The goal is to increase value in the U.S. health care system.
John Arnold and Laura Arnold, the Houston-based philanthropic couple, are donating $7.2 million to jumpstart innovative solutions that can better control rising pharmaceutical prices and provide more equitable access for all patients.
The donation, made through their Laura and John Arnold Foundation, will be spread across four organizations, all of which are focused on finding new value-based business models to link drug pricing to health outcomes, the foundation announced Wednesday.
The affordable health care focus is a new area for John and Laura Arnold, a former energy trader and lawyer, respectively. Their foundation’s previous commitments were focused on areas like education and the criminal-justice system.
“There are major flaws in our drug-purchasing structures, and we must address these issues as part of the effort to improve patient health and manage the cost of care,” said Kelli Rhee, vice president of the Laura and John Arnold Foundation.
Prescription drug spending has reached record highs in recent years, which has put a strain on both patient and government budgets. Total spending on prescription medicines in the U.S. grew 12.2% in 2014 to a total of nearly $298 billion, according to government data. For comparison, drug spending rose 2.4% in 2013.
The Memorial Sloan Kettering Cancer Center’s Evidence Driven Drug Pricing Project run by Peter Bach, an outspoken advocate for better drug pricing metrics, will receive $4.7 million of the total grant. The money will help evaluate alternative value-based payment structures for specialty drugs, among other innovative business models. Such value-based payment models link the actual outcome of a medicine to the price that’s paid, rather than having a set price regardless of how well it may or may not work for a particular patient.
The remaining grant money will go to similar projects being conducted by the Center for Evidence-based Policy at Oregon Health and Science University ($1.6 million), the Program on Regulation, Therapeutics, and Law at Brigham and Women’s Hospital ($748,445), and the National Academy of Sciences Institute of Medicine ($200,000).
“By funding multiple research groups working in overlapping areas of policy and drug economics, the Laura and John Arnold Foundation is creating the infrastructure to test new approaches to pricing and payment that can increase patient access and rationalize the approach to pricing from an industry and policy perspective,” said Bach, head of the Center for Health Policy and Outcomes at Memorial Sloan Kettering.
The multi-million grant is the second such commitment the Arnolds have invested into funding research for better drug pricing models. The foundation also gave $5.2 million to the Institute for Clinical and economic Review (ICER) in July last year. ICER is know for its public reports that put a value-based price on new drugs based on clinical evidence.