Gene therapy ‘cures’ force new payment models

December 28, 2018 | Drug

Melanie senior

Solving the scientific challenges around gene therapy took decades. Figuring out how to pay for these new medicines will, hopefully, be quicker. As gene- and cell-therapies begin to trickle onto the market, with pipelines expanding behind, payers and manufacturers are frantically trying to work out how to fund these often one-time treatments, several of which purport to offer patients something close to a cure.

Smaller companies like Spark Therapeutics have engaged in outcomes-based contracts or installment-payment options with individual insurers; Spark’s Luxturna was approved by FDA for an inherited eye disease in late 2017. It costs $425,000 – per eye.

Big Pharma are involved in the debate, too, as their portfolios also shift toward high-value gene- and cell-based therapies. Novartis’ Kymriah, a $475,000 cancer therapy that involves modifying both genes and cells, has starred in several pharma-payer discussions in the 18 months following its US approval. Despite a no-cure, no-pay deal for children covered by the government’s Medicaid system, uptake of the drug has been limited.

Novartis’ CEO Vas Narasimhan has renewed interest in addressing the pricing issue, however, since paying $8.7 billion for gene-therapy company AveXis in April 2018. The deal came with a recently-filed candidate for spinal muscular atrophy, and two further clinical-stage candidates. (Novartis also has ex-US rights to Luxturna.)

Narasimhan is reportedly looking beyond health insurers to re-insurance companies, like Munich Re or Swiss Re. These groups underwrite conventional insurers, for instance in the case of catastrophic natural disasters. Why not have them, similarly, underwrite the outlier costs of patients in need of these specialized therapies, which, though pricey, can also save up to several million dollars in healthcare costs?

It is not an entirely new idea: several US states have created state-funded reinsurance ‘pools’ to help local insurers cope with the most expensive medical claims, and slow the rise in premiums for families and individuals. The World Bank teamed up with reinsurers in 2017 to cover against future Ebola pandemics, according to the Financial Times. This last parallel is imperfect: infectious disease outbreaks in developing countries present particular population-level health risks that are not relevant in the case of rare genetic disorders. But the re-insurance idea has legs. The costs of multiple specialist treatments could be pooled, for example, including across payers. Europe already offers a few examples of international payer cooperation to fund high-cost treatments for rare diseases.

The difficulty will be in agreeing the details – just as it has been for today’s growing handful of outcomes-based reimbursement deals. At what point, and for whom, does the re-insurance cover kick in? How will payers (and patients) absorb re-insurance premiums as these, necessarily, grow with the number of high-priced, one-time, potentially curative treatments that come to market? Will such a system force already high prices up further still?

The science behind these new therapies is extraordinary. As further gene- and cell-based medicines reach or approach the market in 2019 and beyond, society now requires similarly extraordinary efforts to solve the funding challenge – and fast.