Does a subscription model make sense for pharma?

Drug delivery services are being encouraged to adopt the Netflix model to improve access. But would that encourage or hinder innovation and discovery? (1,210 words, 6 minutes)

Subscription models in the pharmaceutical industry seem to be emerging as innovative solutions to address drug pricing and access challenges. According to Cambridge University Press, these models offer unlimited medication access for a fixed fee over a certain period, providing predictable costs for patients and payers. This approach has shown promising results, particularly in treating conditions that require high-cost medications.

Photo by National Cancer Institute

2015 Australia became the first country to implement a drug subscription model. The federal government negotiated an unlimited supply of hepatitis C medicines for a recurring licensing fee, providing universal access to treatment at no cost to patients. This approach could enable improved treatment adherence and financial predictability. However, questions remain about its broader applicability across different healthcare systems, especially in low- and middle-income countries.

The subscription model could be particularly appealing for chronic conditions that require continuous treatment. Cambridge University Press notes that for diseases such as diabetes, where patients need lifelong medication, this model could help patients access necessary treatments without the burden of high per-prescription costs. In this way, subscription models can prioritize patient health over financial constraints. In addition to chronic conditions, subscription models are gaining attention for their potential to support the development of new antibiotics.

Expert Review of Pharmacoeconomics & Outcomes Research notes that antimicrobial resistance has become a growing threat. Still, antibiotic profitability has been limited by the low cost of generics and strict stewardship guidelines that limit their use. Harvard Business Review reports that low prices lead pharmaceutical companies to avoid developing these critical medications, resulting in a limited pipeline.

The Pasteur Act, currently under consideration in the U.S. Congress, aims to stimulate antibiotic development through a subscription model. This model could enhance innovation and access to costly treatments by delinking revenue from sales volume, incentivizing pharmaceutical companies to invest in the development of critical drugs.

Gene therapies and other high-cost treatments also stand to benefit from subscription models. According to Expert Review of Pharmacoeconomics & Outcomes Research, in cases where upfront costs are high, such as with direct-acting antivirals for hepatitis C, volume-delinked agreements provide steady revenue streams for manufacturers while enabling broader access for patients. The Washington Post reported that Louisiana adopted this model to improve access to Hepatitis C treatments in 2019 and struck a five-year deal with Gilead’s subsidiary Asegua Therapeutics for Epclusa (sofosbuvir/velpatasvir). The state planned to treat 31,000 people between 2019 and 2024.

Despite their potential, subscription models face challenges, particularly in determining appropriate pricing structures. Expert Review of Pharmacoeconomics & Outcomes Research notes that negotiating fees that balance pharmaceutical companies' financial needs with healthcare systems' cost concerns is a complex process. The duration of any agreement also requires careful thought. Shorter contract terms could encourage market competition and risk limiting long-term revenue stability.

Cambridge University Press highlights that while importing bioequivalent medications and short-term contracts could enhance competition, issues such as insufficient regulation in low- and middle-income countries lead to quality concerns and limit the distribution of generics. Achieving the right balance between fostering innovation and ensuring broad access appears to be essential to the success of these models.

Additional reading:

• Pharmaceutical Technology - Could Netflix-style subscription models work for medicines?

• Marketplace - “The Netflix Model” for antibiotics

• The London School of Hygiene & Tropical Medicine - Netflix model for antibiotic subscriptions

THIS WEEK 10/22/24

• The U.S. FDA approved Genentech’s inavolisib (Itovebi) in combination with palbociclib (Ibrance) and fulvestrant for the treatment of adult patients with endocrine-resistant, PIK3CA-mutated, hormone receptor (HR)-positive, human epidermal growth factor receptor 2 (HER2)-negative, locally advanced or metastatic breast cancer.

• Pfizer announced the U.S. FDA approved marstacimab-hncq (Hympavzi) for routine prophylaxis to prevent or reduce the frequency of bleeding episodes in patients 12 years of age and older with hemophilia A (congenital factor VIII deficiency) without factor VIII (FVIII) inhibitors, or hemophilia B (congenital factor IX deficiency) without factor IX (FIX) inhibitors.

• The U.S. FDA granted approval to Dong-A ST’s ustekinumab-srlf/DMB-3115 (Imuldosa), a biosimilar referencing Stelara, for the treatment of patients with autoimmune diseases such as plaque psoriasis, psoriatic arthritis, Crohn’s disease and ulcerative colitis.

• Incyte announced the expansion of its Moments of Clarity program, an educational initiative highlighting stories of people living with mild to moderate atopic dermatitis and their paths to finding relief. In the new program content, each patient shares defining moments throughout their journeys, including how they finally found relief with ruxolitinib cream (Opzelura).

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NOW LISTEN UP: HERE’S JOHN McKENDRY

In season 13 of the NPC Podcast, John McKendry, President and CEO of KYE, gives insights into the importance of operating within regulations, leadership in pharma, and new treatment and delivery options for ADHD. Hear him in conversation with podcast hosts Mitch Shannon, Jim Shea, and Mark McElwain.

HEALTHBIZ REWIND

This feature of NPC Healthbiz Weekly looks back at some of the most insightful moments from previous NPC Podcast episodes. In Healthbiz Rewind, you’ll read bold life sci predictions made during the renowned “Prognostication Korner” segment of the NPC Podcast.

Raj Dam
Assistant Director - Partnerships and External Relations
University of Toronto Scarborough
Season 12, episode 03
Listen to this episode here

What bold predictions do you have about the sciences or life sciences industry over the next 12 to 24 months or even longer?

Well, I can’t say for sure, but I have some predictions based on conversations with people in the industry. Let me share three overall trends I expect. The first is the growth of consumer-focused health care, especially in senior care. From my discussions with organizations and industry bodies, it’s clear that consumers are demanding more focus on their health, whether through at-home care, wearables, or other technologies that improve outcomes and reduce costs. For example, I met a company in Halifax that’s revolutionizing the use of CPAP machines for sleep apnea, a condition many Canadians manage. They’re developing technology to help users better manage their sleep with data, and they’re a great example of innovation in consumer health care.

Second, using AI in patient and professional engagement, or digital transformation at scale, is a big trend. Hospitals and pharma organizations are diving into how AI and digital tools can impact patient data and improve processes. I expect this to continue over the next 18 to 24 months. Lastly, immigration will play a crucial role in the biosciences industry. We don’t have enough skilled workers in this field nationwide, but immigration can help fill that gap. We’re bringing in talented, qualified people who can take on many of the science-based roles needed. These three trends will likely shape the industry over the next 18 to 24 months.

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INTRODUCING DERMATOLOGY.BUSINESS and the DERMATOLOGY.BUSINESS DEEP DIVE PODCAST

If you’ve been digging Dermatology.Business, the new newsletter from the same fine folks who bring you NPC Healthbiz Weekly, here’s some exciting news. Now, you can dive deeper into the Dermasphere with our supplemental podcast, published every other Wednesday at precisely 6:00 a.m. EDT. It has plenty of breaking news to tell you about, as reported directly from the Dermasphere. It’s a treat for both your eyes and ears. As far as your other senses go, you must figure that out for yourself.

Check it out here and request your free subscription.

NEXT WEEK

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