The following glossary was developed to clarify selected more technical terms used in the FoCUS Paying for Cures Toolkit. In recognition of the technical expertise of the sources, the definitions were generally taken word-for-word from the referring source, with some small variations in limited cases as needed to align with the context in the toolkit. All references were pulled in the month of February 2020.
340B Pricing — Section 340B of the Public Health Service Act requires pharmaceutical manufacturers participating in Medicaid to sell outpatient drugs at discounted prices to health care organizations that care for many uninsured and low-income patients. These organizations include community health centers, children’s hospitals, hemophilia treatment centers, critical access hospitals (CAHs), sole community hospitals (SCHs), rural referral centers (RRCs), and public and nonprofit disproportionate share hospitals (DSH) that serve low-income and indigent populations. The program allows 340B organizations to stretch limited federal resources to reduce the price of outpatient pharmaceuticals for patients and expand health services to the patients and communities they serve. These organizations may use 340B savings to provide free care for uninsured patients, offer free vaccines, provide services in mental health clinics, and implement medication management and community health programs. Reference
Accrual Accounting — Accounting can be done on a cash basis (cash accounting) or on an accrual basis (accrual accounting). Accrual accounting records income and expenses in the period to which they are attributable rather than when cash payments come and go. For example, a check written in April for March's utilities would appear as a March expense under the accrual method. Reference
Accumulator – Refers to the running total amount of money you have paid towards your out-of-pocket maximum for covered services. This includes the amount you have paid towards your deductible, copays and coinsurance, but not your monthly premium payments. Reference
Accumulator Adjustment Program – A program used by pharmacy benefit managers (PBMs) which allows them to identify when a manufacturer copay card has been used and prohibits it from counting towards your deductible or OOP maximum. Reference
Actuarial Risk – In general, actuarial risk refers to the risk that the assumptions actuaries implement into models used to price specific insurance policies may prove to be inaccurate or wrong. (Reference) In the toolkit, we use actuarial risk to refer to the risk that the plan may not be able to accurately predict how many patients it will have on a durable cell or gene therapy.
Adeno-Associated Virus — A single stranded DNA virus that has not been found to cause disease in humans. This type of virus is the most frequently used in gene therapy. Reference
Adeno-Associated Virus Vector — Adeno viruses used as vehicles for genes, whose core genetic material has been removed and replaced by the gene that is missing. Reference
Adenovirus — A member of a family of viruses that can cause infections in the respiratory tract, eye, and gastrointestinal tract. Reference
Adjudicate — Comparing a member’s benefits to a claim the patient or his or her doctor has submitted for a health care service (example: office visit) to determine the amount of payment for a claim, what portion the plan pays and what portion the member pays. Reference
Administering Provider — A physician or health care facility trained to administer a particular gene or cell therapy. May not be the patient’s regular provider.
Adoption Curve — Adoption curves are an illustration of the stages in which the adoption of a technological innovation grows in a market.
Adoption Rate – the pace at which a new technology is acquired and used by the public: The speed at which users begin to use a new product, service or function.
Advanced Durable Therapy – As used here, a gene or cell therapy resulting from innovative new science and whose effect is expected to last for a meaningful period of time (minimum 18 months, but hopefully many years) after it is administered.
Adverse Selection — “Adverse selection” describes a situation in which an insurer (or an insurance market as a whole) attracts a disproportionate share of unhealthy individuals. It occurs because individuals with greater health care needs, when given the opportunity, are more likely to purchase health insurance and to purchase health insurance with richer benefits than individuals with fewer health care needs. Adverse selection is a challenge for health plans as it changes their expected pool of enrollees. It can increase premiums for everyone in a health insurance plan or market because it results in a pool of enrollees with higher-than-average health care costs. The higher premiums that result from adverse selection, in turn, may lead to more healthy individuals opting out of coverage, which would result in even higher premiums. Reference
Affordable Care Act — The Affordable Care Act (ACA), signed in 2010, fundamentally restructured the health insurance market in the U.S. One of its provisions required insurers to sell to all customers, regardless of health status, and not charge beneficiaries higher premiums due to pre-existing condition. Reference
Aggregate Stop Loss Insurance – See Stop Loss Insurance
Aggressive Cancers — In medicine, aggressive describes a tumor or disease that forms, grows, or spreads quickly. It may also describe treatment that is more severe or intense than usual. Reference
AKS – see Anti-Kickback Statute
Alternative Therapies – Alternative medicines or treatments for a particular condition
Alternative Treatment Options – Alternative medicines or treatments for a particular condition
Anti-Kickback Statute (AKS) — A criminal law that prohibits the knowing and willful payment of "remuneration" to induce/encourage or reward patient referrals or the generation of business involving any item or service payable by the Federal health care programs (e.g., drugs, supplies, or health care services for Medicare or Medicaid patients). Remuneration includes anything of value and can take many forms besides cash, such as free rent, expensive hotel stays and meals, and excessive compensation for medical directorships or consultancies. In some industries, it is acceptable to reward those who refer business to you. However, in the Federal health care programs, paying for referrals is a crime. Reference
ASP – see Average Sales Price
Average Sales Price (ASP) — A drug pricing method developed for drugs and biologicals covered under Medicare Part B. Manufacturers submit the ASP data for their products to the Centers for Medicare & Medicaid Services (CMS); payment to providers is 106% of the ASP, less applicable beneficiary deductible and coinsurance. Reference
Beneficiary Populations – Persons eligible to receive insurance benefits. Reference
Benefit Design – As a verb, a process of determining what level of coverage or type of service should be included in a medical or pharmacy benefit. Reference
Billing Codes – Codes assigned to particular medical services, procedures and treatments to allow them to be submitted for reimbursement.
Buy-and-bill — Under a buy-and-bill model, providers acquire the product, administer it and then receive payer reimbursement later with a mark-up.
Capped — A cost that has a maximum or a maximum budgetary limit. Typically used in the context of patient out-of-pocket costs, which can have a maximum limit.
Care Coordination — Deliberately organizing patient care activities and sharing information among all of the participants concerned with a patient's care to achieve safer and more effective care. Reference
Care Setting – The location in which treatment and care are administered. Could hospital inpatient, hospital outpatient, clinic, physician’s office, etc.
