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E2 – Get the Facts on COVID-19: Patient Out-of-Pocket Costs

Transcript

Richard: Hello, and welcome to Avalere’s first of a series of podcast focused on COVID-19. I’m Richard Hughes, and I’m a managing director at Avalere and the leader of our vaccines team. I’m joined today by my colleague Kelly Cappio, an associate principal of acting policy and market access at Avalere. In today’s episode we will discuss the COVID-19 vaccine and focus on the timeline of development, as well as the affordability issues as discussed recently.

As we begin, Kelly, why don’t we start with this question of the availability and the timing of a vaccine. Could you address that?

Kelly: Sure. I sure can, Richard. There have been a lot of questions about this, and it is not expected that we will have a vaccine ready to deploy any earlier than in the next year to 18 months. Typical vaccine development programs from discovery to life insurer take a long time. They involve substantial investments and have a high risk of failure. There was a study that came out in 2013, looking at a decade of vaccine development, and they estimated that the entire end-to-end development of a vaccine could cost up to a billion dollars, take over a decade, and have an average of 94% failure. So, this is a complex arena. The good news is that there have been a lot of advancement in vaccine development since the decade of that study.

Companies can move much more quickly with platform technologies. In the case of COVID-19, several biotech [companies] were able to develop a COVID-19 vaccine, in terms of the design of the vaccine, within hours or days of receiving the genetic sequencing of the virus. Companies are moving very quickly, and there have been significant advancements in terms of the science, but these things do take time. In terms of just managing expectations, the time window in a best-case scenario is in 12 to 18 months. What is also good news in terms of the pipeline is that a lot of companies have announced programs. There are at least 13 biotech companies, 3 biopharmaceutical companies, and at least 5 academic institutions that have announced work on COVID-19. That is important because of the risk of failure. The more products that we have in the pipeline, the higher chance we have something to get to life insurers and can be broadly deployed.

Richard: Great. Thank you, Kelly. Maybe it would be helpful to see how this situation differs from H1N1. We saw an outbreak in 2009, and as we went into 2009-2010 flu season, we saw a vaccine made available for H1N1, in addition to the seasonal flu vaccine. How is that different from this situation?

Kelly: In 2009, when H1N1 became clearly a threat and it was not part of the strains initially selected for the seasonal vaccine, companies moved very quickly to develop and manufacturer a monovalent vaccine to address H1N1. As you said, Richard, that was a product mainly purchased by the federal government and made available to Americans free of charge. The difference there in terms of speed is there is a large manufacturer infrastructure already in place to make the seasonal flu vaccines. So that capacity and know-how can be leveraged very quickly in a case like this. There was so limited supply available in November of 2009 that there was some priority setting in terms of which populations should receive the vaccine first. But they [companies] moved quickly in a period of months to manufacturer the H1N1 monovalent vaccine. So that existing seasonal flu infrastructure made all the difference.

Richard: Great. Thanks.

Kelly: So it’s interesting, Richard, when I think about when we might have a COVID-19 vaccine available, the next questions that come to mind for a lot of people is “What will my access be to that vaccine?” and “Will it be affordable?”

There have certainly been a lot of questions about this in the media and coming from leaders in the countries. Can you talk to what we should expect in terms of access and affordability?

Richard: Sure. There were some recent comments from Secretary of Health and Human Services Alex Azar that alluded to reliance on the private sector to make vaccines available, and that really did spark some backlash and reaction from members of Congress, who want it guaranteed that a vaccine would be affordable and available. Azar attempted to persuade members of Congress that everyone would have access to a vaccine, but this raises questions on the need for price controls and discussion of the prices government would give for vaccines. But I think it’s important to back up in a conversation like this on vaccine affordability and talk about what vaccine affordability really looks like.

I think if we walk through what are some of the mechanisms to ensure coverage and access to vaccines, it becomes clear that there is a system in place and there may be gaps in that system, but those gaps predate this outbreak. Just to give some thought to the system of coverage and access that exists today, it’s a system of private coverage, government finance, and public sector vaccine availability. And I think that’s the first pathway we want to discuss, and then I’ll turn it back to you, [Kelly], to talk about the system of public health preparedness and response, where we have a backstop to make sure vaccines are available.

Just to touch first on the system of coverage for vaccines in the US, it is like the much broader health insurance coverage landscape, where it is quite fragmented. To start with Medicare, since the 1980s, beneficiaries—seniors in Medicare—have had access under Medicare Part B to the flu vaccine and pneumococcal vaccine without cost sharing. If you look at Part D, this is the prescription drug benefit in Medicare, and that is where all other vaccines that are not covered in Part B are covered. The most prominent example today is the shingles vaccines. This is where in the current environment you would see coverage of a COVID vaccine. Now this is one of the gaps that predates this outbreak, which is that seniors are still subject to cost sharing in Part D. They [Medicare seniors] typically pay out of pocket for vaccines, and that can certainly be an access barrier, but that can be addressed from a policy standpoint. And then unlike Part D, in the commercial markets—so this is all commercial and private health insurance in the US—the Affordable Care Act (ACA) requires those plans to cover vaccines without cost sharing along with other preventative services. In the US, if you had a commercial health insurance plan and needed access to a vaccine that’s recommended, then you would have access to it without any out-of-pocket cost. That requirement also applies to the Medicaid expansion programs in the states, but it interestingly doesn’t apply to traditional Medicaid. And that’s of interest because that’s where you have a lot of coverage for pregnant women, so a potentially vulnerable population. This again points out a coverage gap pre-existing before this outbreak for vaccines and access barriers in traditional Medicaid and Medicare populations.

