Linking Drug Prices to Success: The Power of Outcome-Based Agreements in the Ozempic Era
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Outcome-Based Contracts (OBAs) are set to revolutionize access to high-demand medications by linking drug prices to patient outcomes. Specifically, this model ensures that the cost of medication reflects its real-world effectiveness, thereby encouraging better healthcare and sustainable pharmaceutical spending. As outcome-based healthcare gains momentum, OBAs will further push pharmaceutical companies to focus on developing innovative, effective treatments rather than just boosting sales. GLP-1 drugs, such as Wegovy and Ozempic, which are popular for weight loss, could exemplify this shift.
Challenges in Patient Coverage
Right now, accessing GLP-1 drugs is tough due to their high costs and insurers' hesitance to cover expensive, newer treatments. Additionally, coverage decisions vary, and many employers do not include these medications in their health plans. According to Mercer’s 2025 Survey of Health and Benefits Strategies, only 42% of employers cover obesity medications, and only 3% plan to offer coverage for weight loss drugs. Therefore, employers face a tough balancing act between cost and access, especially with GLP-1 drugs like Zepbound, which costs $1,059.87—20% less than Wegovy but still pricey.
Outcome-based Healthcare: Aligning Costs with Effectiveness
As we move towards outcome-based healthcare the OBA’s that are its foundation address these challenges by tying drug costs to real-world effectiveness. Pharmaceutical companies and healthcare providers start by agreeing on specific patient health outcomes. If the medication meets these benchmarks, pricing reflects its success. If not, the price could be adjusted. Ultimately, this model promotes impactful treatments and makes life-changing medications more accessible. It is especially useful for chronic conditions like obesity, where patient outcomes are crucial measures of success.
Benefits for Healthcare Providers
OBAs also benefit healthcare providers by creating a reliable framework for prescribing new or expensive medications like GLP-1s. Providers can prescribe treatments with confidence, knowing they have a proven track record of success. In addition, this model fosters collaboration between providers and pharmaceutical companies, shifting the focus from sales to patient outcomes. As a result, this could lead to better resource allocation, improved patient satisfaction, and a more effective healthcare system overall (Mercer, 2024).
Impact on Pharmaceutical Companies
For pharmaceutical companies, OBAs drive innovation and accountability. By linking drug pricing to patient outcomes, these agreements push companies to focus on treatments that deliver real, measurable results. This shift compels them to invest in research and development, knowing that successful outcomes can boost both credibility and profits. Furthermore, OBAs not only streamline drug approvals but also offer a competitive advantage in the value-based healthcare market.
The Role of Technology
Technology platforms like Lyfegen can also play a crucial role in making OBAs more efficient. Lyfegen’s technology simplifies the complex process of planning, testing and creating OBA’s, as well as tracking rebates. Lyfegen’s all-in-one platform makes it easier to manage contracts with transparency. As demand for GLP-1 drugs continues to rise, such platforms ensure that access to these treatments is tied to proven success while keeping costs manageable.
In conclusion, OBAs could transform access to high-demand medications by aligning drug pricing with patient outcomes. Not only does this model make expensive treatments like GLP-1 drugs more accessible, but it also promotes responsible pharmaceutical spending. By leveraging platforms like Lyfegen, which simplify the process, OBAs offer a path to more equitable and value-driven healthcare.
Unlock smarter pricing and market access strategies with Lyfegen's powerful tools! The Lyfegen Drug Contracting Simulator lets you easily model various pricing scenarios, see their impact on revenue and costs, and refine your market access planning. Combined with the Lyfegen Library’s vast collection of pricing models and agreements, you'll have everything you need to make informed, strategic decisions. These tools empower payers and pharmaceutical companies to tackle pricing challenges head-on, streamline negotiations, and address payer concerns with confidence.
Act Now – Reserve Your Spot for a Live Lyfegen Demo here: https://www.lyfegen.com/demo
References
“Welcome to brighter.” Mercer, https://www.mercer.com/en-us/.
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In the US, a piece of proposed legislation with major ramifications on pharmaceutical manufacturing passed the House of Representatives, the first step in the law-making process, on September 9th. H.R.8333 - BIOSECURE Act has received bipartisan support and passed the House 306 to 81.
The BioSecure Act alleges that some Chinese biotech companies post a national security threat, due to their affiliation with the Chinese Communist Party and their military or intelligence agencies. The draft bill mentions “military-civil fusion” being a central concern, a procedure by which under certain circumstances, Chinese companies, whether headquartered in China or not, must surrender all company data to the CCP.
Five companies were named as a “biotechnology company of concern” in the bill: BGI Genomics, MGI Tech, Complete Genomics, WuXi AppTec, and WuXi biologics. Companies relying on these providers have until 2032 to change suppliers, exactly the 8 years estimated to be needed to make the switch, according to a survey conducted by the Biotechnology Innovation Organization (BIO) earlier this year. The same survey found that 79% of the 124 biotech companies surveyed had at least one contract or product from a Chinese CDMO/CMO.
It’s expected that Indian and South Korean CDMOs will see greater demand if this bill is signed into law by US President Joe Biden. In that case, there are concerns that pharmaceutical products could rise in price due to supply chain issues or that patients will lose access to important therapies. WuXi AppTec and sister company WuXi Biologics are involved in the manufacture of several approved drugs, including cell and gene therapies. Shares of WuXi AppTec and WuXi Biologics fell 10% and 3.9% respectively on Tuesday, September 10th.
Unlock smarter pricing strategies with Lyfegen’s tools to manage supply chain and pricing pressures. Act now and book a demo to see how Lyfegen can help optimize your market access: Book a Demo
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A new study published in September, reported by the American Journal of Managed Care, compared how quickly drugs are reimbursed in select countries, including Switzerland, the United States, Germany, Japan, and the United Kingdom. The US does not have an HTA process, and some believe that drugs could get to patients faster if it did have one.
The analysis compared approval-to-reimbursement time, reimbursement rate one month post-approval, and reimbursement rate 12 months post-approval, for 290 approved drugs between 2011–2022. The analysis did not include advanced therapies, pediatric medications, or diagnostics. Data was sourced from the Food and Drug Administration, European Medicines Agency, Swissmedic, and Medicines and Healthcare products Regulatory Agency.
Results: Switzerland had the fastest approval-to-reimbursement times, averaging 6 months, followed by Germany (7.4 months), the US (9.2 months), France (12.9 months), and the UK (17.7 months).
The country with the highest reimbursement rate after one month was France, standing at 25.9%, followed by Switzerland (9.7%), and the UK (0.7%). Neither Germany nor the US had reimbursed a drug within this timeframe.
After 12 months, however, the trend changed. In first place was Germany, with a 74.3% reimbursement rate, followed by the US (70.7%), Switzerland (62.8%), France (49.0%), and the UK (37.1%).
This analysis did not find that that the US was slower than Europe in fact. After one year, only Germany reimbursed more drugs than the US, and by a slight margin. The UK and France on the other hand took longer than the rest of the pack to bring drugs to market.
The full study can be found here.
