How Technology is Transforming Drug Rebate Management
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The complexity of drug rebate management has grown significantly in recent years. With multiple rebate structures, evolving regulations, and limited visibility across the process, pharmaceutical companies and payers face increasing challenges in tracking, optimizing, and ensuring compliance in rebate agreements.
Traditional rebate management often relies on manual processes, spreadsheets, and siloed data sources—leading to inefficiencies, errors, and revenue leakage. But technology is changing that. Automation, real-time analytics, and centralized platforms are transforming how pharma and payers approach rebate strategies.
Automation and AI
Advanced Analytics and Predictive Modeling
Improved Compliance & Transparency
The future of rebate management isn’t manual—it’s intelligent, automated, and built for scale. That’s exactly where Lyfegen comes in.
Our Rebate Analytics Platform is designed to help both payers and pharmaceutical companies take control of growing complexity. With automation, analytics, and real-time insights at its core, Lyfegen enables your team to:
Payers and pharma leaders around the world are already using Lyfegen to recover lost revenue and gain full visibility into their rebate performance.
Now it’s your turn. 👉 Book a demo and see how Lyfegen transforms rebate management—starting today.
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With price tags in the millions, gene therapies are redefining medicine—and reshaping how we negotiate access to it. For both payers and pharmaceutical companies, these breakthrough treatments present a shared challenge: how do you fund what feels priceless?
From Zolgensma to Hemgenix, gene therapies promise one-time cures for rare and life-threatening diseases. But the financial model behind them can’t follow the traditional playbook. These treatments call for a smarter, more collaborative approach to pricing—and that’s exactly what’s taking root.
Why Payers and Pharma Need a New Playbook
Unlike conventional drugs, gene therapies frontload their cost while delivering benefits over time. That disconnect forces a fundamental rethink of how pricing, reimbursement, and risk-sharing are handled.
According to the Lyfegen 2024 Drug Contracting Trends Report, health systems worldwide are moving toward innovative agreements: outcome guarantees, installment plans, and subscription-based models. These aren’t just experiments—they’re becoming essential tools to balance patient access with financial responsibility.
For payers, it’s about managing risk while maintaining equity. For pharma, it’s about demonstrating value in a way that aligns with clinical reality. Either way, the direction is clear: shared risk, shared benefit.
Global Shifts That Are Shaping the Market
The trends are global and accelerating. In the United States, payers like Blue Cross Blue Shield and Medicaid are embracing outcome-based models for sickle cell gene therapies like Casgevy and Lyfgenia. Brazil’s Ministry of Health uses installment payments for Zolgensma, spreading risk over five years while tying reimbursement to real-world outcomes.
In Europe, countries like Spain and Italy combine restricted coverage with annual reassessments, ensuring that high-cost therapies are only reimbursed if they continue to deliver results.
The message? Pricing innovation is no longer a nice-to-have—it’s the only way forward.
How Lyfegen Bridges the Gap
At Lyfegen, we help payers and pharma move beyond the negotiation table—and into action.
• Our Agreements Library, the world’s largest digital repository of value-based contracts, helps you understand what others are doing and where the benchmarks lie.
• Our pricing simulation engine lets both sides explore scenarios before committing—making deals smarter from day one.
• And our automated platform handles everything from contract setup to rebate tracking, saving time, reducing risk, and driving transparency.
A Smarter Way to Fund the Future of Medicine
Gene therapies will continue to challenge the limits of what we think healthcare can afford. But with the right models and tools, both payers and pharma can find common ground—ensuring that innovation reaches the patients who need it most.
Curious about what’s next in drug contracting?
Download the 2024 Drug Contracting Trends Report for exclusive insights, real-world examples, and global benchmarks.
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The UK government is taking a bold step toward modernizing public services by cutting red tape, integrating AI into operations, and bringing NHS England back under direct ministerial control. This reform signals a shift toward efficiency, innovation, and better patient care—one where AI-driven solutions like Lyfegen can play a pivotal role.
