China's First Outcomes-Based Payment Plan for Lymphoma Therapy Launched by Fosun Kite and Chenshi Health

Jan 30, 2024 15:00 CST Updated 15:00

Fosun Kairos

Developer of Tumor Immune Cell Therapy Technologies and Products

Medi Cover

Innovative Commercial Insurance Solution Provider

On January 11, 2024, Fosun Kite and Medi Cover, a health management and patient comprehensive service platform under Sinopharm Group, jointly released Yikai Da (Axicabtagene Ciloleucel Injection), China's first lymphoma value-based payment plan.

After the implementation of the plan, eligible patients who do not achieve complete remission (CR) after using Yikaida will receive a refund of up to 600,000 RMB. This marks China's first innovative payment model for a lymphoma drug based on efficacy value. Yikaida will also become China’s first bio-innovative drug paid for based on efficacy value.

Yikaida China's First Lymphoma Pay-for-Performance Plan Will Strictly Follow the 2014 Lugano Evaluation Criteria (the latest international authoritative standard for lymphoma efficacy assessment) to evaluate Complete Response (CR) outcomes.Moreover, Fosun Kite will collaborate with various parties, including clinical experts, the National Health Commission, and treatment demonstration centers, among other government and medical institutions, to jointly explore and establish a "cure" standard.

Pay-for-performance is actually a risk-sharing model and a manifestation of value-based pricing. In the pharmaceutical field, it essentially involves negotiations between drug purchasers and manufacturers regarding the actual efficacy and payment for new scientific research outcomes, aiming to enable more patients to access the latest treatment technologies with fewer concerns.

The Evolutionary History of Pay-for-Performance

Pay-for-Performance (P4P/PFP) evolved into Pay-for-Effectiveness, which originated in the UK. In the UK, a long-standing European country with high market entry barriers, the government acts as the sole purchaser of pharmaceuticals, directly paying for all medical services. If a new drug is not included in the national health insurance system, it cannot be used clinically. At the beginning of the 21st century, pharmaceutical companies had to negotiate with regulatory agencies through more complex health technology assessments to ensure their drugs were not excluded from the reimbursement system.

The terms of negotiation vary widely. Some involve full refunds to patients for whom a specific treatment is ineffective, while others provide necessary funding to monitor the ongoing effectiveness of a particular drug in patients and adjust payments based on actual treatment outcomes. The core of the negotiation is to establish a cost-effectiveness evaluation mechanism for specific treatments.

The world's first drug in the conventional sense to be paid for by efficacy is bortezomib (brand name: Velcade), a lymphoma and myeloma treatment drug under Johnson & Johnson. The drug was originally reimbursed under the UK’s National Health Service (NHS) system, with 20,000 such patients nationwide at an average cost of £18,000 per person. However, Velcade can only extend the survival period of about 70% of patients by 2-3 years, so the NHS later removed the drug from its medical insurance coverage, drawing opposition from many patients.

Later, Johnson & Johnson negotiated with the NHS to adopt a pay-by-outcome mechanism: When other treatments were ineffective, the NHS agreed to use Velcade and cover the associated costs. After three months, the patient's response to the treatment would be evaluated, and if the treatment was found ineffective, its use would be immediately discontinued, and Johnson & Johnson would refund the NHS.Some cases of payment by efficacy are shown in Table 1.

Source: GBI Analysis

Unlike the European market, the primary insurers for the working-age population in the U.S. are commercial/private insurance companies. Each type of insurance has its own list of covered drugs, and insurance companies also use Health Technology Assessment (HTA) and cost-effectiveness analysis (CEA) to determine which drugs will be included in their coverage packages. Medicare in the U.S. also provides coverage for the elderly population. Unlike countries such as the UK (and other Commonwealth system nations), where national health insurance may refuse to cover high-priced new drugs, in the U.S., it is not permissible to reject innovative drugs solely on the basis of unsuitable CEA.

However, private insurance still needs the CEA to evaluate which products can be included when designing insurance products. Currently, some drugs in the United States have adopted a pay-for-performance model, especially for high-value drugs. Both insurance companies and patients need to pay a portion of the cost, and as the drug becomes more expensive, the amount patients pay also increases, which may make patients hesitant to choose new therapies.

For CAR-T, a high-end and cutting-edge therapy that disrupts traditional treatment models, the potential cost of treatment has already been significantly increased. The pricing of CAR-T typically ranges from $400,000 to $1 million per treatment, mainly due to its potential to cure fatal diseases, bringing long-term benefits. However, despite this, CAR-T products that have been approved for marketing only have a few years of clinical trial periods, especially those that were conditionally approved after reaching Phase II trials, which have even shorter trial durations. Under the traditional business model, patients need to pay first before receiving treatment. For such a novel and expensive product, it is evidently unfair for patients to bear all the clinical risks.

Moreover, there is a series of preparatory and follow-up work before and after receiving CAR-T therapy, including patient preconditioning, initial chemotherapy, post-treatment efficacy evaluation, and post-treatment toxicity management. In the U.S. market, the aforementioned work is not included in the payment standard (sticker price) of CAR-T therapy but is implemented and borne by medical institutions. Therefore, although CAR-T therapy is covered by health insurance, medical institutions providing this therapy may still incur losses because the total cost of CAR-T treatment, including hospitalization, can be 1 to 2 times higher than the cost of CAR-T itself.