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Payers are seeing increased costs due to the demand of GLP-1 drugs. It’s estimated that 57.4 million adults under the age of 65 could be eligible for this class of drugs, based on currently approved FDA indications. There are 36.2 million people with an obesity diagnosis alone in the US.
If 10% of eligible adults take GLP-1 medications for weight loss, a $15 increase could be seen in the per-member-per month costs. This number rises to $50 if one-third of eligible adults start taking these drugs. Zepbound, manufactured by Eli Lilly, has a list price of $1059 per month, whereas Novo Nordisk’s Wegovy costs $1349 for a one month supply. However, last month, Eli Lilly announced a major price cut for their weight loss drug. Now, a 4-week supply of their drug at 2.5 mg will cost $399, whereas 5 mg vials will cost $549.
The measure is aimed at improving patient access, while reducing the risk of counterfeit medications. This price reduction was made without changes to insurance policies, and the drugs are available through LillyDirect, the company’s online pharmacy.
Not all insurers want to cover weight loss drugs like Zepbound, Wegovy, Mounjaro, and Ozempic, and innovative strategies are being explored to manage costs while keeping them available. One strategy is a utilization cap, which sets stricter standards for who is eligible. Another strategy is mentioned in Evernorth’s EncircleRX plan, which provides a 15% cost cap or a 3:1 savings guarantee when the medication is covered for weight loss.
The value of these drugs is still being investigated. If these medications can provide additional health benefits, there could be additional savings for payers down the road. Of note, studies have found reductions in cardiovascular death and sleep apnea when the drugs were used for weight loss.
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A new study investigated how drug rebates affect out-of-pocket costs for health plan beneficiaries. Rebates lower costs for payers, but depending on the health plan, they can raise costs for the patient.
There is a lot of secrecy surrounding the final price paid for a drug at the pharmacy, as official data on drug prices does not factor in rebates or the end price for the patient. The rebates paid by manufacturers to pharmacy benefit managers is not publicly available. The study therefore sought out to understand the relationship between rebates and the prices paid by insurers and beneficiaries.
Results: The negotiated price, defined as the price paid by the beneficiary at the pharmacy and by the payer after rebates are taken into account, rose 4.3% from 2007 to 2020. However, the out-of-pocket price, or that paid by the patient at the pharmacy, rose 5.8% annually. Retail pharmacy prices increased 9.1% annually.
Implications: Low-income families may be especially impacted by plans with higher deductibles and lower premiums, as they are not prepared for surprise costs associated with cost-sharing. As the authors stated: “consumers with a low deductible or capped copays appear to be shielded from steep pharmacy price increases.” The main contributor to increases in out-of-pocket expenses were increasing deductibles and co-insurance payments.
The authors emphasize that drug price transparency is important for health policy recommendations and more work needs to be done to understand drug price inflation.
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Basel, Switzerland / Boston, USA – December 11, 2024
Lyfegen, a global leader in drug rebate management technology, today announced the successful close of its additional CHF 5 million Series A funding round. The round was led by TX Ventures, a leading European fintech investor, with additional participation from aMoon, a global health-tech venture capital firm, and other institutional investors. This funding represents a significant milestone for Lyfegen, enabling the company to accelerate its global expansion and innovation efforts, with a focus on extending its reach beyond Europe into new markets worldwide.
Addressing Rising Drug Costs with Intelligent Drug Pricing and Rebate Solutions
The healthcare industry faces increasing challenges with rising drug costs and the complexity of managing growing volumes of rebate agreements. For payers and pharmaceutical companies, manual processes often lead to inefficiencies, compliance risks, and operational delays. Lyfegen is transforming this process with its fully automated platform that ensures secure, real-time tracking, compliance, and operational efficiency at scale.
Today, 50+ leading healthcare organizations across 8 geographical markets rely on Lyfegen’s solutions to streamline 4'000+ rebate agreements while tracking over $1 billion in pharmaceutical revenue and managing over $0.5 billion in rebates annually. These solutions enable healthcare organizations to improve pricing strategies, accelerate access to modern treatments, and better manage rebate complexities.
Learn more about Retrospective Payment System
Scaling Globally with a Leading Rebate Management Platform
Already used by healthcare payers and pharmaceutical companies in Europe, North America, and the Middle East, Lyfegen’s platform is poised for broader global deployment. By automating rebate management, the platform enables healthcare organizations to simplify complex agreements, save time, reduce errors, and enhance financial performance.
“The market for innovative and personalized treatments is expanding rapidly, but with that comes increasingly complex and costly pricing models,” says Girisha Fernando, CEO of Lyfegen. “Lyfegen’s automated solution simplifies this complexity, helping payers and pharmaceutical companies unlock the full potential of rebates while improving patient access to modern treatments. With this funding and our new partners, we’re ideally positioned to accelerate our growth and make a meaningful impact globally.”
Jens Schleuniger, Partner at TX Ventures, adds: “Lyfegen is at the forefront of innovation, offering payers and pharmaceutical companies a powerful solution to address the rising complexities of pharma rebates. We’re proud to lead this funding round and support Lyfegen’s mission to bring greater efficiency and cost savings to healthcare systems worldwide.”
About Lyfegen
Lyfegen is an independent provider of rebate management software designed for the healthcare industry. Lyfegen solutions are used by health insurances, governments, hospital payers, and pharmaceutical companies around the globe to dramatically reduce the administrative burden of managing complex drug pricing agreements and to optimize rebates and get better value from those agreements. Lyfegen maintains the world’s largest digital repository of innovative drug pricing models and public agreements and offers access to a robust drug pricing simulator designed to dynamically simulate complex drug pricing scenarios to understand the full financial impact. Headquartered in Basel, Switzerland, the company was founded in 2018 and has a market presence in Europe, North America, and the Middle East. Learn more at Lyfegen.com.
About TX Ventures
TX Ventures is one of Europe’s emerging leaders in early-stage fintech investing. The venture capital fund invests predominantly in B2B Fintech across Europe - preferably in seed to series A stage.
For more information about Lyfegen’s solutions or to schedule an interview, please contact:
marketing@lyfegen.com
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In an industry often characterized by incremental changes, Girisha Fernando, the CEO and founder of Lyfegen, is making leaps. We sat down with Fernando to discuss the recent landmark partnership between Lyfegen and Newfoundland and Labrador Health Services—a collaboration that heralds a significant shift in the Canadian healthcare landscape.
Your partnership with Newfoundland and Labrador Health Services is quite a milestone. Can you share with us what this means for the current state of rebate management in Newfoundland?
Girisha Fernando (GF): Absolutely. This partnership is a transformative step for rebate management in Newfoundland. The current system, largely manual and complex, is ripe for innovation. With our digital platform, we're bringing a level of automation and accuracy that was previously unattainable. This means more efficient processing, less room for error, and a better allocation of resources, which is critical in healthcare.
That’s quite an advancement. And how does this impact the management of drug products, especially in areas like oncology?
GF: It’s a game-changer, especially for critical areas like oncology. Newfoundland and Labrador, as the first in Canada to use our platform, sets a precedent. The region, through the pan-Canadian Pharmaceutical Alliance, has been managing complex product listing agreements for drugs, including those for oncology. These agreements are vital for making treatments affordable. Our platform simplifies this, managing the various terms of these agreements efficiently, which is crucial for timely and affordable access to treatments.
