Rare disease on payer’s minds
Even with the COVID-19 emergency measures, payers still had an eye on the potential flood of gene therapies for rare diseases brewing in the pipeline, and were pondering new ways to pay for them.
By Christiane Truelove • [email protected]
Over a decade ago, rare disease used to be an area of specialized pharma development that mainly small, scrappy startup biotechs were tackling. With small patient populations, high R&D costs, and subsequently high costs for therapy, big pharma companies were not opting to incorporate rare disease into their pipelines.
Times have surely changed, and orphan drugs for rare diseases are frequently found in big pharma pipelines. According to PhRMA’s recent report, “2012-2021: A Decade of Innovation in Rare Diseases,” there are more than 700 orphan drugs in development, including rare cancers, a wide range of genetic disorders, and neurological disorders such as amyotrophic lateral sclerosis, or ALS.
One of the reasons why rare diseases are of interest to drug developers, according to PhRMA, is that while an orphan disease can affect 200,000 people or less in the United States, collectively, the impact of these diseases is much larger: 30 million Americans and 400 million people worldwide are living with a rare disease.
There are 7,000 different rare diseases known today, but many more still to be identified. Eighty-five to 90 percent of these are considered “serious or life threatening,” and for many, there are no known effective treatments – less than 10 percent of the known rare diseases have an approved treatment available. About 80 percent of rare diseases are caused by genetic abnormalities and half of these diseases impact children.
These drugs have development challenges: According to the Tufts Center for the Study of Drug Development, it takes nearly four years longer to develop an orphan drug compared with medicines to treat more common conditions. Additionally, only about 6 percent of those drugs reach approval, compared with a 12 percent overall success rate for all drugs.
Gene therapy costs
One disease area where there has been real advances in treatment over the past decade has been spinal muscular atrophy, or SMA, a progressive, neurodegenerative disease leading to decreased musculoskeletal control. SMA affects 10,000 to 25,000 children and adults in the United States. Patients with SMA have a loss of a type of nerve cell called motor neurons, disrupting the signal to the muscles and leading to muscle weakness and wasting. With infant onset, this often affects breathing, crawling, walking, sitting up, and other motor functions. People with SMA do not produce enough of a specific protein to support motor neurons.
There are three therapies approved to treat SMA. Spinraza (numiseren), from Biogen, was approved in 2016 for infants and adults with SMA, and is an antisense oligonucleotide therapy that affects the process that translates genes into proteins.
In 2019 came the first gene therapy for SMA, Zolgensma (onasemnogene abeparvovec-xioi) from Novartis, for treating pediatric patients under 2 years of age. The therapy provides a working copy of the missing, or non-working SMN1 gene responsible for SMA to the patient.
The third treatment, Eyvrisdi (risdiplam), from PTC Therapeutics and the SMA Foundation, was approved in 2020 and became the first oral medication to treat the disease. The therapy is a survival of motor neuron 2-directed RNA splicing modifier.
Each of these therapies are not cheap. Treatments with Spinraza, which is injected directly into the spine, are estimated to cost $625,000 to $750,000 in the first year, and then around $375,000 every year after for the rest of the patient’s life.
Eyvrisdi represents a lower-cost option to Spinraza and is an oral medicine that can be given at home by parents or caretakers. Eyvrisdi is priced by patient weight, about $100,000 per year for an infant, and capped at $340,000 annually for a child of 44 pounds.
Zolgensma is the most expensive drug of the three, at $2.1 million, but it is supposed to be a “one-and-done” therapy – administered once, it replaces the defective or missing gene that causes SMA and allows the patient to function normally.
Another disease area with a one-and-done gene therapy is inherited retinal diseases. Luxturna (voretigene neparvovec-rzyl) is developed by Spark Therapeutics and was approved by the FDA in 2017 for the treatment of Leber congenital amaurosis. Spark Therapeutics priced the drug at $850,000 for the one-time treatment.
