New warranty solution enables drug makers to back high-cost therapies should they fail
New York | May 8, 2023
Marsh, the world’s leading insurance broker and risk advisor and a business of Marsh McLennan, and Octaviant Financial, Inc., a recognized innovator in novel drug warranty and payment models, announced today a new specialized warranty program that enables pharmaceutical companies to expand patient access to their life-changing gene, cell, and specialty therapies.
Advanced therapies hold the promise of curing rare diseases, genetic disorders, and cancers, in a single dose treatment. Since 2017, the US Food and Drug Administration (FDA) has approved 27 such therapies, with thousands more in development or clinical trial phases. Each treatment, however, costs tens of thousands to several million dollars, which can strain the health care system with upfront costs and bar patient access, despite the potential to lower overall health care expenses over time.
Marsh and Octaviant are collaborating to offer pharmaceutical manufacturers a program to customize and implement therapeutic warranties to ease these concerns. The warranties provide health care payers, including Medicaid and Medicare, reimbursement should an advanced therapy treatment fail to deliver the expected medical outcomes on a given patient. They also are compliant with the latest Centers for Medicare and Medicaid Services (CMS) guidelines and state insurance regulations, allowing for reimbursement up to the full cost of the therapy. In addition to the warranties, the Marsh/Octaviant program provides pharmaceutical clients access to strategic insights and proprietary tools, such as therapeutic actuarial services and Octaviant’s precision finance platform, to bring competitive warranties to market.
“To fully realize the benefit of these advanced therapies, health care payers should have meaningful financial recourse in instances where these therapies do not perform as expected,” said Eddie Albers, US Life Science Industry Practice Leader, Marsh. “A well-structured, compliant warranty, issued in conjunction with an advanced therapy, substantially mitigates this risk. It gives health care payers more confidence to cover potentially life-altering therapies, expands access to more patients, and maintains an incentive for manufacturers to develop innovative treatments.”
Emad Samad, CEO, Octaviant, added: “Implementing successful therapeutic warranties requires specialized expertise in disciplines like corporate strategy, reinsurance, and actuarial analysis. Our collaboration with Marsh and the larger Marsh McLennan, leverages the combined capabilities of both firms and consolidates them under one offering. Pharmaceutical manufacturers finally have a platform to create differentiated warranty programs that, unlike current solutions, are meaningful to payers and drive greater utilization of therapies that can save the health care system significant cost and improve patient lives.”
The Marsh/Octaviant warranty program is available to Marsh’s life science clients commercializing any pharmaceutical, including advanced gene and cell therapies. Each warranty program and funding mechanism will be bespoke to the pharmaceutical company and in line with the latest guidelines.