Paying for Personalized Medicine

Payers and Personalized Medicine

By Michael Sherman, M.D.

On November 30, Michael Sherman will deliver a conference address titled “Paying for Personalized Medicine.”

I recall my first PMC board meeting in 2016. Then Chief Medical Officer for Harvard Pilgrim Health Care, a Northeast regional health plan with a reputation for quality and innovation, I was excited to join such an accomplished group of visionaries. Certainly, I was eager to learn and contribute to advancing PMC’s mission.

Despite my enthusiasm, I was surrounded in the room by a high level of frustration with the payer community. And, as the only payer in the room, I was on the receiving end of some of that angst.

It would have been easy to adopt a defensive posture, but rather than take that approach, I saw an opportunity to jump into the fray and strive to become a leader in personalized medicine among health plans. Since then, I have had the privilege of working with colleagues at Harvard Pilgrim, and, later, Point32Health, who have been at the forefront of partnering with innovators. Collectively, we have overcome coverage obstacles with the goal of ensuring that our beneficiaries have access to the types of advances that I would want for my own family were they in need.

Balancing access and affordability is not easy. Our healthcare financing framework is rooted in the last century. It never envisioned advances such as transformational cell and gene therapies and other breakthroughs that can fundamentally change how disease is treated. Still, having a dysfunctional financing system is a lousy reason for not paying for diagnostics and treatments that are expensive up front but may provide a lifetime of benefit.

By convening stakeholders from across the healthcare ecosystem at events such as its annual conference, PMC presents a unique opportunity for leaders from different sectors to hear from and understand the perspectives and needs of others in the ecosystem. These conversations can serve as a catalyst for change and bring stakeholders closer together where they previously had not understood each other’s perspectives.

For example, diagnostics companies have historically focused on concepts such as analytical validity, a test’s ability to measure both accurately and reliably, and clinical validity, a test’s ability to detect or predict an outcome. Manufacturers who can demonstrate both are understandably frustrated when their products are not paid for by health plans. The reality is that payers, even when they fully accept the clinical and analytical validity data, often have questions around what is called clinical utility, which is the “so what?”

For example, an assay may identify the presence of a number of gene alterations and biomarkers in a tumor, some of which predict whether a patient is likely to respond to certain cancer treatment options. This type of testing was not available on a routine basis a decade ago. So, it is an incredible advance.

But if one cannot demonstrate that having that information leads to a better outcome, whether that be more quickly identifying an effective vs. ineffective therapy, improving survival, reducing adverse effects, or some other type of change, one can reasonably question whether that test should be covered. Now, as compared to the recent past, manufacturers are more often proactively collecting this type of data in their clinical trials, a necessary step to engage with payers more effectively.

Even when there is solid clinical utility data, health plans are sometimes slow to adopt for a variety of reasons related to our fragmented approach to care delivery.

For example, payers may question whether evidence collected in carefully controlled clinical trial settings, characterized by doctors and patients who are following a precise playbook, will be replicated in the real world. I believe that by partnering with manufacturers of paradigm-changing treatment advances, we can overcome these types of barriers. As Chief Medical Officer at Harvard Pilgrim Healthcare and then at Point32Health, I worked with a team of all-stars to develop pilots that could de-risk a coverage decision for a payer, create real-world evidence that could guide longer-term coverage decisions, and support broader coverage decisions by other health plans and government payers.

An early example is a collaboration with Illumina whereby Harvard Pilgrim became one of the first payers to broadly cover noninvasive prenatal testing (NIPT), which is a blood-based molecular screening test for Down Syndrome and certain other trisomy chromosomal disorders. At that time, we were covering the test only for women over 35, since that is where the risk was highest. However, most cases occur in women under 35 because although the rate may be lower, that is the age group with the most pregnancies. In return for expanding the policy, Illumina, confident that this more accurate NIPT would displace other less precise screening tests and avoid unnecessary amniocenteses and other confirmatory tests, warranted that our overall diagnostic cost would not rise. By assuming financial risk, Illumina freed up the health plan to implement policy changes on a pilot basis.

Ultimately, this played out as Illumina had promised.

At the end of the collaboration, we all agreed that the cost curve had remained essentially flat, and the health plan made permanent its more expansive policy. Since then, Harvard Pilgrim and Point32Health have led in other collaborations, generating real-world data that has reduced health plan access barriers. Recent examples led by Point32Health include a collaboration with Grail to offer its multi-cancer early detection test to a subset of members and a policy expansion with Foundation Medicine for its FDA-approved genomic profiling assays.

I recently joined RA Capital Management, a $10 billion fund known for evidence-based investment. While I wear a very different hat at the firm, I continue my efforts to ensure that A.) innovators understand the type of evidence needed to gain coverage; B.) a poor reimbursement environment does not deter investment in the type of personalized medicine advances that offer the promise of better care for our loved ones; and C.) health plans find innovative ways to enable appropriate access when the evidence demonstrates benefit to those in need.

By working together across all stakeholders, I am confident that we can overcome barriers and help create a future where patients can be assured of having access to the individualized care needed to drive the best outcomes.

  • Introduction

    Cynthia A. Bens
    Senior Vice President, Public Policy, Personalized Medicine Coalition

  • Speaker

    Michael Sherman, M.D.
    Venture Partner, RA Capital Management