Rare Disease Therapies and the Case for Outcomes-Based Agreements
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Treatments for rare diseases, such as spinal muscular atrophy or CAR-T therapies like tisagenlecleucel, hold transformative potential for patients. Yet, they often come with significant challenges—uncertainties around long-term efficacy, high costs, and the need for tailored patient selection. Outcomes-Based Agreements (OBAs) offer a structured way to address these challenges, aligning financial risk with therapeutic outcomes. However, their implementation requires careful consideration and planning.
The Promise and Practicalities of OBAs
1. What Makes OBAs Valuable?
OBAs shift the focus from upfront costs to real-world outcomes, creating a more sustainable framework for funding innovative therapies. They enable:
• Risk Sharing: Payers and manufacturers align costs with actual therapeutic results.
• Patient-Centric Focus: Treatments are tied to measurable improvements, emphasizing value rather than volume.
• Increased Access: By mitigating cost risks, OBAs can support the introduction of high-cost therapies in resource-constrained settings.
2. Implementation Challenges
Despite their promise, OBAs are not without hurdles:
• Administrative Complexity: Managing OBA agreements involves data sharing, contract monitoring, and performance assessments—all requiring robust systems.
• Data Availability and Quality: Real-world evidence is critical, but gaps in data collection, reporting, and standardization can limit success.
• Stakeholder Collaboration: Successful OBAs require alignment between payers, manufacturers, and healthcare providers. Misaligned priorities or unclear accountability can derail agreements.
How Lyfegen Supports OBA Implementation
Learning from Global Examples
Lyfegen’s Agreements Library—featuring 6,700 public agreements and 20 pricing models from 33 countries—offers invaluable insights into how OBAs have been implemented worldwide. By analyzing these examples, stakeholders can identify models that best suit their unique challenges, reducing the trial-and-error phase of implementation.
Streamlined Scenario Analysis
The Lyfegen Drug Contracting Simulator enables stakeholders to simulate OBA scenarios using real-world data. From adherence-based contracts to outcome guarantees, the Simulator helps users:
• Assess feasibility through scenario modeling.
• Forecast financial implications with real-world inputs.
• Compare multiple pricing models to find the most suitable solution.
Simplifying Administration
Managing the administrative burden of OBAs is crucial. Lyfegen’s tools offer:
• Centralized contract management for version control and compliance tracking.
• Automated data processing to ensure performance metrics are accurately reported.
• Detailed dashboards and trend reports to facilitate collaborative decision-making.
Key Considerations for OBA Success
1. Feasibility Studies Are Essential
Not every therapy or market is suited for OBAs. Conducting thorough feasibility assessments helps determine the viability of such agreements.
2. Data Plans Need Clarity
Reliable outcomes-based contracts depend on well-defined metrics and data collection processes. Establishing these frameworks early is crucial.
3. Commitment from All Stakeholders
OBAs thrive on collaboration. Shared goals, transparent communication, and clear accountability among all parties can ensure smoother execution.
Conclusion
Outcomes-Based Agreements represent an important step forward in addressing the challenges of high-cost, high-impact therapies for rare diseases. With the right tools, insights, and preparation, healthcare stakeholders can unlock the potential of OBAs to improve access, manage costs, and focus on patient outcomes.
Discover how Lyfegen can simplify your journey to outcomes-based contracting. Schedule a demo today to explore our solutions in action.
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As value-based contracting (VBCs) becomes the standard, the role of clinical trials has shifted significantly. They are now essential not only for demonstrating safety and efficacy but also for enhancing financial performance. By creating trials that meet the criteria of VBCs, pharmaceutical companies can increase their financial gains, minimize pricing risks, and facilitate smoother negotiations with payers.
According to a report by Deloitte, aligning clinical trials with value-based pricing strategies can lead to improvements in revenue predictability and cost management by as much as 20% for drugs with high market access potential. This improvement stems from linking trial outcomes to real-world efficacy, which reassures payers and reduces the financial risk for manufacturers by basing pricing on demonstrated effectiveness
For CFOs and Pricing Directors, the Financial Impact is Clear
For CFOs and Directors of Pricing, the financial implications of optimized trials in a VBC framework are significant. When trial designs focus on outcomes that matter most to payers—like reductions in hospitalization or improved quality of life—pricing becomes more flexible, and revenue can be projected more accurately. McKinsey & Company points out that outcome-based models also provide a safeguard against pricing volatility, allowing pharmaceutical companies to stabilize revenue by tying payments to real-world performance metrics.
Efficiency Gains through Outcome-Focused Trial Design
Beyond revenue predictability, operational efficiencies are another key benefit. A focus on outcome-based trials reduces the time and resources needed to negotiate with payers, as the trial data itself becomes a compelling point in payer discussions. For Market Access Directors, outcome-driven trial designs support quicker market entry and stronger, data-backed negotiations that build payer confidence.
Lyfegen’s Platform: Streamlining Trial Optimization for Value-Based Contracts
Optimizing clinical trials for VBC is complex, but Lyfegen’s all in one platform simplifies this process. By enabling real-time pricing simulations based on clinical outcomes or financial goals, Lyfegen helps pharmaceutical companies design financially viable reimbursement contracts and align them with value-based pricing. This empowers pricing teams to model financial outcomes, enhancing both operational efficiency and contract efficiency.
Interested in learning how outcome-focused trials can support your pricing and financial goals? Lyfegen’s Simulator offers the tools you need to optimize clinical trials for success in a VBCs framework.
