Following years of hushed excitement and mounting anticipation in biotech circles, gene and cell therapies finally made the jump in 2017 from the safety of guarded clinical trial experimentation to broad availability to patients and their caregivers in the USA. The USA’s FDA (Food and Drug Administration) approvals of the first two CAR-T (Chimeric Antigen Receptor T-Cell) therapies, KYMRIAH™ (tisagenlecleucel, $NVS) and YESCARTA™ (axicabtagene ciloleucel, $GILD), and the first in vivo gene therapy, LUXTURNA™ (voretigene neparvovec, $ONCE), were welcomed in the mainstream media as ‘transformative’ and ‘revolutionary’ based on the lofty clinical promise of a ‘magic bullet’: ‘one-and-done’ treatment to ‘cure’ a disease. The excitement about the real-world potential of these therapies was so great, that the obvious lack of absolute proof of what was being proposed – long term “cure” free of significant safety issues – did little to temper the clinical community’s expectations of a rapid and positive regulatory approval.
Beyond the clinical benefit and the impact on patient life, if successful, gene and cell therapies also carry the potential to save healthcare systems significant expenditure by eliminating alternative treatment pathways that include expensive treatments and use of care facilities and personnel. For example, curing a single haemophilia patient with gene therapy can eliminate alternative treatment and care pathway costs of anywhere between USD 270k to USD 1m per year for her/his insurer.
We are still in the early stages of the ’gene & cell therapy revolution’, with only a handful of them being thus far approved (three by the FDA, and two by the EMA (European Medicines Agency)). However, these initial examples are expected to be followed by many more over the coming years. These followers will challenge payers and the manufacturers who will engage them – not simply due to the pure volume of these gene and cell therapies raining upon the market, but the patient populations are expected to grow beyond the ‘rare disease’ boundaries that presently limit payer expenditure (Figure 1). From a therapeutic area perspective, gene therapies for haemoglobinopathies and haemophilia are likely to be the next wave of treatments to become broadly available through regulatory approval, which is then expected to be followed by the migration of CAR-Ts to tumour types with more affected patients, as well as to earlier lines of treatment within the same tumour types in which they are presently approved. A look further into the future shows products potentially targeting conditions with even larger patient populations, including Parkinson’s disease and solid tumors.
FIGURE 1: Available gene and cell therapy products currently target small patient populations, but products for larger indications, such as haemoglobinopathies, are in the pipeline
This rich pipeline that brings hope to so many patients and their caregivers, at the same time sends shivers of concern down the back of payers who must consider business imperiling cost structure, or the public shaming of denying cures to patients on the basis of money. Just as in clinical benefit, gene and cell therapies are expected to be ’transformative’ in their economic impact and how this is evaluated. List prices for one-time, curative treatments are likely to continue to hover around and occasionally exceed thresholds previously considered to be price ceilings. In short order, if not already, payers will be forced to consider:
- How many patients will need this particular ‘curative’ therapy?
- How many other patients suffering from this same disease will continue to require treatment? And what if they also will have a ‘curative’ therapy approved for them?
- How many other diseases / therapeutic areas are likely to have curative therapies developed for them – and how many patients will they represent? As well, what will be the expectation for their cost per patient?
- And finally and perhaps most importantly – what if it turns out that the therapy is not what healthcare stakeholders expected it to be? What if it is not curative? Will re-treatment or subsequent treatment be necessary? What if the patient encounters significant adverse events and peripheral costs associated with the use of this curative therapy? Who pays then for the adverse events? And should the cost of the original therapy that led to the patient’s condition considered to be a sunk cost?
GLYBERA™ (alipogene tiparvovec, $QURE), developed for lipoprotein lipase deficiency (LPL), a rare disease with ~1:250,000 incidence, has become the infamous example of how a gene therapy with similar levels of pre-approval excitement can lead to inadequate commercial outcomes. In this case, the product’s performance can be partly attributed to what was in 2012 seen to be a very high, one-time cost. Approved following a challenging regulatory review due to what could be considered to be a perceived limited clinical benefit and small trial size, GLYBERA™ immediately stole headlines with its launch price of ~EUR 1m. Payer reaction was generally cold, with many extending their review timelines in order to fully vet the evidence, negotiate pricing with the manufacturer – and likely to examine how other countries’ healthcare authorities would address this unusual product. When all was said and done, only one German patient received the treatment, and even so with substantial effort from the treating physician and patient advocacy to persuade the sickness fund of the treatment’s clinical necessity. $QURE allowed marketing authorisation lapse in 2017, and the product’s launch has since been well-documented as a case study from which subsequent advanced therapy manufacturers can learn.
