Sep 24, 2020
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For Expensive New Drugs, Biopharma Should Make Money-Back Guarantees Mandatory

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In a recent paper on Value-Based Pricing for Drugs authors Anna Kaltenboeck and Peter B. Bach of the Memorial Sloan Kettering Cancer Center discuss the high cost of medication particularly the newly introduced gene therapies and biologicals and the emerging new policy ideas designed to deal with the impact of those drugs on the healthcare system


The authors focus on three general themes: aligning drug price with drug benefits; altering the mechanism of drug payment; and aligning demand with value. All of those approaches merit discussion as all of us grapple with the issue for paying for brand new drugs which could cure deadly diseases. Photographer: Scott Eisen/Bloomberg The authors state value-based pricing is becoming a necessary policy idea in the U


S. . They go on to claim that value-based pricing is being promoted as a response to high drug prices. But because the term gains traction distinctions in both method and likelihood of improving aligning prices with value must be carefully considered. It s hard to argue with that. However there’s one step that the biopharma industry can immediately take which will help its credibility as well as help the healthcare system: offer money-back guarantees when drugs don t work as promised


This would have been unheard of 5 years ago. It s one thing for a drug to impact biomarkers such as lowering blood pressure reducing LDL-C levels or decreasing plasma glucose. However the ultimate endpoint for most of these drugs is preventing death simply by heart attacks and strokes. Although these classes of medication might stave off death for a finite period of time those with heart problems will possibly still die of heart attack or strokes


An analogous points can be made with drugs to treat cancer. The medication might buy time but not cure the disease. Are money-back guarantees even possible for such diseases? Yet pressure put on drug makers by payers has begun to change this as recently shown with PCSK9 inhibitors drugs that lower LDL-C to unprecedented levels


Because these drugs were launched with an incredibly high list price of about $14 000/year of treatment payers balked at allowing heart disease patients access to those medicines. Amgen which markets Repatha countered this by offering money-back guarantees. For the first time Amgen stated that if a patient has a heart attack while on Repatha the payer is eligible for a full rebate from Amgen for the drug s cost


There are without a doubt some stipulations. One requirement is that a patient must be on Repatha for at least six months before being eligible for a full reimbursement. Also there is a cut-off date set in each contract that Amgen signs with a payer as to how long Repatha is anticipated to protect the heart patient


This sort of guarantee was a primary for LDL-C lowering drugs. Novartis has taken an analogous step with its new gene therapy Kymriah a cure for childhood acute lymphoblastic leukemia (ALL). This CAR-T based therapy is priced at $475 000/patient. Novartis took the unconventional approach that payment for Kymriah would not be made unless the patient responded to Kymriah one month after treatment


If Kymriah doesn t work there isn’t any charge for the drug. Isn t that how things should be? PROMOTED Grads of Life BRANDVOICE | Paid Program
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That ought to be changed. The two major trade organizations for the industry BIO (Biotechnology Innovation Organization) and PhRMA (Pharmaceutical Research and Manufactures of America) should pass resolutions that money-back guarantees become a proper practice with its member companies. This sort of move would help bolster the reputation of the biopharmaceutical industry


It would also improve drug access to patients. New drugs and gene therapies designed to treat cancer rare diseases etc. are justifiably commanding high prices. However in the event that they don t work payments shouldn t be required. Novartis and Amgen have set the bar. Others should follow. To stay inside the loop with Forbes Health coverage subscribe to the Innovation Rx newsletter here

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