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six or nine digits upfront isn’t likely to reap the benefits of that cured patient way down the line. The question then becomes, can the payments be spread out over time? Sangamo Biosciences (NASDAQ: SGMO) CEO Edward Lanphier has been thinking about this problem a lot. His company is the farthest along with a gene editing therapy—a treatment for HIV in Phase 2 testing—and has just begun clinical testing with what it hopes will be a cure for hemophilia. Having tools to track people as they churn from insurer to insurer won’t be the hard part, Lanphier says, but he wonders about grayer areas—compliance, for example. If, as some have proposed, regular payments are tied to a person staying “cured,” then who decides when a person is no longer cured? What if the person stops coming to his monthly or quarterly checkup? Or, as John Rother of the National Coalition on Health Care, puts it, “What do you do with someone who has lung cancer but continues to smoke, or someone cured of hepatitis C who gets reinfected through drug use?”
Last month Andrew Lo, a finance professor at MIT’s Sloan School of Management, and David Weinstock, a researcher and physician at the Dana-Farber Cancer Institute in Boston, floated an idea that addressed several questions around paying for cures, whether one of the hepatitis C drugs now available, a T cell immunotherapy that has knocked out leukemia in early clinical trials, or a still-experimental gene therapy.
Make loans available for patients who are eligible for curative therapy, they proposed. The loans would be gradually paid back, and only if the therapy works. Other financial mechanisms, such as finding deep-pocketed guarantors for the loans, would also theoretically entice lenders to participate. The idea wouldn’t correct the pricing problem, Lo and Weinstock admit. But it could give some patients access to otherwise unattainable therapies, buying time for better solutions to emerge.
“It’s better than the status quo which is the patient doesn’t get the drug or the patient goes into bankruptcy,” Weinstock says. Wait a second. The solution to bankruptcy from medical debt is… debt? Emory’s David Howard and others found that element of the proposal and many others to be headscratchers.
Lo and Weinstock cite a study that shows 62 percent of all U.S. personal bankruptcies in 2007 were related to medical expenses, and three-quarters of those filing for bankruptcy had some form of health insurance, “which underscores the need for a more efficient health care loan market,” they write.
“Our ulterior motive,” Lo says, “is to shame politicians into passing the necessary legislation to cover these therapies through insurance, and it seems that the best way to do this is to have patients ‘mortgaging their health’ through the private sector.”
(Lo has experience running seemingly far-out ideas up the healthcare flagpole. In 2012 he sketched out the idea of a several-billion-dollar “megafund” that would buy and develop a portfolio of drugs, a version of asset financing on steroids. Three years later, this happened.)
Lo and Weinstock want to convene a conference this fall to flesh out the loan idea. Whether their brainchild actually grows into a loan program or not, elements of it are common to many of the creative ideas now in play, so the conversation should be welcome. For many, the question isn’t if changes are coming, it’s when.
“It behooves us and others to think about annuity models, loans, pay-for-performance, to go through them all and cross-match them with what needs to change with [federal] policy,” says Werner, adding that his Alliance for Regenerative Medicine is not yet leaning one way or another. “We need to get those ideas on the table by the end of this year, so when the federal government takes up drug prices, we’ll have proposals out there.”