With an increasing number of biotech companies developing potentially curative treatments, both drug manufacturers and payers face challenges of funding and reimbursement. One potential solution – proposed in markets such as the UK – is to devise creative and innovative payment strategies, such as annuity payments tied to performance.
Under the performance-based annuity payment model, payers would pay for one-off treatments in installments (e.g., yearly, monthly) over the lifetime of the patient. This allows payers to spread cost over multiple time periods and ensure healthcare systems only pay for the working life of a treatment.
In this study we will explore the feasibility, opportunity and challenges such a payment system entails for small biotech enterprises, such as those which have only one asset. We aim to answer fundamental questions on how annuity payments impact the healthcare system, given high cost of goods associated with gene/cell therapies and payment risks involved. In addition, we will also look into the impact of annuity payments on the financials of the biotech, and the price and value of the product when adjusted for the cost of credit.
Contracting schemes in medtech: Challenges and opportunities
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