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Healthcare loans allow patients in multi, single-payer markets broader access to therapy, researchers say

Inspiration came from therapies with prohibitive prices, like one for hepatitis C that is highly effective but costs $84,000, authors say.

Jeff Lagasse, Associate Editor

A group of researchers has proposed a method for making expensive treatments for cancer, hepatitis C and other rare diseases more affordable: healthcare loans. They effectively work like a home mortgage and spread out payments for expensive treatments over time.

Vahid Montazerhodjat, David Weinstock and Andrew Lo floated the proposal in their study published in Science Translational Medicine. The three said these loans allow patients in both multi-payer and single-payer markets broader access to therapy, and would link payment to clinical benefit, lower per-patient cost and provide incentives to develop more curative therapies.

Moreover, they proposed securitization to finance a large, diversified pool of healthcare loans through both debt and equity, the efficacy of which is backed up by numerical simulations suggesting that a wider swath of patients would gain access to certain therapies.

The authors were inspired to examine the effectiveness of healthcare loans by a pair of therapies known not only for their results but for their prohibitive price. A new curative therapy for hepatitis C, they say, appears to cure more than 90 percent of those infected with the virus after six to eight weeks of drug treatment, but at a cost: $84,000, to be exact. At that price, treating all 2.7 million Americans with chronic HCV infection would cost $227 billion, and treating all 180 million infected persons worldwide would cost more than $15 trillion.

[Also: Experts tout securitized consumer healthcare loans as affordability cure for complex therapies]

Glybera, a gene therapy for the rare disease lipoprotein lipase deficiency, also caught their attention. It was recently approved in Germany, but at a price of $1 million; and while the effects may last the duration of a person's lifetime, the costs are typically paid for upfront.

This serves to highlight a problematic fact: Non-curative drugs are often more feasible treatments for patients than curative drugs, largely because the former is purchased in increments over the duration of benefit.

Montazerhodjat, Lo and Weinstock proposed two different models. The first is a short-term approach they claim can be implemented immediately: the establishment of a special purpose entity to fund expensive drug purchases. Under this framework, the patient borrows from the SPE to make their copayment, and the loan is amortized over a repayment period as with other consumer loans, such as mortgages, credit card debt and auto and student loans. The SPE would be financed by a pool of investors who purchase various securities -- bonds and stock -- issued by the SPE.

The second model is a longer-run solution in which private payers and government agencies assume the debt. The authors said that such an approach will likely require new regulation or legislation to address disincentives for insurers to cover transformative therapies, as well as the potential unintended consequences for lower-income patients.

"These new financing mechanisms would increase the demand for the new therapy by expanding access to a larger patient population," the authors wrote. "Hence, standard economic theory suggests that the price of therapy should increase because of this increase in demand. ... However, compared with the pricing of therapies for some cancers with much smaller populations, the current pricing of available therapies for prevalent diseases such as heart disease and high cholesterol does not support this trend."

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They also said that, since multiple companies are currently competing for a limited number of patients, creating a large Healthcare Loans market could provide substantial leverage for payers and lenders to negotiate prices downward.

The healthcare loans approach, though, would be a short-term solution.

"Large copays are antithetical to the very purpose of health insurance," they write. "Hence, our proposal for patients to cover these costs with healthcare loans is only a short-run bridging solution. A more sustainable and economically more efficient approach to address the high cost of transformative therapies is for insurance companies to cover these costs, spread the amortized costs across their policyholders, finance the upfront payments using securitization, and set premiums at the appropriate levels to cover these costs."

Twitter: @JELagasse

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