Value of innovative medicines and pricing challenges with immuno-oncology
In the past five years, the development of immuno-oncology (I-O) has leapt forward at an exponential pace with two immuno agents paving the way, namely CTLA-4 and PD-L1 (Figure 1). Several medicines have been developed that could offer the ‘hope of cure’ to the late stage cancer patients, and with more than a dozen agents currently under clinical development (Figure 2), the future for the cancer patients looks extremely promising.
It is certainly an exciting time for scientists, clinicians, patients, and industry; but for those who have to pay for these medicines, the future does not look so bright. There is strong evidence to suggest ‘the more the merrier’ strategy in immuno-oncology, meaning a combination of agents (combo-therapy) targeting different immuno cells and pathways work significantly better than the single agent (monotherapy) (Figure 3). The cost of treating one patient can be doubled or tripled, but can the clinical benefit be improved in the same magnitude?
Payers ask three questions everyday: ‘how can we afford to pay for these innovative medicines’, ‘which medicines should we pay for now’, and ‘have we really got what we have paid for’?
The first question is related to affordability; on the surface, a simple calculation of the annual budget allocated to medicines against the budgetary impact of introducing innovative medicines. But it is not that simple when we take a long-term view beyond the annual budget, ‘investing early in transformational technologies is an opportunity to build substantial wealth’, as indicated by the Exponential Technologies Moat Focus Index (Reference: Morningstar, 2016). The innovation is crucial to achieving exponential and sustainable growth (Figure 4), but the investment in innovation by many health systems and insurance funds has been stagnant or even declining, does this impact negatively on the growth? What are the missed opportunities for the healthcare system and the general population’s health? Healthcare policy makers and budget holders need better understand the long-term and exponential value of innovation, the opportunity cost of scrutinising the investment, otherwise the affordability issue will become a vicious circle that the less one can afford, the less the growth, and then even less one can afford.
The second question is about the choice among different healthcare innovations, and the pricing is one of the most important components in this consideration. Again, this is not a simple issue with the price tag or the cost of R&D. Pricing is never and should not be determined by the R&D costs, rather it is a component of value; assessors should ask whether the value has been adequately captured in the current methodology, such as Quality Adjusted Life Years (QALY). Should pricing of one medicine be different for patient subgroups based on the magnitude of clinical benefit? Should the price be adjusted once more evidence is available? The pricing, especially related to I-O therapy area where we are still exploring the new mechanism, the reliable bio-makers, the potential for cure, should be a dynamic process, with a flexible assessment framework, where the pricing should not be one-size fits all and should not be fixed for the lifetime of the medicine. Frequent assessment is required, flexible performance-based pricing schemes and commercial deals are necessary, and the long-term and broad value of the I-O therapies should be taken into account. Several Value-Based Pricing (VBP) systems such as Swedish TVL, taking into account the long-term and broad value of innovative medicines, provide insights but only when a consistent value-based approach is established can a fair choice between different health technologies be made.
As for the third question, ideally, payers would like to be assured that once the value of the innovative medicines has been established, the adoption should be optimised to maximise the compliance and uptake and to capitalise on the benefits brought by the innovation. Robust real life data to assess the real world benefit should be collected and adjusted for any implementation hurdles. Yet there is no formal process or mechanism of assessing the value of additional information collected, nor there is guideline on the evidence generation in real life. Real World Evidence will be an over-rated theory if the practical issues related to the quality of the evidence in terms of the statistical power and the biases cannot be resolved (Reference: Grieve et al 2016).
Overall, the challenges with current innovative medicines, especially immuno-oncology therapies lie in three areas: the overall funding and financing mechanisms for the value of innovative medicine, the assessment methods of value and pricing, and the evidence and infrastructure required to adopt the innovative medicines. The way forward should warrant a transformational change in the way how the innovative medicines are valued, assessed, and adopted. All sides including payers, industry and policy makers need to invest time and effort to make this happen.