It seems like a significant step forward for healthcare management. How does this align with the broader goals of Lyfegen?
GF: This partnership aligns perfectly with our goal to make healthcare more accessible and efficient. Automating the rebate process in Newfoundland and Labrador, especially for critical treatments in oncology, directly contributes to the sustainability and accessibility of healthcare treatments.
Looking to the future, what does this partnership mean for Lyfegen and healthcare systems globally?
GF: This is just the beginning. We're looking to extend our platform to healthcare systems around the world. Our aim is to make this technology a standard in healthcare management, fostering more efficient, sustainable, and equitable healthcare systems globally.
Read more about the partnership in the official press release.
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New York, NY - March 29, 2023 - Lyfegen, a global healthtech SaaS company driving the world’s transition from volume to value-based healthcare for high-cost drugs, announced at the World EPA Congress the launch of its latest solution: the Model & Agreement Library. The purpose of the library is to help payers and pharma negotiate better drug prices while providing an in-depth view on current international drug pricing models and value-based agreements. The database library serves as the basis for successful drug pricing negotiations, resulting in accelerated access and drug prices better aligned to their value for the patient.
The shift towards value-based healthcare, rather than volume-based, has been steadily increasing over the years. This evolution has further reinforced Lyfegen's mission to remain at the forefront of analytics and digital automated solutions for the healthcare sector. Indoing so, Lyfegen’s solutions help to accelerate access and increase affordability of healthcare treatments.
“Because of rising healthcare costs and the increase of medical innovations, the thirst for knowledge and need for value-based healthcare capabilities has surged among healthcare payers, and pharma companies across the world”, said Girisha Fernando, CEO of Lyfegen. “That is why we are so excited about launching the world’s largest database of real-world value-based agreements. It gives payers, and pharma a unique insight into how to structure value-based agreements.”
The Lyfegen Model & Agreement Library was developed as an accelerated negotiation resource for both manufacturers and payers – allowing them to save on time, money; and for the first time – an opportunity to learn at their own pace without incurring large research projects or hiring expensive external experts. Users of the library are now enabled to make informed decisions in determining the most suitable drug pricing models and agreements for their products.
The database holds over 2'500+ public value-based agreements and 18+ drug pricing models – spanning across 550 drugs,35 disease areas and 150 pharma companies. Its search capabilities are spread across product, country, drug manufacturer and payer – with all the knowledge, insights, current pricing and reimbursement activities shown in near real-timeacross the industry.
“Just an academic taxonomy of models is intellectually exciting but it's not really helping your typical customer”, said Jens Grüger, Director and Partner at Boston Consulting Group (BCG). “The Lyfegen Platform goes several steps further. Payers and pharma have a problem and they want a solution. The Lyfegen Model & Agreement Library is practical. It offers case examples.”
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The Model & Agreement Library lets the user see the specifics of agreements reached between manufacturers and payers, including which disease areas and drug/device innovations were targeted. This market-leading database allows for one-to-one comparisons of agreements while heightening increased leverage during the negotiations process.
“I like having a palette of contracts that fall under different domains, like disease state, the way the drug is administered, or available evidence. There are different ways to make a contract attractive to us, to pharma, and to our physicians”, said Chester Good, Senior Medical Director Center for Value Based Pharmacy Initiatives at UPMC Health Plan.
This resource represents a breakthrough in the healthcare industry that facilitates the sharing of knowledge – a strong point of discussion that is becoming increasingly more important. Lyfegen is currently providing a limited time opportunity for industry professionals who are interested to try out the Model & Agreement Library with a complimentary 7-day trial.
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Basel, Switzerland, October 27, 2021
Lyfegen announces that Swiss health insurance Sympany is using the Lyfegen Platform to implement & execute complex drug pricing models. Sympany applies the Lyfegen Platform to execute and efficiently manage all value and data-driven pricing models. Sympany gains efficiency and transparency in managing pricing models with the Lyfegen Platform. It offers many pricing models, including pay-for-performance, combination therapy and indication-based models.
The Lyfegen Software Platform digitalises all pricing models and automates the management and execution of these agreements between health insurances and pharmaceutical companies. This is done using real-world data and machine learning enabled algorithms. With the Lyfegen Platform, Sympany is also creating the basis for sustainably handling the increasing number of value-based healthcare agreements for drugs and personalized Cell and Gene therapies. These new pricing models allow health insurances to better manage their financial risk by only paying for drugs and therapies that benefit patients.
"The Lyfegen Platform helps Sympany execute complex pricing models efficiently, securely and transparently. We are pleased to extend our pioneering role in the health insurance industry by working with Lyfegen. This is another step for Sympany to provide our customers with the best possible access to therapies in a sustainable way," says Nico Camuto, Head of Benefits at Sympany, about the use of the Lyfegen Platform.
Girisha Fernando, CEO of Lyfegen, says: "We are very proud to support Sympany in strengthening its focus on value creation, efficiency and transparency amidst the growing complexity of pricing models. It is clear that the trend is increasingly towards complex pay-for-performance arrangements. Ultimately, our goal is to help patients receive their much-needed treatments while helping health insurances better manage risk and cost."
The Lyfegen Platform aims to help patients access innovative medicines and treatments by enabling innovative drug pricing agreements. The Platform collects and analyzes real-time pricing data, allowing health insurances and pharmaceutical companies to obtain relevant information on drug benefits and related financial planning.
About Sympany
Sympany is the refreshingly different insurance company that offers tailored protection and unbureaucratic assistance. Sympany is active in the health and accident insurance business for private individuals and companies, as well as in the property and liability insurance business, and is headquartered in Basel. The group of companies under the umbrella of Sympany Holding AG comprises the insurance companies Vivao Sympany AG, Moove Sympany AG, Kolping Krankenkasse AG, and Sympany Versicherungen AG, as well as the service company Sympany Services AG.
In 2020, profit amounted to CHF 68.8 million, of which Sympany allocated CHF 27.5 million to the surplus fund for the benefit of its policyholders. Total premium volume amounted to CHF 1,058 million. With 575 employees, the company serves around 257,100 private customers, of which around 204,500 are basic insurance policyholders under the KVG. In the corporate customer business, Sympany offers loss of earnings and accident insurance.
More about Sympany: https://www.sympany.ch
About Lyfegen
Lyfegen is an independent, global software analytics company providing a value and outcome-based agreement platform for Health Insurances, Pharma, MedTech & Hospitals around the globe. The secure Lyfegen Platform identifies and operationalizes value-based payment models cost-effectively and at scale using a variety of real-world data and machine learning. With Lyfegen’s patent-pending platform, Health Insurances & Hospitals can implement and scale value-based healthcare, improving access to treatments, patient health outcomes and affordability.
Lyfegen is based in the USA & Switzerland and has been founded by individuals with decades of experience in healthcare, pharma & technology to enable the shift away from volume-based and fee-for-service healthcare to value-based healthcare.
