From The Editor | June 18, 2019

Breaking Down Pricing Of Cell & Gene Therapies


By Erin Harris, Editor-In-Chief, Cell & Gene
Follow Me On Twitter @ErinHarris_1

Biopharma Innovation — Value At Any Price?

Cell and gene therapies raise different challenges than conventional or traditional medicines, and their initial costs are no different. Kymriah, Yescarta, and most recently, Zolgensma, Novartis’ one-time gene therapy that treats children under 2 with spinal muscular atrophy (SMA), which weighs in at $2.125 million, save patients’ lives and are major wins for the industry. Yet, these life-saving therapies leads the cell and gene therapy sector to battle over the challenges associated with their costs.

I conferred with several SMEs in the cell and gene sector to get their take on the challenges for both industry and patient associated with cell and gene therapy prices, and what can be done, realistically, to bring costs down over time. The full-length article will appear on Cell & Gene as well as in the September issue of our sister print publication, Life Science Leader magazine; but for now, here’s a sneak peek at what we’ll be discussing.

Eric David, CEO of Aspa Therapeutics: The challenges to the industry regarding gene therapy pricing are two-fold. First and foremost, the cost to manufacture a gene therapy is significantly more than conventional biologics such as monoclonal antibodies and recombinant proteins. Cost of goods/manufacturing alone for a gene therapy can be between $500,000 and $1 million, and that does not include costs for R&D, the costs to run crucial clinical trials, or the costs to build the commercial infrastructure necessary to provide access to patients. In addition, for the foreseeable future, these therapies will be administered as one-time only, and they will be administered to very small patient populations — sometimes just a few hundred patients worldwide. Companies must be able to recoup their significant investments, or they will not be able to tackle these highly unmet needs.

Janet Lambert, CEO, ARM: Stakeholders from industry, public and private payers, providers, and others must convene to ensure patients are able to access these innovative therapies through their insurance providers without significant or prohibitive out-of-pocket costs.

However, these therapies represent a substantial change in the healthcare reimbursement paradigm, as many treatments for serious conditions currently involve chronic palliative care, providing incremental improvements and/or temporary delays in the progression of disease. Current reimbursement systems are configured towards providing this type of chronic care and may be unable to cope with the high upfront costs of cell and gene therapies. Coupled with the newness of these technologies and the lack of long-term follow-up data, these therapies can have an undesirably high potential risk profile for payers. Ensuring patient access to these therapies relies on the development and implementation of payment models that help payers to absorb the cost of these therapies and as well as offset the perceived risks.

Two reimbursement models that are currently garnering attention and traction from industry and payers alike are payment-over-time and pay-for-performance. Payment-over-time models, which allow insurers to amortize the cost of therapies over several years, better reflect the value provided by cell and gene therapies. Pay-for-performance models can be combined with amortization models, benchmarking future payments on positive health outcomes for patients, or they can be used standalone, providing rebates in cases in which the therapy was not as efficacious as expected. In either case, these models help to shift or share the risk from the payer to the developer, which may make payers more confident.

Stay tuned for the full-length article, which will include more from Lambert, David, and other industry luminaries. What are your thoughts on this topic? Email me directly to share your insight on the sector’s on-going dialogue about pricing.