NHS England was originally established in 2012 as an arm’s-length organization to insulate the health service from political interference. Over time, however, bureaucracy accumulated, slowing decision-making and increasing costs. With Starmer’s decision to fold NHS England’s functions back into the Department of Health and Social Care (DHSC), the system is poised for a fresh start. This restructuring aims to eliminate redundant roles, reduce administrative waste, and reallocate resources to frontline care—ushering in a new era of efficient and accountable healthcare management.
A key takeaway from Starmer’s announcement is his strong push for automation. The government is aiming to cut administrative costs by 25%, ensuring that resources are directed where they matter most: patient care.
Some of the expected changes include:
By integrating NHS England’s functions into the DHSC, the government is positioned to strengthen and streamline negotiations with pharmaceutical companies. This shift could lead to:
One of the most promising aspects of this reform is the government’s commitment to leveraging AI to transform operations. For an AI-powered platform like Lyfegen, this presents a significant opportunity to deliver real-world benefits in healthcare management. Here’s how Lyfegen can help:
While AI promises to revolutionize healthcare efficiency, successful implementation will require overcoming hurdles such as:
Transforming the NHS is no small task. Beyond balancing innovation and cost, the government must manage vast amounts of healthcare data and navigate the complexities of implementing change at scale. However, Starmer’s announcement represents more than just another cycle of NHS reforms—it’s a meaningful step toward a future where efficiency and technology-driven innovation deliver real, lasting benefits to patients.
At Lyfegen, we’re ready to support this transformation by delivering AI-powered solutions that drive real savings and faster patient access. Let’s build a smarter, more efficient NHS together.
Want to see how our AI-powered solutions can support smarter drug pricing and better healthcare access? Let’s schedule a demo today.
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In an era of innovative therapies and escalating healthcare costs, drug contracting has become a cornerstone of sustainable healthcare delivery. Balancing the promise of cutting-edge treatments with financial realities poses a significant challenge for payers and pharmaceutical companies alike. In this blog, we’ll delve into how drug contracting is evolving to bridge the gap between value and cost and how Lyfegen’s solutions empower stakeholders to achieve this balance efficiently.
The healthcare industry faces a dual mandate: ensure patient access to life-saving treatments and maintain financial sustainability. This balance is particularly critical in the face of rising costs for innovative therapies such as gene and cell treatments, which can range from hundreds of thousands to millions of dollars per patient. For example, the average cost of some gene therapies exceeds $1 million per treatment, creating substantial financial pressure on healthcare systems and insurers.
At the heart of this challenge is the need for value-based frameworks that link reimbursement to patient outcomes. Traditional models—which rely on fixed pricing or volume-based discounts—are no longer adequate to address the uncertainties associated with high-cost therapies. These uncertainties include the long-term effectiveness of treatments, variability in patient response, and potential complications that may arise over time.
Moreover, there is increasing pressure from governments and regulatory bodies to ensure affordability without compromising access. For instance, in Europe, innovative reimbursement models are gaining traction, with over 50% of countries exploring outcome-based agreements as a way to manage budgetary constraints. Similarly, in Asia, the growing adoption of health technology assessments (HTAs) underscores the focus on aligning drug pricing with real-world effectiveness.
For payers, these dynamics mean embracing tools that provide clarity on financial risks while ensuring that patients receive timely access to treatments. Pharmaceutical companies, on the other hand, face the challenge of justifying the high costs of their therapies through transparent data and measurable outcomes. Success in this evolving landscape requires collaboration between stakeholders, data-driven decision-making, and the adoption of technology platforms that streamline the contracting process.
Traditional pricing models often struggle to account for the long-term impacts of high-cost therapies. To address these challenges, stakeholders are increasingly adopting value-based contracting models that tie payment to outcomes. However, implementing these models requires sophisticated data analysis, scenario planning, and a commitment to shared goals.
Lyfegen’s suite of tools is designed to simplify and optimize the drug contracting process, enabling payers and pharmaceutical companies to achieve their objectives efficiently. Here’s how:
1. Lyfegen Agreements Library: This comprehensive digital repository offers access to over 6,000 public agreements and 20 unique pricing models.