The promise of gene therapy is being studied in another disease area that is rare but well-known: hemophilia A. According to the National Organization for Rare Disorders, hemophilia A is the most common X-linked recessive disorder and the second most common inherited clotting factor deficiency after von Willebrand disease. Hemophilia A mostly affects males, but females can also be affected. Approximately one in 5,000 newborn males have hemophilia A. About 60 percent of individuals with hemophilia A have a severe form of the disorder. All racial and ethnic groups are equally affected by hemophilia.
The standard of treatment for hemophilia patients, either on a regular basis to prevent bleeding or to treat bleeding episodes, is factor VIII therapy, which replaces the clotting protein these patients lack.
Factor VIII therapy can cost between $300,000 and $500,000 per year. One of the newest treatments, emicizumab, is even more expensive. Emicizumab, approved in 2017, is an engineered bispecific antibody that mimics the activity of activated factor VIII. Some estimates put the wholesale acquisition cost of emicizumab at more than $482,000 for the first year, with a slight decrease in subsequent years.
A gene therapy for hemophilia A may be on the horizon. Although in 2020 the FDA rejected the treatment, valoctocogene roxaparvovec under the market name Roctavian, developer BioMarin Pharmaceutical said it would come back to the regulatory agency with more clinical results in 2022.
In March, BioMarin reported that one year or more of the followup date from its Phase III GENEr8-1 study of Roctavian were published in the New England Journal of Medicine (NEJM). The article reports that following a single infusion of valoctocogene roxaparvovec, participants experienced substantially reduced annualized bleeding rates, reduced factor VIII utilization, and increased factor VIII activity, than they did in the year prior to study enrollment.
One of the concerns with Roctavian is that the treatment may not have a durable effect. Further studies have shown that the production of factor VIII in patients treated with Roctavian wane over time. BioMarin was considering pricing Roctavian between $2 million and $3 million, making it the most expensive treatment in the world.
However, the cost of treating each person with hemophilia A is estimated to be $25 million over a lifetime, and this number includes factor VIII and hospitalization costs for breakthrough bleeds. The most recent study data from BioMarin shows that patients who have received Roctavian have blood clotting protein levels at a range consistent with mild hemophilia and while those levels waned over time, trial participants experienced very few, if any, bleeds across the two years most were studied, company officials stated.
Payers keeping note
As payers began to deal with increased costs in 2021 due to deferred care during the COVID-19 pandemic, they still continued to grapple with the prospect of the impact of future gene therapies’ cost, according to industry experts.
“This was an area that we were very interested in, in terms of if or how the COVID pandemic would impact payers’ management, given that they were distracted, you know, with the COVID emergency and the changes that needed to come from that,” says Erin Lopata, senior director, Access Experience Team at Precision Value & Health.
PVH conducted market research and discussions with some current payers on formulary decision making during the COVID-19 pandemic. “What we found is that while they definitely did take some of their attention away in terms of managing the changes they had to do as a result of the pandemic, it wasn’t really impacting a lot of formulary decision making,” Lopata told Med Ad News.
She and her colleagues expected to see more formulary changes or restrictions now that payers could refocus. “And the answer we got was that there wasn’t really a change in how they were managing formulary, or how they were reviewing products as a result of pandemic. They kind of kept those processes moving, and they were able to adjust as needed.”
Philip Cyr, senior VP, Precision Value & Health, agrees with Lopata’s assessment. “I have not seen the questions I get asked about a new cell or gene therapy to be any different before COVID, then after COVID,” he says. “The same questions I was getting with Zolgensma, I’m getting with some of the newer [therapies]. And so I don’t think the pandemic really impacted a lot there.”
According to Adrian Garcia, executive VP, Head of Payer & Integrated Health Strategy, GSW, “It’s a lot more business as usual.”
Garcia, who recently had been at a major specialty pharmacy conference, said the distraction of COVID appeared to be over for payers. “It seemed like COVID never happened,” he says. “Every corner, every hallway, every meeting room was filled with people having conversations and meetings.”
He adds that payers are still mindful that another COVID variant could pose a bigger threat, but they have to think forward, redeploy resources, and find opportunities to solve some of the problems that were created by the pandemic’s impact on the healthcare system.
