digital. The app, called reSET®, is designed to be used in conjunction with counseling and would be prescribed as appropriate by a health care provider.

Digital therapeutics are a hot space for health care start-ups and Pear Technologies is leading the way. Founder and CEO of the company, Corey McCann told CNBC, “This is the moment for digital therapeutics.” While not yet available for sale in the U.S., the clinical data that led to FDA approval is promising. The trial included more than 500 patients with substance use disorder (SUD) over a 12-week period. The randomized trial compared intensive face-to-face counseling – a standard treatment for SUD – to reSET® combined with a reduced amount of face-to-face counseling. Of the patients using reSET®  who were dependent on stimulants, marijuana, cocaine, or alcohol, nearly 60% were abstinent at the end of the study period, while just 30% of patients who received only the face-to-face counseling were abstinent.

Of note, data from the clinical studies indicated no side effects from the device. If a prescription digital therapy improves patient outcomes and has few or no side effects, should it be reimbursed at a higher rate than a competing intervention that is safe but has more side effects for the patient? Meeting the patient where she or he is seems obvious, and prescription digital therapeutics are another great example of innovation that is consumer-focused.

What do all of these new and potentially lifesaving innovations mean for the health care system? As with any innovation that offers new hope for patients, there will likely be high demand, but that will have to be considered in the context of limited resources. We are witnessing significant new innovations and scientific advancement; the usual questions of access and how to pay for it will be dramatically amplified in this modern era, given the unprecedented price tags. 

Scientific Breakthroughs: From Gene Therapy to Creative New Approaches to Cancer Surgery, Patients Stand to Benefit Dramatically, But How Will We Pay For This Innovation?

By |2018-01-03T21:04:29+00:00January 3rd, 2018|Health Reform, Innovation, Reimbursement, Uncategorized, What do we pay for and why|

Innovation Series: Gene Therapy

Scientific Breakthroughs: From Gene Therapy to Creative New Approaches to Cancer Surgery, Patients Stand to Benefit Dramatically, But How Will We Pay For This Innovation?

From gene therapy to a “pen” that can detect cancerous tissue in 10 seconds, we live in a time of amazing scientific breakthroughs. Advances in technology and our understanding of the genetic basis of disease are resulting in a range of innovations that hold the promise of improving our approaches to treatment – including things like new treatment options for rare diseases and improving the likelihood of success of something like cancer surgery. As we kick off 2018, I wonder what great new innovations the year will bring?

As just one example of innovation, consider the field of gene therapy: early last year the FDA approved the first gene therapy, Novartis’ Kymriah (tisagenlecleucel)‎, bringing “hope to the 3,100 people under the age of 20 in the United States who are diagnosed each year with acute lymphoblastic leukemia,” as the pharmacy benefit manager (PBM) Express Scripts describes in a recent post on its web site. Kymriah is “customized for each individual, using genetically modified versions of the patient’s own immune cells to target and kill leukemia cells.”

Gene therapies “are administered once, unlike nearly all other medications that are repeatedly taken over time,” Express Scripts notes. “And therein lies the challenge.”

The promise of gene therapy comes with a “dramatically higher price;” for example, Kymriah is priced at $475,000. Not only is this price significantly higher than more traditional types of drugs – it’s also much higher than other specialty drugs, the PBM says.

Paying for these types of breakthroughs will present challenges. “Pharmaceutical companies have a single opportunity per patient to get paid,” and “many gene therapies target extremely rare diseases, so there aren’t many patients to share the cost drug makers require to justify the expense of research, development and commercialization. The result is very high price tags,” Express Scripts says.

“The health care system isn’t set up for this type of economic model. Thus, making these therapies available to patients “requires novel collaboration,” the company says. A “new payment model” is needed, and Express Scripts is working with drug companies, policymakers, patient groups and payers on “innovative approaches to make gene therapies accessible for patients.”

For example, value-based contracting can “ensure that payers and patients aren’t on the hook when a treatment isn’t effective. Consultations involving pharma companies and payers can help set appropriate prices.” And “discussions with policymakers can help set an appropriate regulatory framework.”

“Ultimately…gene therapies will require payment and patient care systems which are as novel as the medications themselves,” Express Scripts says. “Ideas on the table include paying for a treatment over time, establishing insurer risk pools and financing one-time payments. A successful model must address patients who change insurers or employers, and tracking their health outcomes over time to ensure payments aren’t being made if the treatment stops being effective.”

What do all of these new and potentially lifesaving innovations mean for the health care system? As with any innovation that offers new hope for patients, there will likely be high demand, but that will have to be considered in the context of limited resources. We are witnessing significant new innovations and scientific advancement; the usual questions of access and how to pay for it will be dramatically amplified in this modern era, given the unprecedented price tags. Particularly in the case of gene therapy, this may require new types of conversations and collaborations between drug developers, payers and patients, along with new payment approaches.