3968_RoundtableBlogPost_BlogDean Hakanson co-wrote this blog post with Ed Schoonveld. This blog post was originally published on The Price of Global Health.

Is the demand for value-based care merely superficial? Are the industry’s decision-making and incentive systems built to encourage clinical innovation? How will pharma companies rethink their pipelines to improve poor commercialization efforts?

In today’s complex healthcare landscape, the questions asked of pharma leaders might seem disparate, but each one is pressing. At a recent roundtable event in New York, hosted by the Financial Times, we sat down with more than a dozen industry leaders to discuss the most critical pricing and access issues facing life sciences companies today. Here are the top three themes that emerged from the discussion:

1. Changes in value-based contracting: One main issue that surfaced during our discussion was the industry’s focus on value-based pricing and value-based contracting. Payers and pharma industry players continue to explore how to tie payment to product performance. Value for money is a very appealing objective, but the pharma industry and payers continue to struggle with large-scale implementations of these types of agreements. There have been some high-profile agreements that have been publicly announced, but the majority of the participants didn’t feel that this would become a long-term solution. The reasons were numerous, including anti-kickback and best price regulations, which do not have a safe harbor for such agreements. Moreover, the challenges with meaningful value metrics and execution hassles are significant. These issues are compounded with innovative therapies that cure widespread diseases, such as hepatitis C, and the entrance of cell and gene therapy. CAR-T innovation makes value-based contracting extremely difficult to implement as the upfront cost of a single treatment presumably provides benefits over many years.

Importantly, some felt strongly that the industry needs a third party—either ICER or an alternative organization—to help assign a value to therapies. ICER has been gaining more attention recently, in part due to the ability to execute this measure and some of the policy discussions happening in Washington, D.C. However, the ICER approach doesn’t match payer perspectives and decision-making in the U.S. Declaring it “the metric” is generally not deemed appropriate by the drug industry. One very innovative suggestion from the event was to have an independent third party establish a re-insurance option to support industry and payer agreements. Many attendees agreed that the rebate system has some serious flaws but often becomes the default approach given all of the challenges.

2. A call to improve R&D “value”: During our discussion, many shared the view that pharma companies should be looking critically at the therapies in their pipelines and mustering the courage to kill products much earlier in the R&D process. In fact, the overall process of R&D became a central point of discussion. Many felt that the process required significant change to deliver the promise of innovation, which could create value for the patient, provider and payer stakeholders. This would require cross-functional teams to look beyond the regulatory milestone and embrace the needs of all three stakeholders. To encourage the right behaviors, one attendee suggested developing a new type of incentive compensation program that would reward cross-functional teams responsible for the development program (beginning as early as phase II). The concept was to have these teams embrace an evidence generation strategy that may be riskier for regulatory approval but creates evidence that is far more valuable for the patient, provider and payer at the time of launch. The more important metric isn’t speed to regulatory approval but speed to formulary approval.

3. Truly communicating value: While this issue certainly isn’t a new one, pharma companies today need to focus on creating the value story earlier in development and do a better job of communicating it to all stakeholders, especially patients. This topic continues to capture the attention of senior leaders as they consider how the content for communication is developed, specifically the data generated, and how governance within the company can drive enhanced value communication. This brought global health economics and outcomes research and real-world evidence into the discussion. All of the attendees agreed that there’s no silver bullet for this important objective and they would like to learn more about how industry benchmarks could be collected to develop a maturity model. That would be an interesting topic for the next roundtable.

Unfortunately, the high cost of healthcare—not just the cost of biopharma innovation—continues to burden patients, families and society as a whole. While many of the attendees had differing or even opposing points of view, there was a shared consensus that ensuring affordable access to pharmaceuticals and cell and gene therapies is paramount. Finding a solution—or, more likely, several solutions—won’t be easy, but it’s a necessary path to forge.


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Topics: Innovation, Pharma, Pharma Industry, Life Sciences, Market Access & Pricing, Drug pricing, Market Access, value, R&D, value-based pricing, commercialization, value and access, global drug pricing, ICER, value-based contracting, Financial Times