The emergence of new specialty breakthrough medications has come with a hefty price tag that may demand alternative financing approaches to ensure they remain accessible to patients, a new analysis suggests.
Researchers at RAND Corp. (PDF) propose health providers could use borrowing instruments such as bonds, mortgages or issue lines of credit to pharmaceutical companies that make such specialty drugs such as Gilead's Sovaldi for hepatitis C, where it can cost more than $80,000 to complete a typical 12-week course of treatment.
“Debt-financing schemes for breakthrough pharmaceutical products might offer a win-win-win for patients, payers and manufacturers,” study authors wrote. “Patients would obtain access to medicines; payers could ensure such access while remaining fiscally prudent.”
As the RAND analysis points out, similar types of debt financing arrangement are often done in other industries and in healthcare, where providers borrow to obtain expensive medical equipment.
One issue any possible debt financing approach for drugs would need to address is the terms in which repayment could be changed based on the real-world effectiveness of the treatment. If a drug or vaccine did not work as well as its results in a clinical trial might have suggested, then the repayment would be lowered.
Researchers acknowledge a borrowing arrangement for specialty drugs in the U.S. might be difficult compared with other countries with national health systems in place because patients here have the ability to change health plans. Study authors are working on possible options that examine how such a borrowing system could work in the U.S., said study co-author Soeren Mattke, managing director of RAND Health Advisory Services.
“It's an appealing concept from an innovator's perspective,” said Tanisha Carino, executive vice president of healthcare market research firm Avalere Health. “From an insurer's perspective, that just seem very complicated.”
Insurers and pharmacy benefit managers alike have raised concerns over the high costs of specialty drugs as more treatments for a number of complex and rare illnesses are being developed.
U.S. prescription drug spending increased by 13% in 2014, the largest annual increase since 2003, reported leading pharmacy benefit manager Express Scripts in its latest Drug Trend Report released Tuesday.
Specialty medication appears to be a major driver for the increase, according to the report, which found spending on such products increased by more than 31% in 2014 and accounted for nearly a third of total drug spending.
“So it's not far-fetched for pharmaceutical companies to offer payers financial arrangements to ease some of the upfront costs,” study co-author Soeren Mattke, managing director of RAND Health Advisory Services, said in a released statement.
Follow Steven Ross Johnson on Twitter: @MHsjohnson