Schedule a demo today to explore how we can streamline your pricing and contract strategies: https://www.lyfegen.com/demo
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In value-based contracts (VBCs), clinical trial outcomes are no longer just about proving safety and efficacy—they’re now critical to driving drug pricing and market access strategies. As payers and healthcare systems shift towards outcome-based models, trial data is becoming the foundation for negotiating both price and reimbursement.
Payers are increasingly prioritizing data from real-world evidence and clinical trials for value-based arrangements. The real-world data aligns closely with payers' needs to predict the cost-effectiveness of drugs and determine coverage. For Market Access Directors and Directors of Pricing, this means that clinical trial results can either accelerate or hinder the process of getting drugs to market. Strong trial outcomes not only justify premium pricing but also provide a solid basis for faster, smoother payer negotiations.
This is especially crucial in markets where budgetary pressures and stringent healthcare regulations make it difficult for new therapies to gain market access. The ability to present data-driven evidence of a drug’s real-world impact can significantly shorten time to market and improve access.
Novartis’ Zolgensma, a gene therapy for spinal muscular atrophy, used a value-based contract with installment payments and performance guarantees, adjusting reimbursement if outcomes fell short—demonstrating flexibility for high-cost therapies in outcome-based pricing models
For CFOs, using clinical trial data means greater financial predictability. By tying pricing to outcomes, companies can secure more stable revenue streams, with lower financial risk from market variability.
Are you ready to leverage clinical trial data to improve your pricing strategy and market access? Lyfegen’s Simulator helps you model pricing scenarios based on trial outcomes, ensuring a smoother path to market and better payer alignment.
Schedule a demo today to see how we can support your pricing and market access strategies: https://www.lyfegen.com/demo
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Introduction
The UK is taking critical steps to standardize the evaluation of AI technologies in healthcare. Last year, the National Institute for Health and Care Excellence (NICE) conducted a systematic review of health economic evaluation (HEE) studies on AI-based technologies, revealing variability in study quality. To address this, NICE introduced CHEERS-AI (Consolidated Health Economic Evaluation Reporting Standards for Interventions that Use Artificial Intelligence), a set of standards aimed at study authors and reviewers. Additionally, the UK Government has announced initiatives to boost exports, benefiting industries like pharmaceuticals by removing trade barriers, with a particular focus on entering the Brazilian market.
Key Takeaways for Pharma and AI Developers
1. CHEERS-AI Standards for Consistent AI Evaluation
• What’s Changing: The CHEERS-AI standards, announced by NICE, provide a framework to improve the quality and consistency of economic evaluations for AI-based healthcare technologies. By addressing gaps in reporting and methodology, NICE aims to make these evaluations more reliable, which is essential for determining the cost-effectiveness of AI solutions in healthcare.
• Impact: For AI developers and pharmaceutical companies, CHEERS-AI sets clearer expectations for the economic evaluation of AI products. A standardized approach facilitates more consistent assessments and could expedite the integration of effective AI technologies into healthcare settings. This initiative also ensures that AI innovations meet rigorous health economic standards, which could build trust among stakeholders and speed up adoption.
2. Removing Trade Barriers for Pharmaceutical Exports
• What’s Changing: The UK Government’s plan to eliminate certain trade barriers is expected to enhance export opportunities across several industries, with a focus on easing access to Brazil’s pharmaceutical market. This initiative includes a £2.3 million fund to support trade growth, with an anticipated boost of £5 billion over the next five years. For the pharmaceutical industry, this includes efforts to improve Brazil’s drug evaluation processes, particularly for cancer treatments.
• Impact: For UK pharmaceutical companies, the removal of trade barriers presents an opportunity to expand into Brazil—a significant and emerging market. Streamlined access to Brazil could lead to increased revenue and greater market diversity. Moreover, improving Brazil’s evaluation standards for cancer drugs aligns with the global shift toward ensuring drugs meet consistent, evidence-based criteria, promoting patient access to high-quality therapies.
Conclusion
The UK’s efforts to standardize the economic evaluation of AI technologies in healthcare and remove international trade barriers represent a proactive approach to fostering innovation and expanding market access. NICE’s CHEERS-AI standards provide the healthcare industry with a reliable framework for assessing AI interventions, setting a high standard for future health economic evaluations. Additionally, the government’s trade initiatives offer UK pharmaceutical companies promising avenues for growth in markets like Brazil. Together, these measures underscore the UK’s commitment to advancing healthcare technologies and supporting the global reach of its pharmaceutical industry.
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Introduction
Spain is making strides in healthcare by prioritizing education, innovation, and cost-effective care. Recently, the Spanish Council of Ministers allocated over 44 million euros from pharmaceutical sales to support various public health initiatives, focusing on two critical areas: reducing unnecessary care and enhancing Health Technology Assessment (HTA) education for healthcare professionals. These investments are aimed at improving the efficiency of healthcare delivery, reducing costs, and supporting more informed decision-making around drug use and preventive care.
Key Takeaways for Pharma and Payers
1. Funding for HTA Education and Training
• What’s Changing: Part of the allocated funds will go toward continuing education programs for healthcare professionals, specifically to improve their understanding of Health Technology Assessment (HTA). By deepening professionals’ knowledge of HTA, Spain aims to ensure that drug evaluation and therapeutic positioning are guided by evidence-based practices.
• Impact: For pharmaceutical companies, this initiative means greater scrutiny of drug effectiveness and cost-effectiveness, especially as healthcare providers become more proficient in HTA principles. Payers may also benefit, as a well-informed healthcare workforce can make better use of resources, potentially lowering overall costs.