Contact Press: press@lyfegen.com
Contact Investors: investors@lyfegen.com
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Basel, Switzerland, August 3rd, 2021
Lyfegen announces that its value-based healthcare contracting platform has been implemented together with Johnson & Johnson Medical Devices Companies Switzerland (Johnson & Johnson) and a leading Swiss Hospital.
Through this new value-based healthcare approach, Lyfegen and its partners drive the shift towards what matters most to patients: improved patient health outcomes and more efficient use of financial and human resources, enabling a sustainable post-COVID-19 healthcare environment.
The shift towards a value-based healthcare in Switzerland and globally can only be achieved through the support of innovative technologies. Lyfegen’s platform is a key enabler for this transition. The platform digitalises and automates the execution of value-based healthcare agreements, paving the way for the resource-efficient scaling of such novel agreements.
“COVID-19 has shown us the urgent need for a more sustainable healthcare system. With the implementation of value-based healthcare agreements on the Lyfegen platform, we are extremely proud to help Johnson & Johnson and hospitals to accelerate the transition to value-based healthcare and improve patient health outcomes at reduced cost.” says Lyfegen’s CEO, Girisha Fernando.
Lyfegen's compliant, secure and patent-protected value-based healthcare contracting platform automates the collection and analysis of patient-level data. Users receive transparency on actionable health outcomes and agreement performance. Lyfegen’s contribution to this partnership is a blueprint for the scaling of value-based healthcare models across hospitals, health insurances, medical device & pharma companies globally. The partnership marks another important milestone for Lyfegen, as the company continues to grow and has recently opened its next investment round.
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He loves innovative tech and spending his free time reading Hi-tech books! Yes, we are proud to announce Lyfegen’s latest addition to the Kiev team: “Full-Stack Developer”, Dima Guzyk!
“Dima is extremely talented and with his passion to develop new and exciting technology that helps patients, Lyfegen’s products will reach new levels. We are very proud to have him in the team! ” says Lyfegen’s CEO, Girisha Fernando.
We sat down with him to give you a little more insight behind the book-loving “Full-Stack Developer”:
Hi Dima! Tell us a little about yourself: where are you from and what is your work experience background?
Hello! I’ve lived in Kiev almost all my life. This is such a beautiful city. For any lifestyle or interest, the city offers amazing opportunities to live out your dreams!
Regarding my work experience: After I graduated from university, I started working at Intellect Service, the biggest electronic document flow solutions developer in Ukraine. Gradually, my professional and communication skills developed and I became Team Lead of the company’s product. It was a great experience and led me to stay with them for 5 years!
My latest experience was at KPMG as a Software Engineer, where I participated in the development of various corporate information systems. Only after a short year, I had the fantastic opportunity to grow and take over the role of Senior Software Engineer.
This is your first experience in the Health Tech industry – what triggered this move?
This is my first experience in the Health Tech industry and I’m so happy! Working at Lyfegen gives even a tech development job a greater purpose: my work will indirectly support greater access for patients to innovative therapies – helping to save lives!
You are joining Lyfegen as a Full-Stack Developer. In simple terms: what will you be working on?
I participate in all the stages of software development, following the business requirements. In addition, I also analyze the domain in detail, propose architectural solutions to the problems we discover, write code, write unit tests, and help with creation of a reliable, scalable and secure application environment! In simple terms, I will bring the technical solutions of Lyfegen to life!
What are your next personal goals with Lyfegen?
My goal is to constantly discover new approaches and technologies, being able to make comparisons between them and implement the best to the work I do.
What motivated you to join?
When I discovered what Lyfegen was doing, giving patients worldwide access to innovative therapies, I knew I had to be a part of the team! Innovative therapies are necessary for humankind – it’s just that no one has been able to make these more accessible to a wider range of patients. This greater purpose and the impact that this technology has, was the key driver!
Enough about work! What passions do you have outside of Lyfegen?
I am an incredibly curious person! I have a wide range of passions that interest me but most of all I enjoy reading historical and Hi-tech books and magazines.
We are proud to have the Lyfegen team continue to grow with such fantastic team-members!
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The Lyfegen Team is proud to announce that as of this month, Simon has taken on the new role of “Customer Success Hero” at Lyfegen!
Simon joined Lyfegen 6 months ago as a working student and very quickly, full of motivation and enthusiasm, took on important responsibilities. Supporting Nico in the management of Lyfegen’s customer relations, which include some of the largest pharma companies worldwide, Simon will be accompanying the customers during the entire journey starting with supporting the customer’s in identifying suitable models up to the continuous support of Lyfegen's solutions. By gaining a comprehensive understanding of Lyfegen's customers' needs, he will also be working together with the technical development team to further enhance Lyfegen's solutions.
We are proud to have him as part of the team and sat down with him to give you a little more insight behind the bike-riding, FIFA-loving, “Customer Success Hero”!
Hi Simon, so tell us: why are you leaving large corporates like Roche and UBS to join the start-up Lyfegen?
After working at these two large corporates for several years I felt like I needed to see something completely different outside the corporate world. I was getting too much into a routine and wanted to take on a new challenge. I always had this entrepreneurial spirit in me and when I got the chance to start at Lyfegen, I didn’t have to think twice. Lyfegen offers me the perfect environment and has a great purpose.
You are working already since January 2020 at Lyfegen; what fascinates you the most?
I am really fascinated by the huge enthusiasm and passion of the whole team! Everyone here is very dedicated to leading Lyfegen to success and to driving value-based healthcare forward. I am also fascinated with how many new things I learn every single day and I am very delighted about how much responsibility I could already take over in this short time.
How do you experience the collaboration with the team?
The team has a great spirit and I felt very welcome and involved from the first second. The communication within the team is very transparent and open-minded. Issues can be addressed openly and critique is always given in a constructive way.
Healthcare is changing to value- and data driven models. How do you experience this change with our customers?
Our customers are all very interested in value- and data driven healthcare, but these models are often a new experience for them. With our technical solutions and our know-how, we support our clients to make the transition to value-based healthcare happen. We are now at a stage where we are pioneers and proactively shape the future environment for such models together with our clients.
What are your personal next goals with Lyfegen?
My personal goal is to further grow with the company. Growing not only personally by gaining more experience and continuously taking over more and more responsibility, but also to help Lyfegen achieve its next milestones. I am looking forward to be part of this journey.
We currently have two open positions - What are your recommendation for other talents that are applying at Lyfegen?
If you are applying at Lyfegen I recommend you to be aware of what it means to work in a start-up. You need to be ready to step outside your comfort-zone, be willing to actively drive things forward and take ownership. If this is what you are looking for, then Lyfegen is the perfect fit for you. Lyfegen offers you the perfect environment to further develop yourself and to work on exciting projects that have a real impact and a great purpose, helping patients to access innovative therapies.
Enough about work! What passions do you have outside of Lyfegen?
I love bike racing and being in nature! I can often be found on weekends biking my way up hills and testing my limits! It’s a great way to disconnect and focus on nature. But I’m not always in nature – I must admit, I do love playing video games too, especially FIFA (and am the proud winner of our last Lyfegen FIFA tournament – yes, the team got together for a 8 hour challenge one weekend!). Work hard, play hard!
