FEATURE

Innovating Payment Models For Gene Therapy

August 30, 2018
Authors: 

Jeff Craven

In 2017, the FDA approved two chimeric antigen receptor T-cell (CAR-T) therapies: Kymriah (tisagenlecleucel; Novartis) for the treatment of childhood B-cell acute lymphoblastic leukemia (B-ALL), and Yescarta (axicabtagene ciloleucel; Kite/Gilead) for the treatment of aggressive B-cell nonHodgkin lymphoma (NHL). Luxturna (voretigene neparvovec; Spark Therapeutics), approved by the FDA in December 2017, was developed for the treatment of biallelic
RPE65-mediated inherited retinal disease.

These gene therapies were noteworthy not just for their innovative methods of treating and potentially curing patients of previously incurable diseases, but also for their significant cost. Novartis listed Kymriah at $475,000 per treatment, with experts estimating complications, additional medication, and hospital stays of these durable treatments could bring that cost up to $1 million or more. Yescarta’s price is set at $373,000 by Kite/Gilead, while Spark Therapeutics listed Luxturna’s price at $850,000.

Gene therapy may still be in its infancy, but the initial clinical benefits of CAR-T therapy are promising. Positive outcomes after a single treatment are measured out in years, with some researchers speculating the benefits could last a lifetime based on long-term results. In a recent study published in the New England Journal of Medicine, patients with B-ALL and a low amount of disease who received CAR-T therapy survived up to 5 years after a single treatment. In the ZUMA-1 trial, patients who received Yescarta had an overall 83% response rate and 58% of patients showed a complete response rate at 15.1 months. Kymriah recently gained FDA approval for treatment of adult patients with relapsed or refractory large B-cell lymphoma. And in a phase 3 trial, Luxturna maintained improvements in the vision of 20 patients as measured by the multi-luminance mobility test.

As developers have continued to set higher prices for gene therapies, managed care organizations, payers, and other stakeholders have raised questions about whether gene therapy is too expensive relative to its perceived clinical benefits. The Institute for Clinical and Economic Review (ICER) recently reviewed the CAR-T therapies and Luxturma. ICER found that the CAR-T therapies’ prices fall within commonly held thresholds for cost-effectiveness and align well with the health benefits patients receive. While ICER found that Luxturna’s price would need to be halved to align with the improved health and productivity patients would receive, ICER’s independent deliberation council voted the gene therapy provided reasonable long-term value despite this lack of traditional cost-effectiveness.  

“Based on the evidence currently available, [CAR-T] therapies provide important clinical benefits and appear to be priced in alignment with these benefits,” David Whitrap, vice president of communications and outreach at ICER, told First Report Managed Care in an email interview. “However, the evidence is limited and very short-term, and we may still face short-term affordability questions that will require innovative solutions.”

While the long-term clinical benefits of Luxturna remains unknown, Mr Whitrap said. “The evidence is clear the therapy improves vision for patients over several years.”

“Assuming a 10- to 20-year period of benefit, at list price the treatment does not meet standard cost-effectiveness thresholds, even after accounting for the broader societal benefits improved vision has on productivity and education cost,” he added.

Challenging Existing Payment Models

The US health care system, built on a fee-for-service model and shifting to a value-based payment model after the Affordable Care Act, was not structured to handle high-cost, one-shot therapies. Whereas patients normally pay for care as they receive treatment, gene therapy is an expensive, one-time treatment with uncertain long-term clinical success. 

The problem is not specific to the United States. Glybera (alipogene tiparvovec; uniQure), a gene therapy used for the treatment of lipoprotein lipase deficiency, was approved in Europe in 2012 and estimated to cost $1 million. Strimvelis, developed by GlaxoSmithKline (GSK) for treatment of patients with severe combined immunodeficiency due to adenosine deaminase deficiency, struggled to find a market in Europe due to a low target patient population and a high a cost of $730,000 per treatment.

For actuarial risk managers, calculating the risk of gene therapies in the market involves taking a number of factors into consideration that are outside the control of the insurance company as well as the developer. Norman Smith, Editorial Advisory Board member and President of Viewpoint Consulting, said that, from an insurance company’s viewpoint, it is not a question of if the drug can fit into the actuarial process, but whether the therapy will be viable in the market. 

Timing of treatment is also a factor. He cited Provenge (sipuleucel-T; Valeant Pharmaceuticals), a cell-based immunotherapy cancer treatment for prostate cancer, as an early example of a treatment approved by the FDA that was “less a drug and more of a process.” During treatment with Provenge, patient cells were harvested and processed in an outside lab but needed to be re-infused within 18 hours to remain effective, which included travel time, he said.

“The issue was, there were six steps in delivering Provenge to a patient, five of which were outside of the control of the company,” he said. “It's a killer.”

