A subscription model helps payers manage the total budgetary cost of a medicine, and to some extent, the actuarial uncertainty for the payer around how many patients might be taking a particular therapy, by establishing a fixed fee for a given year tied to either a target level or unlimited drug supply. Using a subscription model over multiple years can mitigate the actuarial risk of a surge from patient backlog. It can be structured to help align the incentives of public health, payers, and developers to support increased patient access to medicines.

As the figure below illustrates, once the payer and developer have agreed on a contract, this approach might include an up-front or periodic payment of the product cost, with individuals treated as needed. Depending on the contact, treatment is either unlimited (e.g., Netflix with unlimited viewing access) or up to a target level of usage.

Figure: Subscription contract with performance component

While not part of the basic contract, a performance component could also be added to the subscription agreement contract. Under this component, the developer could provide rebates for under-performance based on an outcome metric (I.e. performance-based subscription agreement).

Figure: Subscription Contract with Performance Component

This basic subscription approach has been used in practice in Louisiana and Washington state, in contracts for Hepatitis C medicines. Depending on the design, the model can address a variety of patient access issues. For example, Washington State’s approach was part of an overall state approach to eliminate hepatitis C, addressing issues including patient outreach and screening.