Pfizer VP Robert Popovian Talks Value-Based Reimbursement

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.

Popovian

“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.

Next: Another study

For example, in a study published in 2012, a year after the most-prescribed statin-atorvastatin-lost its exclusivity, researchers concluded that statin therapy reduced low-density lipoprotein levels by 18.8%. That translated into roughly 40,000 fewer deaths, 60,000 fewer hospitalizations for heart attacks, and 22,000 fewer hospitalizations for strokes in 2008. In addition, in the same study, the authors estimated that from 1987 to 2008, the aggregate social value of statins was $1.252 trillion. The same holds true for oncolytic medicines. It was only a little more than a decade ago, before the advent of tyrosine kinase inhibitors, that the median survival time for CML (chronic myelogenous leukemia) patients was about three to five years from time of diagnosis. According to a study published in 2011, patients on imatinib (one of the first tyrosine kinase inhibitors developed) who achieved a stable cytogenetic response have an overall survival rate of 95.2% after 8 years, which is similar to the rate of life expectancy in the general population.

We just need to be patient with VBRs, as they provide a path to new payment models that may be better suited to deal with the “time” challenge.

Finally, biopharmaceuticals bring significant immediate value through cost reduction as we adopt use of biosimilars and increase usage of generics.

MHE: What examples of VBR have you seen that are making a difference? On the opposite side, what are some of the initiatives you’ve seen that were failures?

Popovian: VBRs are being tried and tested in a variety of disease and therapeutic areas. Pfizer has several value-based agreements across different therapeutic areas with payers in the United States, and we are exploring others with a range of commercial and public payers. Some of them look for long term outcomes while others address changes in tried and true surrogate markers.

In my opinion, there is no such thing as a failed VBR initiative. Every challenging VBR initiative provides us an opportunity to learn more about how to implement new reimbursement models that pays for value and not volume. This is similar to biopharmaceutical R&D, where the primary outcome of a successful research program is when researchers learn from their failures and apply those learnings to their efforts to discover new or improved therapies. The “failure leads to innovation” reality is especially true when one is conducting scientific research in areas of significant unmet patient need, such as treatments or new payment models. VBR challenges, like R&D failures, can help us discover better ways to pay for healthcare.