It’s Time for a Collaborative Approach to Gene Therapy Reimbursement

By Jordan Bazinsky, Executive Vice President of Operations for Cotiviti

One of the most critical questions facing healthcare finance in the next decade is how to pay for innovations in gene therapy.

Gene therapies for rare inherited diseases, as well as for certain cancers, hold tremendous promise for those who qualify for treatment. But they also carry high price tags—Luxturna, a therapy designed to treat a genetic mutation that can cause blindness in children, cost $425,000 per eye when it was introduced, so much that healthcare professionals expressed apprehension over handling the drug.

Now, with more than 1,000 clinical trials for cell and gene therapies in process and predictions that such products will generate $12 billion in revenue annually by 2025, leaders for pharmaceutical companies and health plans must consider how to make gene therapies financially accessible to those who need them. It’s an opportunity to explore a new paradigm for reimbursement for complex therapies—one that is informed by collaborative partnership, with careful consideration of the best way to pay for value.

Financing the Therapeutic Revolution

Just 18 years ago, the Human Genome Project provided the first blueprint for understanding the structure, organization and function of the complete set of human genes. It was the culmination of 15 years of painstaking study by researchers from around the globe, and it sparked a period of rapid discovery and transformative technology in the period of genetics.

Today, scientists are able to sequence individual genomes at a fraction of the cost that it took to generate the first human genome sequence and in a relatively short period of time. This set the stage for direct-to-consumer use cases for genetic discovery, where researchers can determine with precision the types of treatments that are most likely to work for a specific individual based on genetic makeup and lifestyle factors. It also prompted the latest phase in genetic research: the introduction of gene-editing technologies and gene therapies that can safely and effectively treat diseases caused by mutations in the genetic code.

While gene-editing techniques such as CRISPR are still in the early stages, they have already shown promise in treating patients with debilitating blood disorders including sickle cell disease and beta thalassemia. Meanwhile, four gene therapies have been approved for use in the United States in the past decade: Luxturna; Yescarta, a treatment for large B-cell lymphoma that fails to respond to conventional treatment; Kymriah, designed to treat B-cell acute lymphoblastic leukemia using the body’s own T cells; and Zolgensma, a gene therapy designed to treat spinal muscular atrophy in children who are younger than two years old. Given the global development pipeline for gene therapies and the number of trials that have reached Phase 2 or higher, researchers anticipate the pipeline for gene therapies could accelerate quickly. The need is high: Today, up to 7,000 rare diseases exist, and most have no treatments.

Currently, it falls to health plans to determine how to ensure that members who qualify for these treatments receive fair access—no small feat given the cost of gene therapies, ranging from $373,000 to more than $2 million for a single treatment. With a limited number of gene therapies on the market, payers currently navigate these decisions based on clinical evidence that outlines the expected benefit for a target population compared with the cost of treatment. And they examine the impact of treatment decisions on their ability to cover the complex healthcare needs of all members.

But what happens when the number of gene therapies approved for use dramatically increases? Health plans likely will face greater difficulty assessing the cost-to-value ratio of these new therapies. Without a way of assessing cost versus value, health plans could struggle to determine how to offer coverage without significantly increasing premiums.

Jordan Bazinsky

Why Collaboration Is the Path Forward

For gene therapies to make the desired impact, health plans and pharmaceutical companies must work together to develop a financing model that rewards innovation while widening access for those who would most benefit from genetic advancements.

Already, payers such as Tufts Health Plan are building financial impact models as therapies near approval, developing guidelines around the use of these therapies and proactively contracting with pharmaceutical companies to negotiate discounts. Such financing models range from milestone-based contracts to warranty, subscription and voucher models as well as performance-based annuities. Another possibility is the orphan reinsurer and benefit manager concept, where an entity is created by health plans and employers to provide coverage, secure the appropriate medical expertise for making coverage determinations, review and approve claims for reimbursement, and track performance data.

Meanwhile, work by the nonprofit Institute for Clinical and Economic Review (ICER) reflects the type of thinking that could one day be applied to discussions around cost-benefit analyses for gene therapies. The organization’s September 2020 white paper, Cornerstones of Fair Drug Coverage: Appropriate Cost-Sharing and Utilization Management Policies for Pharmaceuticals, presents criteria for determining whether cost-sharing and utilization management policies support “fair” patient access to prescription drugs.

Payers and pharmaceutical companies should initiate this conversation now, while the pool of gene therapies available for member use is still small, to ensure a thoughtful approach to policy development and payment. Certainly, pharmaceutical companies need to be able to recover the cost of innovation in developing these novel treatments. But unless manufacturers and health plans jointly acknowledge the access challenges that exist and work together to uncover a solution, the pool of patients who can avail themselves of these innovations will shrink—and so will gene therapy revenue.

Era of Advancement Requires New Approaches to Payment

The explosion in clinical trials taking place demonstrates that when it comes to genetic advancements, the healthcare industry is not limited by science. However, health plans and manufacturers must work together to solve the financing piece of the genetic benefits value equation if these innovations are to make a deep impact for the populations they are designed to treat. By taking the first steps toward developing a thoughtful, creative approach to gene therapy reimbursement, health plans and manufacturers can more effectively reward innovation while establishing equitable avenues for treatment.