2. Lyfegen Drug Contracting Simulator: This tool empowers users to simulate pricing scenarios and evaluate their financial implications in real-time.
3. Lyfegen Rebate Analytics Platform (ARA): Optimize rebate management with seamless automation and centralized processes.
Adopting innovative drug contracting strategies can make the difference between missed opportunities and successful outcomes. Lyfegen’s solutions, are here to help you design contracts that balance value and cost effectively. Book your demo today to see how these tools can support your goals.
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The first quarter of the year is a pivotal time for the pharmaceutical industry. As budgets are finalized and contracts renegotiated, Q1 sets the stage for how effectively organizations manage rebates, optimize costs, and deliver value.
For those navigating the complexities of pharma rebate management, Q1 offers unique opportunities to streamline workflows, review existing agreements, and ensure every rebate maximizes its potential. This period isn’t just about planning, it’s about implementing smarter processes to stay ahead in an increasingly dynamic healthcare landscape.
Why Rebate Management Deserves Q1 Attention
Q1 is the ideal time to evaluate rebate performance from the previous year. Were the agreements aligned with expectations? Did they deliver the promised value?
By assessing past performance, teams can identify underperforming agreements and opportunities for improvement. This ensures resources are allocated to agreements that drive measurable results.
Rebate workflows are often complex, requiring significant manual effort for tracking, reconciliation, and reporting. In Q1, organizations have the opportunity to implement systems that:
Streamlining workflows early in the year creates efficiencies that save time and resources throughout the year.
The first quarter is also critical for renegotiating rebate terms with manufacturers and payers. Updated contracts may include:
Teams equipped with data from previous agreements are better positioned to negotiate terms that align with strategic goals.
The Role of Technology in Pharma Rebate Management
Technology is transforming how organizations approach pharma rebate management. Tools like those offered by Lyfegen enable teams to:
For example, Lyfegen’s platform simplifies rebate tracking and provides actionable insights, ensuring organizations maximize their rebate potential while minimizing inefficiencies.
Start your year smarter!
Q1 is the time to rethink and refine your approach to pharma rebate management. With smarter workflows, clearer insights, and a focus on data-driven strategies, your team can unlock measurable savings and operational excellence.
Book a demo today to discover how Lyfegen’s solutions can simplify your rebate workflows and set you up for success in 2025.
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Die Vertragssoftware von Lyfegen wird von Kostenträgern im Gesundheitswesen und führenden Pharmaunternehmen eingesetzt, darunter Novartis, Roche, MSD, Bristol Myers Squibb (BMS) und Johnson & Johnson.
NEW YORK/BASEL, 20. September 2022 /PRNewswire/ – Lyfegen, ein globales Healthtech-SaaS-Unternehmen, das den Übergang von volume-zu value-based Healthcare für hochpreisige Medikamente vorantreibt, gab heute eine überzeichnete Serie-A-Finanzierungsrunde über 8 Millionen Dollar bekannt, die vom Investmentfonds aMoon mit zusätzlicher Beteiligung von APEX Ventures und weiteren Investoren angeführt wurde.
Derzeit sind weniger als 2 % der Krankenversicherten, die Spezialarzneimittel benötigen, für 51 % der Arzneimittelausgaben verantwortlich. Die Kosten für Spezialarzneimittel in den USA laufen aus dem Ruder: Sie stiegen allein von 2020 bis 2021 um 12 % – und es gibt keine Anzeichen für eine Verlangsamung, denn es kommen immer mehr Zell- und Gentherapien auf den Markt. Infolgedessen wird Value-Based Contracting, die Nutzung wertorientierter Verträge, für die Kostenträger des Gesundheitswesens zu der entscheidenden Alternative, um nur für Medikamente zu zahlen, die tatsächlich wirken.
