Oncology products today are often indicated for several types of cancers—in some cases, up to 10 different indications, including both hematological and solid tumors. With so many indications, pharmacy benefit managers (PBMs) are beginning to question the medical benefit provided by a product for each indication. Express Scripts specifically is going to implement a new payment system for oncology products with multiple indications.
According to Express Scripts spokesperson Brian Henry, “payments for cancer medicines approved to treat different types of cancer will vary based on the condition for which they are prescribed.”1 In other words, Express Scripts is starting the anticipated movement to outcomes-based payments. Currently, if a product has multiple indications, the price remains the same across the board. These prices are always at the highest regardless of the medical benefit provided by the product for a given indication. This new outcomes-based pricing system is aimed to lower the cost of products for patients who may not benefit as much from a product compared to other patients with different conditions.
France is a great example of a country that has already implemented this type of payment system. When a product is reviewed for market approval, the Commission d’Evaluation des Médicaments gives a product an ASMR (Amélioration du Service Médical Rendu or Improvement of the Medical Benefit) score. First, the commission evaluates the product and gives the product an SMR (Service Medical Rendu or Medical Benefit) score. An SMR score determines if the product should be reimbursed, and at what rate. The ASMR score is a grade that provides a base in order to fix the price of a product when comparing to alternatives.2 A product can have multiple SMR and ASMR scores for different indications. This means that a different price and reimbursement rate will be given based on the SMR and ASMR evaluation of each indication.3 This process is similar to what Express Scripts is looking to accomplish.
Many analysts have anticipated this new shift in payment systems. IMS was one of the first to explain and foreshadow this new system. IMS stated that companies are going to have to start demonstrating the degree of medical benefit for each of a product’s indications. This is going to be difficult to implement, especially when trying to evaluate combination therapies in the oncology space.4
Cost and Innovation
Express Scripts is not out to attack pharmaceutical companies. The PBM is looking to provide greater access to their patients in need of life-saving therapies. Unlike France, the United States government does not have the authority to intervene with price negotiations. The free market pricing system is a double-edged sword. The ability to price drugs at a high cost drives innovation in companies because they will be able to reach their intended ROI. Without this free-pricing ability, innovation may decline over time. With the new wave of highly specialized drugs like PCSK9s and novel orphan therapies, you can almost be sure other PBMs will be adopting similar payment methods to Express Scripts.
- Deborah Weinstien, MMM-Online, Express Scripts Wants Cancer Drugs to Prove Value, May 27th, 2015
- ISPOR, ISPOR Global Healthcare Systems Road Map, France – Pharmaceuticals, October 2008
- Nathalie Grandfils, Irdes, Drug price setting and regulation in France, September 2008
- Deborah Weinstien, MMM-Online, Drugmakers Will Have to Show More Than Efficacy to Justify Price, May 5th, 2015