Tuesday, June 18, 2024

Gene Therapies: New Report Highlights Strategies for Managing Costs and Ensuring Access

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Gene therapies, which offer revolutionary treatment possibilities for patients with serious conditions like spinal muscular atrophy, hemophilia, and sickle cell disease, have seen remarkable growth. In less than seven years, the number of single-dose gene therapies approved by the Food and Drug Administration (FDA) has risen from zero to 17. Despite the excitement surrounding these advancements, significant concerns remain about their high costs and long-term benefits, with prices now cresting above $3 million.

A recent comprehensive report titled “Managing the Challenges of Paying for Gene Therapy: Strategies for Market Action and Policy Reform,” published by the Institute for Clinical and Economic Review (ICER) in collaboration with NEWDIGS at Tufts Medical Center, addresses these pressing concerns. The report provides an in-depth analysis of the challenges and proposes innovative strategies and policy reforms to manage the financial impact of gene therapies on the healthcare system while ensuring equitable access for patients.

The report highlights the anticipated growth in gene therapies, with 85 new treatments expected to receive regulatory approval by 2032 across more than 12 therapeutic areas. This surge could lead to an estimated spending of $35 to $40 billion in the United States over the next decade. While the aggregate costs of gene therapies at current prices have not yet become unmanageable for large payers, the approval of therapies for larger populations could create significant budget pressures. Smaller employers, state Medicaid plans, and regional health plans may find it financially impossible to provide access to these therapies without changes in pricing or payment methods.

Determining Fair Prices for Gene Therapies: Report Highlights Innovative Payment Models and Challenges

One of the primary challenges discussed in the report is determining a fair price for gene therapies. These therapies often come with high upfront costs, which are difficult for smaller employers and state Medicaid programs to manage. The report suggests that, although these one-time prices may represent good long-term value if they lead to durable health improvements, they pose a substantial risk to the affordability of overall healthcare costs and insurance premiums. The need to balance incentives for innovation with the provision of equitable and affordable access to these treatments is a collective responsibility that requires overcoming significant challenges.

The report explores various innovative insurance models and payment mechanisms to address these challenges:

  • Milestone-Based Rebates: These contracts involve upfront payments with rebates provided if the gene therapy does not meet specific performance expectations. For example, Bluebird Bio’s gene therapy for sickle cell disease offers a rebate if patients are hospitalized for a vaso-occlusive event within the first three years after administration.
  • Warranties: Warranties offer reimbursement for future payer expenses if the gene therapy fails to meet the promised magnitude or duration of benefit. For instance, Roctavian™ provides an outcomes-based warranty that reimburses payers on a pro-rated basis over four years if the patient loses response.
  • Performance-Based Installment Payments: These arrangements spread payments over time and link them to positive performance targets, helping to manage both short-term budget impacts and clinical uncertainty.

Gene Therapies

Report Recommends Policy Reforms to Support Innovative Payment Models for Gene Therapies

The report outlines several policy reforms to support these innovative payment models:

  • Medicaid Drug Rebate Program (MDRP) Regulations: The report calls for clarifications to MDRP regulations to facilitate the broader adoption of value-based contracts and innovative payment methods.
  • Data Infrastructure Development: The development of robust data infrastructure is essential to support the tracking of outcomes needed for value-based contracts. This includes leveraging existing disease area databases and enhancing manufacturer registries to provide outcomes tracking data.
  • HIPAA Clarifications: The report recommends clarifications to HIPAA regulations to ensure appropriate data access for entities engaged in value-based agreements, enabling them to access the required outcomes and other data needed for payment adjudication.
  • Federal Gene Therapy Coverage Benefit: One proposed strategy is a federal “carve-out” benefit for gene therapy, similar to the coverage provided for renal dialysis. This program would cover the costs of gene therapies for all eligible patients, eliminating barriers such as lasering and ensuring broader access.

The report emphasizes that no single strategy can address all the challenges associated with gene therapy payments. Instead, a combination of innovative approaches and supportive policy reforms is necessary. For example, stacking strategies like combining reinsurance with value-based contracts can help manage both high-cost budget impacts and clinical uncertainty. Similarly, integrating value-based contracts with fair pricing determinations could provide a comprehensive solution for equitable access and affordability.

Gene therapies hold the potential to transform thousands of lives, but ensuring their affordability and accessibility requires concerted action from all stakeholders. The need for innovative market and policy solutions will only grow as more gene therapies are approved, including those for larger populations. The report by the ICER and NEWDIGS at Tufts Medical Center calls for thoughtful consideration of market actions and policy reforms to ensure that gene therapies can reach all individuals who can benefit from them while maintaining the overall sustainability of the healthcare system. The time for action is now, as gene therapies represent some of the most transformative advances in healthcare today.

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Resource: Institute for Clinical and Economic Review, April 23, 2024

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