Here’s to price transparency: Transparency of procedure and physician costs remains an important initiative as the healthcare industry works to rein in healthcare spending and control the wide price variation seen for similar treatments. On Tuesday May 1, Castlight, which offers a user-friendly tool to compare treatment prices for tests and procedures based on cost and quality, announced it raised $100M in a Series D round. That’s a huge sum for any privately held life science company. But the figure is especially startling because Castlight falls into the health IT genre, where historically investments have been much, much smaller. Noted in the Castlight press release, the new round of financing was led by two “major” but unnamed mutual funds, and also included contributions from T. Rowe Price and Redmile Group. Castlight’s previous investors included standbys like Morgan Stanley, Wellcome Trust, Venrock, Allen & Company and the Cleveland Clinic. While the financing announcement positions Castlight as the company to beat when it comes to consumer-focused pricing tools, it has plenty of competition, including from payers such as Cigna, WellPoint, and Aetna who are developing tools for their members. –HB
- Read the Forbes article
- For an article on changes in consumer behavior, check out this article from the NYT.
- Read Castlight Health’s press release from Market Watch here
If I had a million dollars.. I’d buy a year’s supply of drug? Increasing price transparency for routine treatments might create the market dynamics required to lower health care costs. But how should we as a society respond to new drugs whose price tags push the $1million mark? This question is at the heart of Matthew Herper’s article in Forbes published on Tuesday May 1. The story recaps analysis by the smart folks at Bernstein Research, suggesting there are approved drugs already on the market that may push that upper pricing boundary. While there’s not much new in the piece, Herper nicely reviews why the industry has gravitated toward drugs for rare diseases (e.g. Vertex’s Kalydeco or Sanofi’s Cerezyme and Fabrazyme), which can be priced at a premium.
Question is how long will that pricing premium continue? The allure of the “high-cost, high-value” drug means (in some cases) multiple companies are developing drugs to treat the same orphan disease. In other words, this increasing competition creates an opportunity for payers to manage drugs aimed at rare diseases because the therapies themselves are no longer so rare. And even in cases where the disease is rare, payers are also taking a harder look at the “value” of a drug compared to its price tag. Witness the decision by Germany’s HTA IQWIG in December that idiopathic pulmonary fibrosis drug Esbriet had little or no added benefit once side-effects were taken into consideration. Yes, the decision involved a European rather than US payer; and it’s also true that Germany’s reimbursement authority backtracked a bit reassuring orphan drug sponsors that niche drugs will only undergo benefit assessment when they hit the E50 million sales threshold. Still, that’s a pretty low bar to clear from a sales perspective. Moreover, the fact that Germany’s HTA questioned Esbriet at all suggests that while orphan drugs are still special, they aren’t quite as special as they used to be. –Halleh Balch & Ellen Licking
- Read Herper’s article in Forbes here
In the best interest of the Common-Wealth: Massachusetts was the first state to adopt universal healthcare for all its constituents. Now, the state is taking a big step towards value-based healthcare spending with its payment-reform legislation expected to come under Senate preview starting May 14. The payment-reform legislation calls for a state-wide overhaul of how hospitals, doctors, and other providers are reimbursed. At the center of the bill is a value-based payment structure that aims to take away the financial incentives of providing more care and put in its place alternatives to the traditional fee-for-service model.
As the Washington Post reports, this payment-reform has promising predecessors. In 2009, the largest insurer of Massachusetts residents, Blue Cross Blue Shield set up the “Alternative Quality Contract,” in which doctors and hospitals accept a “global budget” to cover all health-care services for a set of patients. Early data from the Alternative Quality Contract published in the New England Journal of Medicine last year found that healthcare spending grew more slowly among providers participating in the Alternative Quality Contract than those elsewhere. While national healthcare spending has slowed in the past few years along with the rest of the economy, healthcare spending in Massachusetts will hit almost 41% of the state budget in 2013. –HB
- Read the Washington Post article on the MA payment reform here
- Read the full NEJM report on BCBS global payment system, Alternative Quality Contract.
A Small Step in the Right Direction for HIV-Care. Just over 30 years ago, the first AIDS cases were reported. Today, HIV remains a threat, but one that can be managed with the use of powerful antiretroviral drugs. Indeed, in the developed world, millions of HIV-positive people now lead long, healthy lives. Still, the current medicines are far from a cure, and the problem of resistance remains a major concern. A recent article published by Carl June and his group at the University of Pennsylvania in Science Translation Medicine may create renewed optimism for an approach—gene therapy–that’s actually decades old. In their paper, June’s team reports on 43 patients who 16 years prior received immune cells designed to attack and kill HIV-infected cells. It turns out that these special T-cells are still circulating in the patient’s bloodstreams, even if they haven’t removed the HIV virus from their bodies. While the genetically engineered HIV-killer T-cells are not exactly doing what they set out to do, there’s also no evidence of nasty side-effects that have been associated with prior gene therapies (including cancer). Moreover, the T-cells’ persistence in the bloodstream and their lack of toxicity raise hopes that so-called adoptive T-cell transfer could become a viable therapeutic approach for HIV. June has already demonstrated the approach can be used to treat leukemia. Now he and his team hope to apply that knowledge to HIV via a trial in 24 patients.–HB
- Read the HIV T-cell research article in Science Translational Medicine here
- Read about the leukemia study in the New England Journal of Medicine article
- Read more from the NPR blog Shots.
The Importance of Real World Evidence In the Anti-coagulant Market: The blockbuster era is over—or maybe not if you happen to be Boehringer Ingelheim, Johnson & Johnson, or Pfizer/BMS, all of whom are jockeying for position in the anti-coagulant space. This week comes news that BI is betting big on the power of real-world evidence to showcase the clinical utility of its medicine Pradaxa, which is designed to treat stroke prevention in atrial fibrillation. The company is undertaking a massive global trial, via the so-called GLORIA-AF registry program; announced May 3, the initiative will look at the long-term use of antithrombotic treatments for reducing the risk of strike in 56000 patients newly diagnosed with atrial fibrillation. The study, which won’t read out until 2020, will assess the long-term safety and efficacy of Pradaxa, J&J’s Xarelto, warfarin, and other therapies. It may also help bolster the reimbursement case for Pradaxa and encourage physicians to prescribe the drug. As difficult as warfarin is to use, the medicine’s side-effects (especially bleeding) can be reversed; there’s no antidote currently for Pradaxa, and physicians remain concerned that its safety profile may actually be no better than the older, and significantly cheaper warfarin. Meantime, the GLORIA registry allows BI to collect data about the real world utility of Pradaxa in advance of the expected launch of Bristol and Pfizer’s Eliquis; that drug received a priority review and based on data presented thus far seems to be positioned as the safer alternative to both warfarin and newer anticoagulant agents.–EL
- Here’s the press release from Boehringer Ingelheim.