In October I attended a personalized medicine dinner discussion hosted at the Washington, D.C. offices of the National Journal (a division of the Atlantic Media Company). The discussion was developed into an upcoming feature, “Are You Prepared For The Pending Personalized Medicine Revolution?” in Life Science Leader magazine’s December 2014 issue. One of the hot discussion topics revolved around who is going to pay for the various products and services that constitute personalized medicine. What I found interesting was the focus on insurance companies being willing to reimburse for the diagnostics, drugs and treatments (which are sure to be expensive) and the absence of the patient having any financial skin in the game. One of the attendees, Len Lichtenfeld, chief medical officer of the American Cancer Society, has often written about the cost and value of care debate. From his perspective, it’s not that patients aren’t willing to pay, but are unable to pay. Another attendee, J. Russell Teagarden, SVP, medical and scientific affairs for the National Organization for Rare Disorders (NORD), stated flat out that patients were unwilling to pay. Having spent 19 years developing policy coverage at Medco Health Solutions, I would imagine he has some pretty good insight on this topic. After the discussion, Teagarden called me to discuss his perspective on the patient’s willingness to pay for treatments. He told me that my comment on value and what patients are willing to pay for really made him think about the interesting dichotomy that exists with some patients being unwilling to pay for anything, while others are willing to pay for nearly everything, especially when it comes to rare diseases. I asked Teagarden if he wouldn’t mind putting his thoughts in writing, which he did in a short article titled Paying For Nothing Or All (see below). I think it serves as an interesting prequel for my upcoming Life Science Leader feature article and the personalized medicine debate. (If you don’t want to miss this article, subscribe to Life Science Leader magazine here.)
The AstraZeneca personalized medicine discussion confirmed the notion that, sometimes, to gain agreement, we need to bring varying points of view together to better understand the diversity of perspectives in order to move forward. At times it may be contentious, frustrating, and hard. But isn’t that often the case when it comes to accomplishing something truly worthwhile?
Paying For Nothing Or All
By J. Russell Teagarden
Pharmacists, at times, watch patients walk away when presented with a modest copay for their prescriptions. Physicians also see that their patients never pick up important prescriptions or stay on them for only a short while because they have to pay something for them. A sizable portion of the covered population is not willing to pay much or anything at all for their healthcare. Some don’t even realize that it’s possible to pay for their own healthcare.
At other times, Pharmacists watch patients dig deep for hugely expensive prescriptions requiring substantial deductibles and copays. Patients push their physicians to prescribe drugs that will cost them dearly. Indeed, there are people, covered or not, who will pay anything to relieve unrelenting and severe suffering or to cure a menacing and lethal disease. Stories abound about people going bankrupt from medical expenses, even for dubious healthcare products and services.
What accounts for these polar differences in willingness to pay among patients? An obvious driver is the value patients perceive in a given product or service. Were that this is the only driver, value propositions become key to making patient responses more uniform. Alas, more is at work. Among covered populations, the moral hazard that comes with coverage (i.e., coverage begets use) inures many patients to the idea that healthcare should be inherently robust and available at little cost. They are further inured from having to make decisions based on value. Therefore, the question of using a product or service corresponds only to whether it’s fully covered or not. Other patients, however, will pay all they have — and more — when they are able to apprehend value distinctions, are moved by the urgency and desperation of a given situation, or are persuaded by just a promising hypothesis.
As more precision is being applied to the molecular basis of disease treatment, more precision should be applied to healthcare coverage policy development. The right healthcare policies will prevent patient inurement to comprehensive coverage, enable patients to discern value distinctions among products and services, and protect them against catastrophic costs. It’s then that we should see a patient’s willingness to pay be based along a continuum of relevant and rational factors rather than on more dichotomous clusters of various considerations.
Pharmaceutical and device manufacturers now need to consider strategies for plan coverage as they consider strategies for regulatory approval. The strategies for coverage policies will need to account for the dichotomous nature of patient responses to costs, i.e., their often unwillingness to pay much at all if clear value isn’t seen, or their willingness to pay more than they have when they perceive an important value. These values are best derived from direct interactions with patients — and the earlier in drug and device development, the better.