CAR-T Therapy — A type of treatment in which a patient's T cells (a type of immune system cell) are changed in the laboratory so they will attack cancer cells. T cells are taken from a patient’s blood. Then the gene for a special receptor that binds to a certain protein on the patient’s cancer cells is added in the laboratory. The special receptor is called a chimeric antigen receptor (CAR). Large numbers of the CAR T cells are grown in the laboratory and given to the patient by infusion. CAR T-cell therapy is approved for treatment of several cancers and under study in additional types of cancer. Also called chimeric antigen receptor T-cell therapy. Reference
Carveout — Refers to the ability to separate out a particular population with a certain type of actuarial risk and manage that population as part of a different risk pool, perhaps managed by another party with greater ability to handle that risk.
Carving-out Actuarial Risk – See carveout
Cash Accounting — Accounting can be done on a cash basis (cash accounting) or on an accrual basis (accrual accounting). Cash accounting records cash inflows and outflows in the period in which they occur. For example, a check written in April for March's utilities would appear as an April expense under the cash method. Reference
Cell — The basic structural and functional unit of all living organisms containing a nucleus with genetic information, organelles, cytoplasm and elements for energy production; building block of an organism. Reference
Cell Therapy – See Cellular Therapy
Cellular Therapy — Transferring cells into a person to improve disease outcomes. Reference
- Encapsulated Cellular Therapy: The therapeutic use of cells (typically human) which have been engineered to make and secrete clotting factors that are shielded from the patient’s immune system and implanted in the body to achieve long term results in disease outcomes. Reference
- Allogeneic Cellular Therapy: Cell therapy using cells from a donor that are altered to create a therapeutic effect (e.g., engineered to produce therapeutic levels of FVIII to treat Hemophilia A), then placed into a patient who was not the original donor. This type of requires either encapsulation or immune suppression to function long term. Reference
- Autologous Cellular Therapy: Cell therapy using cells from a patient that are altered to create a therapeutic effect and placed back into the same patient who donated the cells originally. Reference
Cellular Harvest – Removing cells from a patient as part of a treatment.
Cellular Re-introduction – Re-introducing (modified) cells into the patient as part of a treatment.
Centers of Excellence — Formally defined, a center of excellence is a program within a healthcare institution which is assembled to supply an exceptionally high concentration of expertise and related resources centered on a particular area of medicine, delivering associated care in a comprehensive, interdisciplinary fashion to afford the best patient outcomes possible. Reference
Certification – The process of confirming that a provider has the knowledge and skills to administer a particular treatment or manage a particular patient population to a certain standard.
Charitable Write-offs – Forgiving debt of individuals who cannot pay.
Chronic Condition — Chronic diseases are defined broadly as conditions that last 1 year or more and require ongoing medical attention or limit activities of daily living or both. Reference
Claim Adjudication — Comparing a member’s benefits to a claim the patient or his or her doctor has submitted for a health care service (example: office visit) to determine the amount of payment for a claim, what portion the plan pays and what portion the member pays. Reference
Clearance – As used in this document, means the treatment of the prevalent population for a particular indication.
Clinical Benefit — Clinical benefit is a favorable effect on a meaningful aspect of how a patient feels (e.g., symptom relief), functions (e.g., improved mobility) or survives as a result of treatment. Clinical benefit may be measured as an improvement or delay in the progression of a disease or condition (as manifested by how a patient feels/functions). Reference
Clinical Trial – A research study in human volunteers and is designed to answer specific questions about a disease, new therapies, or new ways of using known treatments. Clinical trials (also called medical research and research studies) are used to determine whether new drugs or treatments are both safe and effective. Carefully conducted clinical trials are the fastest and safest way to find treatments that work in people. Trials are in four phases: Phase I tests a new drug or treatment in a small group to evaluate safety and toxicity. Some Phase I trials solely examine characteristics of a disease and provide needed background information for developing novel therapies. Phase II expands the study and begins to assess efficacy. Phase III expands the study to an even larger group of people and often compares the agent to a standard of care treatment. Phase IV takes place after the drug or treatment has been licensed and marketed. Reference
Clinically Eligible Population – The population that is eligible to receive a particular treatment from a medical perspective. The total estimated incidence and prevalence based on targeted searches of published and online literature for each disease in the US, adjusted downwards to reflect the typical clinical trial criteria for each indication. This is based on an assumption that product labels will ultimately reflect clinical trial populations.
Clinicaltrials.gov — A database of privately and publicly funded clinical studies (medical studies of human volunteers) conducted around the world. (Reference) All clinical trials of FDA-regulated drug, biological, or device products that meet one of the following conditions must be registered in clinicaltrials.gov:
- The trial has one or more sites in the United States
- The trial is conducted under an FDA investigational new drug application or investigational device exemption
- The trial involves a drug, biological, or device product that is manufactured in the United States or its territories and is exported for research. Reference
Code Issuance – New billing codes are issued and retired as needs change. New therapies and services need new billing codes. Sometimes codes specific to a particular new treatment or service are not available when the treatment first becomes available. This can complicate appropriate reimbursement for providers.
Coinsurance – A form of medical cost sharing in a health insurance plan that requires an insured person to pay a stated percentage (rather than a set dollar amount) of medical expenses after the deductible amount, if any, was paid. Reference
Coinsurance Payments – Payments made by a health plan member as part of their coinsurance requirements.
Commercial Insurance – Insurance offered by private organizations, (Reference) and not government entities. Also known as private insurance. May be purchased by the individual directly or through their employer.
Community-based Provider — A physician or health care facility located in a patient’s community. May not be trained to administer a particular gene or cell therapy, but may support follow-on monitoring or care, as well as ongoing patient services and treatment.
Complete Responders – Individuals for whom all signs of cancer have disappeared in response to treatment. This does not always mean the cancer has been cured. Also called individuals in complete remission. Reference
Completion Curves – Statistical estimates that relate the time taken to complete a clinical trial to the number of trials taking that amount of time. In FoCUS pipeline analysis these were used probabilistically to forecast whether an active trial would be completed in the current year of forecast.
Copay Waiver — Not requiring patient payment of the copay, typically under specific circumstances.
Co-pay or Copay - A flat dollar amount you must pay for a covered program. Example: you may have to pay a $15 copayment for each covered visit to a primary care doctor. Reference
Cost Offsets – Costs for other treatments or in other areas of patient care that would be eliminated as a result of a new treatment and whose savings could be used as an offset to the cost of the new treatment.