2. De-prescription of Unnecessary Drugs and Promotion of Preventive Care
• What’s Changing: The initiative will also fund programs aimed at de-prescribing unnecessary medications to reduce healthcare costs. Alongside this, Spain is placing a stronger emphasis on preventive care, which not only improves patient outcomes but also curtails spending on unnecessary treatments.
• Impact: For pharma, this push towards de-prescription may affect demand for certain drugs, particularly those deemed low-value or non-essential. However, it also presents an opportunity to align with Spain’s focus on value-based care, potentially promoting medications that are supported by strong evidence of efficacy. For payers, preventive care investments mean a healthier population with fewer costs linked to chronic diseases, reducing the financial burden on the healthcare system.
3. Supporting Innovation Through Therapeutic Positioning Reports
• What’s Changing: Another portion of the funding will support the consolidation of therapeutic positioning reports. These reports will help evaluate and position drugs more effectively within the healthcare system, ensuring that innovative treatments are assessed rigorously before they reach patients.
• Impact: Pharmaceutical companies may see a more streamlined and transparent pathway for introducing new drugs to the Spanish market. This approach promotes fair competition and emphasizes innovation, aligning with Spain’s broader goals of delivering cost-effective, impactful healthcare solutions.
How Lyfegen’s Solutions Can Support Your Strategy
1. Agreements Library: Lyfegen’s Agreements Library provides access to an extensive collection of value-based agreements that can help pharma companies align with Spain’s focus on cost-effective treatments. This resource allows pharma to explore agreements and pricing models suited to Spain’s HTA-driven environment, improving the chances of successful market access.
2. Drug Contracting Simulator: With the Drug Contracting Simulator, stakeholders can simulate pricing models that reflect Spain’s emphasis on evidence-based evaluation. By assessing various pricing scenarios and outcomes, pharma companies can design agreements that align with Spain’s value-based healthcare priorities, supporting successful negotiations and reimbursement strategies.
Conclusion
Spain’s recent investments in HTA education, de-prescription, and preventive care reflect the country’s commitment to a sustainable, efficient healthcare system. For pharmaceutical companies and payers, these changes highlight the need to align market access strategies with Spain’s goals of evidence-based care and cost containment. Lyfegen’s Agreements Library and Drug Contracting Simulator offer essential tools to navigate these shifts, enabling stakeholders to create outcome-driven agreements that support Spain’s healthcare objectives.
Book a personalized demo today to see how Lyfegen can empower your market access strategy in Spain’s evolving healthcare landscape: https://www.lyfegen.com/demo
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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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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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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, 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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Lyfegen is proud to announce that former New York State Medicaid Director, Jason Helgerson, has joined the Lyfegen Advisory Board.
Lyfegen, the provider of the leading value-based agreements platform for pharmacy, is proud to announce that Jason Helgerson has joined its advisory board. He brings his rich experience in value-based healthcare and more than 20 years of public service to this role. Jason’s forte is in creating effective value-based payment systems, facilitating successful cross-sector collaboration, and delivering transformative stakeholder engagement - all elements that underpin a successful value-based health and social care strategy.
“Seeing how Lyfegen uses advanced technology to solve the immense problem of drug pricing & affordability by enabling value-based agreements made my decision to join Lyfegen’s advisory board an easy one. I am excited about the value Lyfegen can deliver to healthcare payers, providers, and patients in the US and across the world,” says Jason.
In addition to serving as Lyfegen advisor, Jason is the managing director of Helgerson Solutions. He is a nationally recognized leader in value-based healthcare, healthcare & delivery system reform.
Most recently, he was New York State’s Medicaid Director, a role he held for over seven years, managing an annual budget in excess of $68 billion. During his time leading the Medicaid program in New York, Jason drove New York State’s Delivery System Reform Incentive Payment program (DSRIP). Over five years, the DSRIP program in New York created local, multi-sectoral partnerships with the aim of fundamentally restructuring the delivery of healthcare in New York & transitioning 80% of Medicaid payments into value-based arrangements. Jason became an internationally-recognized leader in public sector health care as part of his leadership of New York’s Medicaid Redesign Team, which helped reshape the program to lower costs – tackling a budget deficit – and improve health care quality.
Jason Helgerson earned a BA from American University in 1993, and his Master’s in Public Policy from University of Chicago in 1995. He also attended the London School of Economics’ Summer Graduate School Program in International Economics in 1994. He has worked in a variety of local and state governments, including the City of Milwakee, City of San Jose, CA, State of Wisconsin, and New York. He has served as the Medicaid Director for both the State of Wisconsin and the State of New York.
With vast experience in value-based healthcare, Jason will advance Lyfegen’s mission of accelerating value-based healthcare to improve patients’ lives in the USA.
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.
More about Lyfegen: https://www.lyfegen.com
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Linkedin: https://www.linkedin.com/company/lyfegenhealth
Contact Press: press@lyfegen.com
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Lyfegen is proud to announce that João Marques-Gomes has joined the company’s Advisory Board. João is a university professor, a scientific researcher, and a management consultant in health management.
He is the Chair of Nova University Lisbon’s institute for Value-Based Health Care (VBHC), and the professor of the semester course “VBHC” at the Nova School of Business & Economics and at the Nova Medical School.
His research has been repeatedly funded by FCT – Foundation for Science and Technology, the Portuguese public agency for scientific research. As a management consultant, João Marques-Gomes has worked for public and private hospitals in Europe and Latin America, the European Commission, the Portuguese Ministry of Health, the Portuguese Pharmaceutical Society, and for pharmaceutical companies that are among the world’s top 10 pharmaceutical companies in sales.
