Pharma Discusses How to Reframe Value in Era of Precision Medicine, Combinations

Healthcare experts may agree the shift from volume to value is well under way, but the definition of value has many answers, based on a conversation among 5 representatives from the pharmaceutical industry who appeared Friday at the 2019 Community Oncology Conference in Orlando, Florida.

Measuring the value of cancer drugs should include things like a patient’s quality of life and out-of-pocket costs, and stakeholders must rethink the time frame for measuring value, too, as treatments turn cancer into a chronic disease. But when moderator Bo Gamble, director of Strategic Practice Initiatives for the Community Oncology Alliance, asked the panel how to bring down the cost of drugs, they responded:

It’s complicated.

Panelists were Sean Brusky, senior director and Oncology Portfolio Partnering Lead for Genentech; Dan Wygal, executive director of Contract & Channel Strategy for AstraZeneca; Jax Zummo, senior director, Global Oncology Corporate Affairs, Eli Lilly & Company; Daniel Lyons, senior director, Value & Access, Sanofi-Genzyme; and Ira Klein, MD, MBA, FACP, senior director, Healthcare Quality, Johnson & Johnson.

Gamble asked each panelist how they are working on the value question, how they define value, and how they measure it, with “extra points” if any manufacturer has developed ways of measuring the value of their products against competitors.

Panelists said that changes in the law, notably the Affordable Care Act (ACA) and the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015, have forced a rethinking of how they position themselves. “As the market is evolving from volume to value, we need to show up in a very different way in support of our engagement with community oncology, and with all the stakeholders in the market,” Brusky said, which led to the creation of Oncology Portfolio Partnering. “Central to that effort is bringing life to the value we see in precision medicine and all the technology and data advances that are happening in the industry,” he said.

Klein, who has previously worked for a health system and for a payer, put it directly: “The largest payer in the country decided we were going to take steps to move from volume to value,” he said, referring to MACRA’s overhaul of the way physicians in Medicare are paid.

These shifts caused Janssen, the Johnson & Johnson division that Klein serves, to find ways “to expand the definition of value and put it into action.”

Wygal said the traditional definition of value—getting a concession on wholesale acquisition cost—has given way to a more patient-centered view. A challenge in the past, particularly with developing comparisons between therapies, has been the inability to get data and develop measures that could be scaled to the population a manufacturer would serve. He agreed with Brusky that technology is changing the landscape, and soon the availability of real-world evidence will allow more direct comparisons.

Klein agreed. “This is an industry that wants more transparency,” he said. “A lot of value is hidden.”

Evolving Contract Designs

The panelists pointed to dozens of value-based contracts their companies had reached, although some had not reached agreements with oncology drugs. Wygal and Zummo agreed there is a need to close the gap between the number of contracts quietly in force and the number that appear in the literature, a issue examined in a recent article in The American Journal of Managed Care®.

“If we’re going to be successful with value-based contracts we have to publish in peer-reviewed journals,” Zummo said. “There’s not enough literature out there, and that’s our fault because we use them as a competitive advantage in our portfolio, and we don’t want our fellow manufacturers to know what the designs are, how they perform, etc.”

There’s a lot of creativity happening in contracts at Lilly, she said, including direct-to-practice agreements that don’t involve payers—a feature that may be included in OCM 2.0, the alternative to CMS’ alternative payment model being developed by COA. Patient advocacy groups have played a major role in contract development at Lilly, and all contracts now include end points based on patient advocacy feedback, Zummo said.

Brusky said indication-based pricing and especially contracts that address drug combinations represent the next challenge, especially as precision medicine evolves. “This is going to be critical going forward,” he said, adding, “How do we do that across manufacturers?”

As more therapies treat smaller groups of patients with rare disease—and the therapies cure the disease—he asked, “How do amortize that value over time?”

Klein said this is a central question in value-based contracting and in defining value more broadly. “We’re becoming very successful in turning cancer into a chronic disease, which means the benefit is yielded over multiple years,” he said. “However, I know from my time on the payer side that all deals are done actuarily on a 12-month basis.”

This assumption bears re-thinking, Klein said. Under the ACA, patients with a chronic disease or cancer who find a plan and team of providers that works for them aren’t going to change insurance, “unless they’re forced to.”

Drug Pricing and Transparency

Sanofi-Genzyme’s Lyons said his manufacturer’s pricing strategy is straightforward: increases are tied directly to National Health Expenditure projections that are published on CMS’ website. Thus, the most recent round of price increases was 4.6%, but with mandated and contracted discounts, the net price was negative 8%, Lyons said. Klein echoed these numbers as being in line with Janssen’s pricing strategy.

Against this backdrop, Lyons said the value discussion turns to, what can the manufacturers control? “It all goes back to bringing something to patients that we need and that you will use, in order to help them achieve better outcomes,” he said.

Zummo shared the story of Lilly’s experience with launching a drug against a well-established branded competitor at half the price; payers did not respond. “The incentives in the system don’t exist for us to cut our prices,” she said. “The traditional laws of economics don’t apply.”

Brusky said precision medicine’s potential to pinpoint exactly who should be getting a drug has the potential to bend the cost curve.

But all the panelists said pricing fairness requires larger structural changes, including bringing more transparency changing the rebate structure; Wygal supported this in the commercial sector and Medicare Part D.

“We know a lot of money is going out of the system; it’s not on our bottom line and it’s not going to the patient,” Lyons said.

“It’s our job to make what is complex simple, and I think it starts with reform,” Wygal said.

A physician in the audience challenged the panel over assertions that the industry lacks the ability to change the current pricing and prior approval scheme, saying his patient was delayed getting a medication and developed brain metastases. Wygal said the challenges of the current system, and the threats to the Medicare trust fund, will take more than one stakeholder to solve.

Said Lyons, “You want to know where the money goes, and frankly, so do I.”