It is Time for Outcomes-Based Reimbursement for Biopharmaceuticals

Recently the U.S. Food and Drug Administration granted accelerated approval to aducanumab (Aduhelm), the first Alzheimer’s Disease treatment since 2003. While there has been significant discussion about aducanumab’s approval process and the initial price, little attention has been paid concerning the central dilemma facing the U.S. health care system: how to best value and pay for current and next-generation biopharmaceutical innovation.

The principles that guide consumer markets — price, income, quality and expected benefits — are not relevant in the U.S. health care system since characteristics such as the lack of price transparency, information asymmetry between providers and patients and, most importantly, health insurance prevent the patient from comparing the marginal value of an intervention against its price.

The breakdown of the economic proposition has put the United States in an unenviable position to spend more per person on health care than any other Organisation for Economic Co-operation and Development country while suffering from a declining life expectancy. As such, questions regarding value and spending are front and center for policymakers, employers, patients, and caregivers.

Many organizations, such as the Institute for Clinical and Economic, have tried to define value for biopharmaceuticals through economic modeling. They have pawned the analytical findings to unsophisticated audiences with promises of substantial savings. They have developed economic models as the final arbiter for reimbursement while ignoring the primary principle held by most economists: Economic models are only intended to inform and guide.

Since the health care market does not adhere to economic principles observed for other goods and services and the disparate actors trying to develop value models have failed miserably, how do we create a value framework that serves the link between health impacts and financial gains concerning certain biopharmaceuticals? In addition, how do we maintain incentives for drug innovation in areas of significant unmet need such as A.D. and incentivize domestic drug manufacturing and research, all while ensuring the appropriate use of intellectual property, transparency in pricing, and comparative efficacy?

Biopharmaceutical companies, insurers, pharmacy benefit managers and the government can and must work together to keep each other accountable and embrace value-based or outcomes-based reimbursement. The guiding principle being that “IF” the new innovative medicine delivers the outcomes and value promised to patients and the U.S. economy, the therapy will be rewarded.

Meanwhile, we need to continue fostering an ecosystem that improves health care data interoperability and develop meaningful quality measures that embrace equity and value for patients while reforming regulations to enable insurers, providers, government and biopharmaceutical companies to engage in value or outcomes-based agreements.

Fortunately, with the advent of new technologies, from electronic health records to blockchain and cryptocurrency, and an attentive policy and public audience, meaningful changes and solutions are now within our grasp.

Health care and biopharmaceuticals have entered a revolutionary era of scientific innovation – from COVID-19 vaccines to novel biologics, we now have medicines that prevent, manage and cure serious diseases. With the combination of technological advancements and attentive policy and public audiences, it is time to move beyond the status quo and adopt meaningful frameworks that enable payment for the coming decades of biopharmaceutical innovation based on patient value or outcomes. Unfortunately, the lack of corresponding financing solutions, where insurers, PBMs and biopharmaceutical companies are all held fiscally accountable, will lead to continued payment ambiguity and U.S. market inefficiencies, stifling the full potential of science.


Robert Popovian, Pharm.D., M.S., is chief science policy officer at Global Healthy Living Foundation and a senior health policy fellow at the Progressive Policy Institute.

Mark Atalla, Pharm.D., MBA, is a former Centers for Medicare & Medicaid Services senior adviser for drug pricing and innovation and co-founder of Purposed, a company focused on fixing long-term care.

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