Insurance switching and mismatch between the costs and benefits of new technologies

Abstract

Objectives: Many therapies have immediate costs but delayed benefits. Recent and anticipated transformative therapies may exacerbate these challenges. This study explored whether disconnects between short-term budget impacts and long-term costs and benefits, and among impacts on initial payers, downstream payers, and society, are expected for a range of such therapies and whether they are likely consistent or variable, with implications for potential policy responses.

Study design: Modeling.

Methods: We modeled the impacts of 5 hypothetical therapies affecting different patient types: curative gene therapy for a childhood disorder, highly effective hepatitis C virus therapy, disease-modifying Alzheimer disease therapy, and cardiovascular disease therapy for both rare genetic and higher-risk prior cardiovascular event populations. We constructed disease-specific models, modifying best-available Markov analysis estimates for standard-of-care state transition rates, utilities, and costs. We disaggregated total healthcare impacts into impacts on initial versus downstream payers, dividing payers into 3 types: commercial insurers, Medicaid, and Medicare.

Results: Although we found gaps between the impacts on initial and downstream payers in all examples, some substantial, the magnitude and reasons vary.

Conclusions: As scientific advances generate transformative therapies with substantial structural disconnects between "who pays" and "who benefits," creative approaches may be needed by manufacturers, payers, and others to ensure appropriate access to cost-effective therapies, adequate economic incentives for future development, and sustainable payer economics. Mechanisms may amortize high up-front costs over time, provide for transfers among payers, or a combination. Our research suggests that approaches should be tailored to specific disease and therapy characteristics to be effective.