Drug Pricing, Policy, and Innovation: An Interview with Richard Bagger

In July 2019, HOPA’s Public Policy Committee arranged a Q&A with Richard Bagger, chair of the board of directors of the National Pharmaceutical Council (NPC) and executive vice president, corporate affairs and market access, at Celgene Corporation. The NPC, founded in 1953 and supported by the nation’s major research-based pharmaceutical companies, focuses on research development, information dissemination, and education on the critical issues of evidence, innovation, and the value of medicines for patients.

Drug pricing is being discussed by both parties on Capitol Hill and is a complex and multifaceted issue. What are some of the ways the National Pharmaceutical Council (NPC) is addressing updated payment and reimbursement models to ensure that patients are able to access and afford the innovative care being developed?

The issue of healthcare spending is complex and involves a number of factors. As new technologies like CAR T [chimeric antigen receptor T-cell] therapy change the care paradigm, payment and reimbursement models will need to keep pace. Today, these models are still largely designed to reimburse for acute or chronic treatments. That’s why NPC’s efforts to drive the discussion of innovative payment models and the policy reforms needed to enable value-based payment in public-sector healthcare programs are so important. For example, NPC’s partnership with the Massachusetts Institute of Technology’s FoCUS (Financing and Reimbursement of Cures in the U.S.) project helped facilitate an important conference held in February 2019 called “Paying for Cures,” which discussed ways to ensure system sustainability and patients’ access to new therapies.

Further, a narrow focus on the list price of medicines and the specific role of the biopharmaceutical sector can overlook the need for a broader conversation about where we’re getting value in health care. If we focus only on biopharmaceuticals, which account for 10%–16% of overall spending within a massive healthcare economy, we will fail to achieve the larger goals of recognizing value and bending the healthcare cost curve—while also endangering continued medical innovation.

What are the most challenging barriers to the development of novel therapies in oncology? How can NPC help to foster an environment that drives innovation but still supports access for all patients?

Innovation and access have a common denominator: value. If we miss the mark in defining and measuring value in health care, we risk creating an environment where the innovation that is transforming the lives of patients may be stifled, and patient access to the most innovative treatments may be affected.

In this area, two trends with potential implications for patient access are especially worth watching: value assessment frameworks and cost-sharing with patients.

To engage on the rapidly emerging field of value assessment, NPC published Guiding Practices for Patient-Centered Value Assessment in 2016 to advance the conversation about value assessment frameworks and to ensure that healthcare decision makers assess the right factors in defining and measuring value. As in any equation, if the right variables are not considered, problem solvers will come up with the wrong answer. Similarly, value assessment frameworks must consider value from the perspective of patients, not just from the perspective of payers or healthcare delivery systems. The value that innovative medicines bring to the overall economy and society, as well as to the future of innovation, is also important to include in the equation.

Another potential barrier to access is cost-sharing with patients. With a growing number of patients covered under high-deductible health plans, patient cost-sharing has continued to rise. But NPC-sponsored research has shown the unintended consequences of these mechanisms, including reduced patient compliance with necessary treatments or patients avoiding care altogether. This can translate into missed opportunities to improve patient outcomes and higher costs from health complications that could have been avoided. That’s why it is important for all healthcare stakeholders to continue working with policymakers and payers to ensure that the value of innovative therapies is recognized and that patients have reasonable out-of-pocket costs for their medicines at the pharmacy counter.

What steps can health systems and providers take to prepare for, or implement, value-based programs in their clinical settings? How can they partner with manufacturers and payers to shift toward these newer reimbursement models?

NPC’s research with the Duke-Margolis Center for Health Policy, published in the February 2019 American Journal of Managed Care, provides important direction on this question. The research team evaluated the value-based agreements (VBAs) landscape and found that the shift is already well underway. VBAs are likely more common than previously thought and can take many forms. For example, at Celgene we’ve pursued innovative contracting with several commercial payers that eliminates patients’ co-pay responsibility for enasidenib (Idhifa) through a negotiated arrangement.

On the basis of interviews, the research team also discerned the factors that contribute to the success of VBAs. Reasons for successful negotiations include an easy-to-identify target patient population, a reasonable administrative burden, and the availability of measurable outcomes clearly related to product use. Some reasons for negotiation breakdowns include challenges related to data collection and evidence development, the availability of appropriate outcome measures, implementation costs, disagreement over incentive mechanisms, and financial terms.

These findings provide important learnings for manufacturers and payers seeking to negotiate successful value-based arrangements. As value-based programs continue to gain traction, it is critical to ensure that the performance measures are built to effectively capture the patient's experience. Though gaps exist in the current landscape, NPC’s research on how to incorporate patients' input into oncology performance measures provides clear strategies for closing them.

What work is being done with payers to update payment models for innovative therapies (e.g., CAR T and gene therapy)?

The imperative to investigate innovative new payment models couldn’t be clearer. Experts expect an estimated 45–60 curative or durable therapies—those with short treatment regimens and lasting benefits—to reach the market by 2030. Most of these treatments are gene therapies, cellular therapies, and immunotherapies targeted to rare or ultrarare diseases for which no or very limited treatment options exist. We must be ready to bring those biopharmaceutical advances to patients with reimbursement models, including updated public reimbursement models, that are as innovative as the therapies themselves.

Because developing alternative payment models is a multi-faceted endeavor, NPC’s portfolio—including research and analysis on bundled payments, value-based contracts and risk-sharing agreements, accountable care organizations (ACOs), clinical care pathways, quality measurement, and value assessment—will play a critical role in helping stakeholders engage effectively in these efforts.

The emphasis on drug pricing has received bipartisan support in recent years. As we enter the 2020 election season, what should we be listening for regarding drug pricing policies and the stances of the candidates? What issues have an impact on drug innovation and pricing—for example, ensuring that markets allow for robust competition between brand-name products, developing solutions for the lack of competition for generic products that treat relatively uncommon diseases, and creating robust pathways for biosimilar products to compete with biologics? What resources do you recommend for educating ourselves on this issue?

Some stakeholders seem to believe that most healthcare spending is excessive, and much of the debate on drug pricing is premised on this idea. However, we must challenge those notions through research and dig deeper, as the “Bang for the Buck” study by NPC and RTI Health Solutions did. This study, published in the January 2019 issue of Health Affairs, found that spending for six of the top seven causes of death and disease from 1995 to 2015 was cost-effective and also improved patient outcomes.

In order to effectively address healthcare access, quality, and costs, it is important to look beyond simple, surface-level answers. We must attempt to untangle the complexities within our healthcare system and seek to understand the value that medical innovation brings to patients, payers, healthcare systems, and society. Only then can we begin to tackle the root causes, through policy and market-based solutions.

What should stakeholders be looking for in proposed policy solutions? They should look for

  • approaches that are grounded in value and recognize that value can vary from patient to patient
  • disease-based solutions that reflect areas where health spending does not deliver sufficient value for patients
  • protections for the innovations that create important advances in managing the most serious conditions patients face
  • efforts to monitor the impact of policy approaches on patient access and health outcomes across different patient populations, to ensure that a high quality of care is being delivered.

As stakeholders navigate policy proposals, NPC’s portfolio of research and analysis on evidence, value, access, and innovation provides important resources. For those engaged in health spending issues, NPC’s multistakeholder “Going Below the Surface” initiative is another critically important asset. NPC plays a unique role in this effort, convening payers, providers, patient groups, and others around the same table to work toward common solutions. The initiative is driving research and analysis that goes beyond the headlines and simple talking points and provides a research-first approach to identifying solutions in the health spending debate.