In the past, João worked with ICHOM – International Consortium for Health Outcomes Measurement, as part of the implementation team. He is currently the Vice-President of IBRAVS – Brazilian Institute for Value in Health. João’s actions have had an important impact on the Portuguese society.
João has co-led the Cascais Agreement movement, which gathers the 80+ major stakeholders that have publicly signed the agreement that establishes that by 2021 1/3+ of the Portuguese health care providers must have had an experience with VBHC.
Lyfegen makes it possible for innovation to always have an open door in any market in the world. Thanks to Lyfegen, millions of people will have access to innovative treatments and will enjoy much healthier lives because of this.
João Marques-Gomes
João Marques-Gomes has a PhD in economics from the University of Evora (Portugal), and an MBA from the FIA Business School (Brazil). Part of his PhD studies was done at the University College London (UK), and at the Toulouse School of Economics (France). João did his training in VBHC at ICHOM (UK), at the Harvard Business School, and at the Dell Medical School, UT Austin (USA).
With his vast experience in health economics and value-based healthcare, João will support Lyfegen to achieve its mission of accelerating value-based healthcare to improve the life of patients.
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Join in from anywhere in the world for three days of incredibly interesting presentations and round-tables by industry experts all around the topic of pricing and market access in healthcare.
Only a week left to go! The incredibly exciting annual World Pricing, Evidence & Market Access Congress is taking place from the 23rd to the 25th of September virtually... giving attendees the opportunity to join from anywhere in the world! This is set to be the largest and most comprehensive yet, with over 1000 attendees and more than 230 speakers!
Lyfegen's Girisha Fernando and Nico Mros will be moderating a round-table “How do you include the patient perspective in an outcomes-based contract?” on the 23rd of September at 15:05 CET. Join us! Lyfegen has a digital booth so feel free to get in touch via the swapcard app, if you are already signed up.
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What is ISO 27001?
ISO 27001 is one of the most widely recognized and internationally accepted information security standards. ISO 27001 defines how an organization should manage and treat information more securely, including applicable security controls.
It requires a company to have an information security management system, which means having a documented process for managing sensitive company information, processes, and IT systems.
What this mean for Lyfegen?
To achieve the certification, security compliance was validated by an independent audit firm after a rigorous process of demonstrating an ongoing and systematic approach to managing and protecting company and customer data.
Being a company that manages sensitive health-data points, it is of utmost importance to us to ensure the best tech processes and security mechanisms are in place.
At Lyfegen, we are committed to complying to the highest tech security standard, continuously improving our solutions & processes, as we move forward with the operationalisation of value-& data driven contracts for a fast & sustainable access to innovative therapies. In turn, this will benefit patients worldwide!
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Lyfegen is building the leading contracting software solution to support value-based drug pricing arrangements. This mission requires a hands-on team to optimize all our processes. With Anca Marin joining our team as the new business analyst, we are set up for success.
We sat down with Anca to learn about her experience, her goals, and her aspirations.
Hello Anca, and welcome to Lyfegen! Please tell us a little about yourself: Where are you from, and what’s your educational and professional background?
Hello, my name is Anca. I am based in Bucharest, Romania. I graduated with a bachelor’s degree in accounting and later earned a master’s degree in business management. Before joining Lyfegen, I worked in finance for three and a half years in various industries, such banking, insurance, and ICT.
What excites you about being a business analyst?
The novelty – I believe it is a role where you never get bored as there is always a new situation, idea, or feature to build up, and it is exactly the challenge I want.
Why did you decide to join Lyfegen?
I find meaning and desire in making a change for the better. I also enjoy the work culture and the idea of being part of an innovative company while making a real impact.
What is something you want to learn or improve this year?
This is my first role as a business analyst. Therefore, this year, I want to focus on growing my knowledge and skills as a business analyst, as well as in software development and the healthcare industry.
How will your know-how help to improve our customers’ experience of the Lyfegen platform?
Given my previous roles, I would say that I was usually the one handling challenging and complex situations when dealing with customers. Through these experiences, I learned to find ways to deliver the best results for customers, and I will continue to do so. I also describe myself as being super detail-oriented – and details always make the difference.
Let’s get personal: What are your favorite things to do in your free time?
Besides my full-time job at Lyfegen, I am also a handball goalkeeper. I have been playing since I was 11 years old, and I usually go to two to three training sessions a week. However, I like sports in general, so if I am not on the handball court, I am probably playing other sports, like basketball or tennis.
I also like traveling and nature and activities away from the big cities, such as hiking, backpacking, and camping.
Is there anything else you are looking forward to outside of work this year?
Outside of work, my plans for this year are to get a motorcycle, take trips to the mountains, and make great memories!
We are proud to have you with us, Anca!
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In June, the U.S. Federal Trade Commission (FTC) voted unanimously (5-0) to examine rising list prices of insulin, but also to probe possible anti-competitive practices by pharmacy benefit managers (PBMs) with respect to the use of rebate arrangements. Rebates are payments from drug manufacturers to PBMs in exchange for moving market share towards so-called preferred products on the formulary.
The FTC has specifically cited instances in which cheaper generics and biosimilars are excluded from PBM formularies, as this may violate competition and consumer protection laws.
The FTC inquiry into pharmacy benefit manager (PBM) practices could lead to legal action prohibiting certain rebate practices. In turn, this could induce major changes in the U.S. rebate system. Formulary management could become increasingly value- or outcomes-based, rather than simply a function of a financial power play between drug makers and PBMs. Or, rebates could fall by the wayside altogether, to be replaced by a combination of upfront discounts in lieu of rebates and value-based pricing arrangements. 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 value-based pricing arrangements.