We are proud to have the Lyfegen team continue to grow with such fantastic team-members!
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We are pleased to welcome the latest addition to our tech team! Andrei joins Lyfegen as a full-stack developer. He brings his wealth of backend and frontend experience to elevate our platform.
"I am excited to welcome Andrei to our Tech Team as a talented and motivated Full-Stack developer. Andrei brings great skills and knowledge to our team and will support us in further building our applications." Says CTO, Frederico Braga.
To introduce our newest addition, we interviewed Andrei.
Welcome to the Team, Andrei! Tell us a little about yourself.
Hi! My name is Andrei. I am from Romania, and I graduated from the Technical University of Cluj Napoca. In the last seven years, I have worked as a software developer at different companies and with different technologies like .net, iOS, Angular, Typescript, MSSQL, Mongo DB, SoapUI.
What drives you to be a full-stack developer?
I chose to be a full developer because I like to be involved in every phase of a software application, from the UI side to the server. In the last eight years, the modern technologies used for building stack server-side applications and client-side applications became much easier to use, which allows us to learn multiple technologies on both sides.
What motivated you to join Lyfegen?
At the beginning of my career, I worked for another startup company. I remember my satisfaction when someone used our product, and I want to feel that again. Lyfegen is giving me many opportunities to positively impact the world because we are driving things in the right direction. I consider value-based contracts the best solution for patients, healthcare payers and Pharma companies.
What is your first impression as of now?
I like and appreciate the whole team. All my colleagues have brilliant ideas that are bringing the Lyfegen platform to its best form. The Lyfegen platform is one of the strongest I have seen so far in my career, and this is because everyone has a voice within the team.
How will your know-how help the Lyfegen customers experience our platform the best way possible?
Throughout my career, I have worked on several big projects in different fields providing technical solutions for different problems on the frontend side and the backend side. These experiences have taught me the importance of accessibility features, and I would like to bring that knowledge to improve the user experience of Lyfegen users. I can help the Lyfegen customers better interact with the platform in terms of performance.
What is something you want to learn or improve this year?
I am looking forward to improving my understanding of the healthcare and pharmaceutical industry. From a technical perspective, I'm excited to work and learn Grandstack technologies.
What passions do you pursue outside of work?
I love to play board games, tennis and football. During the summer weekends, I like to go hiking, and in winter, I enjoy skiing. I also have an interest in politics, and I try to stay updated with trends in the IT industry because of my passion for new technologies.
What else are you looking forward to?
I look forward to deepening my relationship with my teammates. I strongly believe that working in an atmosphere that promotes teamwork makes our lives much more enjoyable. At the same time, it has a positive impact on the project.
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He loves innovation and thrives on solving problems using code. Besides developing and studying he plays basketball, travels and reads. We are proud to welcome the newest talent to the Lyfegen team: “Junior Developer” Thungu!
“The motivation and the skills of Thungu are undisputed. Among other things, that is what makes him and Lyfegen a perfect match. Constant evolution and progression are some of the most important objectives at Lyfegen, that is why Thungu will join our Team to help us add new UI components to our products and automate our testing processes in coordination with the UI/UX designers and Business Analysts, resulting in a higher overall quality and user satisfaction of our products. We are looking forward to work with Thungu here at Lyfegen.” Says CTO, Frederico Braga
To introduce our newest talented team member, we virtually sat down with Thungu for an interview.
Welcome to the team Thungu! Tell us a little about yourself.
Hi, my name is Thungu, and I am from Colombo, Sri Lanka. I am a Software Engineering undergraduate at the University of Westminster in my second year while working here at Lyfegen. I also volunteer for the IEEE student branch of my university to organize hackathons, webinars and other tech related events.
What drives you to be a developer?
I love figuring things out, exploring new technologies and solving problems with code. When facing challenges as a developer I always explore the “yes” and try to figure things out before accepting a “no”. That figuring out part is what drives me to be a better developer and what I enjoy mostly about being a developer.
What was your motivation to join Lyfegen?
I wanted my first work experience to be in an innovative company which has a positive impact on the world and when I got to know what Lyfegen does, I knew this was it. With value-based healthcare in its early stages, I see it’s huge potential and the unprecedented value it brings towards humanity. I knew I had to be a part of this great journey!
What are your first impressions so far?
It has been a very pleasant experience. I am enjoying the startup culture - everyone is very close, friendly and welcoming. The flexibility at Lyfegen is one of the things that I appreciate most, as it is really important for me to have an evenly work and university life balance. I am also very impressed by how dynamic and motivated the team is. Everyone is ready to move mountains for patients!
How will you improve the customer experience on the Lyfegen platform?
I will be focusing mainly on Frontend Development and Testing which includes building new components with the help of our Kateryna, our UI/UX designer and testing the functionalities of our products together with Pavlo.
What do you want to learn and improve this year?
I am looking forward to improving my skills and helping Lyfegen in other stages of Software Development in addition to Frontend Development and Testing. I also want to improve my understanding of the healthcare industry.
What are you especially looking forward to as you take on this new role?
Although I enjoy all the virtual coffees, I am very much looking forward to meeting everyone in person someday. I’m also looking forward to grow as a professional and becoming a better and experienced developer. I feel very grateful to work with such an amazing team of experienced developers and other team members.
What passions do you pursue outside of work?
I love to play basketball, create travel videos and also photography is my passion. I read books focusing on life and spirituality, I learn new technologies, and sometimes I play the guitar.
We are proud to welcome Thungu to the Lyfegen team!
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We are thrilled to announce that our tech team continues to grow: A warm welcome to Giancarlo, Lyfegen’s new Full-Stack Developer! With his background as a security engineer, he knows how to make our platform even safer!
“I am excited to welcome Giancarlo to our Tech Team as a Full-Stack developer. Giancarlo’s experience in the areas of Machine Learning, Security and Software Development are critical to our long term success and development of the Lyfegen Platform.” Says CTO, Frederico Braga
To introduce our newest team member, we virtually interviewed Giancarlo.
Welcome to the team Giancarlo! Tell us a little about yourself.
My name is Giancarlo and I live in Chur, Switzerland. I hold a bachelor’s degree in computer science. I previously worked as a security engineer, designing and implementing big data applications at a Swiss telecom company. At Lyfegen I will be working on improving our platform as a full stack developer.
What drives you to be a full stack developer?
For me, the variety of tasks is the biggest appeal of being a full stack developer: One day you could be working on low level database tasks and the next day on implementing user-interface (UI) elements. This keeps the job challenging and interesting!
What motivated you to join Lyfegen?
Until now, I was working for a rather big company where my impact was small. I wanted to change that. At Lyfegen I am able to create something meaningful from the ground up.
What is your first impression as of now?
My first impression was very positive: The people at Lyfegen are kind, helpful and smart. A perfect mix in my opinion! I’m looking forward to all the interesting tasks, complex problems and engaging conversations with my colleagues.
How will your know-how help the Lyfegen customers experience our platform the best way possible?
As a former security engineer, I know the most common threats and pitfalls when it comes to creating a software. I hope to use my expierence and knowledge to make our platform safer and more resilient to potential threats in the future.