Before COVID, gene therapies were a hot topic, “everybody was trying to get prepared for [BioMarin’s] gene therapy for hemophilia,” Garcia says. While Roctavian didn’t make it to market, “the same concerns still exist” about gene therapies’ cost.
The pay debate
The reimbursement and payment systems that payers have built for chronic diseases are not able to sustain the cost levels gene therapies pose without knowing the outcomes, Garcia told Med Ad News.
“If you think about payers mindset, they can’t always assume that they’re going to have a patient for a lifetime,” Garcia says. “But these products are meant to solve a lifetime disease. And so they’re trying; it’s a struggle for them, because they’re trying to do what’s right for the patients. But they’re also restricted by a limited amount of funds or resources. So they can’t give everything to everybody, but they know of the promise of the cell and gene therapies.”
The long-term data doesn’t exist yet, he says. “So I think that [payers] are looking for manufacturers to figure out how do we share the risk in that.”
Cyr says when it comes to determining the long-term effectiveness of gene therapies, there is no one simple answer.
“It’s very much product by product, disease area by disease area,” Cyr told Med Ad News. For example, a report by the Institute for Clinical and Economic Review evaluating the value of Luxturna theorized that the therapy would have a durability effect of only 10 years, not a lifetime. “There’s a lot, biologically, of credibility in it of having a shorter life because your eyes cells reproduce or turn over so quickly.”
The durability effect of Zolgensma is also unknown. “Is it 10 years? Well, maybe not because the gene’s going into the neurological system,” Cyr says. “So you have to think about it from almost a basic science standpoint to see if it’s credible. I don’t think there’s one answer to it. But payers like it when they can engage with manufacturers around the science to come up with the possibility of what a durability of effect could be.”
Durability of effect “is definitely on my mind,” Lopata says. “That data will continue to evolve over time.”
With every disease state being different, figuring out the metrics to determine if a product is truly working poses a large challenge, Garcia states. Because of this, many of the manufacturers have seen an increase in interest in value-based agreements or risk-based contracting from manufacturers.
“As data collection gets better, as data sharing gets better, as the technology gets better, it’s easier to do these types of things,” he says. “The problem is agreeing on the outcomes – what outcomes are you going to measure? And when you’re talking about a durability of effect, what are the points that you can point to earlier so that you know that it’s working versus waiting until it doesn’t work?”
Payers want to avoid “a catastrophic issue of a whole seven-figure product, reimbursement type of scenario,” Garcia says.
Because of these kinds of scenarios, payers are very interested in getting information related to gene therapies “early and often,” to help them plan from a number of perspectives, Lopata says.
“One is from a budget perspective. As payers are considering their budget on medical and pharmacy benefits for the year, these products can have a significant budget impact,” she says. “So being able to understand when they’re launching what is an approximate price or a price range that they can plan for, and then also what’s the expected or anticipated patient population that a typical payer may see – all that information can then be helpful for payers – and the actuaries within the payer organizations – to estimate what the impact of additional cell and gene therapies will have on the budget.”
Also, having the clinical information from the manufacturer ahead of regulatory approval helps payers from the review and management perspective, Lopata adds. Payers will not only want to know how was the trial set up, who was included, what were the results, but also any safety concerns and the operational logistics related to the cell or gene therapy.
Garcia says as clinical trials begin, manufacturers should approach payers and ask them the type of data they would want to see to approve a rare disease product for a formulary. The manufacturers can then build that perspective into the studies, whether ongoing or in post-launch.
“What you’re doing is, you’re showing the investment now,” he says. “That may not guarantee that you’re going to get the coverage at launch. But if you’re showing those data over time, and you’re pulling those in, I think you’re building the evidence that they want to see. And you’re treating them as a partner. So they feel like they’re part of the development, which, obviously makes them intrinsically more motivated to do something right for that product, assuming the data are there.”