The FTC has warned of legal action against PBMs if its inquiries find proof of anti-competitive practices. Here, the agency raised the stakes when it included terms like “commercial bribery” in its statements to describe what it perceives as anti-competitive rebates in the insulin market.
The latest FTC inquiries follow a recent investigation by Senators Grassley (R-Iowa) and Wyden (D-Oregon), which blamed rebate schemes for much of what ails the prescription drug market. Furthermore, nearly two years ago, Senator Klobuchar (D-Minnesota) and colleagues commissioned the General Accounting Office (GAO) to examine rebates. The GAO report is due out this fall.
PBMs receive rebates from drug manufacturers in exchange for preferred positioning on the formulary, which in turn drives market share. Experts have criticized rebates for the fact that payers often don’t base their decisions to include a drug on comparative clinical- and cost-effectiveness. Rather, decisions are strictly based on financial terms, namely which manufacturer offers a higher rebate payment to the PBM; a financial power play in which PBMs may threaten not to cover certain drugs if they don’t get the rebate they want. This applies to insulin as well as numerous other therapeutic categories.
What’s worse is when rebate traps or walls are involved. Branded manufacturers leverage their position as market leaders by offering financial incentives to PBMs and health insurers in the form of “all or nothing” conditional volume-based rebates, in exchange for (virtually) exclusive positioning on the formulary. This can mean keeping competitors off the formulary entirely, or severely limiting formulary access to a competing drug with drug utilization management tools like step edits. Here, a patient must use a preferred drug and fail on it (a so-called “fail-first” policy) before “stepping up” to a non-preferred drug.
Because the portion of the rebate retained by PBMs is often calculated as a percentage of a drug’s list price, PBMs can have incentives to establish formularies that favor branded drugs with higher list prices and larger rebates over lower priced biosimilars, specialty generics, or even branded competitors. Rival drugs entering the market lack sufficient sales volume to be able to offer the same level of rebates to PBMs that originator firms can provide.
Proof of the establishment of anti-competitive practices could lead to legal action being taken against PBMs. The question then becomes what would replace rebates? Payers may establish an entirely different formulary management system that is more value-based. Surely, it would be a system that’s less contingent on the role of the financial power play between drug makers and PBMs.
In areas such as immunotherapy targeting certain cancers, cell and gene therapy, and rheumatology, there are already a growing number of value-based agreements.
Girisha Fernando, CEO and Founder of Lyfegen, which offers a platform to track value-based agreements with real-world data, said that many outcomes-based deals are kept secret and therefore under the radar, so to speak. Commercial payers generally don’t share publicly what types of value-based deals they have with drug companies to maintain their competitive advantage. Yet, in an interview with Endpoints News Fernando stated that he’s observed at least a 300% increase in value-based agreements over the last five years. The Lyfegen Platform enables more efficient and transparent management of value-based drug pricing contracts by using intelligent algorithms to capture and analyze patient-level drug cost data.
Fallout from the FTC inquiry – should rebates be identified as anti-competitive - may entail further increases in value-based dealmaking.
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 n a variety of research, teaching, speaking, editing, and writing projects.
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Pharmaceutical regulating authorities in the U.S. and Europe are under increasing pressure to approve new treatments as quickly as possible. Expedited approval programs were created to speed up patients’ access to innovative treatments that meet unmet health needs or treat life-threatening diseases. But concerns about post-approval follow-up persist. Value-based drug pricing arrangements are a solution that generates real-world data and evidence of a drug’s safety and benefit to health outcomes.
Global health authorities must consider the risks of bringing a new drug to market quickly with limited data about a product’s safety and effectiveness–these risks versus the potential benefits of a new drug that addresses an unmet medical need, alleviates a public health emergency, or saves a patient’s life. The U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMA) are the ones weighing those risks and benefits and guarding the safety of pharmaceutical products and medical devices.
The usual approval process for pharmaceutical products is similar for both agencies. It includes pre-clinical testing, three clinical trials, and a final approval before manufacturers can sell their drugs to patients. Drugs that show potential and meet certain criteria may qualify for an expedited approval process.
Expedited drug approval programs
Both the European and U.S. agencies have developed expedited approval programs to speed up the process of drug development and approval when a treatment shows the potential to meet an unmet medical need or treat a life-threatening condition. A new drug may qualify for consideration under more than one expedited approval program.
· Priority-review designation (PR) – started in 1992, ensures the submission application will be reviewed within 6 months instead of the usual 12 months
· Accelerated approval (AA) – started in 1992, allows drugs to be approved using a surrogate endpoint instead of the outcomes of a clinical trial
· Fast-track designation (FTD) – started in 1997, a process to expedite the development and review of drugs designed to treat unmet medical needs and serious, life-threatening conditions
· Breakthrough-therapy designation (BTD) – started in 2012, speeds the development and review of drugs with the potential for better health outcomes compared to the results of current treatments on the market
Related Post: Value-based pricing vs best price? Medicaid's best price problem
· Accelerated assessment – started in 2004, a review of the application to be completed in 150 days instead of 210 days if there are no major objections from the authorizing agency
· Exceptional circumstances authorization – started in 2005, eligible for drugs that treat extremely rare diseases and where it is not possible to conduct large clinical trials
· Conditional marketing authorization (CMA) – started in 2006, accelerates approval of drugs designed to meet an unmet medical need or serious, life-threatening disease
· Priority medicines scheme (PRIME) – started in 2016, reviewers are appointed earlier than usual in the development process, mostly used for orphan medicines
Comparing FDA and EMA use of expedited approvals
A study published in 2020 in The BMJ (British Medical Journal) compares the use of expedited approval programs by the FDA and the EMA. The focus of the study included approvals of new medicines from 2007 to 2017. During that time, the FDA approved 320 new drugs, and the EMA approved 268.
