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#BIOCEO18: A Bright Future

February 13, 2018
“A transformative year in medicine.” That’s how BIO President and CEO Jim Greenwood recently described 2017, a year that marked government approval of new gene therapies targeting leukemia in children and young adults, lymphoma in adults and a rare form of hereditary blindness. These treatments are transforming the landscape of modern medicine, and they are also raising questions about how to ensure these more costly, one-time therapies remain accessible and affordable for patients.

These and other questions were addressed during a panel discussion at the 2018 BIO CEO & Investor Conference. The conversation was moderated by Brady Huggett, Business Editor at Nature Biotechnology, and the panelists who joined the discussion were:

  • Ted Haack, Owner, Managing Partner, Haack & Associates

  • Dennis J. Purcell, Founder and Senior Advisor, Aisling Capital

  • Michael B. Weiss, Partner, Cahill Gordon & Reindel LLP

  • Michael J. Werner, Partner, Holland & Knight LLP

Much of the discussion focused on value-based pricing agreements. As Greenwood has written previously:

“The emerging trend in health care is about rewarding value, rather than volume. This is the future, where there is less focus on the number of tests or treatments a patient receives and more focus on whether a patient’s health is improving.”

Indeed, as new gene therapies have entered the marketplace, they have been launched with some form of outcome-based pricing agreement between the drugmaker and particular payers. These include Kymriah developed by Novartis and Luxturna discovered by Spark Therapeutics.

Huggett asked the panelists whether “this is something we are going to see more of in the future, especially as it is applied to things like gene therapy or CRISPR technologies that come along.” In response, Haack stated, “Unequivocally, unambiguously, yes.” Haack continued, “I don’t know why if I am a gene therapy company why I wouldn’t effectively put my money where my mouth is.”

Werner echoed this sentiment, adding, “I think we are going to see more and more of this approach, because number one, I think it intuitively makes sense to a lot of people who say, ‘If we think our drug is good, then we are going to put our money where our mouth is.’ Number two, it’s going to be the way to convince payers to jump with you into the pool.”

While innovative payment models may hold a lot of promise for the future, there are still hurdles to overcome before they can become more available to patients. As Werner noted, “It’s going to be easier at the beginning … with private payers who have the ability to do that. How the Centers for Medicare & Medicaid are able to do that on a big scale given the statutory boundaries which it operates is still unclear.”

Greenwood has highlighted some of these legal and regulatory challenges before:

“Over the years, policymakers have adopted several policies designed to protect patients and taxpayers, such as the Medicaid ‘Best Price’ rule and restrictions on communications between drugmakers and payers. These policies may have been appropriate for the old payment model based on volume or consumption, but they also act as barriers to a value-based approach.”

“From the industry perspective, we want to get to a place where we’ve got the pathway,” said Werner. Speaking of current progress, Werner added, “The important thing is that it shows that the payer community, CMS and private payers, are willing to have these conversations and willing to be flexible. That’s a huge win.”

Speaking about whether these evolving changes in the way we pay for medicines will impact future investments in the biotech industry, Werner explained that the “future is bright for the sector, and I don’t see the investment slowing down. Investors will continue to invest as these changes happen.”

“I can’t think of a better time to be in this industry,” said Purcell. “It’s not the ‘promise’ of the technology; it’s there. Gene therapies work. CAR-T therapies work. Gene editing works.” Purcell concluded, “If you’re an investor, what better time is there to take advantage of an industry that’s going to be the industry for the next 20 years. In an industry that’s changing all the time, I think the opportunities are going to be phenomenal.”