Is paying a “mortgage” the solution to expensive prescriptions?

An economist at the Massachusetts Institute of Technology and an oncologist at Harvard have proposed putting highly effective but prohibitively expensive drugs in the hands of consumers: installment loans for health care.

Entry last month in the journal Scientific translational medicine, the authors compare drug loans to mortgages, noting that both can allow consumers to purchase big ticket items that require a large upfront payment that they might not otherwise be able to afford.

Some consumer advocates and health insurance experts see it differently.

“Isn’t that why we have health insurance?” asked Mark Rukavina, a Boston-based healthcare consultant whose work has focused on affordability and medical debt. “Insurance protected people from financial ruin for these unpredictable and costly events. Now, with large deductibles, we have coverage for preventive care, but not for treatment. “

Andrew Lo, a financial economist at the Sloan School of Management at MIT, and Dr David Weinstock, oncologist at the Harvard-affiliated Dana-Farber Cancer Institute, agree that insurance would be a better option. But for many consumers, this protection is not enough these days.

“It’s a temporary private sector way of dealing with something right now,” Lo said.

Their proposal calls for loans to be funded by a pool of investors who would buy bonds and stocks issued by an organization that provides loans to consumers.

While it is “unpleasant” to talk about patients mortgaging their lives for treatment, Lo said, they hope the proposal will spur change.

Health care installment loans offered by Lo, Weinstock and their co-author Vahid Montazerhodjat, a former MIT doctoral student who worked with Lo, would aim to help people afford “transformative” therapies that cure life-threatening conditions such as cancer or hepatitis. C. They are not designed to pay for the maintenance drugs that help people cope with chronic illness. It is easier for insurers to cover maintenance drugs because they are purchased over a long period of time, they said.

In contrast, the breakthrough hepatitis C drugs Sovaldi and Harvoni, for example, can cure people of destructive liver disease in a matter of months, but the price of $ 84,000 or more has led many insurers to limit coverage to people whose disease has progressed significantly to show signs of liver damage.

“There are miraculous cures like Harvoni, but they are beyond reach” for many people, Lo said.

According to the authors, someone who wanted Harvoni treatment could take out a nine-year health care loan at an annual interest rate of around 9%. In a variation of conventional loans, if therapy does not work or if the patient relapses or dies, the patient is not obligated to repay the loan.

Do sick patients have a good loan outlook? Lenders might want to assess not only the creditworthiness of loan applicants, but also their health to determine if the applicant is likely to live long enough to repay it.

The study’s authors say that demanding reimbursement only if the treatment works will protect patients and spur the development of more effective drugs.

This is the wrong approach, said A. Mark Fendrick, director of the University of Michigan Center for Value-based insurance design.

Medical treatment is not always straightforward. Even highly “transformative” drugs such as Sovaldi are not guaranteed to work, Fendrick said, and other factors come into play. For example, about 10% of people prescribed Sovaldi for hepatitis C n have not completed their treatment, Fendrick said, referring to analysis by the CVS Health Research Institute.

“In this situation, the person who does the right thing and gets the right result is penalized and has to pay back,” he said. Instead, he argued, patients who follow their doctor’s recommendations and “do what you’re supposed to do” shouldn’t be held responsible for loans.

The proposal does not address drug prices except to say that the potential for increases due to increased demand for previously unaffordable therapies needs to be addressed.

Price increases are a real concern, said Paul Ginsburg, director of public policy at the Schaeffer Center for Health Policy and Economics at the University of Southern California. The health law made it easier for people to buy expensive drugs. It extended Medicaid coverage to millions of low-income adults and capped the amount that consumers typically spend on care each year at around $ 7,000.

“It helped people, but it also pushed up the prices,” he said. From a pharmaceutical company’s perspective, “it just means more people can afford this drug, so we can charge more.”

Lo said MIT’s Financial Engineering Lab and the Dana-Farber Cancer Institute will host a conference this winter to bring together drugmakers, insurers, patient advocates, financial engineers and others to discuss strategies to make drug therapy more affordable. Health care loans will be the order of the day, he said.

Kaiser Health news is an editorially independent program of the Henry J. Kaiser Family Foundation, a non-profit, non-partisan health policy research and communications organization not affiliated with Kaiser Permanente. You can see the original report on its website.

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