Innovative treatments call for innovative pricing models and access solutions. With ever more novel and costly pharmaceuticals applying increasing pressure to healthcare budgets, traditional upfront pricing approaches may prove unsustainable. In this context, innovative pricing frameworks may offer a route to balance access and affordability, increasing certainty around future expenditure.
Novel pricing and payment models have the potential to accelerate patient access, while managing clinical uncertainty, budget impact & healthcare system sustainability, as well as sufficiently incentivizing innovation.1 Potentially good candidates for such models may be immunotherapy products, orphan drugs, and cell and gene therapies.
Examples of innovative pricing models
Outcomes-based payments1: Payment is tied to the medicine’s real-world performance under a financial structure and is linked to observable outcomes. This approach may prove useful in scenarios when there is some uncertainty at launch around the magnitude and/or durability of the clinical benefit, or its real-world effectiveness. The aim here is to pay for actual value, rather than anticipated value. Depending on the concern that needs addressing, there are a range of outcomes-based payments, such as coverage with evidence development.
- For instance, in the case of Zynteglo, Bluebird has devised an innovative strategy, including one upfront payment paired with an outcomes-based agreement. Bluebird would reimburse contracted payers up to 80% of the therapy cost, should a patient fail to achieve & maintain transfusion independence up to two years following infusion.2
Over-time payments1 (also known as staggered payments, instalment-payment models or mortgage models): Through these, payments to manufacturers can be made over fixed periods for each patient receiving treatment. Hence, this approach may mitigate the substantial upfront cost of a treatment, such as a one-off therapy with curative potential. Additionally, there is potential for the over-time payment to be linked to a specific outcome being observed.
- For instance, in the case of Zolgensma, AveXis was collaborating with payers to create 5-year outcomes-based agreements and novel pay-over-time options.3
Understanding the implications of innovative pricing models
Pharmaceutical companies are under increasing pressure to share some of the financial risks with payers and showcase the long-term value of their assets. Innovative pricing schemes may offer a pathway to do so, without compromising on innovation. They may equip pharmaceutical companies with more tools for their discussions with payers and place them in a potentially better position to find common ground with payers.
While pharmaceutical companies lose some of their revenue certainty, payers gain some budget certainty/predictability and minimize the impact of extremely high upfront costs. At the receiving end, patients can access expensive, potentially critical, treatment in a timelier manner.
However, implementation of innovative pricing models comes with its own challenges, especially around operationalizing outcomes-based contracts that may be complex and heavily data-driven. Substantial investment is needed and it is frequently a sticking point between payers and pharmaceutical companies as to where this comes from. Infrastructure requirements include IT infrastructure, human resources & capabilities (e.g., around data collection/tracking, management & analysis) and datasets/sources (e.g., patient registries, payer databases). At the same time, legal and regulatory frameworks in place need to be respected. Additionally, the buy-in of the healthcare professionals and management bodies is needed.
How GPI can help you navigate this space
Embracing the shift to innovative pricing models is vital for pharmaceutical companies to sustain medical innovation, enhance patient access to their products and remain relevant. Such models are becoming a larger part of the access pathway, therefore pharmaceutical companies need to be able to understand, offer, negotiate and operate them. Nevertheless, a one-size-fits-all approach is not applicable here. The type of innovative scheme will need to be tailored to the specific case, depending on several factors, such as the disease area, product characteristics, patient needs, healthcare system structure and specific payer needs & preferences.
At GPI, we can support you to unlock the full potential of innovative pricing models. We offer valuable insights into payer perceptions, priorities and values. We can support you in designing an efficient pricing model tailored to payer expectations and assist you in developing a robust evidence generation plan to present to payers. We can advise on the selection/definition of appropriate outcomes with clinical relevance. Moreover, we can guide you in the translation of the collected evidence into a strong value story for the payers.
References:
- EFPIA (2020). ADDRESSING HEALTHCARE CHALLENGES: Novel Pricing and Payment Models: New solutions to improve patient access. [online] Available at: https://www.efpia.eu/media/554543/novel-pricing-and-payment-models-new-solutions-to-improve-patient-access-300630.pdf [Accessed 23 Apr. 2025].
- Business Wire (2022). bluebird bio Announces U.S. Commercial Infrastructure to Enable Patient Access to ZYNTEGLO®, the First and Only FDA-Approved Gene Therapy for People with Beta-Thalassemia Who Require Regular Red Blood Cell Transfusions. [online] Available at: https://www.businesswire.com/news/home/20220817005677/en/bluebird-bio-Announces-U.S.-Commercial-Infrastructure-to-Enable-Patient-Access-to-ZYNTEGLO-the-First-and-Only-FDA-Approved-Gene-Therapy-for-People-with-Beta-Thalassemia-Who-Require-Regular-Red-Blood-Cell-Transfusions [Accessed 23 Apr. 2025].
- Novartis (2019). AveXis Announces Innovative Zolgensma® Gene Therapy Access Programs for US Payers and Families. [online] Novartis. Available at: https://www.novartis.com/news/media-releases/avexis-announces-innovative-zolgensma-gene-therapy-access-programs-us-payers-and-families [Accessed 23 Apr. 2025].
