Gene therapies bring the prospect of cures once unimaginable. The potential is exciting, but we cannot assume today’s healthcare system can accommodate the financial burden expected from the gene therapy pipeline. Innovative therapies come with high manufacturing and delivery costs and target low patient numbers leading to million-dollar price points. The healthcare system has the challenge of managing the short-term budget impact, assessing and ensuring value while enabling patient access to therapeutic innovation. In addition, gene therapies propose long-term clinical value supported by limited data. The high cost of gene therapy coupled with a desire for early access has led to a scenario where innovative reimbursement models are trying to catch up to science. Two recent gene therapy approvals, BioMarin’s $1.5 million Roctavian in the EU for hemophilia A and bluebird bio’s $2.8 million Zynteglo in the US for transfusion-dependent thalassemia, once again bring the challenge of affordability and need for innovative payment models to the forefront that address outcome measurements, value assessments, implementation challenges, and financial risk. BioMarin executed a 5-to-8-year outcomes-based payment model for Roctavian in the EU, and the company will provide rebates if a patient returns to prophylaxis. A model with a 5 to 8-year outcomes analysis is hardly viable in the US with the existing payer infrastructure. Currently, if a patient leaves a payer, there is no universal tracking system to follow a patient to their next insurer. Patient portability makes it highly unlikely a payer will realize the full value of the one-time high-cost gene therapy. The inability to realize long-term offsets and monitor long term outcomes leads to a preference for performance-based contracts with short term milestones. While plans seeking solutions for this by utilizing third-party vendors, success is hindered by multiple variables that require stakeholder coordination.
Zynteglo’s payment model utilizes a shorter time frame. Bluebird bio proposed an outcomes-based agreement for Zynteglo that assesses efficacy at 2 years with a payback of 80% for treatment failure. To address the administrative resource challenge, bluebird bio has partnered with Real Endpoints to facilitate implementation and monitoring of their risk-based agreement and address some administrative barriers to successful outcomes contracting. Through a single contract, Real Endpoints provides small and mid-size health plans an easy path to contract implementation and a platform to perform all analytics and financial reconciliation.
Although third-party partnerships may increase efficiencies and decrease administrative burden, they do not address the high upfront cost of gene therapies. Entities like The FoCUS Project and The Duke Margolis Center of Health Policy seek to transform our healthcare system by bringing diverse stakeholders together to address the need for novel financing and reimbursement collaboratively. The Institute for Clinical and Economic Review’s (ICER)’s approach focuses on using evidence to improve access and affordability while striving to create a more sustainable healthcare system.
Payers also need support in managing financial risk. We’ve seen the advent of orphan reinsurers and benefit managers (ORBM) and PBM-offered programs that provide reinsurance or stop-loss carve-out models taking over the financial risk for high-cost therapies for a PMPM fee. These programs cover the cost of the treatment, not the total medical expense. While reinsurers assume all financial risk, they do not offer an outcomes component. Another option gaining traction is warranty payment models. In this structure, a patient-specific warranty policy reimburses payers’ treatment-related costs for suboptimal performance over an agreed period. The value is related to covered healthcare costs and may or may not have an outcomes component but does not solve for actuarial risk. Annuity models may address actuarial risk, but data tracking and patient mobility remain challenging. Subscription models solve for data tracking, patient mobility, and actuarial risk but not performance and require large treatment populations not seen in current gene therapies. Curative therapy funds and annuities that travel with patients are other ideas being considered; however, none of these models presents a complete solution.
Payers and manufacturers are utilizing models at varying stages of maturity, but no model solves all the challenges gene therapy presents. Simultaneously, payers continue to draw attention to the problem of paying for innovative therapies. As the gene therapy pipeline continues to expand, payers need financial solutions to prevent access from being impacted. Manufactures should consider alternative data sources, like real-world evidence, to close the data gap seen with accelerated approvals and small patient populations. Working collaboratively with payers early in therapy development to define the target patient population and financial impact can help payers plan for budget impact. Manufacturers bringing potentially curative treatments like gene therapies to market, those that regulate them, and those required to pay for them must continue to evaluate current models and consider how to remove policy, operational, and other barriers to successfully execute novel payment models. All stakeholders are responsible for facilitating access to life-changing treatment, ensuring that cost and complexities do not hinder innovation, avoiding disparities and finding sustainable financial solutions.
Brennan Z. With two new expensive gene therapy approvals, outcomes-based pricing deals grab the spotlight again. Endpoints News. August 26, 2022. Accessed November 1, 2022. https://endpts.com/with-two-new-expensive-gene-therapy-approvals-outcomes-based-pricing-deals-grab-the-spotlight-again/
Real Endpoints Marketplace announces collaboration with bluebird bio to help scale delivery of a first-of-its-kind value-based contract for one-time gene therapy. News release. GlobeNewswire. October 4, 2022. Accessed November 1, 2022. https://www.globenewswire.com/news-release/2022/10/04/2527404/0/en/Real-Endpoints-Marketplace-announces-collaboration-with-bluebird-bio-to-help-scale-delivery-of-a-first-of-its-kind-value-based-contract-for-one-time-gene-therapy.html
FoCUS. White Paper on Emerging Market Solutions for Financing and Reimbursement of Durable Cell and Gene Therapies. June 16, 2021. Accessed November 1, 2022. https://newdigs.tuftsmedicalcenter.org/wp-content/uploads/2022/06/FoCUS-WP-CGT-Market-Solutions.pdf