According to Casey McCann, executive director, value, access, and reimbursement strategy at Klick, “Clinical efficacy proven in typical pharmaceutical pivotal research is based on a large-term clinical trial model. So, the industry will begin to change how we prove efficacy for new payment models in a new way. We will need longitudinal assessments of efficacy within individuals to justify continued payments.”
Sometimes, payers will accept a validated surrogate endpoint, but in most diseases, McCann believes to justify ongoing payments, payers will need non-validated biomarkers that are easily and accurately measured and correlate with efficacy.
“This requires an early pre-launch strategic assessment of the clinical program integrated with the economic considerations,” he says. “Market access stakeholders need to be engaged early and often for pre-launch cell and gene therapies. The whole industry will begin thinking more creatively in terms of the intersection of clinical data and financial metrics. In fact, value-based contracting will require a variety of data, including clinical lab values and clinical performance measures; utilization research, like ER/hospital use; and economic data, such as costs.”
Lopata states that the primary outcomes of many of the studies for gene therapies are based on surrogate endpoint markers such as protein levels or lab levels. “They’re things that are easy to measure, and they’re objective measures, so, you’re able to determine if the drug or the cell and gene therapy is doing what it was intended to do based on its mechanism of action,” Lopata says.
The problem is, she adds, that a lot of times those endpoints are not easy for payers to figure out if they actually translate to patient outcomes. “Payers want to see things like how does the drug impact overall survival? How does it impact your likelihood of being admitted to the hospital or going to the ER? How does it impact your even functional status?” Lopata says. “It becomes very hard for a payer, based on just the lab value, to say, ‘Well, what’s the true value of this?’ You really need that outcomes-based data. And a lot of times, it turns into a long-term data question too, because you don’t just want to see a benefit to a patient in functional status over 12 weeks, you want to see that benefit to be able to be sustained over time as well.”
McCann believes that surrogate endpoint studies will need to occur in parallel, as an integrated program of multiple metrics. “In the near future, we expect pivotal studies to get complicated to the point of needing financial metrics to account for value-based contracting,” McCann told Med Ad News. “The days of pricing in a vacuum and rebates will eventually be gone.”
“I’ve been at payers where we’ve taken functional status, and correlated it with claims data to come up with predictive model models to look at utilization based on increases and decreases in that functional status,” Cyr says.
McCann says there has been greater collaboration among government, industry, nonprofit, and advocacy stakeholders in sharing this kind of information. “We are also starting to see unprecedented creative funding solutions,” McCann says. “For instance, one pharma company agreed to give payers a partial refund on a therapy for eye disease if a patient’s vision hasn’t improved within 30 or 90 days, or if those improvements aren’t maintained after 2.5 years.”
McCann says an “annuity payment model” like this allows for periodic, smaller payments to spread the upfront costs of gene replacement therapy.
Another idea is the “Netflix payment model,” in which the state pays a flat, subscription fee to a pharma company in exchange for unlimited access to its drugs over a period of several years.
Lopata says a warranty model also benefits patients. “The nice thing about warranty models is that the patient has an opportunity to be reimbursed as well, because patients are on the hook for significant cost,” she says. “Depending on their benefit design, they’re probably going to hit their deductible, and pay a lot of money all in one lump sum as well. So warranties provide opportunity to make the patient whole should they not have outcomes based on the way the contract is written.”
Although Pfizer does not have any of the gene therapies in its pipeline ready to launch (its factor VIII and factor IX hemophilia therapies and Duchenne muscular dystrophy therapy are all in Phase III), the company put a pilot warranty program into place last year.
The program, which is called the Pfizer Pledge, is for the company’s decade-old lung cancer drug Xalkori. The program is an insurance-backed warranty that promises if the drug does not work in the first three months of treatment in U.S. patients with metastatic nonsmall-cell lung cancer (NSCLC), Pfizer will refund the cost of the drug to whomever paid for it – whether a cash-paying patient, an insurance company, or Medicare Part D.
“They’re being very transparent and public about it,” Lopata says. “And so hopefully, they’ll additionally share some of the outcomes.”