The study shows that, as of April 2020, there was an overlap of 75% (239) of new drugs which were approved by both the FDA and the EMA. Most of the drugs approved by both agencies were developed to treat cancer, digestive and metabolic disorders, or blood and cardiovascular disorders.
Out of the 320 drugs the FDA approved, 57% (181) of the new drugs qualified for at least one of the FDA’s accelerated approval programs. Out of the 268 drugs approved by the EMA, only 15% (39) qualified for one of the EMA’s expedited approvals.
A different study of global drug approval programs, covering January 2007 to May 2020, focused on expedited approvals for 128 new cancer drugs. The EMA approved 73% (94) out of the 128 new drugs and qualified 46% of them through expedited approval. The FDA expedited 91% (117) of the new cancer drugs through at least one accelerated approval program. (In 2019, all the cancer drugs the FDA approved during the year qualified for expedited approval.)
Of the six jurisdictions in the study, the FDA was the first to approve 80% (102) of the new cancer drugs. In Europe, delays in submissions of regulatory applications slowed many of the approvals. The EMA’s approvals of the same 102 drugs took an additional median time of 9.7 months.
Related Post: Indication-specific pricing to make inroads in the U.S.
Post-approval confirmatory trials
The expedited approval process in both Europe and the U.S. relies on post-market, real-world clinical data to confirm the safety and effectiveness of a drug. After the FDA or EMA grants expedited approval and the drug is on the market, the manufacturer is required to conduct confirmatory trials to gather enough real-world evidence to transition the drug from an expedited approval to a regular approval. Both the FDA and the EMA carry a backlog of confirmatory trials that were not completed on time.
An NPR (National Public Radio) analysis of FDA and National Institutes of Health data showed there are around 200 drugs with expedited approvals currently on the U.S. market. Many drugs, especially cancer treatments, have more than one accelerated approval to cover expanded uses. Close to half of these drugs transitioned to standard approvals after confirmatory trials, and another 9% were withdrawn.
The 30 years of data NPR reviewed also revealed that 42% of confirmatory trials didn’t start within the first year after the drug was made available to patients. Some confirmatory trials were delayed by three or more years, and even up to ten years.
The EMA also appears to have a substantial percentage of manufacturers who are slow to transition expedited approvals to standard approvals. In 2016, only about half of the drugs that received expedited approvals from the EMA had converted to standard approvals. Manufacturers who switched to standard approvals took an average of 4 years to complete the conversion process.
Gathering real-world evidence through value-based drug pricing arrangements
Both healthcare payers and drug manufacturers benefit from value-based drug purchasing arrangements for drug treatments that come to market under expedited approval programs.
For manufacturers, the real-world evidence generated by a value-based agreement may be quite helpful for a few reasons. First, the data could satisfy the requirements for post-approval confirmatory trials. Second, manufacturers can show with real-world evidence that their treatment offers better benefits to patient outcomes as compared to competitors’ products. Third, manufacturers can use the data supporting the real-world effectiveness of their product to negotiate and justify their drug’s list price and preferential position on a payer’s formulary.
While payers want the expedited approval process to bring treatments for unmet needs to patients as quickly as possible, they may still have unanswered questions post-approval about a new drug’s benefits. Under a value-based arrangement, payers can collect and analyze real-world evidence to address their uncertainty and concerns about a drug’s safety, benefit to patient health outcomes, and cost-effectiveness.
Value-based pricing agreements between payers and manufacturers allow both parties to share the financial risk of a drug not performing as expected. And if a drug underperforms, real-world data from the value-based agreement can reinforce the terms of a manufacturer’s rebate. Therefore, manufacturers willing to share risk and enter value-based drug purchasing arrangements with payers have a competitive advantage.
The Lyfegen Solution
Lyfegen is an independent, global analytics company that offers a value-based contracting platform for healthcare insurances, pharma, and medtech companies wanting to participate in value-based drug pricing agreements. Lyfegen’s software platform includes three-fold functionality to implement value-based, data-driven agreements with greater efficiency and transparency: data ingestion, agreement execution, and insights generation. The Lyfegen Platform collects real-world data and uses intelligent algorithms to provide valuable information about drug performance and cost.
By enabling the shift away from volume-based and fee-for-service healthcare to value-based healthcare, Lyfegen increases access to healthcare treatments and their affordability.
To learn more about our services and the Lyfegen Platform, book a demo.
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The high-costs of newer drug treatments make the adoption of non-traditional, value-based drug purchasing arrangements a necessity for healthcare payers and administrators trying to manage their budgets, provide patients with quicker access to the most effective treatments, and reduce wasteful spending on treatments that don’t work. Recent regulatory changes and advanced AI contracting software options are making value-based drug pricing arrangements easier.
Even before the onset of the pandemic, annual budgets for public and private healthcare insurers were strained by the high and increasing costs of prescription drugs. Meanwhile, pharmaceutical manufacturers are bringing new and even more expensive drug treatments to market each year. According to Bloomberg, the median list price for a year’s supply of a new drug introduced to the U.S. market in 2021 was $180,007.
