A Way Forward for ATMPs: How Pharma and Payers Can Determine Value-Based Agreements

For public decision makers, advanced therapy medicinal products (ATMPs)—medicines for human use based on genes, tissues, or cells—offer groundbreaking new opportunities for the treatment of disease and injury, but their complexities also present groundbreaking challenges related to the use of adequate evaluation methods, sustainable payment models, and organizational conditions to enable the uptake of these treatments.

Even before the first patient is treated, ATMPs require high upfront costs for public healthcare providers due to new logistical and infrastructural demands such as investments in infrastructure (equipment, storage, and treatment capacity) as well as more complex procedures for quality control. This is more than just the list price for these medicines, which are often very high. “In the last couple of years, we have seen list prices up to 2 to 3 million euros for treatment for some of the new gene therapies,” says Sarah Wadmann, PhD, senior researcher at the Danish Center for Social Science Research – VIVE. “And in addition to the cost of the medicine, there are also significant investments that need to be made to enable the use of these therapies.”

On top of the costs, the long-term clinical effectiveness (especially for so-called “one-time” treatments)—as well as an any adverse effects—are unknown. “Typically, the timeframe of clinical trials is not long enough to capture long-term effects,” Wadmann says. “And the smaller patient populations can make it difficult to make adequately powered randomized controlled trials. So for payers, it’s challenging to determine if these therapies are cost-effective, and even if they are, how to ensure affordability and patient access given the budget impact.”

Many countries are already under strain when it comes to drug spending. According to a new report from the Oslo Medicine Initiative in 2022, medicines (excluding drugs used in hospitals) accounted for 17% of total health expenditure on average in EU countries in 2016. Yet the proportion was more than 40% in Bulgaria, more than 30% in Romania, and more than 25% in Latvia, Lithuania, Greece, Hungary, Croatia, and Slovakia. “For payers, especially in lower- and middle-income countries, it’s a real concern if expenditure on new medicines outpaces the growth of other healthcare expenditures,” Wadmann says.

According to Wadmann, trying to determine the value of ATMPs has reopened some classical valuation debates, such as what counts as valid evidence for clinical effects, and how to account for other types of effects than direct health effects (eg, productivity gain). Regulators, health technology assessment agencies, and manufacturers need to find out how to deal with observational study designs and real-world data, as well as discounting—that is, determining the value of effects that will only materialize in the future.

While these valuation issues are not exclusive to ATMPs, to overcome the challenges, pharmaceutical companies, public authorities, healthcare payers, and other stakeholders must develop joint solutions. “International coordination is key because evidence production in the pharmaceutical sector is often planned on a global scale,”
Wadmann says.

Denmark and one of the first outcomes-based agreements in gene therapy
Public healthcare providers can look to a real-life example of an ATMP valuation approach in Denmark.  The Danish Medicines Council and Amgros, the buyer of medicines for Danish public hospitals, were able to collaborate with Novartis to generate an innovative outcomes-based pricing agreement for a gene therapy medication.

What helped in the beginning of the journey to determine the valuation of this product was that Denmark already had a registry for patients with hereditary eye diseases, according to Pia Krogsgaard Villadsen, MBA, head of market access for Novartis Denmark. At the time, 12 patients were diagnosed and found eligible for treatment. “That means that the patients were actually already set up for the entrance of this gene therapy into the Danish market,” Villadsen says. “That’s important to remember, because that obviously has an impact on the initial high budget impact when you talk about this treatment.”

Novartis submitted the dossier for the medication to the Danish Medicines Council in March 2019, and then did the price negotiations with Amgros after the added value assessment by the Council. These negotiations “were tough,” Villadsen says. “I must admit tougher than normal for more standard products.”

In September 2019, the Danish Medicines Council issued its first rejection for the therapy, raising concerns related to the durability of the gene therapy, and what the council stated was “an unreasonably high price,” according to Villadsen. “So it was back to the negotiation table, where we sat down for many meetings and discussions, and really tried to dig deeper to try to better understand the concerns from payers.”

Finally, on April 27, 2020, the Danish Medicines Council gave its endorsement after finalization of the negotiations on a pay-for-performance agreement. One of the critical success factors was the identification of an objective efficacy measure to build the agreement on, one actually used by ophthalmologists in clinical practice. “We decided on a success criteria for the efficacy—if we reached that, the payments would continue over a period of years, but if we didn’t hit this threshold, the subsequent payment installments would stop,” Villadsen says. “That was an attempt to both address the durability concern, but also to spread this initial high budget impact over several years.” There was also the desire from Amgros and the payers to design an agreement that could be used as a template for other disease areas as well.

Trying to hammer out the contract was essentially starting “almost from the beginning,” says Dorthe Bartels, MSc, MBA. “Again, we need to do it a little bit different than we normally do because we need to involve many more people than we do in a regular contract for a product,” says Bartels. Negotiation had to include stakeholders in the region and in the hospitals, as well as the medicines council, Amgros, and a pharmacist.

