Ultra high-cost drugs, or medications that cost more than $1 million per patient, can be life-altering treatments. They are also covered in an obsolete payment system, according to Mike Evans, RPh, chief pharmacy officer for Danville, Pa.-based Geisinger.
“Every year, a higher and higher percentage of our total spend, from a payer perspective, is on pharmacy,” Mr. Evans, who also serves as Geisinger’s enterprise pharmacy vice president, told Becker’s. “In fact, probably within the next three years, pharmacy spend will trump medical spend from a payer perspective.”
Geisinger operates 10 hospital campuses, more than 140 other care sites and a health insurance company. The payer-provider generates more than $8 billion in annual revenue.
On the payer side, medications are mainly covered through a fee for service payment system rather than a value-based structure. Applying that payment structure to ultra high-cost drugs leaves too much risk for the payer, especially if the patient changes insurers shortly after receiving the therapy, Mr. Evans said.
“The current payment system worked OK when we had small molecule therapy and the therapies are up to a couple hundred dollars,” he said. “You can amortize that risk. But now, when you have therapies that are a million dollars-plus, amortizing that risk is very difficult, particularly for smaller payers.”
For example, a million-dollar CAR T-cell therapy includes cell collection through apheresis, genetically altering those cells, multiplying them and administering the therapy. Applying a fee for service model to this treatment leaves too much to chance, according to Mr. Evans.
“We really need a payment structure where the outcome of the value of that therapy is actually getting back or getting to who paid for the therapy,” he said, adding manufacturers and payers — not members — should share the risk. Another option is a third party to act as a holding company to manage the risk.
More health systems are leaning into outcome-based payment models for CAR T-cell therapies, according to Fran Gregory, PharmD, vice president of emerging therapies for Cardinal Health. Dr. Gregory recently told Specialty Pharmacy Continuum payers can alleviate the risk of a patient changing plans by paying for CAR T-cell therapies in increments.
Similarly, “pay for performance” contracts with drug manufacturers ensure that, if the patient relapses within a specified timeline, the manufacturer reimburses the payer. This spreads upside and downside risk among the payer, manufacturer and provider, according to Mr. Evans.
“Manufacturers through value-based contracts have always been willing to go upside risk with you, but they’re never willing to go downside risk,” he said. “That needs to change.”