Thanks to COVID-19 vaccines and COVID-related treatments, pharmaceutical sales reached record levels in 2021. Sales in North America account for close to half of the total $7.3 billion global market revenue for that year. And since prescription drug prices are higher in the U.S. than anywhere else in the world, the increasing costs of drugs are a top concern for policy makers, healthcare payers, and consumers.
New, more expensive drug therapies are in development
A growing niche and focus for pharmaceutical companies is high-cost cell and gene therapy products. Market analysis by Grand View Research forecasts the global cell and gene therapy clinical trials market to reach a compound annual growth rate of close to 15% and an estimated market revenue of USD 24.5 billion by 2030.
While the U.S. Food and Drug Administration (FDA) has approved only a limited number of cell and gene therapies so far, expedited approvals of new drugs and favorable designations of new therapies as orphan drug or breakthrough therapies support increasing consumption of these new drug therapies in the U.S. market. The FDA predicts that by 2025, it will approve up to 20 cell and gene therapy products a year.
Healthcare payers and consumers feel the pain of higher drug prices
Even though payers are getting rebates and not paying drug manufacturers’ full list prices, they still have cause for concern as drug prices increase annually. Payers need to protect their annual budgets from outsized expenditures, especially for specialty drugs.
Both payers and patients suffer the effects of high and increasing drug prices. A study of 14.4 million pharmacy claims made from 2010 to 2016 revealed the median healthcare insurer payments for specialty medications rose by 116%; the median patient out-of-pocket costs increased by 85%. Drug list prices during the same 7-year period more than doubled, rising faster than inflation.
Drug manufacturers recognize the need for non-traditional, value-based payment arrangements
A new cell or gene therapy’s price tag may generate as much attention as the drug’s ability to treat disease. For example, one of the most expensive drug therapies in the world is Zolgensma, approved by the FDA in 2019. Novartis Gene Therapies (formerly AveXis) developed the drug to be a cure for around 500 infants born each year in the U.S. with spinal muscular atrophy (SMA). A full course of treatment is priced at $2.125 million.
Soon after Zolgensma received FDA approval, some of the top U.S. insurers quickly set up tight restrictions limiting coverage of the treatment. To help payers manage the impact of the cost and ensure patient access to Zolgensma, Novartis offers insurers the option of either a 5-year, pay-over-time contract or an outcome-based agreement.
The list price of Zyntelgo, the latest gene therapy to be approved by the FDA, surpassed Zolgensma as the world’s most expensive one-time drug therapy. Zyntelgo was developed by bluebird bio as a single-use treatment for an inherited blood disorder, beta thalassemia. According to bluebird, Zyntelgo’s price of $2.8 million is a good value when compared to the estimated $6.4 million worth of lifetime care costs for a patient living with beta thalassemia.
Estimates suggest that only around 850 patients in the U.S. will meet the criteria for treatment with Zyntelgo, and not all of those who are eligible will want the drug. Predictions of Zyntelgo’s annual sales revenue range from $64 million to $200 million.
The majority of patients eligible for Zyntelgo are covered by commercial health insurance, with most of the rest using Medicaid. Bluebird is offering payers a sizeable refund if the treatment underperforms or fails. If patients still need blood transfusions within two years after receiving Zyntelgo, bluebird will refund the payer up to 80% of the treatment’s costs.
Payers recognize the benefits of using value-based drug pricing agreements
Outcome-based agreements help payers address any uncertainty about the effectiveness of a new treatment, gain insight into a drug’s value to patient health outcomes, and reduce the risk of overpaying for a low-value treatment. The real-world evidence collected while managing value-based drug arrangements helps manufacturers justify their list price and reinforces refunds and rebates to the payer if the treatment doesn’t deliver results as expected. So why has there not been greater use of value-based drug agreements?
Regulatory barriers to value-based drug purchasing arrangements eliminated
This year, U.S. legislators have addressed most of the legislative hurdles that, in the past, hindered value-based drug purchasing arrangements. Policymakers updated two pieces of legislation to support increased adoption of value-based drug pricing agreements.
The Medicaid Best Price rule was changed in July, allowing pharmaceutical manufacturers taking part in Medicaid to report multiple best prices. This was followed by the passage of the Inflation Reduction Act in August, which allows Medicare to negotiate directly with drug manufacturers over the prices of some of the most expensive drugs covered by the Medicare program.
Overcoming technological challenges to implementing value-based drug agreements
Another significant obstacle to increased adoption of value-based drug pricing arrangements has been the difficulty in operationalizing complex, data-driven, outcome-based contracts. These non-traditional agreements require a powerful, interoperable contracting software platform with extensive data collection and analysis capabilities to make real-world evidence both accessible and insightful.
To take on an outcome-based contract, an organization has two options. The first is to develop the IT framework in-house and devote management resources to monitor compliance and data security. This option is expensive, time-consuming, and beyond the current capabilities of many organizations.
The second option is to outsource the administrative burden of an outcome-based contract. In recent years, third-party vendors have developed comprehensive contracting software to bridge the gap and help manufacturers, payers, and providers transition from fee-for-service into value-based agreements.
The Lyfegen Solution
Lyfegen is an independent, global analytics company that offers a software-as-a-service platform for healthcare insurances, pharma, and medtech companies wanting to participate in value-based drug pricing agreements without making large investments in software upgrades. With extensive industry expertise and a vast library of resources, we can assess your current capabilities and advise and guide you through pre-implementation. Deployment of our customizable and scalable contracting platform is quick and integrates seamlessly into your existing workflow without compromising data security or compliance.