What is something you want to learn or improve this year?
In previous jobs I was mainly developing backend applications. This year I want to improve on the frontend side and learn new technologies when it comes to graph databases. I always wanted to improve my Italian, so maybe 2021 is the year where I take some time to do just that!
What passions do you pursue outside of work?
I play lacrosse in our local club twice a week. Food is another passion of mine: I also love to cook and try new restaurants. On rainy Sundays, you’ll find me playing boardgames or Dungeons and Dragons with my friends.
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The transition to value-based care is happening at a slower pace than policymakers and healthcare industry leaders had hoped. Stakeholders are struggling to negotiate and then operationalize these complex agreements.
The adoption of value-based drug pricing agreements is not widespread in the U.S., despite the stated strong interest from policymakers and the healthcare industry in tying the price of drugs to their benefit to patient outcomes and value to the health system. Outside of the government Medicare and Medicaid programs, the fee-for-service, volume-based payment model still accounted for almost 56% of commercial health payer contracts as of 2018.
Many value-based pharmaceutical arrangements are not disclosed publicly, making it difficult to know how many are implemented in the U.S. each year. According to the trade group Pharmaceutical Research and Manufacturers of America (PhRMA), there were 73 publicly disclosed value-based drug contracts at the end of 2019. A study published the same year in the American Journal of Managed Care (AJMC) suggested that, because of the confidentiality surrounding most agreements, analysts are underestimating the number of value-based pricing arrangements in effect and their impact on the U.S. pharmaceutical market.
In this article, we will highlight some concerns a payer and manufacturer considering a value-based drug pricing arrangement may each face, and give some insight into why these agreements aren't more widely accepted.
Payers modeling risk
A 2019 survey by the National Pharmaceutical Council (NPC) and the Duke-Margolis Center for Health policy showed that for payers, top deal-breakers in negotiations for value-based pricing arrangements were disagreements over incentive mechanisms for participation and financial terms. From the payer’s standpoint, a new, high-cost drug–especially one that addresses unmet needs or rare and orphan diseases–is worth the risk if it brings innovative, effective treatment for patients who may have no other options. But payers want to share that risk with the manufacturer when there’s the potential for a substantial impact on the payer’s budget.
Based on publicly available information, oncology, hematology, cardiology, and endocrinology drug treatments are common subjects of value-based pricing arrangements. These treatments have well-defined patient populations, easy-to-see impact measures, endpoints, and cures that make them more appealing to payers. It’s much more difficult to objectively measure the patient health outcomes for treatments covering pain management or mental health.
Payers also prefer treatments that show clinical results in a few months, not years. Tracking a patient’s health to confirm a drug’s value becomes more difficult when a drug takes years to show evidence of long-term benefits. For example, a longer-term benefit of treatment may be the avoidance of hospitalization. In the U.S., patients may leave a payer’s plan at any time, so this future cost may not be captured in the data collection under a current agreement.
Related Post: Value-based pricing vs best price? Medicaid's best price problem
Manufacturers sharing risk
When considering coverage of a new drug, payers might question the results of clinical trials, especially if there is limited real-world data because of an expedited FDA approval. So manufacturers must continue to create opportunities to generate real-world evidence that convinces payers of their drug’s value. And they must be ready and willing to share in the risk that a drug may not meet expectations in phase 4 confirmatory trials.
When a new drug has strong competition in the market, manufacturers need real-world evidence to differentiate their product and show their treatment brings better clinical outcomes and value than other options available. Value-based drug pricing agreements are an opportunity to fill that knowledge gap. Pharmaceutical companies not willing to do them to get that real-world evidence may lose out to those who are ready to take on innovative pharmaceutical agreements.
Contract partners building data-gathering and analytics capacity
In the 2019 NPC survey, manufacturers cited data collection challenges and disagreements on outcome measures among their top deal breakers.
Choosing the right contract model to fit the product and the capabilities of the contract partners is the first step. This means researching publicly available value-based drug pricing arrangements to learn the rewards and pitfalls of various contract models. All the contract partners must agree on the key metrics to be measured and how the data will be used to determine a drug’s value to patient health outcomes.
For the data-sharing component of value-based pricing arrangements, contract partners must develop a relationship that includes trust, cooperation, and an unusual level of transparency. Sometimes this relationship is best fostered and protected by the support services of a neutral third party, especially when one or both of the contract partners doesn’t have the technical capacity or administrative staff to operationalize a value-based drug pricing agreement.
The Lyfegen Solution
Value-based drug pricing arrangements are hard, but Lyfegen can make them easier. If your organization is considering a value-based pricing agreement, start by researching real-world examples of drug pricing arrangements in Lyfegen’s Models and Agreements Library. With a collection of more than 20 drug pricing models and over 1000 value-based agreements in use worldwide, the Lyfegen Library can help you discern what pricing arrangement is appropriate for your goals, your current operational capabilities, and your contract partners.
Lyfegen’s value-based contracting software can then operationalize the contract model you choose. We help healthcare insurances, pharma, and medtech companies implement and scale value-based drug pricing contracts with greater efficiency and transparency. The Lyfegen Platform collects real-world data and uses intelligent algorithms to provide valuable insights on drug performance and cost.
By enabling the shift away from volume-based, fee-for-service healthcare to value-based healthcare, Lyfegen increases access to healthcare treatments and their affordability.
To learn more about Lyfegen’s software solutions, contact us to book a demo.
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Signs point to a greater role for indication-specific pricing in Medicare and Medicaid
Indication-specific pricing is a differential pricing method used by payers. Conceptually, it’s based on the idea that certain drugs with multiple indications have differential relative clinical benefit for each indication, or for each distinct patient subpopulation. The rationale behind indication-specific pricing is that the comparative clinical value of a drug can vary widely across indications, accordingly, so should the price if price and value are to align.
The figure below shows the difference between a uniform price – in this case, the price for indication A; green line – applied to all indications versus indication-based pricing.
Figure: Indication-specific pricing
Source: Institute for Clinical and Economic Review
The standard pricing model for pharmaceuticals constitutes a single price across all indications; in this instance, the price for indication A. It’s straightforward, as there is only one price. Besides, it’s the model stakeholders in the healthcare system have been accustomed to for decades. Moving to indication-specific pricing implies different prices for the four indications A, B, C, and D.
The most straightforward approach to indication-specific pricing by payers for a drug approved for, say, two different indications is to simply treat it as two different drugs. This would require two types of packaging, unique sets of National Drug Codes, for instance, for each of the packages, and for injectable drugs, two different Healthcare Common Procedure Coding System (HCPCS) J codes.
Indication-specific pricing is appealing because it supports value-based healthcare by aligning price and value. But it’s not an easy task for both drug manufacturers and payers to set indication-specific prices, as this requires patient stratification, and ultimately anchoring of prices to certain measures of cost-effectiveness, such as the cost per Quality-Adjusted-Life-Year (QALY).
Thus far, the use of indication-specific pricing has been limited in the U.S. to several pilot programs. Specifically, the pharmacy benefit manager (PBM) Express Scripts employs indication-specific pricing in number of different classes of cancer drugs, and the PBM CVS Caremark does this for several auto-immune diseases.