Cost Sharing Limits – Limits on patient out-of-pocket costs, including copayments, coinsurance, deductibles, etc., for in-network services. Also known as out of pocket maximum limits. Reference
Coverage Policies – A health plan’s policies defining what services and treatments will be covered by the plan and under what circumstances.
Covered Lives – The number of individuals covered by a particular health plan.
CRISPR-Cas9/ZFN Genome Editing Therapies — Genome editing technologies enable scientists to make changes to DNA, leading to changes in physical traits, like disease risk. Scientists use different technologies to do this. These technologies act like scissors, cutting the DNA at a specific spot. Then scientists can remove, add, or replace the DNA where it was cut. The first genome editing technologies were developed in the late 1900s. More recently, a new genome editing tool called CRISPR, invented in 2009, has made it easier than ever to edit DNA. CRISPR is simpler, faster, cheaper, and more accurate than older genome editing methods. (Reference) Cas-9 and ZFN (zinc finger nuclease) are particular techniques for applying CRISPR.
Cross-subsidizing – Using profits from one activity to pay for another activity that is losing money or making less money. Reference
Data Monitoring Processes – Processes for tracking patient treatments, services and outcomes over time.
Deductible — The amount you must pay for covered care before your health insurance begins to pay. Insurers apply and structure deductibles differently. Example: under one plan, a comprehensive deductible might apply to all services while another plan might have separate deductibles for benefits such as prescription drug coverage. Deductibles for family plans may be embedded or non-embedded. Under an embedded deductible, each family member must meet his or her own deductible until the overall family deductible amount has been met. Under a non-embedded deductible, the overall family deductible must be met before the plan begins to pay. Reference
Deductible Waiver – Not requiring patient payment of the deductible, typically under specific circumstances.
Delivery Channel – The intermediaries and providers through which a medicine gets from developer to patient. May include wholesalers, specialty distributors, specialty pharmacies, physicians, hospitals, and others.
Developer – A company or organization responsible for bringing a new medicine through discovery and clinical trials.
Disease burden — Disease burden is the impact of a health problem as measured by financial cost, mortality, morbidity, or other indicators. It is often quantified in terms of quality-adjusted life years or disability-adjusted life years, both of which quantify the number of years lost due to disease.
Disease Group – A collection of indications with a common core — in this case therapeutic areas, e.g., oncology/cancer, neurological, etc.
Disease Processes – The paths by which a disease evolves over time within the patient.
Disease Progression – The evolution of a disease over time; Typically becoming worse.
DRG – See Diagnosis Related Group
Diagnosis Related Group (DRG) – Under the Inpatient Prospective Payment System (IPPS), Medicare pays for a patient’s inpatient hospital stay under 1 bundled payment, which covers all costs for acute care services performed. Some examples of costs include room and board, operating room, nursing, supplies, laboratory services, and radiology. Although drugs, devices, and supplies typically fall under this bundled payment, there is an exception to this rule, known as new technology add-on payments (NTAPs). When certain criteria are met, the Centers for Medicare & Medicaid Services (CMS), may provide additional payment for new, high-cost technologies in the inpatient setting. An NTAP provides additional payment to hospitals above the standard Medicare Severity Diagnosis-Related Group (MS-DRG) payment amount. A given technology’s NTAP designation lasts no more than 3 years for a specific indication. Reference
Diagnosis Related Group (DRG) rate – The rate at which a particular Diagnosis Related Group is reimbursed.
Drug Utilization Review — An ongoing review of prescribing, dispensing and use of medication. It is often used as utilization management tool to control and promote more efficient use of scarce health care resources. Reference
Durability – As used in the toolkit, the time medicine effectiveness is expected to last or endure.
Economic Benefits – Financial benefit associated with a particular treatment in the form of either cost savings or better health.
Ecosystem — Something (such as a network of businesses) considered to resemble an ecological ecosystem especially because of its complex interdependent parts. Reference
Efficacy — The ability, especially of a medicine or a method of achieving something, to produce the intended result. Reference
Eligible Population – The population able to receive a particular treatment based on the product label and approved indication.
Ex vivo — Outside of the living body. Reference
Excess Insurance – Excess insurance is insurance coverage that kicks in when a particular loss reaches a certain amount. At that point, insurer will cover losses in excess of that sum up to the policy limit. For insurance companies or HMO, excess insurance is termed reinsurance. Excess insurance for self-funded employers is termed as stop-loss coverage. Excess insurance covers a claim after the primary ipayer limit has been exhausted or used up.
Executional – The ability to operationally deliver or appropriately manage a process.
Expansion – Multiplying cells that have been genetically modified to the right number required for re-insertion into the patient. Reference (Adapted)
Expiration – Medicines are subject to expiration dates.
Factoring — A financial arrangement between the factor and client, in which the client gets advances in return for receivables, from a financial institution (factor). It is a financing technique. In the case referred to here, the financial institution might “buy” at a discount a payment due to a company (the client) in the future and pay the company up front or in annual payment.
Financial Strength – In this case, refers to the financial stability of the plan or other intermediary.
First-line Therapies — The first treatment given for a disease. It is often part of a standard set of treatments, such as surgery followed by chemotherapy and radiation. When used by itself, first-line therapy is the one accepted as the best treatment. If it doesn’t cure the disease or it causes severe side effects, other treatment may be added or used instead. Also called induction therapy, primary therapy, and primary treatment. Reference
Gene Replacement Therapy – A medicine that replaces a faulty gene or adds a new gene in an attempt to cure disease or improve your body's ability to fight disease. Reference
Gene Therapy — A type of experimental treatment in which foreign or altered genetic material (DNA or RNA) is inserted into a person’s cells to prevent or fight disease. Reference
Genetically-driven Conditions – Medical conditions caused by a change in the genome.
Group Milestone(s) – Outcome milestones or targets that are defined based on the results of a group of individuals and not a single individual.
Health Insurance Portability and Accountability Act (HIPAA) – a US federal law regarding health information. Protects the privacy of a patient’s information.
