Dr Darius Lakdawalla Talks Cost and Value of Breakthrough Therapies

The concept of the value of new breakthrough therapies has become disconnected from the actual cost of them, but there are ways to better align the benefits and costs of treatments, according to Darius Lakdawalla, PhD, Quintiles Chair in Pharmaceutical Development and Regulatory Innovation at the University of Southern California Sol Price School of Public Policy.

Transcript (slightly modified for readability)

How is value currently being determined for new breakthrough therapies?

Currently, the problem is that value has been disconnected from cost. So payers may be paying for a new therapy that comes out but that value might accrue over many years into many different constituencies. For example, with hepatitis C, the cost of the drug is born instantly as soon as the patient is given the therapy. But the benefits of that treatment accrue over decades. But the problem is that the payer who paid for the drug might not be around long enough to enjoy all of the benefits produced by the treatment.

How can the benefits and costs of breakthrough therapies be better aligned while treating large populations?

One way is to think about spreading out payments. For example, if instead of a cure we had a chronic therapy that was sold every year over the patient's lifetime that would actually, ironically, be a lot easier to finance even though patients would like it less than a therapy they took over a 90-day period and then stopped.

So being able to spread out payments through the same ways that help you spread for your house or your car would be one solution. It amounts to a financing problem rather than a healthcare or scientific problem. I think a role for the government might be in order here, because so many people benefit from these therapies above and beyond the patient. For example, others who will no longer get infected, people who benefit from liver transplants that are able to occur because hep C patients are no longer occupying as many donor livers. All these people also benefit and that might necessitate a role for the government.