Finding the right reimbursement model for gene therapies

With cell and gene therapies growing more and more important to healthcare, we sat down with Debbie Warner, vice president of Kantar’s Health division, to learn how the industry can overcome funding challenges and demonstrate the true value of these transformative medicines.

What are some of the current issues with reimbursing cell and gene therapies?

Funding these therapies is a major challenge for the market at the moment, as is figuring out how payments can work on a broader scale as they become more numerous in the marketplace.

The current model for paying for treatment in the US is buy-and-bill, in which the provider is fully reimbursed for the cost of the drug (plus a negotiated margin) and administration fees following each treatment encounter. That generally works for high cost, chronic therapies because payment for treatment is naturally spaced out over time. By contrast, cell and gene therapies that range from hundreds of thousands to millions of dollars in treatment costs are usually a one-time administration, with all the cost incurred up front. For providers, this creates a huge cash flow issue under the buy-and-bill model.

Another issue is performance risk. Despite the demonstrated efficacy that led to the therapy’s FDA approval, payers can’t be sure if the therapy will truly work for the individual patient who receives it.

There are a number of different payment modalities that are being investigated and negotiated to overcome challenges like these. One approach that's being looked at is outcomes-based agreements, which address the concerns of performance risk. Another approach involves milestone payments which help spread the cost over time. Milestone payments can also serve as an element of outcomes-based agreements. Another model that could help control the cost burden of these therapies is broad risk pooling through reinsurance.

While these models offer a number of benefits, they’re all rather different from some of the fundamental aspects of the current reimbursement system. There are regulatory issues in terms of government price reporting and compulsory rebates that need to be worked around. Also, you need to take into consideration that there are three parties typically involved in these transactions – the pharma company that's selling the product, the provider purchasing the product, and then the payer that is ultimately paying the bill. So, there are a lot of different details that still need to be worked out.

Express Scripts (recently acquired by Cigna), the pharmacy benefits manager and owner of Accredo Specialty Pharmacy, has entered into contractual agreements with several gene and cell therapy manufacturers to undertake a roll in executing these purchasing arrangements. Express Scripts, in turn, enters into negotiated agreements with payers, enabling them to work as a financial intermediary of sorts between the payers, providers and manufacturers. This helps address some of the challenges that need to be overcome.

Do you have a sense of which model might become the most popular or do you think it's going to be a mixed approach?

I think it’s probably going to be a mixed approach, with some of it depending upon the nature of the disease state and what can be expected of the clinical benefit. For example, if gene therapy completely eliminates the need for high cost chronic therapy in diseases like spinal muscular atrophy or hemophilia, milestone payments may work best. Whereas something like Luxturna (voretigene neparvovec), for which there are no treatment alternatives, might work best with a performance-based rebate.

In many cases, though, what looks good on paper may not work in practice.  Eventually the array of current approaches will get thinned out, while new models may be developed by manufacturers or payers.

Do you think there's going to be any resistance from the healthcare industry to these new models, or do you think people are quite keen to find new ways to do this?

The biopharmaceutical industry has been a key part of creating solutions. Novartis is just one example among many companies that have been very active. They began working with CMS prior to launch on outcomes-based and indication-based pricing agreements for Kymriah (tisagenlecleucel). (Though last year, CMS abandoned the effort for apparent political reasons.) Novartis, along with other cell and gene therapy manufacturers, offers outcomes-based agreements with treatment centers and now has agreements with Express Scripts.

Manufacturers also have a seat at the table within the multi-stakeholder MIT think tank group called FoCUS (Financing and Reimbursement of Cures in the US), which is working on finding solutions for funding curative therapies.  

How do you think pharma companies can best demonstrate the value proposition of gene therapies?

The measures used in clinical trials to gain FDA approval are typically highly technical surrogate markers of benefit which can be difficult to translate into what they actually mean for patients. For example, the FDA-oriented primary endpoint in hemophilia gene therapy trials is a laboratory measure of coagulation factor activity. So, BioMarin has included as a secondary endpoint, the number of bleeds requiring factor replacement, which is much more meaningful to patients and caregivers. They also included five different patient reported outcome measures as exploratory endpoints

Spark Therapeutics created a composite endpoint, the multi-luminance mobility test (MLMT) score, for the Luxturna clinical trials. This endpoint enables the treatment’s benefit to be conveyed in terms of improved mobility and functionality.

Pharma also needs to manage the conversation around what a ‘cure’ actually means in terms of degree and duration of improvement, as well as the percentage of patients that respond to therapy. There is a risk of over-promising and under-delivering. Being able to set proper expectations is going to be very important to maintaining confidence among patients, caregivers, and providers.

Gene therapy is a very rapidly evolving space. Do you have any sense of how long it will take these new approaches to value and reimbursement to really take effect?

It's somewhat a function of the number of gene therapies and the number of eligible and treated patients. They are currently rather few and far between. Luxturna sales through its first 15 months on the market equate to approximately 50 treated patients. When you spread that across all payers, it may not be worth it for them to undertake the administrative challenges involved with putting in place a new payment model. However, when you add in the approximate 1,500 patients treated globally over the last 18 months with CAR-Ts (based on sales over the same period), and all of the treatments still in development, the impact on any given payer begins to build.

Then, of course, it will take time to work out all the kinks. Over the next three to five years, as we continue to see gene and cell therapies coming to market in somewhat more prevalent chronic diseases like hemophilia, I would expect us to move from a few reimbursement pilots here and there to some methodologies that have built a track record and become commonplace.

About the interviewee

Debbie Warner brings over 30 years of experience, including 24 years in the pharmaceutical industry including roles in sales, account management, product management, medical affairs and managed markets. She brings extensive knowledge of specialty drug reimbursement, distribution models, patient access to care, specialty pharmacy. She has led multiple projects examining evolving trends in specialty disease market access and the impact of these trends on all key stakeholders.

For the past six years she has led the Commercial and Market Access Consulting team at Kantar, helping clients address critical commercialisation, reimbursement, coverage, and competitive issues in the US and 5EU healthcare landscape.