Hematological Cancer — Cancer that begins in blood-forming tissue, such as the bone marrow, or in the cells of the immune system. Examples of hematologic cancer are leukemia, lymphoma, and multiple myeloma. Also called blood cancer. Reference
Hematological Condition – A medical condition that begins in blood-forming tissue, such as the bone marrow, or in the cells of the immune system. Reference
Heterogeneity – Refers to the fact that patients are not identical and may have different treatment effects reflecting patient diversity in risk of disease, responsiveness to treatment, vulnerability to adverse effects, and utility for different outcomes. Reference
High Risk Pools – The name for a type of health insurance offered to individuals who have been denied health insurance because of a medical condition. Insurance has been provided from high risk pools to individuals whose premiums are rated significantly higher than average due to health status or claims experience. Reference
HIPAA – See Health Insurance Portability and Accountability Act
Human Gene Editing Technology — Genome editing (also called gene editing) is a group of technologies that give scientists the ability to change an organism's DNA. These technologies allow genetic material to be added, removed, or altered at particular locations in the genome. Reference
In vivo — In the body. The opposite of in vitro (in the laboratory) or ex vivo (outside the body). Reference (Adapted)
Incidence — The number of new cases of a characteristic or condition that develop in a population in a specified time period (Reference), usually a year.
Indication — A health problem or disease that is identified as likely to be benefited by a therapy being studied in clinical trials. Once such a benefit has been established and approved by regulatory authorities, the therapy is said to be approved for a specified indication. (Segen’s definition as noted)
Individual Milestone(s) — Outcome milestones or targets that are defined based on the results of a single individual (versus that of a group).
Installment Financing – A financing approach for a medicine where the value, typically paid up front, would be paid in installments/pieces over time.
Intermediary – A stakeholder in the pharmaceutical value chain between the developer of the medicine and the patient, for example wholesalers and pharmacies.
Inventory Carrying Costs — Inventory carrying cost, or carrying costs, is an accounting term that identifies all business expenses related to holding and storing unsold goods (Reference). In this case the costs of holding un-administered medicine.
J-code — Medical benefit drugs are coded by J-codes per the Healthcare Common Procedure Coding System. A J-code identifies the chemical name of the drug but does not identify the medication manufacturer, strength, or package size. Reference
Just-in-time Delivery – Delivery that allows a provider to take ownership for a medicine “just in time” right before it is administered in order to avoid handling and inventory carrying costs.
Label Indication – The approved use of a medicine. The U.S. Food and Drug Administration (FDA) approved label is the official description of a drug product which includes indication (what the drug is used for); who should take it; adverse events (side effects); instructions for uses in pregnancy, children, and other populations; and safety information for the patient. Labels are often found inside drug product packaging. Reference
Laser Out — A laser is the practice of assigning a higher specific deductible for an individual with a known condition that is likely to exceed the specific deductible. It is essentially used when an individual on a plan possesses a higher pre-disposition for illness or higher health care costs than other employees (Reference). This shifts responsibility for these patients’ costs back on the employer, as stop loss insurance is intended to help manage “unknown” risks. In practice patients may also be lasered out and excluded from the policy.
Lentivirus — A family of retroviruses that have a single strand of RNA. A modified, non-disease causing version is used in gene therapy to make infected cells produce a desired protein (of a modified gene). Reference
Mark-up — An amount added to the cost price to determine the selling price. Reference
Market Adoption — see adoption rate and adoption curve
Market penetration — Market penetration is a measure of how much a product or service is being used by customers compared to the total estimated market for that product or service.
Medicaid — A government program that provides health coverage to some citizens who are younger than 65 years of age who can’t afford private health insurance (Reference). Enacted in 1965 under Title XIX of the Social Security Act, Medicaid is a federal entitlement program that provides health and long-term care coverage to certain categories of low-income Americans. States design their own Medicaid programs within broad federal guidelines. Medicaid plays a key role in the U.S. health care system, filling large gaps in the health insurance system, financing long-term care coverage, and helping to sustain the safety-net providers that serve the uninsured. Reference
Medicaid Best Price – The Medicaid rebates described under Medicaid Drug Rebate Program below are intended to provide Medicaid with net prices that are comparable to or lower than the best prices received by most other payers (the “best price”). Best price is currently calculated on a unit basis so the lowest price for any one patient would become the Best price for all Medicaid patients. A variety of developers of durable gene and cell therapy, as well as payers, are interested in value-based payment (VBP) agreements, where prices for treatments may vary depending on actual outcomes for patients. Under this scenario Medicaid Best Price calculations, as currently written, may result in inappropriately low prices for all Medicaid patients, which makes some sorts of agreements infeasible. For example, no manufacturer would accept an agreement giving a commercial payer a rebate of 100% if a product fails, because such an agreement could establish a “Best Price” of $0 for all Medicaid patients, even if 95% of all Medicaid patients had successful outcomes.
Medicaid Drug Rebate Program (MDRP) — The Medicaid Drug Rebate Program (MDRP) is a program that includes Centers for Medicare & Medicaid Services (CMS), state Medicaid agencies, and participating drug manufacturers that helps to offset the Federal and state costs of most outpatient prescription drugs dispensed to Medicaid patients. Approximately 600 drug manufacturers currently participate in this program. All fifty states and the District of Columbia cover prescription drugs under the MDRP, which is authorized by Section 1927 of the Social Security Act. The program requires a drug manufacturer to enter into a national rebate agreement with the Secretary of the Department of Health and Human Services (HHS) in exchange for state Medicaid coverage of most of the manufacturer’s drugs. Manufacturers are then responsible for paying a rebate on those drugs for which payment was made under the state plan. These rebates are paid by drug manufacturers on a quarterly basis to states and are shared between the states and the Federal government to offset the overall cost of prescription drugs under the Medicaid Program. The rebate levels are fixed by regulation, but for most new innovative medicines the rebates are the greater of 17.1% (pediatric-only or blood clotting factor) or 23.1% of the Average Manufacturer Price (AMP) per unit or the difference between the AMP and the best price per unit, adjusted for drugs with prices rising faster than the Consumer Price Index-Urban (CPI-U) based on launch date and current quarter AMP. In addition to signing a national rebate agreement, drug manufacturers are required to enter into agreements with two other Federal programs in order to have their drugs covered under Medicaid: a pricing agreement for the Section 340B Drug Pricing Program , administered by the Health Resources and Services Administration, and a master agreement with the Secretary of Veterans Affairs for the Federal Supply Schedule.
