AMCP General Session: What is Value? And What is it Worth?

During the general session at AMCP Nexus 2017, Susan A Cantrell, RPh, explained that the results of the AMCP Board of Directors’ “deep dive” into understanding the costs of health care boiled down to one word: value.

“We have long said that costs should not be viewed in isolation,” Ms Cantrell told the general session audience during her keynote speech. “A medication with a high cost isn’t necessarily a bad thing, if for example it cures the disease and avoids more expensive therapies down the road—that is just simply good value.”

She also shared three value messages developed by the AMCP, which included: managed care creates better value by maximizing health outcomes for patients, managed care identifies and report value through the use of real world evidence, and managed care advocates for value through a competitive marketplace along with policies that promote better treatment options

In order to explore the complications of understanding value and the many differing expert opinions on how managed care can achieve better value in the future, Alan Weil,
editor-in-chief of Health Affairs, led an panel of professionals from all across the managed care spectrum. Expert panelists included Steven Miller, MD, chief medical officer of Express Scripts; Robert Dubois, MD, PhD, chief science officer and executive vice president of the National Pharmaceutical Council; JD Kleinke, a medical economist and health care expert; and Jane F Barlow, MD, MPH, senior advisor of the Massachusetts Institute of Technology Center for Biomedical Innovation.

Their discussion touched on a number of topics such as innovating payment systems to handle gene therapies, what the future of managed care looks like, and the fundamental philosophy of value vs worth.

The Self-Sustaining System

Mr Weil began the discussing by posing a question to the panel based on a quote by John Crowley, chief executive at Amicus Therapeutics,“if you develop a therapy that really does cure somebody, the system will figure out how to pay for it,”—Mr Weil asked the panel to give their thoughts on whether or not this is true.

Dr Dubois answered by saying that as he thought about this question, he identified that there are really four challenges to conquering high price drugs that came to mind—what he called the “four Cs”—or four ideas that need to be balanced in order to achieve proper value.

The first of these was cost, which naturally is the cost of the drug by Dr Dubious stressed that cost should also consider the cost of the disease or more so the costs avoided by a curative therapy. The second idea he highlighted was calendar, or considering how payers pay upfront for a treatment that is timeless. The third idea was certainty, or understanding how effective a treatment is and the value that treatment provides long-term. And the final idea was concern, or figuring out how much do we want to spend and how will it be divided between the stakeholders at play.

“There isn’t a single answer,” Dr Dubious said.

To counter that, Dr Miller gave a simple answer to the question of whether or not the system will figure out how to pay for high cost curative treatments.

“In America today, the answer is no,” Dr Miller said.

He argued that we currently have spectatular drugs that cure hepatitis and we have only treated 1.3 million people who have the disease—not all of the people with the disease—suggesting that the system has not balanced itself to pay for the cure. He also highlighted the availability of gene therapies in the United States, which are not proced for the market place and therefore do not get paid for.

Dr Barlow counter that she does not think the answer to the question is “no, we’re not going to pay.”

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“The question really is how sustainable is this going to be within our current system,” she said. She added that the mentality among payers is often “I’m not going to pay for a single gene therapy, because if I pay for one I’m going to have to pay for them all.” She said that is presents a huge challenge because we need to bring the mentality of the payers more in line with the needs of the patients.

Dr Miller responded that he agrees that the system needs realignment.

“In America we have a model that isn’t sustainable,” he said. “We don’t know how to pay for things that are cured.” However, he noted that the system has figured out how to pay for expensive procedures like curative transplants, suggesting that the entire model of payment has to be restructured and innovated when it comes to curative therapies.

“We have got to change our mindset,” Dr Miller said

Narrow Payment Horizon

Dr Dubois explained that he thinks stakeholders have too narrow a payment horizon, meaning that payers need to take into account the costs that curative therapies offset.

He used a gene therapy that can cure childhood blindness as an example. At $1 million dollars a treatment the initial costs seem expenseive; however, the cure will these children the ability to be more productive members f society, who are not reliant on health care assistance, and over time the value of the cure will pay for itself through reducing these burdens.

He suggested a payment model that does the math to account for these factors and gets payer on board.

Mr Kleinke agreed but argued that under this equation the payer pay the bills and society benefits—a glaring disconnect. He explained that without the advent of a flawless single-payer system, solutions will have to become borne out through payment innovation.

Dr Miller suggested a system that combines value-based pricing with amortization. He posited a gene therapy payment model that cost the payer $100,000 a year for a certain term, and was paid in full yearly as long as the patient continued to show that they were cured.

However, he said that the issue with this type of model becomes portability. If a patient leaves the payer who fronted the cost of the drug and joins a new health plan, how would this hypothetical payment model account for that? Dr Miller said that Express Script is developing models like this now, and not only for gene therapy but for other drugs as well.

The Worth of Value

Dr Dubois argued that no matter how the money is spread out over time or how the math is done, the burden of high cost therapies still comes down to the cost of the drug times the number of patients who need the drug.

“We have to come back to the fundamental question ‘do we want to pay for a cure,” Dr Dubois said. “ I just don’t see any way in the United States that we say ‘heck no’ to that.”

He argued that society as a whole will have to be held accountable for paying for these treatments because so many facets will benefit from the drug’s value. He explained that a patient who uses a gene therapy to cure a disease will save future employers money, save the government money, and save future health plans money. He suggested a legislative solution to this problem that holds these entities accountable for the cost of curative treatments.

“[We need a system] where everybody has to pay in,” he said. “If we don’t come up with a system like this then it is going to leave no cures for people over the age of 70—can’t afford it.”

Mr Weil asked the question why does this value conversation only apply to specialty pharmacy—when we don’t expect to be held accountable for the long term value of treatments in other sectors of health care.

“This idea that everything should have a pay off relative to the value is misguided,” Dr Miller said. He argued that putting a price value on a life will lead down a rabbit hole of endless value claiming for future therapies. He said the conversations should not be about absolute value of life but about the relative value of gained at the time of treatment.

Dr Dubois argued for pricing based on long term value by saying the worth of the drug is relative to whether or not you can duplicate its benefit elsewhere. He said the reason specialty pharmacy needs to take value into account is that you cannot get the cure from anything other than the drug—and when you can, the worth of the value decreases. In essence, competition in a drug space is what balances price.

Dr Dubious said that when the medical value is low then prices should not be priced high, but in the case of a $475,000 gene therapy treatment that can save a child’s live, he said society should not have a problem footing that bill.

Dr Miller concluded by saying the science and innovation behind these treatments is phenomenal; however, “it is managing it them is going to be the problem.”

—David Costill