Bloomberg has a good article from earlier this week that is looking at the genetic treatments that are in the pipeline that may be long term cures for rare and expensive to treat diseases. The most important paragraph from a policy perspective is the outlay/benefit dissonance:
The new therapies aim to fix the root causes of disease with a single dose, in which the correct genetic material is introduced into the patient’s cells. If the treatments can replace a lifetime of conventional costly drugs, they may slash overall spending, even at multimillion-dollar prices. Yet the prospect of high costs is already stirring pushback.
The big problem is similar to the Hepatitis-C cure cash flow problem. Current technology was not particularly effective, but not particularly costly. And since the technologies were not particularly effective, watching and waiting was a reasonable clinical choice. A patient with Hep-c could be handled for a modest sum unless they were crashing and qualified for a liver transplant. Life long costs for the patient might be fairly high in direct medical spend and lower quality of life, but the yearly costs were unlikely to be high for any payer.
The introduction of a new set of technologies produced a surge of cures. People got better! It also made getting treatment really attractive for people who were previously being watched and waited for trouble. From an insurer point of view, this was a cash flow challenge as demand went up massively for a very expensive cure that produced benefits that the current year insurer could not easily capture. The benefits flowed to the patient in the form of better health and future insurers who did not have to pay for the now surpassed therapeutic regime.
New genetic cures are a similar problem from a payer’s point of view. They may produce amazing improvements in the quality and quantity of life. They may have a break-even point of three or four or five or ten years compared to current non-curative treatment. That means after the break-even point, they are all cost saving gravy. But under current payment regimes, the current payer still does not internalize the savings that equals or exceeds the oh-my-god level of one time cash outlays for the new technologies.
This is an incentive mismatch.