Bis 2025 werden die Nettoausgaben für Medikamente in den USA voraussichtlich bis zu 400 Milliarden US-Dollar betragen. Darüber hinaus kommen regelmässig neue Medikamente auf den Markt. Es fällt Pharmaunternehmen immer schwerer, sich mit den Kostenträgern auf kommerzielle Bedingungen zu einigen. Damit steigt die Gefahr, dass Patienten keinen Zugang zu lebensrettenden Therapien erhalten. Lyfegen hilft Regulierungsbehörden, Pharmaunternehmen und Kostenträgern bei der Einführung wertorientierter Zahlungsmodelle, indem sie den gesamten Prozess der Datenerfassung, Anonymisierung und Vertragsverhandlungen für alle Parteien digitalisiert. So kann die Preisgestaltung und Kostenerstattung für Medikamente vereinfacht werden.
„Wir freuen uns, diese Finanzierungsrunde bekannt zu geben und dieses Vertrauensvotum von aMoon, APEX und weiteren Investoren zu haben, die den Wandel im Gesundheitswesen verstehen und unser Bestreben um den Ausbau der Lyfegen-Plattform unterstützen", sagte Girisha Fernando, CEO und Gründer von Lyfegen. „Wir arbeiten derzeit mit führenden staatlichen Kostenträgern, Krankenversicherungen in Europa, den USA und dem Nahen Osten sowie mit einigen der weltweit grössten Pharmaunternehmen zusammen. Wir beabsichtigen nun, unsere Präsenz in den USA weiter auszubauen und Partnerschaften mit privaten und öffentlichen Krankenversicherungen einzugehen. Die Abkehr von der volumenbasierten Gesundheitsversorgung war noch nie so notwendig wie heute, und wir freuen uns, dass wir eine wichtige Rolle bei der Umstellung auf Value-Based Contracting spielen können."
„Lyfegen adressiert einen bedeutenden Marktbedarf in einer Branche, die sich dramatisch und schnell verändert, und wir sind begeistert, dass wir mit unserer Investition dazu beitragen können, ihre Anstrengungen zu unterstützen", erläuterte Moshic Mor, General Partner bei aMoon und ehemaliger Partner bei Greylock and Greylock Israel. „In Zeiten von Budgetdruck und Rezession im Gesundheitswesen braucht die Welt Lösungen wie die von Lyfegen mehr denn je. Wir sind stolz mit diesem erfahrenen Führungsteam zusammenzuarbeiten, das weiterhin den Zugang zu neuen Medikamenten verbessert, während es die wertorientierte Gesundheitsversorgung immer mehr zum Mainstream macht."
Informationen zu Lyfegen
Lyfegen ist ein unabhängiges, globales Softwareanalyseunternehmen, das eine wert- und ergebnisbasierte Vertragsplattform für Krankenversicherungen, Pharma- und Medizintechnikunternehmen sowie Krankenhäuser auf der ganzen Welt bietet. Die sichere Plattform identifiziert und operationalisiert wertbasierte Zahlungsmodelle kostengünstig und macht diese mit einer Vielzahl von realen Daten und maschinellem Lernen skalierbar. Mit der zum Patent angemeldeten Plattform von Lyfegen können Krankenversicherungen und Krankenhäuser eine wertorientierte Gesundheitsversorgung einführen und skalieren und so den Zugang zu Behandlungen, die Gesundheitsergebnisse der Patienten und die Kostenersparnis verbessern.
Lyfegen hat seinen Sitz in den USA und der Schweiz und wurde von Persönlichkeiten mit jahrzehntelanger Erfahrung im Gesundheitswesen, in der Pharmaindustrie und im Technologiebereich gegründet, um den Übergang von der volumenbasierten und kostenpflichtigen Gesundheitsversorgung zur wertorientierten Gesundheitsversorgung zu ermöglichen. Weitere Informationen finden Sie auf www.lyfegen.com.
Verwandte Links:
Linkedin: https://www.linkedin.com/company/lyfegenhealth
Pressekontakt: yael@gkpr.com
Ansprechpartner für Investoren: investors@lyfegen.com
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Each year, the NAMD (National Association of Medicaid Directors) Conference in Washington D.C. brings together the nation's Medicaid directors, leaders in the industry, and key decision-makers for a one-of-a-kind conference. With the global public health emergency, the Medicaid system and the work of Medicaid directors and their staff has never been more important. While COVID-19 has disrupted health care at all levels, it has shown the importance of more innovative payment models and the need for broader access to treatments. The shift towards value-based healthcare has become one of Medicaid’s hottest topics, with CMA and Lyfegen joining forces to present the latest value-based contracting technology at this year’s NAMD Conference.
