by Richard Staines
AMSTERDAM, Nov 12 (APM) - A “pay for performance” model is a pharma-backed think-tank’s preferred option for funding expensive treatments that cure or provide long-term benefits to patients with severe diseases, a conference has heard.
Adrian Towse, director of the Office of Health Economics (OHE), in London, told the International Society for Pharmacoeconomics and Research (ISPOR) conference on Tuesday that there were three potential funding models for advanced therapies that could potentially cure serious conditions.
These treatments are associated with high up-front costs, but bring healthcare savings over time, unlike many conventional drugs. Costs are often increased as cell therapies involve several steps and use of expensive medical devices.
Towse said the OHE has taken a look at three models that could be used to fund drugs in this category - a “pay for performance” approach when companies are reimbursed if patients stay cured, an amortisation model where costs are written off in accounts over a long period, and innovative financial tools such as bonds.
Bonds involve a third party providing up-front funding for treatment, which is gradually paid back over time by the state concerned. The model has already been used successfully to finance developing world vaccine programmes, Towse noted.
He said the “pay for performance” model had the clear advantage of reducing up-front costs for payers, while creating a steady income stream for manufacturers, although there were drawbacks for manufacturers if patients relapsed or died earlier due to co-morbidities.
Amortisation worked well from an accounting point of view as it reflected the change in the value of the treatment over time, but involved high up-front costs that caused issues with payers.
Meanwhile bonds, have the complication of needing the third party to administer the system. They also remove the crucial element of risk that improves the performance of drug developers, he said.
Towse said: “Pay for performance is the way forward. With amortisation and innovative finance, it is less easy to see how they may offer a solution.”
Only Unicure/Chiesi’s Glybera (alipogen tiparvovec) for lipoprotein lipase deficit, Dendreon’s Provenge prostate cancer vaccine and Tigenix’s ChondroCelect and Genzyme's matrix applied characterised autologous cultured chondrocytes (MACI), both for cartilage repair, have been approved as advanced therapies.
And only ChondroCelect has been marketed, but delegates heard that more of these treatments are likely to be approved and marketed on coming years, bringing their own funding problems.
The OHE is part funded by the UK Association of the British Pharmaceutical Industry, along with UK government research organisations and commercial clients.
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