According to the PBMs, indication-specific pricing can provide a justification for higher prices for secondary indications that provide greater clinical benefits. In the context of value being assessed, this may help address payer resistance to expanding coverage to include supplemental indications. Partnering with Lyfegen may be the solution for manufacturers and payers alike, as its platform can put users on the right track towards successful implementation of indication-specific pricing arrangements. The Lyfegen platform identifies and operationalizes value-based indication-specific models in a cost-effective manner.
Indication specific pricing could alter prices for the biologic Avastin (bevacizumab), for example, when used for cervical cancer and colon cancer, respectively, depending on the willingness to pay threshold, which in turn may be based on different cost per QALY estimates.
Also, there are differences in the comparative value of the cancer drug Herceptin (trastuzumab) when used in different indications (metastatic versus adjuvant HER-2 positive breast cancer). A possible solution to this problem is for Herceptin to have two prices, one for its metastatic indication, and another for its adjuvant indication.
When Novartis won its groundbreaking CAR-T approval, Kymriah (tisagenlecleucel) in 2018, both the drugmaker and U.S. policymakers at Centers for Medicare and Medicaid Services (CMS) touted performance-based and indication-specific pricing as ways to help finance the $475,000 therapy. Unfortunately, the CMS backed away from a plan to implement a value-based contract for Kymriah. This decision may be revisited, as the pipeline is filled with cell and gene therapies that have large upfront costs for CMS, which must somehow be managed.
Moreover, given the many value-based experiments state Medicaid agencies are currently involved in – from value-based formularies to subscription models for the purchase of hepatitis C medications – this could spur more use of indication-specific pricing in Medicaid.
New “best price” rules in Medicaid went into effect July 1, 2022. The reason for changes in best price rules is to induce more use of value-based contract arrangements, including indication-specific pricing. Newly established protocols allow for the reporting of multiple best prices.
Specifically, to facilitate the broad adoption of these types of contracts, the novel best price rule allows drug manufacturers to report a range of best prices to the extent they may be determined by varying discounts under value-based pricing arrangements, along with the regular best price under any non-value-based pricing arrangements.
Here, value-based pricing arrangements are outcomes-based contracts which vary rebates based on patient outcomes. This can be stratified by indication. In this context, lower discounts may be offered for patients with better-than-expected outcomes in certain indications, and higher discounts for poorer outcomes and lower-than-expected clinical effectiveness of a drug in one or more indications.
About the author
Cohen is a health economist with more than 25 years of experience analyzing, publishing, and presenting on drug and diagnostic pricing and reimbursement, as well as healthcare policy reform initiatives. For 21 years, Cohen was an academic at Tufts University, the University of Pennsylvania, and the University of Amsterdam. Currently, and for the past five years, Cohen is an independent healthcare analyst and consultant on a variety of research, teaching, speaking, editing, and writing projects.
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When was the last time you used a business software or platform with a seamless user experience? Was it fun? Was it visually appealing? Probably not.
In this article, we consider the benefits of drastically improving the user experience of contracting software with examples of companies that have taken this step and inspired Lyfegen.
Contracting Software
Contracting software has usually been perceived as boring and unsophisticated, until recently. It takes careful application of innovation, user empathy, and design thinking to create unique, memorable experiences. Contracting software should focus on providing a pleasant user experience, especially when it is about patients. It takes away a whole lot of burden from the users while providing the most value.
There are new innovative designs of forms, pages, and workflows that keep users engaged and satisfied. Enjoyable contracting software should provide the most value while reducing the negative impacts.
Why great user experience is paramount to user satisfaction
Lyfegen takes cues from consumer web applications where innovation thrives. In 2020, Lyfegen conducted a big user experience review, where our product team needed to get to the bottom of what can make using the platform more enjoyable. “Why can't my business software look and feel enjoyable?" At Lyfegen we think that it can and it should. Every software should look and feel enjoyable.
We learned how users interact with the approval workflow using real-world data and feedback from customers. With these learnings, we further optimize the user experience and address issues or concerns that appear consistently. Users will bring expectations raised by consumer apps to their business applications. In response, we raise the bar to make work software equally appealing.
Lyfegen makes the whole process a breeze by rewarding customers with an amazing design experience, stepping up the game by making value-based contracting fun.
Some successful real-world examples
In consumer web applications, there are so many companies that are making drastic changes from the old design patterns to newer more innovative designs. These brands took the bold step of doing things differently while still providing the desired results. These are also the ones that Lyfegen took inspiration from.
Airbnb.com enables contracts between guests and hosts.
- Big beautiful imagery. People, smiles, quirky architecture.
- Emotional scenes that make you want to be there: cottage in the woods, hut on the beach, or a comfy townhouse.
But also clever UX: Forms disguised as slick toolbars. Generous date pickers that are easy to click
Mobile.de enables contracts between car buyers and sellers.
- Sensible defaults bootstrap your car search with a single click.
- Common search patterns detected from thousands of users turn into quick search shortcuts such as "City car" and "Family car.”
- Kickstarting a search avoids having to fill many form fields.
Upwork.com enables contracts between job seekers (talent) and hiring clients.
- The contracting path is optimized for speed. Both parties want to get the work under way quickly.
- Templates bootstrap and automate repetitive tasks. Why write every contract from scratch when you can extract best practices into a common library. Hint! This is what the Model Library will do in the Lyfegen Platform, watch out for a future blog post.
Lyfegen Platform mechanisms that bring speed and joy
The Lyfegen Platform enables contracts with pharmaceutical companies, healthcare payers and healthcare providers. At Lyfegen we understand that great user experience is paramount to user satisfaction. Hence, the reason why we pay critical attention to existing problems and proffer appropriate solutions to them is to create experiences that have the most long-lasting impact on the users.
What do we do differently to make these contracts fluid and useful?
- Forms: We use sensible defaults to make filling forms faster. Quick date pickers with popular date ranges (“Last month”, “This week”) help when scheduling is a big part of your work. Progressive disclosure reduces information overflow on forms – show only what the user needs to fill in right now to complete the task.
- Approvals: What is a modern way to do contract approvals? Chat threads! Users are familiar with chats from WhatsApp, Facebook and many other tools. A chat thread can be attached to virtually any item on the platform: agreements, claims, cases and refunds. The chat stays with the item so users don't lose context of what happened to the item.
- Tasks: How does the user know what they should be focusing on today? On the Home screen, the My tasks widget, email notifications, and the Recent Activity widget collect essential platform activity. You can see instantly what needs your attention today.
- Collaboration: @-mentions and chat threads offer quick resolution to questions. Tag a colleague and ask a question. They get a notification and provide an answer in the same thread. Problem resolved, move on! Chat works particularly well when conversation heats up and many users talk concurrently in real time.
- Interactive insights. Showing KPIs and key results on a dashboard is common practice. In fact, a dashboard is the favorite starting screen for many users. But charts really come alive when you interact with them. Have you used a mortgage calculator on a bank website? We also let users model alternative scenarios and see projections. “What will happen in my agreement next year if we continue like this?”
