Early Health Technology Assessment is Due Diligence
Dr. Christopher McCabe
The ASSESS Project Chief Scientific Officer
I spent my first 15 years in Health Technology Assessment doing analyses and writing reports that you could boil down to ‘Lovely science, but not enough health to justify the price.’. Being a slow learner, it took that long to understand that my work was a symptom of a broken life sciences R&D system. It specializes in producing technologies that can be life changing for the individuals who receive them, but cost so much that they damage the health, health care systems and economies of the societies those individuals live in.
A strong claim to make, but over the last 15 years we have seen increasing evidence that the prices we currently pay for break through biotherapies, displace many more times health than they produce. In the UK it is at least 2.5 times the health lost as gained, but it is often over 10 times. In the US, it is two, three or four times depending upon the specific technology. Many European countries are in a similar position to the UK. The excess cost translates to higher taxes or longer health care waiting lists in publicly funded health systems, and higher premiums in privately funded systems. The former reduces the productivity of the work force, the latter eats up funds that could either fund consumption (demand for non-health goods and services) or investment. Health touches every aspect of our lives, and when we make our health systems less efficient, we damage our fellow citizens and the economy.
After much prevarication, national governments in developed nations are pushing back. The UK engages in increasingly strong confidential price negotiations plus a voluntary scheme that produced refunds of around 23% on drug spending. Germany and France have revised their evaluation frameworks, and Biden’s legislative centre piece, the Inflation Reduction Act has targeted substantial reductions in pharmaceutical prices. Meanwhile in China, the world’s largest pharmaceutical market by volume, negotiations for coverage in the national insurance system demands discounts in excess of 60%. The incumbents are understandably resistant to recognizing the change that is coming, telling governments that they will kill innovation and lose life sciences R&D investment, but as more and more governments act, it is clear that change is coming. By the time the scientific breakthroughs of today reach the market, the requirements for commercial success will be radically different. Commercial success will require prices that are matched to value. What is produced must be worth more than what has to be sacrificed to pay for it.
Life science investment needs to change now to be ready for the health care markets of the 2030s. Commercial due diligence must consider the target market not as it is now, but as it is likely to be in the future. That means considering the likelihood that a candidate technology can meet value-based reimbursement targets, understanding the evidentiary and regulatory pathway for reimbursement success, having full awareness of the probability of achieving the target commercial return on investment in a value-based environment, and taking specific actions that can increase commercial success.
I have spent the last 15 years thinking about how to fix the broken life sciences R&D eco-system. An eco-system that creates technologies that are worth the price required to deliver a fair commercial investment return. The ASSESS Project has been established to deliver early health technology assessment as due diligence, to help scientists and engineers understand their value proposition from the payers’ perspective and de-risk technology development. The ASSESS Project is there to help Tech Transfer Offices identify which high value breakthroughs to protect and put in their shop window, and to support Life Science Investors with future-proof commercial due diligence.