We sat down for a brief interview with CMA’s President, Ken Romanski, and Lyfegen’s CEO, Girisha Fernando, to gain more insights into the importance of this partnership:
Thanks for joining us, Ken and Girisha. Can you tell us why this partnership is an important milestone, both for CMA and Lyfegen?
Ken: Our partnership with Lyfegen is a key milestone for CMA as we expand and complement our portfolio of technology-based solutions with extremely high-value business analytics products. Our utmost priority is to support Medicaid programs by lowering costs, while at the same time improving health outcomes for vulnerable citizens.
Girisha: This partnership sets the basis to create enormous value for our state healthcare payers and pharma. By partnering together, we enable our customers to implement value-based pharmacy agreements, actively managing the budget impact of new treatments and aligning existing formulary spending with value for beneficiaries.
For Lyfegen, this is a market entry into the U.S. – why CMA?
Girisha: CMA’s experience and technical expertise are unique. CMA is a highly recognized technology partner for State Healthcare Payers across the nation, with over 20 years of experience. Lyfegen has made a conscious decision to combine its capabilities with CMA to enable our customers to leverage the potential of value-based agreements for their pharmacy programs.
What is the value of this partnership for healthcare payers?
Ken: CMA is very excited to work with Lyfegen and our clients to deliver tens of millions of dollars in savings per year by leveraging our experience in Medicaid data management to implement this robust value-based analytics platform.
Girisha: Our customers benefit from the combined years of experience and unique expertise in data and value-based healthcare solutions. We focus on providing the first proven, scalable, highly secure value-based agreement platform for State Medicaid that allows our customers on average to avoid 54 million dollars in treatment costs that do not work and gain 7 million dollars in efficiency due to the fully automated end-to-end process. We are extremely excited to present all aspects of our partnership and present the value and opportunities our platform can bring to State Medicaid programs at NAMD.
Join CMA and Lyfegen at NAMD and understand first-hand how they can support you to realize savings for your pharmacy programs, improving patient health outcomes with their unique value-based agreement platform.
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Fünf Männer aus der Region wollen die Gesundheitsbranche aufmischen. Im 2018 wurden sie von der Plattform «Innovation Basel» für ihre visionäre Idee nominiert: Eine digitale Plattform, die eine Kombination aus Blockchain und Cloud verwendet, um faire Medikamentenpreise zwischen Herstellern und Versicherungen auszuhandeln. Was heisst das aber und was ist dabei so visionär?
(Bild: zVg) Das Lyfegen Team: Diese fünf Männer haben eine Vision und eine Mission. Die Idee liess Girisha Fernando nicht mehr los: Der 29-jährige Basler wollte nach neun Jahren bei der Roche im Market Access, Pricing und IT unbedingt «etwas noch Spannenderes, Revolutionäres machen», wodurch Patienten im Dschungel des Gesundheitswesens geholfen wird. Aber es sollte dabei auch für Pharmaunternehmen und Versicherer eine Win-Win-Situation entstehen.
Zusammen mit seinen Mitstreitern Leon Rebolledo, Michel Mohler und Nico Mros gründete er 2018 «Lyfegen» und entwickelte eine bahnbrechende Idee: Eine auf Blockchain und Cloud basierte Software Lösung, die es Versicherern und Herstellern von Medikamenten erlaubt faire Preise anhand deren Wirksamkeit für den einzelnen Patienten auszuhandeln.