McCann says it’s critical that all parties work together to create validated mechanisms for long-term data collection on these treatments with focus on how to track these patients and ensure the benefits are durable. “Longitudinal assessment of efficacy within individuals will definitely be required to justify continued payments, particularly when member turnover occurs.”
When it comes to turnover, some payers have raised concerns that they could pay for an expensive therapy, but if the patient switches insurers, another insurer will benefit from the reduced costs for that patient while the original payer is stuck with the bill. But Lopata points out that many rare disease patients tend not to switch insurers very often. “We see rare disease patients tend to be a little, ‘stickier’ than other types of patients, especially, if the patient chose their payer,” she says. “If their current center of excellence is within the network, they may not want to risk switching.”
Though some patients have a choice in insurers, sometimes it’s the employer’s choice. “Even if the patient’s really happy with their plan, and their network, they’re in the plan that paid for their gene therapy, the employer can say, ‘Well, we can get a better rate with a different payer, and so we’re going to switch,’” Lopata adds.
There has been interest in having the cost of a drug “travel” with the patient from health plan to health plan, but nothing definitive has been proposed, Lopata says. “We haven’t seen much of that yet, but there have only been a few cell and gene therapies launched.”
And when it comes to the payer debate, employers need to be included as well, Lopata states. “Employers are also a key stakeholder here,” she says. “The fully insured employers, they’re having to make these decisions around what are they going to pay and how do they pay for this?
“I think everyone’s getting a little bit overwhelmed, because while everyone appreciates that there’s a need for different payment models for these one time therapies, it’s a lot for anyone to absorb. As more of these products come along, it’s not just going to be like a never event to have a cell or gene therapy patient in your population, it’s going to be more common, and that in most cases does not appear to be sustainable for many employers and payers.”
RWE has a role
In looking beyond surrogate clinical endpoints to determine the value of a gene therapy, payers will have to figure out a way to incorporate information about
real-world evidence (RWE), experts say.
The good news is, according to McCann, is that 90 percent of payers already say they use observational real-world data to make their formulary decisions. “And the future is only going to demand more such data collection starting earlier in the drug development process,” he adds.
McCann believes that a prelaunch strategic five-to-10-year data generation plan – including health economic information – will be enormously helpful to all product launches in the very near future. “Health economic and outcomes research (HEOR), which produces real-world data, (RWD) and real-world evidence (RWE), is definitely where the industry is moving,” he says. “The FDA has already started to expect RWD and RWE as part of NDAs and submission packages.”
Today, many pharma companies are already using existing mechanisms to gather real-world data on the patients they are treating. “For instance, patient outcomes surveys and other data collection have long been incorporated into clinical trial programs,” McCann says. Data are being collected from patient support programs so pharma companies can know how they are treating specific populations, including patients in underserved communities.
“We believe the future of innovative payment models will drive the greater integration of RWE into drug development,” McCann says. “It’s an incredibly exciting time to be engaged in health economics and patient outcomes evidence generation.”
When it comes to all the data being generated, the question becomes, who will collect it and distribute it among payers, manufacturers, and patient advocates? Cyr says he was surprised by the answers provided by panelists at a recent conference.
“I was absolutely shocked when every one of the panelists said, ‘I want a third party to do this.’ And I was just like, payers and Medicaid and patient advocates and physicians and providers, I thought I’d never hear we want a third party to do that.”
Lopata says this sentiment was also expressed in the recent payer surveys she had conducted. “There was definitely a proportion that wanted a third party for just that exact reason, to have that neutrality when it comes to collecting data and deciding what’s a failure, or not a failure.” At the same time, she also heard from other payers that to bring in that type of third party would add more administration, “it’s another vendor you’ve got to manage.”
Ultimately, for companies that want to have their gene therapies accepted in payer formularies, communicating and collaborating with the payers are key.
“The more you engage them early on, and the more you pull them in and provide opportunities for them to have input, the stronger that collaboration is going to be,” Garcia says.
|Chris Truelove is contributing editor of Med Ad News and PharmaLive.com.|