Insights from the Endpoints UK Biotech Summit October 2019
Fifteen years ago, Health Economics Outcomes Research (HEOR) was the pharma industry’s new kid on the block. HEOR seeks to assess and demonstrate the value that new medicines bring to patients and health systems, enabling the company and its customers to have confidence in pricing and health benefits. Even ten years ago, this was an area of business still working hard to justify a place anywhere near the top table and was primarily used to support new drugs at Phase 3 and beyond.
Today the best organisations place HEOR at the heart of Cell and Gene therapy (C>). It’s a vital tool in the pricing and reimbursement of this new class of drugs. No longer on the periphery, just about everyone in the immunotherapy business has an interest in the contribution HEOR can make to clinical development. Critically their contribution extends to many other stakeholders (whether they know it or not) most significantly patients, care systems and investors.
Health and outcomes research comes of age
At last week’s Endpoints UK Biotech Summit, senior leaders from Morphosys, Immunocore, Oxford Biomedica, Genmab, Autolus and Cancer Research UK led a debate on cancer drug trials. Questions around pricing and reimbursement were amongst the most numerous and significant. It was agreed that these are the ones requiring the most creative thinking, an openness to doing things differently and new leadership skills to resolve them. The panel rightly identified the urgent questions for drug makers as being:
1) How much should you charge for your new drug?
2) How and when should you be paid for it?
3) How are you going to manage the inevitable changes to your business model?
If there is any part of C> that needs people from outside the industry to join and manage change it is pricing and reimbursement. If payments are going to be received by drug makers over a period of years, rather than in a single transaction then the industry will need to “mortgage” its future income to cover its costs and insure itself against a whole slew of risks – some known and others unknown.
Where is the data?
Fast approvals and smaller, shorter clinical trials will mean that when the therapy is marketed it will have a smaller evidence base than traditional drugs. So, gathering real world evidence and learning quickly from it become critical. In this new world, data will be key; patient registries will be essential to gathering, managing and interpreting personalised longitudinal data. There will inevitably be issues around data quality (especially if patients self-assess) volume and complexity.
Pricing and reimbursement to impact pharma business model
All of this means that the pricing and payment models of C&G Therapies will impact i) Finance departments which will need to learn skills from industries that charge customers over multiple years instead of in simple transactions; ii) Pharmacovigilance teams who will need to become more adept at handling and analysing personal data and using AI to analyse huge volumes of information; iii) Policy and Communications groups who will need to make the case for these complex medicines to governments, regulators, insurers, health care systems, patients and investors.
The significantly increased period of payment from payer to company will affect every country, however in non-socialised markets (like the USA) where health insurers pay for patients’ medicines there are further layers of complexity, – for example, what happens when the patient changes health insurer? This risk could disincentivise payors from reimbursing this class of medicines, or at least make them much more resistant to it, both approaches could deny access to therapy for patients.
Financial services industry; a source of new people?
All of the above means that C> companies will need people with new skills and very different experiences. HEOR will be essential but it won’t be enough on its own. Individuals with actuarial expertise will be needed to assess and manage financial risks, skill sets usually found within the insurance/financial services industries.
If the financial services industry becomes more closely integrated with the industry might it disintermediate the VC and PE community as a source of financing?
What do you think?
Do get in touch if you’d like to discuss any of this.
Executive Chairman, The RSA Group
D: +44 (0) 20 3818 8841