Faire Preise bedeuten unter anderem auch, dass die Vergütung dieser Medikamente auf der Wirkung des Medikaments basiert. Wenn ein Medikament bei einem Patienten besser wirkt, dann wird ein Preis A bezahlt. Wenn ein Medikament bei einem anderen nicht so gut anschlägt, dann wird Preis B vom Versicherer an den Hersteller fällig oder sogar nichts bezahlt. Unser Tool ermöglicht genau diese faire, wirkungsorientierte Preisgestaltung, was sich auch Value-based Healthcare nennt. So ein Tool gibt es auf der ganzen Welt bisher nicht. Name Surname
Position, Copmany
Fachleute sprechen hierbei von «Wertbasierter Gesundheitsversorgung». Dieses Thema ist aktueller denn je, auch in der Schweiz, in der steigende Behandlungs- und Medikamentenpreise zu höheren Kosten für die Bevölkerung führen. Es müssen neue, nachhaltige Modelle eingeführt werden, um die Kostenexplosion im Gesundheitswesen aufzuhalten.
Warum aber ist so ein Tool wertvoll? «Weil unser Tool Daten sicher sammelt, analysiert und dann den jeweiligen Partnern, sei es ein Versicherer oder ein Hersteller wie Pharmaunternehmen, die Daten anonym, automatisiert und gleichzeitig zuspielt.» Dies geschieht mit Hilfe der Blockchain (eine dezentralisierte Form der Datenverarbeitung und -sicherung, die beispielsweise Geldeinheiten, Wertpapiere, Besitz- oder Grundrechte verwaltet, siehe Erklärung in der Infobox), ganz ohne Kryptowährung, betonen die fünf innovativen Köpfe.
(Bilder: PEXELS) Im Gesundheitswesen explodieren die Kosten. Eine revolutionäre Idee könnte dieser Entwicklung entgegen wirken.
Die Idee hat schon für viel Wirbel in der «Szene» gesorgt. Und sie gehen mit ihrer Idee aufs Ganze: «Wir haben schon 750’000 CHF von einer Gruppe von Basler Business Angels erhalten», sagen die Lyfegen-Gründer. Diese Business Angels seien selbst erfolgreiche Unternehmer. Namen dürfe man leider keine bekannt geben. Zudem müsse man zu 100 Prozent hinter einer Innovation, einer Vision oder einer Idee stehen, die der Gesellschaft helfen könne, betonen sie. Fernando: «Ich bin fest davon überzeugt, dass nicht nur unsere Lösung, sondern auch die Denkprozesse, die wir bei unseren Kunden anregen, die Implementierung einer wertbasierten Gesundheitsversorgung vorantreibt. Konzept und Lösung sind innovativ.»
Vertrauen und Transparenz zwischen Ärzten und Patienten ist immens wichtig. Darauf basiert auch das Konzept des Value-based Healthcare.
Zwar sei man bei Lyfegen sehr technisch veranlagt, jedoch steht der Kundennutzen und der so genannten «Impact» für alle Parteien im Vordergrund. Also auch für die Versicherten und für das gesamte Gesundheitswesen. «Unsere Lösung trägt dazu bei, Patienten Zugang zu innovativen Behandlungen und der bestmöglichen Gesundheitsversorgung zu ermöglichen. Wir wollen Leben retten. Punkt», betont CTO Leon Reborello. Girisha Fernando kann aus eigener Erfahrung berichten: «Mein Grossvater hatte Prostatakrebs und die Ärzte sagten, dass es Medikamente gibt um seine Lebensdauer zu verlängern. Aber die Versicherung wollte aus Kostengründen nicht für das Medikament bezahlen. Dies muss aufhören – durch wertbasierte Vergütung würden die besten und innovativsten Medikamente für Patienten und Ärzte zugänglich. Mit unserer Lösung tragen wir dazu bei, dies zu verwirklichen.»
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In light of Swiss National Day on August 1st, Lyfegen’s CFO Michel Mohler gives his take on the recently released European Innovation Scoreboard & the role of the Swiss HealthTech industry.
A month ago, the European commission released the European Innovation Scoreboard, which provides a comparative analysis of innovation indicators between EU/European countries and regional neighbors. Based on scores for 27 separate indicators, the countries fall into four performance groups: Innovation Leaders, Strong Innovators, Moderate Innovators, and Modest Innovators.
Switzerland is the overall Innovation Leader in Europe, outperforming all EU Member States, as shown in the figure below.
