Evaluating “Value”: How Do We Foster Innovation in Today’s Cost-Conscious Healthcare Environment?

Two out of three participants in a recent FasterCures workshop believe that patients’ needs and priorities are not driving decisions made by payers, innovators, and providers. To have a stronger grasp on the role the patient can and must play in reimbursement decisions, FasterCures and the Cystic Fibrosis Foundation convened a one-day multi-stakeholder workshop earlier this month titled, “Value and Innovation: What Will the New Day Look Like for Patients?”

Fifty-three leaders participated from across the four Ps – venture philanthropy patientorganizations from TRAIN (the Research Acceleration and Innovation Network), biotechnology and pharmaceutical company executives, payers (public and private), and provider organizations.

Anchoring the day-long conversation, the first of five sessions focused on the stakes for patients in a cost-constrained environment, and how patients and their advocates can help shape the dialogue and decisions about who will pay for development of new treatments and rising healthcare costs. An overview of the Affordable Care Act followed, providing important context to the conversation about curbing health care costs. Next, the group focused on resources and infrastructure for research being created by innovative patient foundations – and how these groups are doing more and more to transform both the path toward cure and care for their disease. The fourth session looked into the types and sources of evidence payers use and are looking for to make informed reimbursement decisions. Finally, participants dug into the meaning of the term “value” and how new payment and delivery models are driving the definition of value and affecting innovation.

Five themes surfaced during the dynamic discussion:

1. Patient-relevant outcomes will ultimately drive the definition of value: Patient engagement in all stages of drug and device research and development, care delivery and payment decisions is vital. Determining and measuring outcomes that are important to patients is an emerging area of research and practice that will require experimentation and refinement.
2. Innovators and patients need to understand the evidentiary needs of payers: Defining what evidence is needed and collecting it at the earliest possible point can help drive toward a shared understanding of value across all stakeholder groups. High quality evidence is needed to make regulatory and payment decisions and will ultimately be generated through both traditional and novel study designs and analytical methods.
3. Better data is needed to make better decisions: A lot of data and information is being collected and stored from multiple sources across multiple platforms. Agreeing on standards and facilitating stronger interoperability would enable sample sizes to grow and better evidence to be harvested for the benefit of all stakeholders.
4. All stakeholders agree that it’s imperative to remove waste from the healthcare system: Up to 50 percent of healthcare delivered is of uncertain value and this uncertainty impacts all stakeholders. Cost pressures can force payers into the uncomfortable role of being “watchdogs” for quality and the evidence available to make decisions is uneven and may be applied inconsistently by different payers in the system.
5. The concept of value is derived from the total cost of a patient’s care, not the cost of an individual product: There is a strong need to unite sources of information about costs of care delivered in different settings by different providers, including family caregivers, and to identify means to calculate savings achieved through prevention and avoidance of harms. Costs of individual products are important but not sufficient to inform decisions about effective care to achieve better health outcomes for the individual and the broader population.

The call to cut waste out of the health care system and streamline the process of finding, delivering, and paying for the best possible therapy was a resounding theme.  Patient groups may also find themselves in the unfamiliar position of having to advocate for reducing inefficient treatments and care for their own patients out of the system.

Participants concurred that innovation and value aren’t mutually exclusive concepts and in fact need to be mutually reinforcing. Balancing the real-world competitive market factors for innovators and payers while striving to meet patient needs will require transparency, flexibility, communication, and – above all – trust within and between stakeholder groups.

These are issues of growing concern to many organizations with diverse constituencies and you’ll be hearing more about them. FasterCures will issue a detailed report on the workshop and its outcomes and an upcoming blog post will focus on recommendations generated at the workshop.

The World According to BIO CEOs

By Kristin Schneeman. Program Director, FasterCures

We look forward every year to attending the BIO CEO & Investor Conference in New York in February, because it gives us a window into what the issues of interest and concern to the biotech community are, as we’re planning our own activities for the year.

Here are a few nuggets picked up at this year’s conference:

• Reimbursement continues to be a key and thorny issue – and not everyone in the industry is dealing with it.  Companies and deal-makers noted that even in early-stage programs, commercial considerations are “at the table,” and that today you need to have not only a biological and clinical hypothesis in early research but a commercial hypothesis as well.  However, almost immediately after a fascinating panel discussion about “Reimbursement in an ACA World,” which catalogued some of the fundamental ways in which the world of not just healthcare but research is changing, a panel of very accomplished investors was asked how reimbursement factored into their world view right now – and they all fell back on the conventional wisdom that “truly innovative products will always get paid for.” One investor in a later panel mentioned that “the Street is ‘catching on’ to reimbursement” – just catching on?


• Everyone seems to love the FDA this year.  Investors described the regulatory environment as “favorable,” friendlier,” and companies praised the new accelerated approval and breakthrough designation initiatives – while noting that they remain something of a “black box.”  


• Rare diseases are hot, with companies and investors.  They see that these products can command high prices.  Personalized medicine is causing common diseases to be redefined as subtypes that in many cases could be considered “rare,” and clearly companies were embracing this line of thinking.  Hepatitis C, on everyone’s lips last year, was almost nowhere to be found – instead we heard about multiple myeloma, lysosomal storage disorders, and “genetically defined cancers.”  This is great news for patients with rare diseases, but how long will the fad last?  What happens to patients then?  And, as one speaker noted, “just having orphan designation isn’t a get-out-of-jail-free card on pricing anymore.”


• China is attracting not just big pharma companies but smaller biotechs as well – and not only to take advantage of cheaper gene sequencing or clinical research capacity, but to manufacture and sell products as well as to raise capital.  While doing business in China is not an easy row to hoe, you could hear the excitement of the panelists talking about this new frontier for U.S. companies.  Many U.S.-educated Chinese scientists and businesspeople are returning home to make their careers.  Will development of the academic infrastructure to fuel homegrown science and companies be far behind? 


• Sadly, there was almost no discussion about the impact of impending budget cuts on NIH, which fuels much of the science these companies thrive on, or FDA, which must have the capacity to regulate and approve their products. Their own user fees, which go directly to FDA review of their products, are threatened with sequester – where is the outcry?  Besides a promising few talking about the value of these agencies, the policy agenda seemed largely focused on repealing IPAB, the Independent Payment Advisory Board, from the Affordable Care Act.  

As always, an informative and thought-provoking two days, interspersed with fascinating glimpses of the products coming down the pipelines of dozens of companies.

Relevant postings:
--- Medical research delivers cures, saves lives and – oh, by the way – is pretty great for our economy too
--- Cutting-Edge Science, Collaboration, and Sustained Funding Needed to Get New Medicines from Lab to Patient
--- The Next Big Thing In Biotech: BIO CEO Conference
--- Are Drugs for Ultra-Rare Diseases the Future of Biotech? Francois Nader of NPS Weighs In