Of course, CAR-T therapy and gene therapy in the U.S. can still follow the traditional commercialization model, but conventional practices have been shaken by risk-sharing payment methods.

The World's Most Expensive Drug - Novartis' Spinal Muscular Atrophy TreatmentZolgensma (onasemnogene abeparvovec) is an example of a one-time treatment. If patients survive for five years after receiving the treatment, it equates to an annual cost of $425,000. Zolgensma is used to treat children under the age of 2, with approximately 1,000 such patients in the United States.

AveXis, a Novartis subsidiary, is responsible for the development and commercialization of the drug and has partnered with Accredo Specialty Pharmacy (a PBM business unit under Express Scripts, which is part of Cigna). According to the insurer’s reimbursement plan, Accredo pays AveXis the full treatment cost upfront on behalf of the insured before treatment begins. Alternatively, payment can be negotiated into installments over five years, with potential discounts based on treatment outcomes. AveXis also offers patient access and affordability support programs. Express Scripts hopes to provide similar payment models for other gene and cell therapies.

In the UK and Germany, the CAR-T therapies Kymriah and Yescarta are both covered by health insurance reimbursement, but the final payment price depends on real-world outcomes and post-marketing trial data.

Companies also have risks they are unwilling to bear.

Of course, not all gene and cell therapy payment plans are proceeding smoothly, especially as some gene therapies currently being developed for rare diseases have been put on hold. A typical example is Strimvelis — the first ex vivo gene therapy approved in Europe back in 2016, used to treat adenosine deaminase deficiency (ADA-SCID). The therapy was originally developed by the San Raffaele-Telethon Institute for Gene Therapy (SR-TIGET) in Italy, with GSK taking over subsequent development.

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ADA-SCID is a rare, life-threatening hereditary immune deficiency caused by mutations in the ADA gene. This gene encodes the production of adenosine deaminase, which is crucial for the function of the immune system. Due to the lack of adenosine deaminase, the functions of B cells, T cells, and natural killer cells in the patient's immune system are impaired.

”

As a result, ADA-SCID patients almost completely lose the ability to resist viruses, bacteria, and fungi, requiring long-term living in a sterile environment. Symptoms of infection usually appear during infancy, and without treatment, most do not survive beyond the age of 2. This disease has only been reported in 15 pediatric cases in Europe.

Despite the therapy being approved and supported by the UK's NICE at a price of €594,000 (US$648,000), the treatment can only be administered through an Italian research center. Complicated cross-border reimbursement procedures have led to a waiting period of one year from approval to receiving treatment. In 2017, GSK began divesting its rare disease business, and in 2018, Strimvelis was sold to Orchard Therapeutics. Then, in July 2023, the marketing authorization was transferred to Fondazione Telethon, an Italian non-profit organization. The SR-TIGET, which originally developed the therapy, is an affiliated institution of this foundation.

Bluebird Therapeutics also experienced failures in the European market with two gene therapies: Zynteglo, approved in 2019 for the treatment of severe β-thalassemia at a price of $1.8 million; and Skysona, approved in 2021 for the treatment of cerebral adrenoleukodystrophy at a price of $3 million. However, due to the inability to secure reimbursement, both products eventually withdrew from the European market and shifted focus to the U.S. market. Clearly, while risk-sharing can help advance patient access to high-cost therapies, it cannot bridge the substantial R&D expenses incurred by companies developing gene therapies.

References:

1.https://www.baiji.com.cn/news/baiji_news/2017/0816/318908.html; What Does the First "Pay-by-Outcome" Insurance Policy Look Like?

2.https://mp.weixin.qq.com/s/4NEzGiiCmH-JWJsLHiV03w; Pioneering in the Province! In Panzhihua, Traditional Chinese Medicine Treatment for These Diseases Will Be Paid Based on Efficacy

3.https://mp.weixin.qq.com/s/WuCVLkF8BQvNadNORWpcAA; Zhejiang Pilot Program Includes Liver Transplants in Medical Insurance, Individuals Cover 30%!

4.https://mp.weixin.qq.com/s/s3ta9eukB_gReJ4cI_CTyQ; TCM Pays by Efficacy Brings New Changes in 2 Years

5.https://ybj.sh.gov.cn/qtwj/20210414/a4d9d5b7509c4dca99489d6f6fce6e07.html; Notice on the Trial of Performance-based Payment for Some Diagnostic and Treatment Services Hu Medical Insurance Medical Management Issued [2021] No. 14

6.https://ybj.sh.gov.cn/qtwj/20220120/d85cb2c5f04c44cd8fa871b2ad904003.html; Notice on the Trial Implementation of Performance-Based Payment for Certain Diagnostic and Treatment Services, Document No. 7 [2022] of Shanghai Medical Insurance Management

7.https://ybj.sh.gov.cn/qtwj/20220519/ad620ec0be714247b43cbf87ca53c7f2.html; Notice on the Trial of Performance-Based Payment for Some Medical Consumables Hu Yibao Yiguan Fa [2022] No. 19

8.https://www.163.com/dy/article/F170IIGM05384OHU.html; Pay-by-Outcome? Oncology Drugs Can Actually Be Handled This Way?

This article is reprinted from GBIHealth

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