Are we surprised? Since 2012, Switzerland’s performance relative to the EU countries has improved by 22.6% points. This being the second year where the Switzerland’s innovation score even surpassed the United States.
While most know Switzerland for its banks and timely precision, this little country has positioned itself globally as an innovation leader, scoring particularly high due to certain innovation dimensions. For the purpose of simplicity, we will focus on the three dimensions scoring the highest in relation to the EU.
1) “Human resources”: Switzerland scored particularly high when analyzing the quality of talent: this mainly being compromised of new doctorate graduates, population with a tertiary education and lifelong learning.
2) “Attractive research systems”: An attractive research ecosystem, leading in international scientific publications, most cited publication, and foreign doctorate students.
3) “Firm investments”: Overall company innovation and R&D expenditure.
Keeping in mind that the European Innovation Scoreboard is not specifically oriented towards indicators within the healthcare industry, it is unquestionable that the above mentioned dimensions are strongly influenced by the country’s leading position in Healthcare. Life Sciences being a pillar of the above seen growth, strongly dependent on skilled workforce and continuous innovation.
Lyfegen’s headquarters being in Basel, Switzerland, is not coincidental and allows us to be on the forefront of healthcare innovation, contributing actively.
The innovative Swiss ecosystem partnered with Lyfegen’s solutions and patent-pending technology are doubtlessly a winning combination for saving patient lives and driving Swiss innovation forward!
Sources:https://ec.europa.eu/commission/presscorner/detail/en/qanda_20_1150
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Innovation Center is Shifting Focus from Medicare to Medicaid
The U.S. Department of Health and Human Services is revamping value-based payment models, which it pursues at its so-called “Innovation Center” or Center for Medicare and Medicaid Innovation (CMMI). The CMMI implements alternative payment models in the government programs Medicare and Medicaid for the purpose of cost containment and improvement in quality of care.
Since its founding in 2010, CMMI has launched more than 50 alternative payment models. An oft-cited success story is the Medicare Part D (outpatient drugs) Senior Savings Model, which the Innovation Center set in motion to test the impact of offering Medicare beneficiaries prescription drug plan options that include comprehensive coverage of all insulin products – including medical devices - with considerably lower out-of-pocket costs. Thanks to a robust public-private partnership between the Centers for Medicare and Medicaid Services (CMS) and entities with whom it contracts - Medicare Advantage and Medicare Part D plans, as well as pharmaceutical companies - this model has achieved the goals laid out by the Innovation Center, which include cost savings, improved quality of care, and more equitable outcomes.
The CMMI payment models – sometimes called demonstration projects - are viewed as ways to bypass statutory or legislative obstacles, for the purpose of experimenting with new approaches to reimbursement. Though often piecemeal in nature, demonstration projects can be a fallback option if legislative efforts fail, as they appear to have done with the Build Back Better Act which is currently on ice.
For example, CMMI payment models are incorporating bundled payments for treatment episodes, to reduce Medicare Part B (physician-administered) drug spending through more prescribing of biosimilars and generics and a streamlining of healthcare services.
The CMMI is now shifting some of its focus of alternative payment models from Medicare to Medicaid. Continued Medicaid expansion appears to the impetus behind efforts by policymakers to prioritize equity and reduce inequality in health outcomes. Total Medicaid enrollment has grown to 86 million, an increase of 20% since February 2020.
In October of last year, the policy and programs group director at CMMI, Ellen Lukens, said that “models have been predominantly Medicare-oriented, and have disproportionately served white beneficiaries.” By contrast, relatively few models have centered around Medicaid beneficiaries, many of whom are minorities. That is about to change.
The CMS administrator, Chiquita Brooks-LaSure, has laid out a vision for the next decade, one in which CMMI will drive “meaningful change” towards an “equitable” and “value-based system of healthcare.”
To carry out the mission of improving equity, policymakers will explicitly address barriers to participation in CMMI payment models by healthcare providers that serve a high proportion of minority populations. Policymakers also want to entice more underserved patients to register to participate in pilot programs.
