Biopharmaceutical innovation in oncology continues to garner premium pricing in the US healthcare system. While many of these products provide evidence of transformational health impacts on patients’ lives during clinical development, uncertainty often exists around how promising efficacy and safety clinical data will translate into real-world benefits and risks. Long -term survival data, durability of effectiveness, and heterogeneity of outcomes across diverse sub-populations represent some of the common evidence gaps at launch. Notwithstanding these limitations, the promise of alleviating the extraordinary burden of disease in cancer patients often carries a high upfront investment acquisition costs for payers, providers and sometimes patients. Warranties, and related reinsurance solutions, are emerging product offerings that are designed to remedy the value uncertainty associated with oncology drug acquisition. Warranties achieve similar business goals as value-based agreements (VBAs), allowing patients, payers, and providers to recoup investment in therapy that doesn’t achieve its effectiveness goals. Warranties mitigate some key concerns around Medicaid Best Price as well as administrative burden of traditional VBAs, holding the potential to improve equitable, affordable access to biopharma innovation by cancer patients. Yet there are costs and risks of warranties to be considered including, administration fees, risk premiums, documentation burden, manufacturer inexperience with actuarial modeling and uncertainty around government pricing implications. In this session we will explore the genesis of the warranty strategy in oncology, featuring cases that elucidate the upside and downside effects.
