December 4 - 6, 2019
Value Creation in Precision Medicine
Schedule:>> Wednesday 4 December
Day 1 will review and discuss principles for assessing value, generic business models and systems for paying for value, as they are proposed or tested in various institutions worldwide.
>> Thursday 5 December
Day 2 will apply principles to two different types of health systems, which require differentiated treatment of value creation and business models: centralised systems, such as France or the UK, which are primarily public, and de-centralized systems such as the US or Switzerland, which primarily rely on private insurance systems.
>> Friday 6 December
Day 3 will discuss various systems in the specific case of Switzerland, with a view to elaborating recommendations for assessing the value of prevention.
>>Discussion will be in plenary and parallel sessions, to give ample time to concrete and applied discussions, with a view to elaborate innovative outcome.
- Trono Didier
- Florin Marie-Valentine
Acknowledging the need to adapt or revise ways to measure the value of health and medical care.
As precision medicine advances within an already complex healthcare system, it is imperative to recognise the need to change the way value of medical care and health is created and accounted. On the one hand, value is increasingly created by synergistic harnessing of technological advances and data leading innovative diagnostics, therapeutics, and biomarkers. On the other hand, the economic value of prevention and quality of life in good health is overlooked and must be reassessed taking into consideration the cost of personalised therapies.
When fully personalized therapies are found to be the most effective solution, a paradigm change is needed to answer the question of affordability, requiring focusing on the broader economic and societal value of a therapy. In other words, framing health as an investment rather than a cost (or re-orienting from transactions-driven to value-based health care provision) and at the same time finding new ways to sustain solidarity with the more vulnerable.
Moreover, novel technologies such as genomic sequencing enable a more predictive approach warranting a change of paradigm to put more emphasis and means on prevention. While representing an initial investment, a question is whether precision medicine has the potential to halt the steep increase in healthcare costs. In any case, the balance between treatment and prevention in terms of investment and reimbursement needs to be reassessed.
Providers of medical and healthcare, payers and industry strive to make precision medicine affordable, acceptable and inclusive. Pricing and licensing around precision medicine must take into account the fact that health care systems are very resource constrained. A possible approach is to shift to ‘value-based health care’, which has a more holistic approach to the pricing for drugs and treatments. It summary, it considers the total cost of disease over the life of a patient. In value-based healthcare, drugs and treatments would be priced in relation to the benefit, or added value, that they deliver to society.
The workshop will discuss ways to re-assessing value creation with precision medicine to manage risks and harness benefits. It will discuss in particular:
- major principles and initiatives
- how these principles can apply to two broad types of payment and medical systems: centralized and public or public/private (for example: UK or France), and decentralized and private or private/public (for example: Switzerland or the USA), and
- specific application to Switzerland, focusing in particular to the need to incentivize and reward diagnostic and prevention.
The debate about cost and affordability of cures is as much about acceptability, ethics and inclusiveness as about cash flow and value, and in particular the alignment between value generation and financing mechanisms. In the current systems, funds cannot be transferred between individual budgets or payers, and budgets are typically set on an annual basis (which, in private and decentralised systems, reduces the ability for payers to reap the benefits of paying for high-cost treatments).
Contributions developed during the workshop will address three specific aspects: how to assess value over the entire life of a patient, how to design new business models for medical systems and industry, and how to pay for value.
Assessing value over the entire life of a patient
There is a temporal misalignment that may dis-incentivise doing so. Not only must payers be able to align cash flow, annual budgets and amortize the price of diagnostics, prevention and therapy over the life of the patient, but in multi-payer systems, payers may not see the benefits in the long term if patients change insurers and/or insurers do not agree on splitting the cost of treating such patients. The divide between medical and social protection schemes in many countries must also be considered. A treatment for dementia for example would mostly reduce nursing home spending, not so much medical spending.
Accounting for the full economic impact a medicine entails incorporating the GDP and non-GDP related effects, and the trickle-down multiplier effects. A healthy population, for instance, makes positive economic contributions in terms of unpaid labour and consumption. Like any innovation, therefore, precision medicine should be considered as a growth driver, and associated value.
Should the value of a medicine account for all the multiplier effects, there may be no need to assume a fixed healthcare budget. A limited and fixed budget can be a major pushback on innovation – through restricted access to innovative drugs – and is therefore detrimental to the equity and quality of any health system.
New business models
Thus developing the economic rationale to justify fully personalized treatments requires the development of new business models for pharmaceutical companies, payers (insurers, governments) and patients, and with appropriate incentives. Depending on the severability – the extent to which the cost of a drug is separable from the cost of overall treatment and management of the disease – and the value generation horizon – the time it takes to amortise the expense and realise the value –, various types of business models could and could be developed to overcome short-term budget constraints and strategic payer behaviour. These include (a) loans or debt financing (for insurers, not indebted patients), (b) inter-payer transfer payments, special ‘cure funds’ (pool solutions) or re-insurance, and (c) patent buyouts by government or tax coverage. Debt financing – which could be of bond type or mortgage type – can be used to overcome short-term budget constraints, or funds can be reallocated based on value generation, such as paying back debt from hospital budget, if “cure” avoids admissions.
Paying for value
There are also different types of possible pricing schemes. The tendency is to a move towards outcome-based or value-based pricing, to which indication-based pricing is a precursor.
Pricing and payment schemes for new curative drugs should be negotiated early in the development of the drug in a way that makes economic and social sense, and is adapted under varied national regulatory contexts. Key principles would include: (a) amortisation over time, (b) distribution across actors, (c) performance-based incentives and (d) indicators.
Prescription of drugs should be guided by individual genomic data when possible, thus increasing response rates and decreasing side effects. Reimbursement of genomic sequencing would make economic sense when pharmacogenomics information is available and for prevention (e.g. for cardiovascular disease).
 Candidates for such case studies could include Gilead’s Sofosbuvir (Sovaldi) for chronic Hepatitis C patients, Novartis’s Car-T (Kymriah) for leukaemia, or RT-100 gene therapies for congestive heart failure.