Dr Jane F. Barlow Discusses Potential New Reimbursement Models for New, High-Cost Therapies

I think there’s a number of different ways that payers are looking at new reimbursement models for new, high-cost therapies, said Jane F. Barlow, MD, MPH, MBA, senior advisor, Center for Biomedical Innovation at Massachusetts Institute of Technology.

TranscriptWhat are some potential new reimbursement models for high-cost therapies?

I think there’s a number of different ways that payers are looking at this. One has come into play already with the CAR T therapies, and that’s a reimbursement model that says we will only reimburse when it’s at a center of excellence so we have people who really understand and know this new technology and delivering it. And, having a milestone payment, which basically says in a short period of time, perhaps 1 year, or even some as short as 30 and 60 days, have payments that make sure people make the gates before they get paid or get reimbursements if they don’t get paid, is one model. I call those milestone-based payments, and they’re usually less than 2 years and have a performance-based component.

Another model that’s emerging is around performance-based annuities, where you spread the payments out over time, usually more than 2 years—3-5 is what I hear talked about most. So, it makes the payments smoother for payers, and then you apply a performance-based aspect to it, where payments in the out years might be forgiven in part or in whole if the drug doesn’t perform as it was intended to according to the agreed upon metric.

The third area where there’s a lot of talk, but it’s a little more complicated, is creating broader risk pools and perhaps carving out these treatments to a risk pool for people with gene therapies. It’s a little bit hard for me to visualize how that would work in the long run in a sustainable fashion, but I think it’s really the third model that there’s work being done on.

What are some benefits and challenges of these models?

I would say the benefits and challenges of each of the models is sort of addressing the multistakeholder views, and how that plays out in each model can be a little bit different. At the end of the day, all the stakeholders have to experience some change in how they normally would do business. That’s the manufacturer, it's the provider who gets change in their buy and bill arrangement typically in these models, it’s the payer who’s implementing new things.

Each model has its pros and cons for each stakeholder and they’re a little bit different and until we actually do these, we’re not going to know how they really are going to play out in the long term. So, we have to pilot and implement and then iterate upon that.