The “Netflix Model” might represent a truly disruptive approach to improve access & reduce long-term costs of treating Hepatitis C, while maintaining innovation incentives using a market-based mechanism. From @peterbachmd, Mark Trusheim & me @JAMA_current: https://t.co/ro5r8Q6lYr pic.twitter.com/ZK6V7uH99Z
— U.S. Senator Bill Cassidy, M.D. (@SenBillCassidy) October 30, 2018
WASHINGTON—U.S. Senator Bill Cassidy, M.D. (R-LA), a member of the Senate health committee, today published with Dr. Peter Bach of the Memorial Sloan Kettering Cancer Center and Mark Trusheim of the Massachusetts Institute of Technology an article in the Journal of the American Medical Association (JAMA) entitled “Alternative State-Level Financing for Hepatitis C Treatment—The ‘Netflix Model.’”
At a recent National Academy of Medicine event, Dr. Cassidy mentioned his examination of data related to this issue, noting he’s been working with Dr. Rebekah Gee, the Louisiana Department of Health secretary, to research “what if we get X amount of dollars and we treat all of our Hepatitis C patients who are on Medicaid and in prison, and what would that do to real cost?”
“This market-based subscription model can transform the healthcare community into a collaborative team to eliminate Hepatitis C,” said Mark Trusheim. “It incentivizes all stakeholders to work together to find and treat as many patients as possible, as fast as possible. Each extra person treated advances towards the measurable public health goal with no incremental drug cost for the payer, provider or patient; and moves the manufacturer closer to earning a performance bonus.”
Key excerpts from the JAMA article are below:
The current shortfall in HCV treatment is in part due to the reliance on the per-prescription revenue model. Often what generates the most revenues and profits for drug corporations is charging a higher price per prescription, even if that approach leads to a lower number of filled prescriptions. With HCV treatments, state Medicaid programs and prison systems have responded by limiting access to these drugs, even though it would be better if persons with infections such as HCV were treated rapidly and broadly and even though current pricing puts these therapies in the range of typical cost-effectiveness thresholds. Put simply, under the per-prescription model, the states’ only alternatives are unappealing: raising taxes or reallocating funds from other parts of their discretionary budget, including other priorities in health care. …
The proposed subscription model developed for HCV elimination within a state includes several key components. First, the subscriber should not be the state, but a purchasing coalition constituting all payers for health care. …
Second, in exchange for the subscription fees over a fixed number of years, the drug corporation would not only provide access to its HCV therapies, it would also commit to patient and provider outreach efforts to enhance treatment rates in tandem with complementary commitments by the purchasing coalition. …
Third, the subscription price would be determined through a bid process open to all manufacturers. …
Assembling a cross-payer coalition in a state would be unusual, and this coalition would need to be coordinated by an entity committed to monitoring and evaluating the program. The Center for Medicare & Medicaid Innovation within the Centers for Medicare & Medicaid Services has the requisite authority to test alternative payment approaches that could lower cost and improve care quality and outcomes. …
To be clear, revenues are not the same as profits that drive drug company contracting decisions. Production costs will increase with the anticipated increased treatment rates. However, the marginal production costs for small molecule drugs are relatively low. Other factors affecting profitability may also change under a subscription model. …
The benefits to public health, payers, and manufacturers appear to justify working together to overcome the hurdles, and indeed, this model might represent a truly disruptive approach to improve access and reduce long-term costs, while maintaining innovation incentives using a market-based mechanism.
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