By Joseph Neu
The importance of finance leadership in initiatives by life sciences companies to deliver critical treatments to more people.
At the second meeting of NeuGroup’s Life Sciences Treasurers’ Peer Group (LSTPG), we heard from a member whose company has created a new finance solutions lead role focused on affordability. Filled by a former NeuGroup member, this role is the next step in the company’s effort to overcome the myriad challenges standing in the way of access to its drugs and their affordability. It also exemplifies the core mission for LSTPG: Sharing and learning to better support the efforts of life sciences businesses to offer lifesaving or quality-of-life-enhancing treatments, technology and devices to the world.
Defining a finance solutions lead role. An affordability role aims to coordinate with commercial leads globally and locally—along with financial services partners including banks, fintechs and payment services providers—to help improve the ability of customers to pay for the drugs they need. This can include pay-over-time financing options as well as variable pricing options when patients pay directly.
FI partnerships. Coordinating with banks and other financial institutions that are committed to social impact projects is a potential source for progress. Societe Generale, which hosted the meeting, introduced the group to its social impact solutions team, which is dedicated to helping firms across the health care space improve access, especially in developing markets, using financial solutions. It also helps companies finance necessary infrastructure and education needs, working with NGOs, the UN and economic development policy leaders in the process.
More than money. In developing markets, the access issue is about more than just pricing, profit and other money issues. Many biologics and other drugs, for example, target specific diseases that affect small portions of the population. To determine if and where they exist requires diagnostic capabilities and sharing of data. Then, if the patients are there to treat, firms need to have distribution and proper storage in country, like refrigeration, and just as importantly, awareness and education on the availability of the treatment, proper administration and patient adherence. The latter may be supported by texts to patients to remind them to take their pills daily, for example, and continue to take them though the prescribed period.
Targeting the point of sale. One area for innovation is at the point of sale. If patients faced with filling high-cost prescriptions have an easy-to-follow flow at the point of sale or prior to it—offering them instant financing (think Rocket Mortgage smartphone apps) or a special credit card to pay a preferred price in installments for items not covered or where the net cost to them would be higher—they might choose to fill them rather than walking away from the pharmacy counter.
Looking across the flow of funds. Looking across developed markets, starting with the US, efforts to bring financial innovation to bear on access and affordability are made more difficult by the combination of payer and reimbursement schemes across public and private sector players (Medicare, Medicaid, managed care organizations, pharmacy benefit managers, etc.), which are in turn entrenched by regulation and political policies. So finance leaders need to look across the health care system’s flow of funds for opportunities to increase affordability and access that exist only in discrete channels.
Single- or patient payers make it easier. Generally speaking, as the US system makes clear, it is easier to come up with financial solutions where there is a single payer (or multiple payers’ interests are aligned). In developed countries with single-payer, public sector health care schemes, for example, there is one point of contact for negotiation. However, government payers may not find variable pricing or private financing acceptable, or even allow private payments at all, meaning that financing solutions to improve access are difficult, but not impossible. One member described a pilot program to reduce co-payments on a high-priced drug (which are based on the list price vs. the end cost for the consumer) by introducing a lower-priced SKU for Medicare patients, which it could negotiate with the single payer (the federal government). Financing solutions, therefore, tend to work best where the private patient bears some responsibility for payment and/or payers’ interests are aligned with the patients’.