Medicaid State Plan — The Medicaid state plan is a formal, written agreement between a state and the federal government, submitted by the single state agency (42 CFR 431.10) and approved by CMS, describing how that state administers its Medicaid program. The state plan:
- provides assurances that a state will abide by federal rules in order to claim federal matching funds;
- indicates which optional groups, services, or programs the state has chosen to cover or implement; and
- describes the state-specific standards to determine eligibility, methodologies for providers to be reimbursed, and processes to administer the program. Reference
Medicaid Waiver — Authority granted by the Secretary of Health and Human Services to allow a state to continue receiving federal Medicaid matching funds even though it is no longer in compliance with certain requirements of the Medicaid statute. States can use waivers to implement home and community-based services programs, managed care, and to expand coverage to populations, such as adults without dependent children, who are not otherwise eligible for Medicaid. Reference
Medical Benefit — Insurance coverage which pays for all or a portion of the member’s medical costs.
Medical Management – Helping health plans, providers and patients manage a patient’s health, providing resources to help health plans administer care resources, and give members appropriate and cost-effective benefits to improve their health. (Adapted from Aetna and Blue Cross of Idaho)
Medicare – A government program which provides health coverage, generally to people 65 years or older (Reference). Enacted in 1965 under Title XVII of the Social Security Act, Medicare is a federal entitlement program that provides health insurance coverage to 45 million people, including people age 65 and older, and younger people with permanent disabilities, end-state renal disease, and Lou Gehrig’s disease. Reference
Medicare Advantage — A type of Medicare health plan offered by a private company that contracts with Medicare to provide you with all your Medicare Part A and Part B benefits. There are many types of Medicare Advantage Plans (MAP) include HMOs, PPOS, Private Fee-for-Service Plans, Special Needs Plans and Medicare Medical Savings Account Plans. If you’re enrolled in an MA plan, Medicare services are covered through the plan and aren’t paid for under Parts A and B Most Medicare Advantage Plans offer prescription drug coverage. Reference
Medicare New Technology Add-on Payment – See New Technology Add-on Payment (NTAP)
Medicine Distribution Model — The approach to ensuring that the medicine gets from the developer to being administered to, or in other cases by, the patient.
Medigap Plan — A Medicare Supplement Insurance (Medigap) policy helps pay some of the health care costs that Original Medicare doesn't cover, like: Copayments, Coinsurance, Deductibles. Medigap policies are sold by private companies. Some Medigap policies also cover services that Original Medicare doesn't cover, like medical care when you travel outside the U.S. Reference
Member — Someone enrolled in a health plan’s health coverage plans, whether they’re the main person on a policy or a qualified dependent. Reference
Milestone-Based Contract – A one-year performance-based agreement in which the payer makes an upfront payment by a payer to the developer of the agreed price for a medicine. The developer is then contractually obligated to provide a refund for non-performance if specific performance milestones or outcomes are not met.
Monte-Carlo Model – A statistical modeling technique. Monte Carlo simulations are used to model the probability of different outcomes in a process that cannot easily be predicted due to the intervention of random variables. It is a technique used to understand the impact of risk and uncertainty in prediction and forecasting models. Reference
Morbidity — Refers to having a disease or a symptom of disease, or to the amount of disease within a population. Morbidity also refers to medical problems caused by a treatment. Reference
mRNA delivered via liposomes or nanoparticles – mRNA is a molecule in cells that carries codes from the DNA in the nucleus to the sites of protein synthesis in the cytoplasm (the ribosomes) (Reference). Abnormal gene expression, caused by a mutation in a DNA sequence, can result in the transcription of defective instructions. The translation of defective instructions by the cell can lead to the failure to produce, insufficient production or over production of a protein, or the production of dysfunctional proteins. This protein defect is the underlying cause of genetic disease. mRNA therapy is engineered to deliver mRNA encoding natural, functional proteins that replace defective or missing proteins (Reference). Liposomes, nanoparticles and other approaches are ways of delivering mRNA therapies.
Multi-year Milestone-Based Contract — A performance-based agreement extending beyond one year in which the payer makes an upfront payment by a payer to the developer of the agreed price for a medicine. The developer is then contractually obligated to provide a refund for non-performance if specific performance milestones or outcomes are not met.
Narrow Network – A network with fewer providers or suppliers (Reference), which typically are reimbursed at a lower rate by the health plan or pharmacy benefit manager with the expectation of higher volume for the supplier, given fewer in-network competitors.
National Medicaid Pooling Initiative – Multi-state pharmaceutical purchasing pool administered by Magellan Medicaid Administration, Inc./ Provider Synergies. Services include development and maintenance of a preferred drug list, rebate contracting and utilization consultations.
Net Financial Impact – The total financial impact taking into account both the cost of the item and the savings from any items no longer needed as a result of the item
Network — The facilities, providers and suppliers a health insurer or plan has contracted with to provide health care services. Reference
Neurological Condition — A disease of the central and peripheral nervous system. Reference
New Technology Add-on Payment (NTAP) — Under the Inpatient Prospective Payment System (IPPS), Medicare pays for a patient’s inpatient hospital stay under 1 bundled payment, which covers all costs for acute care services performed. Some examples of costs include room and board, operating room, nursing, supplies, laboratory services, and radiology. Although drugs, devices, and supplies typically fall under this bundled payment, there is an exception to this rule, known as new technology add-on payments (NTAPs). When certain criteria are met, the Centers for Medicare & Medicaid Services (CMS), may provide additional payment for new, high-cost technologies in the inpatient setting. An NTAP provides additional payment to hospitals above the standard Medicare Severity Diagnosis-Related Group (MS-DRG) payment amount. Reference
Not Medicare or Medicaid – In the context of the FoCUS toolkit, the term refers to all lives not included in Medicare or Medicate coverage including but not limited to commercial plans, self-funded employer benefits, the Veterans Administration, Federal Employee Health Benefits, correctional health services, Tricare, Indian Health Services and the uninsured.
Oncology — A branch of medicine that specializes in the diagnosis and treatment of cancer. Reference
Oncolytic viruses — A type of virus that infects and lyses (breaks down) cancer cells but not normal cells. Oncolytic viruses can occur naturally or can be made in the laboratory by changing other viruses. Certain oncolytic viruses are being studied in the treatment of cancer. They may make it easier to kill tumor cells with chemotherapy and radiation therapy. Reference
Ophthalmological Condition – Disease or disorder of the eye.