Lyfegen’s software platform includes three-fold functionality to implement value-based, data-driven agreements with greater efficiency and transparency: data ingestion, agreement execution, and insights generation. The Lyfegen Platform collects real-world data and uses intelligent algorithms to provide valuable information about drug performance and cost.
By enabling the shift away from volume-based and fee-for-service healthcare to value-based healthcare, Lyfegen increases access to healthcare treatments and their affordability.
To learn more about our services and the Lyfegen Platform, book a demo.
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How the U.S. Institute for Clinical and Economic Review is reshaping market access
In the U.S., comparative clinical effectiveness analyses are gaining traction as ways to inform coverage, pricing, and reimbursement of pharmaceuticals by both public and commercial payers. And, while use of cost-effectiveness data to inform coverage decisions is prohibited in the public sector (Medicare and Medicaid) it can be used in the commercial sector.
A recently released Xcenda analysis shows that 70% of U.S. commercial payers identified comparative clinical- and cost-effectiveness evidence in the Institute for Clinical and Economic Review’s (ICER) published reviews as the most important items in the reports with respect to informing coverage and reimbursement decisions.
Additionally, 50% of payers said that long-term cost-effectiveness – for example, cost-per-Quality-Adjusted-Life-Year – is “very impactful” in informing the decision-making process. And, as the figure below shows, 52% used results from an ICER assessment in pricing negotiations while 38% implemented a prior authorization protocol based on an ICER evaluation.
Source: Xcenda, International Society for Health Economics and Outcomes Research (ISPOR) annual meeting presentation, May 2022
Further bolstering the Xcenda analysis, an Evidera study from late 2019 suggested that ICER can influence value-based benchmark prices. The use of value-based pricing is increasing in the U.S. And, where appropriate, ICER favors the use of value-based contracting to align price and value. In fact, in certain instances such as gene therapies, ICER believes that such treatments can only be viewed as being cost-effective if value-based contracting is applied. 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 value-based pricing arrangements.
To illustrate the impact ICER assessments can have with respect to pricing and reimbursement decisions, let’s consider ICER’s evaluation of PCSK9 inhibitors – indicated for individuals with inadequately treated levels of LDL-cholesterol. In 2016, two PCSK9 inhibitors were approved by the Food and Drug Administration: Alirocumab (Praluent) and evolocumab (Repatha). ICER reviewed the drugs’ clinical- and cost-effectiveness and suggested the list prices needed to be substantially reduced to make the treatments cost-effective.
What ensued was the establishment of several ICER-payer partnerships that led to formulary exclusions of these therapies and subsequent “price wars” as manufacturers of Praluent and Repatha drastically lowered their list prices to remain competitive.
Broadly, cardiovascular disease represents a competitive market with an established standard of care that includes numerous therapeutic options for most patients. Here, payers were able to leverage ICER’s assessment of the PCSK9 inhibitors in negotiations with drug manufacturers. In turn, this led, for example, to one manufacturer lowering the wholesale acquisition cost of Praluent to $5,850, down from $14,600.
In other therapeutic categories with much less competition, ICER’s impact is less clear-cut. For example, in a therapeutic area such as spinal muscular atrophy, characterized by low prevalence, high mortality rates, and lack of effective treatments, ICER’s cost-effectiveness analysis either did not influence payer coverage - as with the drug Spinraza (nusinersen) - or may have been leveraged by the manufacturer to push for wider acceptance among payers -as with Zolgensma (onasemnogene abeparvovec).
In 2019, ICER published its final recommendations on spinal muscular atrophy therapies. To meet an ICER-imposed cost-effectiveness threshold of up to $150,000 per life year gained, Spinraza would need to be priced at a maximum of $145,000 for the first year of treatment and $72,000 annually for subsequent years. This was considerably lower than Spinraza’s list price of $750,000 for the first year and $375,000 annually for subsequent years. ICER also recommended that Zolgensma could be priced at up to $2.1 million per treatment to be considered cost-effective, which turned out to be in line with its list price of $2.125 million at launch.
Interestingly, although ICER’s analysis found that Zolgensma was cost-effective while Spinraza was not, payer coverage for both drugs followed a similar trend over time, with payers restricting access in the initial periods immediately after launch and later relaxing these criteria.
The shift in coverage criteria could be due to an initial reflex response that payers have to restrict access to extremely expensive medications, followed by a loosening of criteria. Historically, this has been the case. Subsequently, after acknowledging the dramatic clinical benefits that Spinraza and Zolgensma have demonstrated in clinical trials for treating a disease with no other therapeutic options, payers relent, if you will. Also, in the case of Zolgensma, ICER’s evaluation may have led to a further easing of payer restrictions.
Of course, cost-effectiveness analyses, such as the ones published by ICER, must invariably be adapted for local use. Context matters, nationally, but also intra-nationally, in different jurisdictions and sub-markets. Further challenges include local or federal (national) regulations which may prevent the use of cost-effectiveness analyses under certain circumstances; stakeholders’ resistance to adopting such analyses or be bound by their findings; and the general lack of available (and appropriate) cost-effectiveness data.
Nevertheless, there is a consistent trend which points to the growing influence of ICER evaluations on payer decision making, specifically with respect to drug pricing and reimbursement. Clinical- and cost-effectiveness data can be used to determine whether to cover a technology, inform the use of prior authorization or other conditions of reimbursement, and serve as a benchmark for price negotiations with manufacturers.
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 n a variety of research, teaching, speaking, editing, and writing projects.
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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
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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