OBJECTIVES: With an increasing number of biotech companies developing potentially curative treatment both drug manufacturers and payers face challenges of funding and reimbursement. One potential solution being considered by payers in markets, including the UK, is to devise creative and innovative payment strategies - such as annuity payments tied to performance. Under the performance-based annuity payment model, payers would make pay for drugs in instalments (e.g. yearly, monthly) over the lifetime of the patient. This allows payers to spread costs over multiple time periods and ensure healthcare systems only pay for the working life of a treatment. . In this study we will explore the feasibility, opportunity and challenges such a payment system entails for both the manufacturer and the payer. Key questions will include:

• What would be the impact on the financials (i.e. cash flow or balance sheet) of the biotech?
• What is the impact on overall price and value of the product, when adjusted for the cost of credit?
• What is the impact on healthcare systems, given long term commitments and payment risks involved?

METHODS: Qualitative information has been collected through in-depth interviews with various commercial experts across the biotech and finance industry (i.e. private equity groups or investment banks). RESULTS: Information collected from qualitative interviews will form the results of this conceptual paper. CONCLUSIONS: For payers, performance based annuity payments can address an affordability problem for potentially curative therapies and reduce uncertainties around clinical value. At the same time, using government or health-insurer backed annuities as collateral, smaller biotech companies can mitigate cash flow effects and avoid impact on value. In order to be viable, manufacturers will need to consider the cost of credit, set against their own financial repayment milestones when pricing these annuity contracts; whilst reviewing their funding and business models.