Can the Netflix Model be the answer to eradicating public health crises?
The Solution to Public Health Crises
In the last decade, the cost to develop a single pharmaceutical drug has reached upwards of 1 billion dollars, resulting in higher drug prices for consumers (1). The reason for the hike in the price of prescription drugs created by biopharmaceutical companies is due to the increasing cost of research and the low approval rates of drugs (1). Government officials have expressed worry that lifesaving drugs have reached an unattainable price for most patients. In the current payment model, Pay Per Prescription, a single payment gives one patient a single treatment, which can be an issue if the treatment has an extraordinarily high price, as is the case with the Hepatitis C drug, Epclusa, which costs $78,078 dollars per patient in the United States (2). The current payment model makes it financially unviable to offer treatment to a significant percentage of the population in need since local governments have limited budgets to treat public health crises. However, implementing a subscription payment model, also known as the “Netflix” model, can result in the eradication of treatable illnesses and the amelioration of public health in heavily affected communities. In the subscription payment model, the local government pays the biopharmaceutical company a fixed price and in exchange, they receive a high or even unlimited quantity of treatments that can be given to patients. The Netflix model benefits communities since they can treat more patients and combat the spread of the illness, while also benefiting the drug’s manufacturer since they receive a large, guaranteed payment.
Public Health Benefits of this New Model
In terms of public health, the Netflix Model can improve the rate of deaths due to Hepatitis C in the United States. Around 20,000 people die due to Hepatitis C per year and unlike many public health issues, there is a cure for Hepatitis C on the market (3). According to the National Academies of Sciences Committee, if 85 to 95 percent of people diagnosed with Hepatitis C were to be cured, the disease would be removed as a public health issue (3). However, the reason most people die from Hepatitis C is due to a lack of monetary support for treatment. Using the Netflix Model for Hepatitis C treatment is a win-win for pharmaceutical companies, the state, and the public. Local governments might be willing to pay more as a lump sum than they would be on a pay-per-prescription model since they are guaranteed a larger supply to treat the population in need (3). Pharmaceutical companies would also benefit from this new model since they could obtain higher revenue compared to the previous model, as compensation for their innovation and research of the drug (3). Besides Hepatitis C treatment, this model would be useful in tackling high HIV infection rates in states such as Florida, Louisiana, and Georgia and this would allow these states to create a subscription model for antiretroviral therapy as well as PrEP which many patients do not have access to due to cost or lack of access.
Implications of the Netflix Model in the United Kingdom
The NHS is implementing a Netflix-style subscription model similar to the one Louisiana and Washington used for Hepatitis C drugs through Gilead and AbbVie. The reason behind the implementation of this model was because the NHS wants to boost the development of antibiotics and through this model, they will be able to incentivize drug companies to create new and improved antibiotics (4). The NHS subscription model offers participating drug makers an upfront payment to gain access to their stock of antibiotics. The current system the NHS has bases the payments on the quantity of antibiotics sold to U.K.’s National Health Services. This pay-per-prescription system is not allowing for the development of new antibiotics since antibiotics are sold for a low price and new antibiotic drugs would be slightly more costly and not well suited for a system that is volume-based (4). The push for the subscription model is to improve public health in the UK since 700,000 people die per year due to drug-resistant diseases and antimicrobial resistance (AMR) may cause economic damage (4). As the Health Minister of the UK, Nicola Blackwood, said: “Having a full pipeline of antimicrobials is critical in our efforts to address AMR, but currently not enough pharmaceutical companies are investing in the development of new drugs (5).”
A New Model That Still Benefits Pharmaceutical Companies
For years, pharmaceutical companies have relied on the pay-per-prescription model, which only yields high revenue when many patients purchase the treatment. However, the rising costs of drug research and development have led drug developers to increase their prices which reduces the number of patients that can afford the treatments and therefore impacts revenue. Shifting to a subscription model could help pharmaceutical companies recoup their investments faster and make drug development an even more lucrative business. The pharmaceutical industry has high fixed costs but low marginal costs, meaning that a high initial investment is required to bring a new drug to the market, but once the drug has been developed it is comparably inexpensive to manufacture. In theory, a subscription model would be ideal for pharmaceutical companies since they would receive a guaranteed payment for the treatment, which would recoup the investment they made to develop that drug. This subscription payment method has already been put to the test in Australia when in 2015 the government negotiated a fixed payment to four pharmaceutical companies for Hepatitis C treatment drugs (2). Pharmaceutical companies would be eager to participate in bids since they would be guaranteed a slice of the profits and would prevent competitors from controlling the entire market.
References
1. Gardner, J. (2020, March 03). New estimate puts cost to develop a new drug at $1B, adding to long-running debate. Retrieved October 30, 2020, from https://www.biopharmadive.com/news/new-drug-cost-research-development-market-jama- study/573381/
2. Rosenberg, T. (2019, March 05). Treat Medicines Like Netflix Treats Shows. Retrieved October 30, 2020, from https://www.nytimes.com/2019/03/05/opinion/can-netflix-show- americans-how-to-cut-the-cost-of-drugs.html
3. Center, U., & Sood, N. (2019, August 16). Using the Drug Pricing Netflix Model to Help States Tackle the Hep C Crisis. Retrieved October 30, 2020, from https://healthpolicy.usc.edu/article/using-the-drug-pricing-netflix-model-to-help-states-tackle- the-hep-c-crisis/
4. Bell, J. (2019, July 09). UK testing Netflix-style payments to boost antibiotics development. Retrieved October 30, 2020, from https://www.biopharmadive.com/news/uk-testing-netflix- style-payments-to-boost-antibiotics-development/558369/
5. Department of Health and Social Care. (2019, July 09). Development of new antibiotics encouraged with new pharmaceutical payment system. Retrieved October 30, 2020, from https://www.gov.uk/government/news/development-of-new-antibiotics-encouraged-with-new- pharmaceutical-payment-system
