IDEAS home Printed from https://ideas.repec.org/a/eee/hepoli/v126y2022i1p49-59.html
   My bibliography  Save this article

Amortization of gene replacement therapies: A health policy analysis exploring a mechanism for mitigating budget impact of high-cost treatments

Author

Listed:
  • Dabbous, Monique
  • Toumi, Mondher
  • Simoens, Steven
  • Wasem, Juergen
  • Saal, Gauri
  • Wang, Yitong
  • Osuna, José Luis Huerta
  • François, Clément
  • Annemans, Lieven
  • Graf von der Schulenburg, Johann-Matthias
  • Sola-Morales, Oriol
  • Malone, Daniel
  • Garrison, Louis P.

Abstract

With gene replacement therapies (GRTs) increasingly and rapidly reaching the healthcare marketplace, the vast potential for improving patient health is matched by the potential budgetary impact for healthcare payers. GRTs are highly valuable given their potential life-extending or even curative benefits and may provide significant cost-offsets compared with standard of care. Current healthcare systems are, however, struggling to fund such valuable but costly therapies. Some payers have already implemented specific financing models to account for the new treatment paradigms, but these do not address the budget impact in the year of acquisition or administration of these costly technologies. This health policy analysis aimed to assess the rationale and feasibility of amortization, within the context of financing healthcare technologies, and specifically GRTs. Amortization is an accounting concept applied to intangible assets that allows for spreading the cost an intangible asset over time, allowing for repayment to occur via interest and principal payments sufficient to repay the intangible asset in full by its maturity. Our systematic scoping review on the amortization of healthcare technologies found a very small literature base with even that being unclear and inconsistent in its understanding of the issues. Where amortization was proposed as a solution for funding costly, but highly valuable GRTs, the concept was not fully investigated in detail, nor was the feasibility of the approach fully challenged. However, by providing clear definitions of relevant concepts along with an example of amortization models applied to some example GRTs, we propose that amortization can offer a promising method for funding of extraordinarily high-value healthcare technologies, thereby increasing market and patient access for these technologies. Nonetheless, healthcare accounting principles and financing guidelines must evolve to apply amortization to the rapidly developing GRTs.