That’s the system of private coverage for vaccines, and then when you look to the safety net or system of government finance for vaccines, there are several programs. There are vaccines for children program, which came about in the mid-1990s, ensures all children in the country who are in Medicaid who are uninsured or underinsured have access to vaccines. And the federal government purchases those vaccines and provides them for states, and then states gives them to pediatricians so those children can have access to vaccines. So those children would have access to any potential COVID-19 vaccine. There is also the section 317 immunization program that allows the federal government to procure vaccines and give those to the state for underinsured and uninsured adults. The states have varied programs for that population using federal vaccines. Now that program and the number of vaccines they can distribute depends on congressional appropriation. It dependent on the level of funding Congress gives the program. The program is also flexible in the event of an outbreak such as this, because it can distribute vaccines to any adult. Even if you had health insurance, you would be able to get a vaccine, if the government distributes through that program. That’s the conventional system of coverage and access for vaccines in the United States.

So let’s turn back to Kelly. Kelly, can you tell us about the system of public health response and preparedness, which is designed to kick into action in a situation, like this pandemic. Could you tell us about this system?

Kelly: Sure. Thanks, Richard. The Public Health Emergency Medical Countermeasures Enterprise, commonly called the PHEMCE, is a standing body of agencies and departments that consistently for years worked together to support the development, procurement and stock piling of medical countermeasures. Medical countermeasures are products that diagnosis, prevent or treat conditions that would result from a security threat—like any chemical, biological, urological, nuclear threat—or pandemic flu (pan-flu) and emerging infectious diseases. The government has been working in this area for a long time, and they enter partnerships with companies to develop these products in advance of an event so they can stockpile and be ready. Some examples of medical countermeasures are the H5N1 flu vaccine, anthrax vaccine, and small-pox product, and these products are maintained in the strategic national stockpile. The stockpile can deliver products anywhere in the United States within 12 hours, which is very impressive.

Medical countermeasures in stockpiles may be U.S. Food and Drug Administration (FDA) licensed and may also have an emergency use authorization (EUA). The FDA grants an EUA either during an emergency or in preparation for an emergency. It allows for the use of an unapproved medical product or unapproved use of an approved medical product giving the government flexibility in certain cases like emergencies to deploy products. In terms of this pathway, it’s a mechanism for the government to directly engage with partnership in getting products to the end, ready to go and have them on hand. It will be direct purchase from the government and company negotiating terms. We talked about H1N1 earlier, Richard, and the H1N1 pandemic is an example of this direct procurement mechanism. The US government bought the vaccines directly from manufacturers during the H1N1 situation and distributed to providers participating in the vaccination program and it made it much quicker in the response. It could be the case with COVID-19, the government does something similar by purchasing all the COVID-19 vaccine so that they can distribute that directly. Or, based on how the pandemic continues to unfold, we could be looking at a conventional supply and chain distribution, with the coverage and financial pathway you described Richard.

Richard: Thank you so much, Kelly. We talked about several pathways for affordability, coverage, and access for vaccines. Maybe we should touch on the role of the advisory committee on immunization practices (ACIP). This is the body at the Centers for Disease Control (CDC) that makes vaccine recommendation, and [they] do have some bearing on how vaccines are covered. What would that potential [role] look like? I know they have recently made recommendation for an Ebola vaccine that was an outbreak a few years ago. So what does that look like? And how does that depend on timing and availability of a vaccine?

Kelly: That is a good question. And feel free to jump in. But I think the type of recommendation, whether it is for a certain age group or risk group, is going to depend on how things unfold, and the timing of things, like when the vaccine will be available and what does the pandemic look like at that time. But as you mention, [Richard], the ACIP recommendation is significant in terms of triggering the requirements already in place and statute.

Richard: Yes, is it, and as I mentioned commercial requirements coverage under the ACA are the same ones that apply to Medicaid expansion, that rely on an ACIP recommendation. The ACIP drives coverage requirements for vaccines. This will be an essential component to think about for future vaccines. The timing and the outbreak situation at the time is important to think about for an ACIP recommendation. So, say if an outbreak subsides, and COVID-19 is still prevalent in certain populations but not others, could we potentially be looking at a narrower recommendation?

Kelly: We could be. And in the case of H1N1, because the vaccine supply was limited at first, ACIP recommendations played an important role in prioritizing groups for vaccination. And they [ACIP] were able to amend that recommendation as things developed. It could be a situation with a narrow recommendation at first and then it becomes broader.

Richard: Okay, great. Anything else that comes to mind when we talk about vaccine access and affordability for COVID-19?

Kelly: I hope that it will be reassuring to people to hear that there are mechanisms in place to ensure access and affordability to COVID-19, should we reach life insurer vaccine.

Richard: I agree. I think it’s important we don’t minimize the current gaps in the system. I think it’s a great time to take note of those gaps. But as vaccine affordability is being discussed, we should consider existing infrastructure systems policies already in place.

Kelly: Agreed

Richard: Great! We appreciate you listening to this first episode of this podcast series.