The primary clinical benefit of gene and cell therapies, ‘cure with one-time administration’, is also the root cause of their most serious commercial challenge. Historically, therapies have been priced with the expectation that they will be used on a regular basis for a period of time that will allow the physician to monitor response and make adjustments as needed. This process also allows for the total cost of therapy to be distributed over months or years, assuming that the patient has responded well to therapy. Manufacturers of gene and cell therapies, on the other hand, must be compensated for the cost of the therapy from a single treatment decision, which also results in a single administration of the therapy. Such a unique dynamic results in a significant risk undertaken by all stakeholders, including the payer. The full cost of therapy, which also is on the higher end of the pricing spectrum due to the severity of the disease, level of unmet need, clinical benefit and innovation which led to it, leads to a ‘psychological sticker shock’ and a serious affordability challenge in many markets. These financial challenges, combined with issues assessing and communicating clinical benefit of these novel products through traditional health technology assessment systems, as well as the general scarcity of long-term safety and efficacy evidence at launch, will naturally create ‘uncertainty’ in the mind of any rational payer – which unfortunately may in turn deny funding (Figure 2).
FIGURE 2: One-time funding of innovative treatments pose diverse clinical and economic challenges for manufacturers and payers
To overcome these challenges and make the novel, potentially curative treatments available to patients, manufacturers and payers are exploring options for the rebalancing of financial and clinical risk. At present, it is a commonly held belief that payers are undertaking an unsustainable share of risk when the decision to fund one of these curative, but high budget impact therapies is made. For all stakeholders to be successful, both parties must find a middle ground between payer and healthcare provider expectations for financial predictability and stability, avoiding payment for failure, and manufacturer demands to realise some compensation for the clinical and economic value of their innovation. (Figure 3) While payers in the USA and Europe carry similar expectations of the appropriate level of risk for the clinical and economic value gained, a deep understanding of each stakeholder’s objectives, motivations, incentives, and acceptable conditions is essential to develop a comprehensive toolkit for new payment models to support these significant steps forward in innovation.
FIGURE 3: There are different needs and expectations of manufacturers and payers / providers when it comes to innovative payment models
SPARK ($ONCE), the manufacturer of LUXTURNA™, which treats a rare progressive eye condition resulting in blindness, demonstrated how an outcome-based agreement can be leveraged to soften payer objections to an expensive gene therapy. With their USD 850k launch price, SPARK offered rebates to USA-based health insurers that provided ‘or-(some-of)-your-money-back’ assurances on LUXTURNA™’s short-term (30-90 days) efficacy, and long-term durability (30 months). While this model does not necessarily alleviate the “sticker shock” and adds the burden of tracking patient outcomes, SPARK was able to generate an air of cooperativeness and self-awareness by engaging with payers on the possibility of a customised payment model.
Payment models which may ignore clinical outcomes, and merely spread financial outlay across several years are also being explored by healthcare stakeholders. These models can also incorporate clinical outcomes by providing additional financial incentives to the manufacturer for a sustained clinical response over the duration of the payment schedule. While these agreements are intriguing and do hold potential, the reality is that both USA and European payers historically avoid payment models with a long-time horizon (greater than 3-5 years). As has been commonly cited, health insurance plan beneficiaries in the USA change plans every few years, which creates uncertainty for who will receive or make payments as an individual changes coverage provider. While most European payers do not face similar issues, long-term payment arrangements do not provide the immediate financial / budgetary opportunities which may be politically advantageous – an important consideration when healthcare is organised and administered by a political party.
FIGURE 4: SPARK offers a performance-based agreement to insurers to make LUXTURNA’s almost USD 1m price more palatable
Eventual success of innovative payment models broadening access and realising the promise of cutting-edge, curative gene and cell therapies will depend on the ability of manufacturers and payers to compromise on risk sharing. Manufacturers of novel one-time treatments can increase the likelihood of successful negotiations by following a few guiding principles:
- ENGAGE PAYERS EARLY TO UNDERSTAND EXPECTATIONS: Understanding payer and provider decision-makers and influencers, as well as their motivations, is critical to designing mutually-beneficial and net value-add payment models
- Actions: Discuss payer objectives, motivations, and incentives to identify payer-specific agreements
- PLAN FOR INNOVATIVE PAYMENT MODELS EARLY IN DEVELOPMENT: Evidence available at the time of launch will inform the structure of innovative payment models; clinical and non-clinical evidence generation activities should be planned with this consideration
- Actions: Consider implications for outcome-based agreements in trial design and plan evidence generation activities that can support novel payment models
- INITIATE PAYER CONVERSATIONS ON INNOVATIVE CONTRACTING MODELS: Realising the value perception benefits of innovative contracting requires a communication strategy to accompany payer and provider stakeholder engagement
- Actions: Include innovative contracting plans as part of the overall value proposition to address specific payer objections
- ESTABLISH SYSTEMS TO TRACK OUTCOMES WITH MINIMAL BURDEN: Added burden of outcome tracking is a strong detractor for payers and providers, which can be a roadblock for innovative payment models
- Actions: Engage providers to understand how outcome tracking can be supported and collaborate with patient communities and support development of registries