Conference Presentation, Panel
Finding a Cure for the Cost of Durable Therapies
Milken InstituteDan Mendelson, Yvonne Greenstreet, Joe Grogan, Michael Sherman, Mark Skinner, John Birch, Ian Kramer, Jupiter Lazmar
- Medical science is expected to deliver major advances in gene and cellular therapies over the next 18 months to two years, with at least nine companies currently developing curative treatments for hemophilia.
- Alnylam Pharmaceuticals anticipates continuing innovation, including the ability to delay hereditary amyloidosis progression and reverse disease features, having already raised approximately $4 billion over a 16 to 20-year development period.
- Commercial models are evolving to address high costs, with rare disease therapies currently priced between $250,000 and $650,000 annually, while a potential $1 million hemophilia gene therapy is viewed as a value proposition if it yields sufficient cost offsets.
- Payers are implementing value-based payment structures, such as rebates for suboptimal responders and caps on transplant costs, to manage access to transformative treatments that grow at 15 to 20 percent annually.
- Drug spend is projected to rise to 30 to 35 percent of total healthcare costs within five to ten years, a trend considered beneficial if it results in reduced hospitalization and extended lives.
- Without smarter pricing and payment approaches, insurance affordability is projected to become unmanageable for employers and patients within the next three to five years.
- Financial risks include adverse selection, where a plan covering high-cost therapies could face insolvency within two years if competitors exclude such treatments and all hemophiliacs migrate to the covered plan.
- Health plans estimate that without new payment mechanisms, the healthcare system may collapse if patients are not integrated into discussions regarding high-cost healthcare metrics.
- The White House Office of Management and Budget reports that drug price trajectories have moderated significantly in the last 18 to 20 months, with government efforts focused on leveraging generics and creating financing vehicles similar to historical capital market innovations.
- Policy expectations include a shift toward outcome-based measures in Medicare Advantage and other systems, with the government playing a role in eliminating adverse selection to ensure a level playing field.
- Regulatory and clinical frameworks are being refined to allow coverage for cures like hemophilia treatments even without 10 to 20 years of long-term study availability.
- Alnylam has committed to raising prices no more than the Consumer Price Index (CPI), while Harvard Pilgrim leads in using data to structure clinical improvement-based contracts.
- Approximately 7,000 rare diseases currently lack treatments, and a lack of perceived value could lead health plans to exclude coverage or self-insured employers to drop these therapies.
- The Institute for Clinical Effectiveness Research utilizes a $150,000 per quality-adjusted life year limit, though this metric is regarded as complicated and controversial without a single universal measure of value.
- While the panel will not find a cure for the cost of durable therapies, the ongoing discussion aims to align regulators, insurers, and the hemophilia community on six core outcomes to inform broader disease spaces.