Annual Meeting

Q&A with Bruce Pyenson

Francesca Cook, MPH - June 03, 2021

ASGCT Government Relations Committee Chair Francesca Cook talked to Bruce Pyenson about reinsurance and risk, U.S. healthcare, and how the system will need to adapt to regenerative therapies.

Bruce Pyenson is adjunct clinical associate professor of New York University’s School of Global Public Health and is a member of the Institute for Healthcare Delivery Science at the Mount Sinai Health System. He focuses on utilizing data science and actuarial practices to address pressing issues in healthcare and has co-authored some 30 peer-reviewed publications on topics ranging from lung cancer screening to survival in hospice, medication errors, and reinsurance for high-cost biotechnology products.

Bruce presented a talk in the pre-meeting workshop Emerging Issues in Market Access on May 10, just before the 24th Annual Meeting. In this Q&A, conducted by ASGCT Government Relations Committee Chair Francesca Cook, Bruce discusses reinsurance and risk, U.S. healthcare, and how the system will need to adapt to regenerative therapies. Want to catch up on the workshop? Registered attendees can access it on-demand on the meeting platform and on through August 13!

Francesca Cook (FC): The role of reinsurance was a topic addressed by several panel members in the Emerging Issues in Market Access workshop. You noted that a new reinsurance vehicle which might pool multiple therapies could improve gene and cell therapy financing, and ultimately patient access. Please tell us how that might work and whether this type of solution would work for both rare disease therapies as well as for more prevalent diseases.

Bruce Pyenson (BP): The reinsurance industry is successful and stable, and it’s an essential part of the finance sector. However, it is far removed from the delivery of care to patients and the complex food chain of distribution, from the manufacturer to the patient. What is needed is a vehicle that combines care delivery, medical management, Centers of Excellence, and simplified distribution with reinsurance financing. The reinsurance industry can provide the financial expertise for large-scale pooling across multiple products. However, other expertise is needed—the knowledge to squeeze cost inefficiencies out of the distribution system, to contract with manufacturers for discounts, to provide appropriate patient services and medical management, and to connect with the right medical providers. The right experts might see today’s intermediary mark-ups as opportunities to reduce payer spending and bring value. That’s why a new type of vehicle is needed.

FC: What factors do you believe are driving up the cost of healthcare?

BP: International comparisons show that U.S. healthcare spending is far higher than in any other country, and our outcomes and quality are mediocre. I’m an enthusiast for efficiency, but we’re really about as efficient as other countries in terms of avoidable care. The problem is that our prices are much higher. A year ago I wrote a blog in Health Affairs, “There’s Nothing Wrong With US Healthcare That Less Money Couldn’t Fix.” I was hardly the first to say it. It seems that healthcare price inflation has been such a fact that it’s built into our regulatory language, financial forecasts and expectations. However, we can start by asking, “Why not deflation?”

FC: What can we learn from corporate risk managers regarding ways individual companies can develop risk-sharing options of interest to payers?

BP: Risk managers in the pharma industry are the financial professionals who arrange for various kinds of insurance for the company—for example, product liability insurance, workers’ compensation, and business interruption insurance. Their job is to efficiently protect the company from risks, and they work with their insurance brokers and various kinds of property-casualty coverage. They know what actuaries do, and they know what captive insurance companies are. These experts can help bring discipline to what are often rather diffuse internal discussions about risk-sharing arrangements.

FC: Given your 30+ years working in healthcare, do you believe that our healthcare system can adapt to support the proliferation of one-time gene and cell therapies as it has adapted to other innovative technologies (e.g., monoclonal antibodies), or do you think we are at a breaking point that requires wholesale changes around how healthcare is financed and paid for?

BP: I’ve written that we will never get to personalized medicine unless we figure out how to take full advantage of biosimilars. An argument could be made that advances such as cell and gene therapy are better value than spending on drugs for which biosimilars are available. Also, the misinformation and regulatory barriers to equivalence may well also be barriers to approved personalized medicine. On the other hand, the productivity gains of Moore’s Law for chip engineering and manufacturing ought to apply to protein synthesis, PCR, and many other advanced techniques that are at the heart of gene and cell therapies. Innovation always threatens the status quo, and it’s not clear whether innovation will prevail.

FC: What concerns do you have around patient out-of-pocket costs and how we can support patient access, while also considering some of the healthcare financing changes you note above?

BP: Problems with affordability are fundamentally about healthcare costing too much. People’s real income has been stagnating for years, and rising healthcare costs are siphoning money that could go to wages, infrastructure, education, housing, public health, etc. These other items, by the way, are more important to people’s health than healthcare.

FC: What topic in healthcare are you most passionate about right now, and why?

BP: I’m particularly passionate about system change in healthcare. We have been “re-engineering” healthcare with efficiency in mind for decades, but costs keep climbing, and our outcomes are getting worse compared to other countries. I’m hopeful that a shift to risk and fixed budgets will reverse the incessant inflation. It will take new players, innovation, and new entrants. The overdue spotlight on disparities will be a key driver. And as the piece I mentioned before says, “there’s nothing wrong with U.S. healthcare that less money couldn’t fix.”

Bruce Pyenson is a Principal and Consulting Actuary at Milliman, Inc. His views do not represent those of Milliman.

Francesca Cook, MPH, is chair of the ASGCT Government Relations Committee

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