In conclusion, these are only a few examples of usage patterns that make contracting software modern and enjoyable. There is more room for improvement and the possibilities are endless. It requires the expertise which we at Lyfegen provide. Through our platform, we create brand new experiences in value-based contracting. Care to know more about contracting software? make sure to keep an eye out for our future posts.
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This influential player in the U.S. pharmaceutical sector is changing the dynamics of price negotiations between payers and drug manufacturers. But is ICER helping bring healthcare costs down or contributing to rising drug prices?
Who is ICER?
Over the last decade, a small, Boston-based independent, nonprofit research organization has become a powerful influence over the formulary exclusion decisions and drug prices commercial and government payers will pay. Founded in 2006, The Institute for Clinical and Economic Review (ICER) was relatively unknown before 2014. But after gaining national recognition for an assessment about the cost-effectiveness of a Hepatitis C therapy regime, ICER quickly became a trusted source of data and pharmaceutical economics research.
ICER’s assessments are cited in national policy debate and in pharmaceutical price negotiations between insurers and drug manufacturers. According to ICER, the U.S. Department of Veterans Affairs, some state Medicaid agencies and over 75% of private insurers, pharmacy benefit managers, and self-insuring organizations now use ICER’s drug pricing assessments and resources in their policy decision making.
What does ICER do?
ICER conducts clinical and economic assessments of drug treatments to calculate what it considers a drug’s fair market price. They consider a drug’s value and effectiveness for treating the illness for which it was designed, followed by a budget impact analysis to estimate how much the national health system could save with its suggested cost-effective pricing. Using this data, ICER analyses calculate a suggested drug price for payers where cost-effectiveness aligns with the value of the increased benefit to the patient’s health. ICER says it seeks feedback from all stakeholders—manufacturers, clinicians, payers, patients and families.
How is ICER affecting national drug prices?
A leading pharmaceutical economics expert, Dr. Adam J. Fein of Drug Channels Institute, reports that pharmaceutical list prices rose by up to 15% from 2010 to 2015. During the next five years, up to mid-2020—as ICER rose to national prominence—list price growth dropped to 4.2%.
In 2018, ICON, a leading healthcare industry consultant, conducted a survey about the influence of ICER’s work on drug pricing and national healthcare costs. The ICON survey revealed that ICER’s cost effectiveness metrics and price recommendations are affecting contract negotiations between drug manufacturers and payers and driving drug prices down.
Most payers are no longer willing to accept whatever price drug manufacturers decide to charge. Over a third of the payers in the ICON survey stated it was likely, or extremely likely, that they would ask for a rebate from the drug manufacturer to reduce the cost of a drug to match ICER’s suggested price. In response, manufacturers will increase their drug list price, then offset part of the price increase with larger rebates to payers—this is known as the gross-to-net bubble.
How is ICER affecting access to expensive drug treatments?
Out of the 90 participants ICON surveyed during a pharmaceutical industry webinar, 65% believed ICER had a moderate to significant impact on formulary decisions; ICON’s research also showed that payers who use ICER’s cost-effective pricing were more likely to use strict prior authorization requirements for some drugs to encourage clinicians and patients to use the most cost-effective drug treatments. Critics point to this as one of the harmful consequences of ICER’s work.
What do critics of ICER say?
Some patient advocate groups—with the support of pharmaceutical manufacturers—are concerned that by encouraging payers to exclude less cost-effective but still clinically effective treatments in their formularies, ICER is promoting payer discrimination against some patients who need expensive specialty medications, such as the elderly, people with disabilities, and those living with rare diseases.
Critics such as The Alliance for Aging Research point to data that show ICER’s impact on payer demands for higher rebates are causing increasing out-of-pocket costs for seniors using Part D Medicare benefits. Manufacturers raise their list prices, then meet payer demands for ICER’s suggested drug pricing using the gross-to-net bubble rebates. However, some payers still calculate the co-insurance percentages that patients pay for their prescriptions based on the manufacturer’s full, undiscounted list price.
Lyfegen can help implement value-based drug pricing agreements
Despite the debate about whether ICER is a help or a hinderance in the work of healthcare cost containment and better patient access, ICER’s influence will probably continue to grow as value-based contracts and risk-sharing agreements become more common. Lyfegen’s value-based contracting platform operationalizes and manages these complex drug pricing payment arrangements by seamlessly capturing and analyzing data.
Lyfegen’s software can help your organization implement any value-based contract, covering multiple therapeutic areas, with public or private payers. Contact us to learn more about our platform and to book a demo.
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Families forced to hold a fundraiser because their child’s healthcare system won’t save his life.
Recently, the news has once again been covering a family that is struggling to cover the cost of the most expensive drug in America for their son, Devdan. The insurer refused coverage of the treatment for his rare disease, totaling $2.125 million.
Devdan was born with Spinal Muscle Atrophy (SMA). SMA damages the nerve cells in the brain and spinal cord, causing progressive muscle weakness and problems breathing, speaking, swallowing, and walking. Zolgensma’s onetime gene therapy treats SMA and has earned the title of the most expensive drug in America.
It is currently Devdan’s only hope for a normal life. In this case, to save their child’s health and future, the parent’s initiated a fundraiser through Ray of Hope Foundation.
Most of us probably don’t consider what or how hospitals pay for their supplies. When we pay our medical insurance premiums, we buy a plan and think we’re covered in case of a medical emergency. But what many families of children with rare disease have learned, that’s not always the case. Rare diseases aren’t funded the same way common medical conditions are paid for. There aren’t enough patients to warrant extensive research and treatment developments. Consequently, medical care is often unconventional. As a result of these novel treatments, patients with rare disease often receive Surprise Medical Billing or are denied coverage altogether.
Value Based Healthcare (VBHC) Saves Lives
Medications and treatments that deviate from the routine can be a financial disaster for hospitals, families, care providers, and health systems. And organizations with a strong commitment to value-based healthcare have seen sustainable gains. In this case, had Devdan’s medical facility operated under a value-based healthcare reimbursement model, this life-saving treatment would have been available and the critical care for this child could have begun without delay.
Calculating value-based reimbursements measures numerous points of quality and the overall health of a population. Unlike a fee-for-service model, value-based healthcare providers must report data to payers and demonstrate improvement. The VBHC model has many advantages, including improved patient satisfaction, a reduction in healthcare delivery costs, and better health for the patient populations being served.
Better management of financial challenges with Lyfegen
The VBHC model has many advantages, including improved patient satisfaction, a reduction in healthcare delivery costs, and better health for the patient populations being served. Luckily, Devdan’s Ray of Hope fundraising effort has achieved the needed target of $2.86M. More than 29’000 people came together to raise this enormous amount in such a short period of time to give Devdan a second chance at life.
This unfortunate scenario is common for those dealing with rare disease, and those in need of extraordinary medical care. Had Devdan’s insurance participated in a value-based program, the necessary medicine could have been provided for with no delay in treatment. As the health care market adjusts to the pandemic and prepares for the future, leaders must decide whether to accelerate their participation in value-based healthcare to meet the clinical and financial challenges that will remain for years to come.
To learn more about Lyfegen and request a free demo, contact us today.
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