Orphan Disease — A condition that affects fewer than 200,000 Americans nationwide (Reference). US laws provide incentives to manufacturers for development of treatments for Orphan Diseases.
Orphan Reinsurer and Benefit Manager (ORBM) – A FoCUS-proposed, new service solution that can provide services to payer organizations not wanting to build their own capabilities to manage durable gene and cell therapies. The proposed intermediary ORBM combines the risk-bearing of reinsurers with the therapy contracting capabilities of pharmacy benefit managers, the provider network building and medical management capabilities of insurers, and perhaps a specialty pharmacy distribution capability.
Outcome(s) — A specific result or effect that can be measured. Examples of outcomes include decreased pain, reduced tumor size, and improvement of disease. Reference
Out-of-Pocket Costs — Health care costs, such as deductibles, co-payments, and co-insurance that are not covered by insurance. Out-of-pocket costs do not include premium costs. Reference
Out-of-Pocket Limit — The maximum amount you will be required to pay for covered services in a year, before the plan covers 100% of all costs. Generally, this includes the deductible, coinsurance, and copayments (varies from plan to plan), but not premiums. Plans can set different out-of-pocket limits for different services, and some plans do not have out-of-pocket limits (Reference). Some health insurance or plans don’t count all of the patient’s co-payments, deductibles, co-insurance payments, out-of-network payments or other expenses toward this limit. Reference
Paradigm – A framework or way of thinking.
Patient Access Support Programs – Patient Assistance programs and other services offered by pharmaceutical developers to help patients access prescription medicines.
Patient Assistance Programs — Pharmaceutical manufacturers may sponsor patient assistance programs (PAPs) that provide financial assistance or drug free product (through in-kind product donations) to low income individuals to augment any existing prescription drug coverage. Reference
Patient Backlog – Untreated patients, particularly those who may have been waiting for a particular treatment in order to be treated.
Patient Mobility – The ability of patients to switch health plans and providers over time.
Patient Preference – The patient’s ability to select among alternatives based on which they prefer, based on whatever criteria they choose to employ.
Patient-derived Cellular Gene Therapy Products – Cell Therapies using the patient’s own cells. Cells are removed from the patient, genetically modified (often using a viral vector) and then returned to the patient. Reference
Payer-imposed Access Restrictions – Restrictions on medicines access driven by payer guidelines. Could include prior authorization, step therapy requirements, coverage that restricts who may access a medicine for a particular indication, etc.
Payment Over Time – Paying for a treatment over multiple years rather than in one upfront treatment.
Peak Penetration – The maximum rate of patient adoption of a therapy.
Performance Risk – In this case, the inability to accurately predict the real-world efficacy and durability of efficacy of a particular therapy in a patient or group of patients.
Performance Thresholds – The target level that must be met on a particular measure in order to confirm that the product has performed effectively. For example, for a product to treat hemophilia, there might be a particular minimum level of Factor VII in the blood that could define effectiveness.
Performance-Based Annuity – A multi-year payer-developer agreement that includes an up-front payment by the payer of some portion of the medicine cost, as well as a commitment to further payments to the developer from the payer every year for a defined number of years, with outyear payments triggered by outcomes being achieved.
Performance-based Rebates – Payments refunded from a developer to a payer or provider paid after the fact based on how a product performs against agreed-upon expectations.
Performance-based Payments – Payments by a payer to a developer for a treatment at specific points in time based on how a product performs against agreed-upon expectations.
Per-Member-Per-Month (PMPM) — Applies to a revenue or cost for each enrolled member each month. The number of units of something divided by member months. Often used to describe premiums or capitated payments to providers, but can also refer to the revenue or cost for each enrolled member each month. Many calculations, other than cost or premium, use PMPM as a descriptor. Reference
Pharmaceutical Assistance Programs – See Patient Assistance Programs
Pharmacy Benefit — Insurance coverage which pays for all or a portion of the member’s drug cost; alternatively referred to as the Drug Benefit. Reference
Pharmacy Benefit Managers — Organizations that manage pharmacy benefits, handling the claims processing and administrative functions involved with prescription drug programs, for managed care organizations, other medical providers, or employers. PBM activities may include some or all of the following: benefit plan design; creation/administration of retail and mail service networks; claims processing; and managed prescription drug care services such as drug utilization review, formulary management, generic dispensing, prior authorization, and disease management. Reference 1 and Reference 2
Pharmacy Services – The division of a health plan or health services that administers the pharmacy benefit.
Physician Preference – The physician’s ability to select among alternatives based on which they prefer, based on whatever criteria they choose to employ.
Pipeline – The pharmaceutical drug candidates that are in discovery or development at any point in time. Each developer has a pipeline. In this case we refer to the total drug pipeline across all developers.
Plan Amendment – See State Plan Amendment
Plasmid DNA – Plasmids are units of DNA that are not part of an organism’s chromosomes. They can be used in a type of gene therapy. Circular Plasmid DNA molecules can be genetically engineered to carry therapeutic genes into human cells. (Adapted from FDA)
Population – the total number of people with a particular characteristic; in this case with a specific condition.
Preferred Drug List – A list that specifies how prescription drugs are covered by a plan (Reference). In some cases this is the list of drugs that are covered without prior authorization or at a lower copay level.
Premium Setting – The process by which a health insurer or plan sets the premium, i.e., the amount that must be paid for a patient’s health insurance or plan. A person and/or his or her employer usually pay the premium monthly, quarterly or yearly (Reference). A health insurer typically sets premiums every year.
Prevalence — The portion of a population who have a specific characteristic or condition in a given time period (Reference), usually the present time.
Prior Authorization — A decision by a health insurer or plan that a health care service, treatment plan, prescription drug or durable medical equipment is medically necessary. Sometimes called preauthorization, prior approval or precertification. A health insurance or plan may require preauthorization for certain services before a patient receives them, except in an emergency. Preauthorization isn’t a promise a health insurer or plan will cover the cost (Reference). Prior authorization is often required for more expensive treatments.
Prior Authorization Criteria – The criteria on which a positive or negative prior authorization decision is made.
Probabilities of Success – In this context, the probability that a product, on completing one level in the trials process, will initiate a trial at the next level.
