Fig. 2: Proposed structure of securitizing 30-year PBAs using cure-backed securities.
From: Securitization as a means to pay for cell and gene therapies for orphan diseases: a simulation study
Before the investment period, payers purchase the drug for their covered patients using long-term performance-based annuities (PBAs). During the one-time investment period, investors purchase the senior and junior bonds, which are used to partially pay the drug company upfront for the durable therapy. During each repayment period, payers pay the annual PBA payments for each patient contingent on continued patient survival to investors instead of the drug company. These payments are distributed to pay senior bondholders first before paying junior bondholders. The pharmaceutical company, which owns the equity securities, receives any leftover money from the annual installment payments.
