An era of significant innovation in the development of cancer therapies began more than a decade ago with the leveraging of precision medicine. The focus on identifying tumor mutations led to first-in-class targeted therapies and immunotherapies. Now we have advances such as cellular and gene therapies. According to a recent report from the IQVIA Institute, US spending on cancer care reached $71 billion in 2020, and over the last 5 years there have been 62 distinct new cancer therapy launches, for a total of 130 indications across varied tumor types—17 of them approved in 2020.1  Often these agents target rare orphan cancers and are granted an FDA breakthrough designation and/or a priority review, where accelerated approval of an indication is based on early phase clinical trial data subject (to confirmatory trials. An active pipeline is shifting toward next-generation biotherapeutics, gene-editing technologies like CRISPR, expanded CAR-T indications, and RNA therapeutics.

As scientific breakthroughs come, generally higher costs follow. Some one-time treatment gene therapies may cost upwards of $1 million when all of the required care is considered. Current payment models may not be sustainable to ensure patients will have access to innovative therapies going forward.

Value-Based Oncology Care Delivery:

Health care payment reform conversations have been ongoing with the goal of shifting from a volume-based fee-for-service model to a model hoping to achieve the promise of high-value oncology care delivery. The Community Oncology Alliance (COA) 2021 annual conference outlined some of the historical alternative payment models (APMs) that have demonstrated high-value care via several oncology medical home models that formed the basis of the 5-year Center for Medicare and Medicaid Innovation (CMMI) Oncology Care Model. OCM included practice-transformational activities, quality measures, defined episodes of care, per- patient-per-month enhanced services payment, as well as shared savings and the introduction of shared risk based on performance benchmark reporting. The OCM is due to transform into the Oncology Care First model with a greater emphasis on shared risk. COA is also going to pilot its own OCM 2.0 commercial model this summer. The OCM/OCF and several national payer models were among 35 oncology APMs in the United States Most are among commercial payers, though self-funded employers are driving some adoption. These models are built off of collaboration, communication, and shared goals looking to demonstrate value by focusing on quality of care.

Precision Value and Health deployed a survey among our proprietary database of US access decision makers designed to capture payer and provider stakeholder insights related to delivering value-based care in oncology.2 Overall, value-based reimbursement models were identified by both payers (58%) and providers (75%) as the most challenging aspect of delivering value-based care in oncology.

Cellular and Gene Therapies:

Our survey also asked about challenges specific to cellular and gene therapies. Payers reported long-term outcomes/real-world data (82%) and implementation of innovative reimbursement models (81%) as extremely/very challenging, while health system providers noted implementation of innovative reimbursement models (78%), followed by cost-benefit analyses (68%).

Potentially curative one-time gene therapies require large up-front costs for a payer. When CAR-T was approved, payment was often handled through single-case, carve-out payer agreements for the member’s therapy with reimbursement amounts negotiated with the health system provider. In-market experience expanded, and CMS issued a national coverage determination for Medicare patients providing some guardrails, with commercial payers following suit. As indications proliferate, Medicare Advantage plans may be more inclined toward APMs as they assume the risk to manage their Medicare population.

Some of the other APMs that have been put forth include outcomes-based contracts that tie payments to real-world results, so the plan pays up-front costs with manufacturer rebates each year if a specific outcome is not maintained, multi-year amortized payments, or milestone-based contracts. Confounding innovative adoption is our US employer-anchored system where job changes every few years adds risk a payer will not realize downstream savings from a post-treatment member to offset the significant initial expense. Often, plans and self-funded employers use a stop-loss/reinsurance strategy to limit risk.

One thing is clear as the science evolves, there is not a singular answer as to what APM is the “best” model. There are challenges with any APM in terms of defining parameters, operational considerations, stakeholder risk/reward, transparency, metrics, and sustainability. It is imperative that manufacturers proactively engage in building evidence solutions that support value demonstration of their therapies. That way, irrespective of whether payment models are tweaked or radically changed, demonstrating value will drive patient access to innovative therapies within any model.


1 Global Oncology Trends 2021, IQVIA Institute for Human Data Science, 2021.

2 Precision Value and Health proprietary survey of Oncology Care Delivery in a Value-Based World, deployed Q3, 2020 using the Qualtrics platform and N=49 commercial payers and health system provider respondents.