A March 11 policy conference in Washington produced some creative thinking about the problem of high-cost specialty drugs.  And on the same day, the RAND Corp. think tank released a study on the subject, “Borrowing for the Cure.”

The poster drug for the debate is Gilead’s hepatitis C drug, Sovaldi.  Its average wholesale price is $1,000, and a typical 12-week treatment course costs over $80,000.  No one doubts either the effectiveness of the drug or its value, including its reduction of health care costs over time.  The problem is that the value accrues over a long time frame, through reduced hospital time and avoidance of transplant costs, while all the cost is incurred in a very short time frame, 12 weeks or less.

What’s the cure?  Both the RAND study and speakers at the conference propose a debt-financing model.  That is, a payer issues a debt instrument, such as a bond, mortgage, or credit line, to the drug manufacturer, with a repayment period matching the period over which the drug pays for itself through reduced health care costs.

At first blush, the idea may be startling.  But RAND points out that the approach is common in many American industries.  No one would think it strange for a contractor to enter into an equipment lease with a manufacturer, or for a hospital to lease its imaging equipment.

The RAND study includes an important caveat: the debt-financing proposal assumes that the same payer is responsible for the patient over the life of the debt instrument or, alternatively, that the debt is transferred to the patient’s new payer.