Efforts to implement value-based reimbursement (VBR) are moving forward in many disease and therapeutic areas, though not as quickly as hoped, according to Robert Popovian, PharmD, MS, vice president, U.S. government relations, Pfizer Inc.
“It is important to maintain these initiatives though, as we move from a volume-based reimbursement model to a value-based one—basically, paying for value and not volume,” says Popovian, who will be presenting “Develop Reimbursement Strategies That Anticipate the Disruptive Potential of Next-Generation Therapies” at CBI’s 11th Annual Oncology Market Access Strategy Summit, in San Francisco, March 1.
According to Popovian, VBRs face financial, technological, and policy challenges. “The siloed financing/budgeting mechanism provides little impetus for VBRs that are intended to reduce overall healthcare expenditures,” he says. “Interoperability is still challenging, both from an adoption and implementation perspective.”
Finally, Popovian believes that critical policy issues, such as updating the rules around how and with whom manufacturers can communicate about a product, need to be addressed. “Restrictions can impede proper communications between manufacturers and parties interested in the implementation of VBRs,” he says.
Managed Healthcare Executive (MHE) asked Popovian about the impact of VBRs on outcomes, VBRs versus other healthcare reimbursement initiatives, and VBR successes and failures.
MHE: A high percentage of the costs of healthcare are spent in the last six months of patients’ lives when there is little to no hope for improvement in a patient’s outcome. Any perspectives on how VBR might impact this?
Popovian: Despite changes in the delivery of medical care (e.g., increase in hospice care) and reimbursement methodology (e.g., implementation of DRGs for hospitals) over the past several decades, there is still an over reliance on hospitalizations and ICU/CCU services in the last months of life. In addition, the fee-for-service payment approach for physicians has not changed. The fee-for-service payment mechanism incentivizes the delivery of more services, some of which may be unnecessary.
One additional issue to keep in mind is that research clearly demonstrates that patterns of care do not necessarily reflect the needs or wants of the terminally ill patients. VBRs will create an environment where precision medicine treatments are more accessible to patients, reducing waste and inappropriate use.
MHE: Healthcare reimbursement initiatives have tended to be a zero-sum game where any new and seemingly impactful initiative is overcome by equally impactful initiatives on the part of providers. How would VBR be different?
Popovian: One of the first things we need to fix in healthcare is the siloed finance mechanism by which each segment has a separate expenditure budget. This scheme discourages the use of innovative technologies, which tend to reduce overall healthcare costs. It is important to note that CMS recently announced new bundled payment models. Such payment mechanisms are more common in the private sector and include biopharmaceuticals in the payment models.
Second, we must look at the challenge of “time” for VBRs. In the biopharmaceutical industry, we deal with this challenge on a daily basis. “Time” is a finite commodity in the biopharmaceutical ecosystem. It is defined by the life of a patent and, as such, there is only a limited opportunity for a medicine to have a financial return that will fund future research opportunities. Beyond the critical need to re-invest in future cures, another “time” barrier to appropriate evaluation of the value proposition of a biopharmaceutical is the fact that the overall societal value for innovative medicines is not captured until years after the approval of the medicine. Take for instance the HMG-CoA reductase inhibitor medicines better known as statins. It is only now, years after most statins have lost exclusivity and are generic, that they truly realize their value.