The pharmaceutical industry is bringing plenty of innovative therapies to market. But companies should be prepared to field a number of questions from insurers, who hold the purse strings, a new survey shows.
The survey, conducted by KLAS Research and backed by the Center for Connected Medicine, polled senior-level leaders and executives at eight health plans, including major national insurers and provider-owned payers, and found that all were concerned with the rising cost of novel therapeutics, such as gene therapies, that are hitting the market.
Seven of the plans placed this as a "high" concern, and the remaining insurer considered these costs as a "medium" concern, according to the report. While those concerns extend to payers of all sizes, one executive said that smaller plans are likely to feel the costs the most.
“Novel therapeutics are for orphan or rare diseases, and the complexity in the development of these drugs makes the cost extreme. And by extreme, I am talking over $100,000 a year in costs," the executive said. "If a small plan has fewer than 50,000 lives, it only takes a couple of members who need novel therapeutics to start impacting the plan’s budget significantly.”
Another executive noted that the high costs put insurers in a bind, as they aim to strike a balance between managing healthcare spending and ensuring patients can access treatments that they'd benefit from. The high cost of new therapeutics may lead to access being restricted largely to the wealthiest patient groups, the executive warned.
"We need to be good stewards of the health care dollar. There is a limited amount of money in the system to actually pay for care. We want to be in a position to make care, whether it is therapeutics or procedures, affordable and equitable for all," they said. "We don’t want to be in a situation where we are limiting access to care to people who have more money. We don’t want to have that disparity in health care."
The 30-minute interviews asked executives what the largest challenges are in managing these expenses. One said that the value of emerging therapies is still hard to pin down, as they're billed as curative, but the incremental effects may be more limited.
Offering novel therapeutics that simply cost more, rather than exceed existing standards of care, is "just wasting resources," the executive said.
The impact on budgets is also, perhaps, obvious, but was a key concern for the interviewed executives. Many health plans are toeing the line between offering extensive coverage options and turning a profit, according to the report.
"For some cases, the cost for one member to receive these therapies might be the same as the cost of insulin for all diabetic members," one executive said. "Some of the costs on the highest end are going to be very complicated."
However, some of these emerging treatments are genuine breakthroughs, and ensuring access is critical, the executive added.
Other concerns they cited include the high costs to patients as well as the burden on patients in determining eligibility, which could include extensive testing and diagnostics.
All of the surveyed executives said their organizations lean on clinical expertise to make coverage decisions. About two-thirds said their companies use a cross-functional team to advise about coverage, and others said they have a specialty pharmacy team in place to track these therapies.
What could make these decisions easier? More data from the drugmakers, one executive said.
"There has to be a willingness to collaborate so we can understand how things are going. If a pharmaceutical company is not willing to share information, that could affect my decision to cover the treatment," they said. "I don’t have to know everything, but I want to have enough data so that I know whether I should continue to cover novel therapeutics.”