This case study explains the global differences in test reimbursement and reveals that for some tests the laboratories own costs aren't even covered....
Peter Keeling of Diaceutics provides insight on the role personalized medicine can play, specifically the diagnostic, in adding value to a therapy and why pricing models need to be reviewed to reflect the value that complementary and companion diagnostics can have on the overall targeted therapy value.
There is a rising storm of debate around ‘excessive’ therapy prices on one side and, on the other, the exploration of ‘new models’ to articulate the positive impact which the pharma industry’s 10% of the health cost pie has on the other 90% of healthcare spend.
At one end of the spectrum, payers are seeking and getting steep discounts from launch onwards for new therapies [i]. (This combative approach is surely equivalent of Tesla launching their new people’s car with 30% off from day one!) Payers’ empowerment comes from the arrival in the US of cost-effectiveness groups like the non-profit Institute for Clinical and Economic Review (ICER), whose methods closely resemble those of NICE, the successful gatekeeper to therapy pricing in the UK [ii]. Whether we agree with the methods deployed by ICER in terms of their inclusiveness or not, they are getting the ear of Medicare and presidential hopefuls [iii] and will serve to intensify the pricing debate.
Does personalized medicine help or hinder the debate?
Of course, not all of the therapies under pricing scrutiny are personalized with the use of biomarkers. It does seem as if the pharma industry has, by implication, leveraged its existing Health Economic Assessment (HEA) models to consistently cross the $100,000 per patient barrier in return for dramatically improved outcomes in smaller patient segments targeted with the use of biomarkers. It is a pity then that the diagnostics at the heart of this segmentation are so ignored.
Our observation here is a simple one. Current HEA models which focus on therapy pricing generally ignore the value of the diagnostic in two ways:
We are conflating access with value
We will be the first to decry the lack of reimbursement infrastructure which dogs new companion and complementary diagnostic launches across the leading healthcare markets. We continue to encourage our clients to invest time to navigate this neglected field [vi].
However, we must not confuse the access barriers to optimal testing (a pain to manage though they are) with the need to articulate the profound impact which diagnostics can have on the value of targeted therapy. We laud the three year journey which EPEMED and the Office of Health Economics (OHE) have been on to argue for a new evaluation framework dedicated to diagnostics. EPEMED and OHE have proposed “a broader framework for considering the value contribution of complementary diagnostics and provides policy recommendations to support the implementation of this comprehensive framework for assessing their potential value contribution.” [vii]
Frankly, the inclusion and articulation of diagnostic value needs to be elevated alongside the articulation of the targeted therapy and it is no more acceptable to talk about personalized medicine value only for therapies, than it is to describe the value of a new car without its tyres.
As we all search for new models which collaborate to unlock value rather than battle to protect historic turf, we encourage access and reimbursement experts everywhere to better understand the heroic power of diagnostics to reshape the debate.
[v] Koelsch C, Przewrocka J, Keeling P.(2013) Towards a balanced value business model for personalized medicine: an outlook. Pharmacogenomics. 2013 Jan;14(1):89-102. doi: 10.2217/pgs.12.192.