All of the negotiations resulted in a 120-page contract instead of the typical 20-page Amgros contract, Bartels says, adding that the process was “very huge, and very complex, but we learned a lot.” She adds that even though the contract was very complex to negotiate, both sides tried to simplify at least the patient data collection part of it, agreeing to “keep it as simple as possible” to collect and analyze what was needed to determine the outcomes.

Villadsen says on the Novartis side, one of the learnings was that it was important to start a dialogue early with payers, even before having all the clinical details about a therapy in hand—”even though it’s just at a conceptual level.”

“Before you put a proposal for an agreement on the table, you need to understand the concerns from the payers—both the formal ones, and the informal ones,” Villadsen says, adding that the company made the mistake of being “too quick” in offering a proposal to the Danish Medicines Council and Amgros. “When we got the first rejection, it left us frustrated, but especially also the physicians and the patients” who were waiting for the therapy to be approved.

But one of the things that made the negotiations ultimately successful was that the parties managed to agree on an efficacy measure, one “that was completely objective, not open for interpretation or disagreement,” Villadsen says. And having a patient registry already in place helped, “because from day one you can already monitor the patients and include the efficacy data for each individual patient in the registry.”

Bartels agrees that companies who want to get their ATMPs approved need to start talking earlier with payers. “And it will be very, very useful for us to have the experience...[to learn] about what’s happened in other countries around us...[and discover whether] a company has tried this before?” she says.

On Amgros’s side, “We need to do it a little differently in the future when we have these ATMPs,” Bartels says. “We have started to make a new standard contract for ATMPs, where we involve all the people in our back office—and by that, I mean that the pharmacies, the departments, the lawyers in the regions—we have checked all of these into a consultation.”

Within the next few months, Amgros is hoping to have an ATMP contract template on its homepage “so everybody can see what we are thinking should be a part of an ATMP, and what could a contract look like,” Bartels says. “Hopefully, we can have a system where we can do it in a much easier and less time-consuming way.”

Denmark’s experience with negotiating an outcomes-based agreement for this gene therapy medication showed that when it comes to negotiating ATMPs, payers and pharma can work successfully together, Bartels says, “because we both, on both sides of the table, would like this to be a success, so the patient in the end could have the medicine.”

ISPOR’s Signal series
Wadmann, Villardsen, and Bartels spoke about ATMP valuation and contract negotiations during ISPOR’s 8th Signal installment, “New Insights Into ATMP Valuation and Outcomes-Based Pricing Experience.” ISPOR started the Signal program to bring a broader understanding of innovation (beyond product innovation), with the goal of putting these issues front and center for the health economics and outcomes research (HEOR) community. Each episode in a series is a self-contained installment and not dependent on the previous episodes; however, all are connected by an intent to look at the concept of innovation and experience with it from different groups of healthcare stakeholders, building foresight into how these innovations might impact healthcare decision making in the next decade.

The first Signal program, “Next Gen Innovation: ‘How To’ From the US Department of Veterans Affairs,” highlighted how the US Department of Veterans Affairs’ ecosystem has emerged as a model for supporting the entire life cycle of innovation in a large and highly complex integrated health system. ISPOR’s second Signal series event, “From Price Determining Value to Value Determining Price: It’s About Strategy at a System Level,” looked at how to bring systems-level thinking to healthcare and how the pharmaceutical industry, payers, and HEOR experts can work together in a new system for commercial strategy. The third Signal event, “National Institute for Health and Care Excellence (NICE), UK: Transformation in Action,” looked at how how NICE intends to be at the forefront of anticipating and rapidly evaluating new and existing technologies to provide independent, world-leading assessments of value for the UK’s National Health Service and improved access for patients. The fourth Signal event, “Venture Capital Investment: Upstream Decision Making on Value in Healthcare,” examined how innovation in healthcare—from therapies to research on the best care protocols—is funded before concrete solutions come to the market, and how that paradigm can change. The fifth episode, “The New Science of Cause and Effect: Causal Revolution Applied,” addressed the challenges of causal models spanning the subjects of selection bias, personalized treatment effect, fusion of data from several sources (observational and experimental studies), and causality in observational studies as well as application of modern computing tools in HEOR. The sixth installment in the Signal series, “New Analytical Approaches to 21st Century Challenges,” focused on envisioning and discussing the approaches needed to analyze the many, often irrational-seeming, behaviors that are generated by the myriad interactions of billions of people, firms, and institutions locally or globally, in small groups or as nations, at timescales ranging from nanoseconds (as in computer trading) to millennia (as in evolution). ISPOR’s seventh Signal installment, “The Real Experience Revolution^®: Towards a New Empiricism of Health,” welcomed Christopher Lawer, creator of Umio and the Umio Community, who presented a new “radical” empiricism of health and its interactional creation, and explored how we can better see real experiences with health, disease, and illness; ask how and why do real experiences form, become different, and recur; and address the origin and persistence of health inequalities and disparities within social groups, places, communities and populations.

Christiane Truelove is a freelance medical writer based in Bristol, PA.