Many gene therapies need to be administered as early as possible to obtain the greatest clinical benefit. To complicate matters, the prior authorization process for these therapies can be extensive, which can delay timely access to care for severely ill patients, limit market size, and ultimately affect the commercial success of these drugs, Mr Smith said. 

Other challenges include the potential for managed care plans to not see gene therapy treatment claims every year and know how to price premiums accordingly, coordinating payment with the benefits of treatment, managing risk pools for patients, and modifying payments in cases where a gene therapy treatment falls short of expectations or if the patient does not respond to treatment.

Rethinking Payment Models

Various reimbursement strategies have been proposed in managed care for gene therapy, including outcomes-based and value-based pricing. Within the context of CAR-T therapy, ICER recommended setting lower launch prices for future drugs and increasing the price or offering rebates or refunds for a high initial price once clinical benefits are known. “Value-based pricing should be viewed in context with the affordability of a new treatment for different health insurers and payers based on the size of the population eligible to receive the therapy,” ICER researchers noted in a final report on CAR-T therapies. Additionally, ICER recommended entering patients of CAR-T therapy into a registry to track long-term outcomes and follow up.

Policy recommendations for Luxturna and future similar therapies by ICER included educating clinical societies, patient groups, and manufacturers on the indications and benefits of the drug for rapid diagnosis, allowing private payers to create innovative payment methods without triggering Medicaid Best Practice constraints, and negotiating with private and public payers ahead of FDA approval of such therapies. 

The team behind the MIT New Drug Development Paradigms Financing and reimbursement of Cures in the US (NEWDIGS-FoCUS) Project said that globally, managed care organizations and other stakeholders are just learning about gene therapy will change “pathways, settings, and management” in health care. MIT NEWDIGS-FoCUS is a project that brings together stakeholders in health care to discuss solutions to accessing curative therapies for patients in a way that minimally disrupts payers and allows manufacturers to continue their innovation. 

In an email interview, MIT researchers Mark Trusheim, MSc, Casey Quinn, PhD; Daniel Mytelka, PhD, MBA, CFA; and Colin Young, PhD, said few alternative payment models are being proposed in the United States. and the rest of the world. “Currently, there are very few payment models prepared to meet these emerging challenges,” the researchers said. “This is in part because too few products in too small a range of diseases have launched, and partly because stakeholders inside the ecosystem are trying to understand the financial impact, new distribution of financial risk, and how the existing payment systems might adapt to the new reality of cell and gene therapy with minimal structural change.”

The FoCUS project researchers said managed care will need to adapt to these financial risks by calculating actuarial risk internally while considering factors like reinsurance and new pooling of patient populations, contracting with developers based on performance, and anticipating a large backlog of patients upon drug approval while also ensuring appropriate patients receive timely care.

In particular, placing patients into high-risk pools is one way European countries like Germany have managed to pay for patients with high-cost chronic diseases, Mr Smith said. These disease management programs coordinate care across providers and are paid for by statutory health plans, or “sickness funds.”

However, the problem is not just affordability, but managing patients and their treatments, the MIT researchers said. Major side effects of gene therapy, such as cytokine release syndrome and neurotoxicity in the CAR-T therapy, may require long hospital stays and expert care to manage, which drive up costs.

Another model proposed is a payment that follows a patient if they leave an insurance system before they have finished paying for treatment. However, challenges with that model exist in the sharing of patient data under HIPAA across companies, and experts said that model does not address factors such as patient age, disease, and whether they are covered under
public plans like Medicaid and Medicare. Patients may also encounter issues when meeting their out-of-pocket obligations in cases where payments are spread across multiple years.

“When do the payments start, and then when does it end?” Mr Smith said. “Does it end when the person dies? You can't control [these variables], particularly if you're the drug company, but the insurance company can't do that, either.”

More Gene Therapies On The Way

Experts emphasized there is no one model that addresses all the issues associated with paying for gene therapies, and some have envisioned a need for “precision” financial solutions based on individual gene therapies.

“The current situation is the tip of the iceberg with only a few hundred patients treated,” the MIT researchers said. “In reference to the clinical pipeline, we estimate that there may be as many as 40 more cell and gene therapies to launch in the next 5 to 7 years, including some with many more patients.”

But payers have become more aware of the financial challenges and growing need for solutions within the past year. As more gene therapies seek and receive FDA approval, the best payment models will be ones that “stabilize the system overall while also being feasible,” they said.

“With many other potentially transformative gene and cell therapies in the pipeline, stakeholders must collaborate now to develop payment and delivery systems that can ensure timely patient access, manage short-term affordability for expensive one-time treatments, and continue to reward the innovation that brings these new treatments to market,” Mr Whitrap said.