The CMMI has undertaken a major review of the Center’s existing payment models to determine what works and what doesn’t. The review calls on the Innovation Center to explore new forms of value-based models in Medicare and especially Medicaid. Here, payment would be tied not only to improved patient outcomes and decreased overall healthcare spending, but also reductions in health disparities and increased patient affordability (lower out-of-pocket costs). Partnering with Lyfegen may be the solution for manufacturers and payers alike, as Lyfegen's value-based payment solution is already widely being used by payers and pharma manufacturers in Europe.
As the Innovation Center embarks on a quest to improve the Medicaid program, using alternative payment models, it may need to consider adjusting its criteria of what counts as a successful model. The equity parts may be easier to measure than certain other objectives. For example, lowering federal expenditures appears to be the overriding goal of the CMMI models, and therefore cost savings to the government their standard measure of success. But, depending on the disease area in question, sometimes cost savings might not be easily achievable, even if the model is very much worth it and may save beneficiaries out-of-pocket expenses. In certain disease areas, improved health outcomes might be a better objective, along with a cost-effective use of additional resources.
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.
The U.S. Department of Health and Human Services is revamping value-based payment models, which it pursues at its so-called...
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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 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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Under value-based drug pricing, the cost of a prescription medication reflects the value of the health benefit patients receive from the drug. Patients gain better access to effective, high-priced prescription medications, while health insurers manage financial risk and reduce healthcare costs.
U.S. consumers are paying more for prescription drugs
Patients in the U.S. pay the highest prices in the world for prescription drugs. How much higher? Here’s an example:
According to a 2020 study by RAND Health Care, the manufacturer’s average price per standard unit of insulin in the U.S. is $98.70 compared to an average price of $8.81 in other industrialized countries.
Another 2020 study by the U.S. Government Accountability Office (GAO) shows that, even after discounts and rebates, American consumers and health insurers pay more than double for most prescription drugs when compared to patients and insurers in other industrialized countries. Estimates included in a recent report from the Department of Health and Human Services (DHS) to the White House reveal patients who use prescription medications spend an average of $1,567 per person on prescription drugs each year.
High drug costs affect patient health outcomes
Patients may forgo treatment when high drug prices make healthcare too expensive. A recent poll of 1,526 adults conducted by the Kaiser Family Foundation (KFF) revealed about 3 out of 10 survey respondents had not taken their medications as prescribed over the last 12 months because of the cost.
Twenty-five percent of those surveyed reported taking four or more prescription drugs—members of this group were more likely to report difficulty affording their prescriptions. Instead of taking their medications as prescribed, the KFF survey found patients who had trouble paying for their medications often did one or more of the following:
Value-based drug pricing improves health outcomes
Value-based pricing relates the cost of a drug to the clinical benefit patients receive from the drug. When executed correctly, value-based healthcare (VBHC) contracts give patients greater access to effective treatments to improve their health outcomes while insurers pay drug prices that are in line with the value of the health benefit the drug offers.
Determining which drugs produce the greatest positive impact on health outcomes relies on the enormous task of collecting and analyzing patient-level healthcare data. One of the important ways VBHC contributes to better patient outcomes is by providing reliable, actionable, real-world data about healthcare costs.
When real-world data about a high-priced drug shows limited health benefits—or the same benefit as a similar, lower-priced drug—insurers can restrict access to the high-priced drug by requiring strict prior authorizations or increasing patient cost-sharing. When real-world data show a drug is effective, safe, and cost-effective relative to other treatments on the market, both healthcare providers and insurers work to facilitate access to that drug for patients who need it.
The Lyfegen Platform supports the transition to value-based healthcare
Lyfegen has developed a software platform that helps health insurance companies, hospitals, pharmaceutical companies, and medical device manufacturers manage value-based drug pricing contracts with greater efficiency and transparency. The Lyfegen platform uses machine learning to collect and analyze patient-level drug cost data to execute complex pay-for-performance agreements.
If your organization is considering the transformation from fee-for-service to value-based healthcare, Lyfegen can help. Contact us to learn more and to arrange a free demonstration of our platform.
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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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