Innovative Payments, Management are Needed for Cell and Gene Therapies

Cell and gene therapies are a transformative approach that provides new therapeutic options for patients with cancer, immune disorders, hemophilia, and other conditions. However, these therapies present fundamental challenges for payers seeking to balance access, cost, and affordability.

During a session at AMCP Nexus 2020 Virtual, Brian Corvino, MBA, managing director, and Jennifer Sturm, MBA, senior manager, both of Deloitte, discussed the need for innovative payment models, benefit design, utilization management, and value assessment to ensure access to these therapies is cost-effective and sustainable.

Cell and gene therapies offer great promise for treatment options. They involve the manipulation, deletion, or enhancement of genetic code with the goal of addressing a health disorder. Per the FDA, cell and gene therapies include “cellular immunotherapies, cancer vaccines, and other types of both autologous and allogeneic cells for certain therapeutic indications, including hematopoietic stem cells and adult and embryonic stem cells. Gene therapy seeks to modify/manipulate the expression of a gene or to alter the biological properties of living cells for therapeutic use.”

In the past three years, the FDA has approved multiple cell and gene therapies, including four chimeric antigen receptor therapies—tisagenlecleucel, voretigene neparvovec-rzyl, axicabtagene ciloleucel, brexucabtagene autoleucel—and a vector-based gene therapy— onasemnogene abeparvovec-xioi. The cell and gene therapies pipeline continues to grow, with 378 agents currently in the pipeline in 2020, with most common disease areas being hematologic and solid tumor cancers. Some estimates suggest that there could be 30 to 60 FDA-approved cell and gene therapies and a total of 350,000 U.S. patients treated by 2035.

While cell and gene therapies have the potential to change treatment for severe diseases, existing pricing models have sparked difficult discussions. Things that are unique to cell and gene therapies relative to traditional specialty therapeutics include:

  • Single administration with higher upfront acquisition costs and resource-intensive administration
  • Personalized for the individual patient—often a small eligible patient population
  • Often priced to “value,” as they may provide durable or curative effect, in serious conditions, with improvement over standard of care
  • High manufacturing costs
  • Gap between upfront payment and long-term realized plan benefit

Cell and gene therapies have thus required the industry to rethink how it assesses value, finance, and payment for these interventions. As cell and gene therapies are expected to grow in the next few years, the budget impact will increase over time, as per-member, per-treatment costs can approach or exceed $1 million for these therapies. Sustainable funding of cell and gene therapies is a central issue for payers and health plans that are increasingly concerned about the ability to keep health benefits affordable.

Despite high upfront costs for these therapies, their effectiveness may be favorable compared with conventional therapies. A study assessed the extent to which cell and gene therapies offer true breakthrough health benefits. The study compared 127 small molecules and 46 biologics approved by the FDA between 1999 and 2015, for which quality-adjusted life year analysis was available versus seven cell and gene therapies. Average health gains for cell and gene therapies (5.8 QALYs) exceeded corresponding gains for biologics (0.4 QALYs) and conventional drugs (0.5 QALYs).

It is important to consider a therapy’s total lifetime cost, not just cost per administration. For example, the hemophilia A lifetime treatment costs can sometimes exceed $20 million per patient.

Many payers are considering how to better manage financial risk related to cell and gene therapies. Cell and gene therapies present the following challenges to the health care ecosystem: patient portability (patients can move between health plans throughout their lifetimes; a plan risks paying for the treatment and losing the member to a different plan who would capture the benefit), upfront payments (large payments create revenue, cost, and underwriting challenges), high markups (traditional buy and bill reimbursement models imply unreasonable markups on top of these costly drugs), and timing issues (these are often one-time treatments that prevent future costs—time of cost and value realized are not in sync).

Innovative models have been considered, including:

  • Direct purchases: specialty pharmacies or specialty pharmacy distributors purchase drugs directly from the manufacturer to avoid markups typically seen in buy and bill models
  • Outcomes-based: down payment and installments based on patient outcomes of treatment
  • Installments: combination of down payment and installments from payer to specialty pharmacy or pharmacy benefit manager to remediate the impact of a large lump sum payment
  • Stop loss

Cell and gene therapies require an unprecedented level of interactions and alignment of incentives between ecosystem stakeholders.

Presentation: W5 Cell and Gene Therapy Payment Models: Balancing Access to Innovation, Cost and Affordability.AMCP Nexus 2020 Virtual.