Suggested Citation

  • Dabbous, Monique & Toumi, Mondher & Simoens, Steven & Wasem, Juergen & Saal, Gauri & Wang, Yitong & Osuna, José Luis Huerta & François, Clément & Annemans, Lieven & Graf von der Schulenburg, Johann-Ma, 2022. "Amortization of gene replacement therapies: A health policy analysis exploring a mechanism for mitigating budget impact of high-cost treatments," Health Policy, Elsevier, vol. 126(1), pages 49-59.
  • Handle: RePEc:eee:hepoli:v:126:y:2022:i:1:p:49-59
    DOI: 10.1016/j.healthpol.2021.11.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0168851021002852
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.healthpol.2021.11.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hanna, E. & Toumi, M. & Dussart, C. & Borissov, B. & Dabbous, O. & Badora, K. & Auquier, P., 2018. "Funding breakthrough therapies: A systematic review and recommendation," Health Policy, Elsevier, vol. 122(3), pages 217-229.
    2. Stephen Powell, 2003. "Accounting for intangible assets: current requirements, key players and future directions," European Accounting Review, Taylor & Francis Journals, vol. 12(4), pages 797-811.
    3. Aris Angelis & Huseyin Naci & Allan Hackshaw, 2020. "Recalibrating Health Technology Assessment Methods for Cell and Gene Therapies," PharmacoEconomics, Springer, vol. 38(12), pages 1297-1308, December.
    4. Qiu, Tingting & Hanna, Eve & Dabbous, Monique & Borislav, Borisov & Toumi, Mondher, 2020. "Regenerative medicine regulatory policies: A systematic review and international comparison," Health Policy, Elsevier, vol. 124(7), pages 701-713.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Denise A. Jones, 2018. "Using real options theory to explain patterns in the valuation of research and development expenditures," Review of Quantitative Finance and Accounting, Springer, vol. 51(3), pages 575-593, October.
    2. Rositsa Koleva-Kolarova & James Buchanan & Heleen Vellekoop & Simone Huygens & Matthijs Versteegh & Maureen Rutten-van Mölken & László Szilberhorn & Tamás Zelei & Balázs Nagy & Sarah Wordsworth & Apos, 2022. "Financing and Reimbursement Models for Personalised Medicine: A Systematic Review to Identify Current Models and Future Options," Applied Health Economics and Health Policy, Springer, vol. 20(4), pages 501-524, July.
    3. repec:dau:papers:123456789/1185 is not listed on IDEAS
    4. Corinne Bessieux-Ollier & Marie Chavent & Vanessa Kuentz & Elisabeth Walliser, 2012. "The mandatory adoption of IFRS on intangibles: upheaval or inertia? The case of France," International Journal of Accounting, Auditing and Performance Evaluation, Inderscience Enterprises Ltd, vol. 8(1), pages 91-113.
    5. Marcelien H. E. Callenbach & Rick A. Vreman & Aukje K. Mantel-Teeuwisse & Wim G. Goettsch, 2022. "When Reality Does Not Meet Expectations—Experiences and Perceived Attitudes of Dutch Stakeholders Regarding Payment and Reimbursement Models for High-Priced Hospital Drugs," IJERPH, MDPI, vol. 20(1), pages 1-12, December.
    6. repec:dau:papers:123456789/1900 is not listed on IDEAS
    7. Juan Carlos Salazar-Elena & M. Paloma Sánchez & F. Javier Otamendi, 2016. "A Non-Parametric Delphi Approach to Foster Innovation Policy Debate in Spain," Sustainability, MDPI, vol. 8(5), pages 1-26, May.
    8. Tunis, Sean & Hanna, Eve & Neumann, Peter J. & Toumi, Mondher & Dabbous, Omar & Drummond, Michael & Fricke, Frank-Ulrich & Sullivan, Sean D. & Malone, Daniel C. & Persson, Ulf & Chambers, James D., 2021. "Variation in market access decisions for cell and gene therapies across the United States, Canada, and Europe," Health Policy, Elsevier, vol. 125(12), pages 1550-1556.
    9. repec:dau:papers:123456789/2618 is not listed on IDEAS
    10. Jean-François Casta & Olivier J. Ramond & Lionel Escaffre, 2008. "Economic Properties of Recognized Intangibles under Domestic Accounting Standards: Evidence from European Capital Markets," Post-Print halshs-00681592, HAL.
    11. Patel, Pankaj C. & Guedes, Maria João & Soares, Nuno & da Conceição Gonçalves, Vítor, 2018. "Strength of the association between R&D volatility and firm growth: The roles of corporate governance and tangible asset volatility," Journal of Business Research, Elsevier, vol. 88(C), pages 282-288.
    12. Elisabeth Albertini, 2019. "Integrated reporting: an exploratory study of French companies," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 23(2), pages 513-535, June.
    13. Gong, James Jianxin & Wang, Sophia I-Ling, 2016. "Changes in the value relevance of research and development expenses after IFRS adoption," Advances in accounting, Elsevier, vol. 35(C), pages 49-61.
    14. Corinne Bessieux-Ollier & Marie Chavent & Vanessa Kuentz & Élisabeth Walliser, 2010. "L'adoption en France des normes IFRS relatives aux incorporels : bouleversement des pratiques ou inertie ?," Post-Print halshs-00526410, HAL.
    15. Zapf, Anke, 2020. "Herausforderungen und Chancen bei der Bilanzierung von Kryptowährungen," Junior Management Science (JUMS), Junior Management Science e. V., vol. 5(2), pages 148-175.
    16. Aguilera-Cobos, Lorena & Rosario-Lozano, María Piedad & Ponce-Polo, Angela & Blasco-Amaro, Juan Antonio & Epstein, David, 2022. "Barriers for the evaluation of advanced therapy medicines and their translation to clinical practice: Umbrella review," Health Policy, Elsevier, vol. 126(12), pages 1248-1255.
    17. repec:dau:papers:123456789/2641 is not listed on IDEAS
    18. Karine Fabre & Anne-Laure Farjaudon, 2007. "Une Etude Exploratoire Des Regles Et Pratiques Françaises Et Internationales En Matiere De Traitement Comptable Des Actifs Incorporels," Post-Print halshs-00543078, HAL.
    19. Simone A. Huygens & Matthijs M. Versteegh & Stefan Vegter & L. Jan Schouten & Tim A. Kanters, 2021. "Methodological Challenges in the Economic Evaluation of a Gene Therapy for RPE65-Mediated Inherited Retinal Disease: The Value of Vision," PharmacoEconomics, Springer, vol. 39(4), pages 383-397, April.
    20. Karine Fabre & Anne-Laure Farjaudon, 2005. "Ecart D'Acquisition Et Normes Ias/Ifrs Une Etude Empirique Des Pratiques Des Entreprises Francaises," Post-Print halshs-00581193, HAL.
    21. Patrizia Gazzola & Stefano Amelio & Fragkoulis Papagiannis & Elena-Madalina Vatamanescu, 2019. "Financial Reporting in European Football Teams: A Disclosure Analysis of Player Registrations," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 9(4), pages 182-206, October.
    22. Carolina Zampirolli Dias & Brian Godman & Ludmila Peres Gargano & Pâmela Santos Azevedo & Marina Morgado Garcia & Maurílio Souza Cazarim & Laís Lessa Neiva Pantuzza & Nelio Gomes Ribeiro-Junior & Andr, 2020. "Integrative Review of Managed Entry Agreements: Chances and Limitations," PharmacoEconomics, Springer, vol. 38(11), pages 1165-1185, November.
    23. Rick A Vreman & Thomas F Broekhoff & Hubert GM Leufkens & Aukje K Mantel-Teeuwisse & Wim G Goettsch, 2020. "Application of Managed Entry Agreements for Innovative Therapies in Different Settings and Combinations: A Feasibility Analysis," IJERPH, MDPI, vol. 17(22), pages 1-20, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:hepoli:v:126:y:2022:i:1:p:49-59. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu or the person in charge (email available below). General contact details of provider: http://www.elsevier.com/locate/healthpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.