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Outcomes-based Pricing: a new model for cancer therapies?

13 Oct 17 - 12:00AM Carl Marotta  | Skills Alliance blog

Outcomes-based Pricing: a new model for cancer therapies?

Working in the Life Sciences sector for the past 7 years, I closely follow the developments in science and technology and have a key interest in the Haematology/Oncology space. CAR-T therapies have been a hot topic for a while now. When the news hit that the FDA had approved the first cancer gene therapy treatment,  Novartis' Kymriah, the talk that followed was rather perplexing. The focus,  rather than being on the 83% overall remission rate, was heavily skewed towards the US$475,000 price tag and the outcomes-based pricing model. 

83% remission rate for patients sounds pretty amazing given these children and young adults, who otherwise would have had a very bleak outcome, will now have a chance at life, so why the focus on the price? I was not familiar with the outcomes-based pricing model previously which is becoming a common-practice, especially in the US. So what is outcomes-based pricing?

Outcomes-based pricing refers to contract arrangements between manufacturers and payers, where the manufacturer is obliged to issue a refund or rebate to the payer that is linked to how well the therapy performs in a real-world population. Novartis have implemented a model for Kymriah under which full payment will be rendered only if patients have no detectable tumour cells one month after treatment. In theory it sounds like a great model, however I’m intrigued as to what the price would be with a more traditional value-based pricing model.

With clinical data from the study for Kymriah being based on just 63 patients, I wonder how much the Real World Evidence will skew the data on remission rates, and whether Novartis have factored in those patients with no response to treatment into the price. We would love to hear your views on this.

Anna Henry
Business Leader

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