Product Candidates – Medicines in development that have the possibility of becoming a medicine/product if they succeed in discovery, clinical trials and achieve regulatory approval by the Food and Drug Administration (FDA).
Product Distribution – The process of getting a medicine from developer to the administering provider.
Product Inventory Risk – The risk that a provider faces in taking ownership of a medicine that his or her costs of holding the medicine may exceed reimbursement, because e.g., the product is wasted, damaged or reimbursement changes.
Prognosis — An opinion, based on medical experience, of the likely development of a disease or an illness. Reference
Progression Rate – In this context, the speed at which a product moves through the different phases of discovery and clinical trial research.
Prospective Payments – In this context, forward-looking payments over time (as opposed to rebates being refunded after the fact).
Provider — A physician (M.D. – Medical Doctor or D.O. – Doctor of Osteopathic Medicine), health care professional or health care facility licensed, certified or accredited as required by state law. Reference
Provider Discounts – Providers providing discounted services to a patient.
Provider Network — The doctors, clinics, hospitals and other medical providers that a carrier contracts with to provide health care to its covered persons. Individuals are generally limited to network providers for full coverage of their health costs. Reference
Provider Network Management – The process of establishing, certifying, negotiating with, and refining a plan’s provider network.
Quality of Life Improvements – Patient-well-being centered improvements in measures such as health-related quality of life, functional/cognitive status, palliation of symptoms, and symptom-free intervals. Reference
Rare Conditions – See Rare Disease
Rare Disease – A disease affecting a small share of the population. Often used synonymously with orphan disease, which in the US is defined as affecting fewer than 200,000 Americans.
Real-World Data – Data accumulated through real-world (as opposed to clinical trial) usage of a medicine or other treatment or service.
Rebate — A discount that occurs after drugs are purchased from a pharmaceutical manufacturer and involves the manufacturer returning some of the purchase price to the purchaser. When drugs are purchased by a managed care organization, a rebate is based on volume, market share, and other factors. Reference
Rebate Basis – The basis on which a rebate (repayment or discount) will be defined. For example, could be on a per patient basis or on a population basis.
Refractory Disease — A disease or condition that does not respond to treatment. Reference
Reinsurance — Insurance that an insurance company purchases from another insurance company to insulate itself (at least in part) from the risk of a major claims event. With reinsurance, the company passes on ("cedes") some part of its own insurance liabilities to the other insurance company. The company that purchases the reinsurance policy is called a "ceding company" or "cedent" or "cedant" under most arrangements. The company issuing the reinsurance policy is referred to as the "reinsurer". In the classic case, reinsurance allows insurance companies to remain solvent after major claims events, such as major disasters like hurricanes and wildfires.
Reinsurer — A company that provides financial protection to insurance companies. Reinsurers handle risks that are too large for insurance companies to handle on their own and make it possible for insurers to obtain more business (that is, underwrite more policies) than they would otherwise be able to. Reinsurers also make it possible for primary insurers to keep less capital on hand to cover potential losses. Reference
Relapsed Disease – A disease that has returned after a period of improvement. Reference
Risk Corridor — A financial arrangement between a payer of health care services, such as a state Medicaid agency, and a provider, such as a managed care organization that spreads the risk for providing health care services. Risk corridors protect the provider from excessive care costs for individual beneficiaries by instituting stop-loss protections and they protect the payer by limiting the profits that the provider may earn. Reference
Risk Pool — A group of individuals whose medical costs are combined to calculate insurance premiums. Reference
Risk Pooling — The pooling of risk is fundamental to the concept of insurance. A health insurance risk pool is a group of individuals whose medical costs are combined to calculate premiums. Pooling risks
together allows the higher costs of the less healthy to be offset by the relatively lower costs of the healthy, either in a plan overall or within a premium rating category. In general, the larger the risk pool, the more predictable and stable the premiums can be. Reference
Risk Premium – A premium to cover unexpected costs.
Risk Tolerance – A health plan’s tolerance for a risk that might not be completely addressed. Bigger plans should have higher risk tolerance because they can better handle unexpected events.
Safe Harbor — Something (as a statutory or regulatory provision) that provides protection (as from a penalty or liability). Reference
Second-line Therapies — Treatment that is given when initial treatment (first-line therapy) doesn’t work, isn’t tolerated, or stops working. Reference
SEER Database – See Surveillance, Epidemiology, and End Results (SEER)
Self-Insured Plan — A plan where the employer assumes direct financial responsibility for the costs of enrollees’ medical claims. Employer sponsored self-insured plans typically contract with a third-party administrator or insurer to provide administrative services for the plan. Reference
siRNA Therapies delivered naked, via liposomes, nanoparticles, or in bacteria — Gene silencing through RNA interference (RNAi) has emerged as a potential strategy in manipulating cancer causing genes. Small interfering RNA (siRNA) is an important RNAi tool that has found significant application in cancer therapy. However due to lack of stability, poor cellular uptake and high probability of loss-of-function due to degradation, siRNA therapeutic strategies seek safe and efficient delivery vehicles for in vivo applications. Liposomes, nanoparticles and other approaches are ways of delivering SiRNA therapies. Reference
Small Sample Size Volatility –The results of statistical analysis on a sample that is small in number can be volatile, because a small change in one value can result in a big average change. For example, if you have
Social Program Costs – Costs associated with a variety of non-health governmental programs designed to protect citizens from the economic risks and insecurities of life. The most common types of programs provide benefits to the elderly or retired, the sick or invalid, dependent survivors, mothers, the unemployed, the work-injured, and families. Reference
Solid Tumor — An abnormal mass of tissue. Solid tumors may be benign (not cancer), or malignant (cancer). Different types of solid tumors are named for the type of cells that form them. Examples of solid tumors are sarcomas, carcinomas, and lymphomas. Leukemias (cancers of the blood) generally do not form solid tumors. (Adapted from Cancer.gov)
Sovereign States Drug Consortium (SSDC) – An organization of Medicaid programs that have agreed to collectively solicit and evaluate offers from manufacturers for state supplemental rebates. This Medicaid rebate pool is organized and managed by the participating states.
Specialty Pharmacy – Pharmacy focused on providing services to patients with often rare conditions, who require high-cost, complex medications, frequently only available from a limited panel of specialty pharmacies (Reference). Many are mail order pharmacies.
