Making Healthcare Affordable Again - the Promise of Consumer Health Loans

Prohibitive costs of healthcare, especially specialty pharmaceuticals, is not news anymore—to the contrary. The past year has seen plenty of discussions on who should get coverage for the new immunotherapy treatments in cancer, hepatitis C drugs, and the newer anticholesterol agents. Now, a new proposal from researchers at MIT and Dana-Farber offers a remedy: securitized consumer healthcare loans (HCLs).

The researchers propose providing patients with HCLs for large healthcare expenses to improve their access to a broader set of therapeutics. In their paper published in Science Translational Medicine, the authors claim that HCLs can be a win-win for multiple stakeholders—patients get the much needed financial support, investors are guaranteed a return, and payers are assured of covering high-value care because payment can be linked to clinical benefit, which in turn can lower per-patient cost.

The researchers use the anti-hepatitis C virus (HCV) medications and Glybera as examples. The new anti-HCV agents guarantee a cure with 8 to 12 weeks at a cost that could range between $84,000 and $120,000. Glybera is a gene therapy that cures the highly rare disease lipoprotein lipase deficiency, and was recently approved in Germany. Its price tag is nearly $1 million—an upfront cost whose effect would last the patient’s entire lifetime.

“The stark reality is that many patients don’t have access to transformative therapies like Glybera solely due to affordability,” said David Weinstock, MD, one of the study authors. “This is a problem that will only grow as scientists create more cures. In the next five to seven years we could see cures for diseases like amyotrophic lateral sclerosis, Duchenne muscular dystrophy, and many types of cancer, but those therapies could be too expensive for the average patient.”

Securitized HCLs may also be profitable investments. Based on numerical simulations and statistical models, a large, diversified fund of HCLs generated hypothetical annual returns of 12%. For comparison, over the 10-year period from January 2006 to December 2015, the Standard & Poor’s 500 Index saw a compound annual return of only of 7.3%.

Acknowledging the associated risks with this technique, the authors argue that the lack of a better alternative might just leave the patients in status quo.

As Andrew W. Lo, PhD, summed it, “The science is here and it’s moving at breakneck speed. Now we need the financial models to catch up.”