Specific Stop Loss Insurance – See Stop Loss Insurance
State Plan — The Medicaid state plan is a formal, written agreement between a state and the federal government, submitted by the single state agency (42 CFR 431.10) and approved by CMS, describing how that state administers its Medicaid program. The state plan:
- provides assurances that a state will abide by federal rules in order to claim federal matching funds;
- indicates which optional groups, services, or programs the state has chosen to cover or implement; and
- describes the state-specific standards to determine eligibility, methodologies for providers to be reimbursed, and processes to administer the program. Reference
State Plan Amendment (SPA) — As federal requirements and state policies change over time, updates to the Medicaid State Plan are made via state plan amendments (SPAs). States can choose to submit SPAs to make changes to their programs; for example, to change a provider payment methodology or discontinue coverage of an optional service (Reference). A State Plan Amendment may be needed to allow a state to participate in new prescription drug payment models.
Step-Therapy — Step therapy is a type of prior authorization for drugs that begins medication for a medical condition with the most preferred drug therapy and progresses to other therapies only if necessary, promoting better clinical decisions. Reference
Step-Therapy Requirements – The requirements a patient must meet before progressing to the next level/step of a step therapy-driven treatment plan.
Stock — an accumulated inventory or supply of a product (Reference), in this case a medicine. As a verb, to accumulate inventory or supply of a product.
Stop Loss Insurance — Also known as excess insurance, stop loss insurance is a product that provides protection against catastrophic or unpredictable losses. It is purchased by employers who have decided to self-fund their employee benefit plans, but do not want to assume 100% of the liability for losses arising from the plans. Under a stop-loss policy, the insurance company becomes liable for losses that exceed certain limits called deductibles. There are two types of self-funded insurance:
- Specific Stop-Loss is the form of excess risk coverage that provides protection for the employer against a high claim on any one individual. This is protection against abnormal severity of a single claim rather than abnormal frequency of claims in total. Specific stop-loss is also known as individual stop-loss.
- Aggregate Stop-Loss provides a ceiling on the dollar amount of eligible expenses that an employer would pay, in total, during a contract period. The carrier reimburses the employer after the end of the contract period for aggregate claims. Reference
Surveillance, Epidemiology, and End Results (SEER) Program – Run by the National Cancer Institute at the National Institutes of Health, SEER is an authoritative source for cancer statistics and data in the United States. Reference
T-Cell Receptor Therapies – A treatment based on a group of proteins found on T cells (a type of immune cell that recognizes and binds to foreign substances). T-cell receptors bind to certain antigens (proteins) found on abnormal cells, cancer cells, cells from other organisms, and cells infected with a virus or another microorganism. This interaction causes the T cells to attack these cells and helps the body fight infection, cancer, or other diseases. Also called TCR. Reference
Therapeutic Benefit – Improvement in the course of a disease.
Therapeutic Modality – In this context, the mechanism by which a particular treatment is administered. Therapeutic modality affects the location of treatment, payer benefit classification, provider reimbursement mechanisms, and pati"stoplossent financial participation, which in turn affects the financial challenges these therapies generate.
Therapy Class Inclusion – In this context, ensuring that a particular therapy class or disease area is covered under the reinsurance contract.
Therapy Contracting – Negotiating for the reimbursement of a particular therapy and establishing a contract between a payer/health plan or pharmacy benefit manager and a developer.
Time to Peak – The number of years before use of a medicine reaches is maximum (peak) usage.
TOP$ - a Medicaid multi-state purchasing pool promoted as The Optimal PDL Solution and managed by Magellan Medicaid Administration, Inc. / Provider Synergies.
Transfection — The process of artificially introducing nucleic acids (DNA or RNA) into cells, utilizing means other than viral infection (Reference) to produce genetically modified cells.
Treatable Population – The total estimated incidence and prevalence based on targeted searches of published and online literature for each disease in the US, adjusted downwards to reflect the typical clinical trial criteria for each indication. This is based on an assumption that product labels will ultimately reflect clinical trial populations.
Treated Population – The total estimated population that will receive a particular treatment. The number will be smaller than the Treatable Population because not all the clinically relevant population will be treated, due to lack of access, patient and physician preferences and use of alternative therapies.
Treatment – A product or procedure to treat a disease or condition.
Ultra-orphan or Ultra-rare Disease – Not a formal term; used in this toolkit and the FoCUS analysis to indicate a medicine with fewer than 10,000 patients in the US.
Un-capped – A cost that does not have a maximum or a maximum budgetary limit.
Uncertainty – Not having certain knowledge, in this case about the performance of a product or whether one will have a patient on the product.
Underwriting – The process by which a health plan assesses risk, estimates costs, and sets premiums.
Uptake – Usage or consumption
Usage Criteria – The criteria according to which a medicine is supposed to be used appropriately.
Vaccine — A preparation of killed microorganisms, living attenuated organisms, or living fully virulent organisms that is administered to produce or artificially increase immunity to a particular disease. Reference
Value-based Agreements – A general term for a variety of precision-financing contracts, such as those described in this toolkit, that allow payers and developers to better match up payment and product value.
Value-based Purchasing Arrangements – See value-based agreements
Viral Vector Delivery – Delivering genes to cells to stimulate the desired response using modified viruses as the delivery mechanism. See viral vectors.
Viral vectors — A type of virus used in cancer and gene therapy. The virus is changed in the laboratory and cannot cause disease. For oncology, viral vectors may produce tumor antigens (proteins found on a tumor cell) to stimulate an antitumor immune response in the body. Viral vectors may also be used to carry genes that can change cancer cells back to normal cells (Reference). In gene therapy viral vectors may carry genes encoding the desired effect (for instance, insulin production in the case of diabetics). Reference
Waiver – See Medicaid Waiver
Warranty — An assurance, promise, or guaranty by one party that a particular statement of fact is true and may be relied upon by the other party.
Wastage — Loss, decrease, or destruction of something (as by use, decay, erosion, or leakage), especially: wasteful or avoidable loss of something valuable (Reference). In the context of gene therapy waste could be caused by letting a product expire prior to use or mishandling or accident that renders the product unusable.
Wholesaler – An organization responsible for distributing medicines from the manufacturer’s operations to pharmacies, hospitals and other provider organizations.