Guest Column | September 6, 2018

New Approaches To Market Access And Reimbursement For Gene And Cell Therapies

By Walter Colasante, Pascale Diesel, and Lev Gerlovin, CRA

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While the promise of gene and cell therapy research has been discussed for decades, we are now at the point where many clinical development programs are advancing to later stages or even approval. With gene therapy alone, there are 34 drugs in pivotal trials and another 470 in early-stage clinical development in the U.S.1 While these programs could lead to a new generation of therapies targeting significant areas of unmet need, they often represent entirely new approaches to treatment that will also call for new levels of innovation in both pricing and drug access strategies.

Current reimbursement models in general do not accommodate many of the unique factors that are common among gene and cell therapies, including smaller patient populations, shorter treatment windows, potentially curative efficacy, high up-front costs, lack of long-term efficacy and safety data, and fees associated with complex administration, dosing, and patient monitoring requirements. Recently, our team at CRA completed an analysis of the challenges associated with pricing and reimbursement of gene and cell therapies. The key finding from this review is that it will be necessary to refine or even fundamentally restructure value demonstration and pricing strategies to support these therapies, and that these new models may need to be implemented very soon. Drug developers may also have to consider new business models and explore partnerships with a range of stakeholders, including payers, to ensure that innovative gene and cell-based treatments can be both commercially viable and widely available.

Challenges In Demonstrating Value And Mitigating System Affordability Concerns

The price of gene and cell therapies, as with many other drugs, will depend to a great extent on their perceived value as defined by multiple factors, including their level of innovation, durable clinical benefit, treatable patient population size, and impact on health systems. Many will present uncertainties and unanswered questions even at the conclusion of the value assessment process. Value assessments for these therapies will also be developed by a broad range of industry stakeholders, including health technology assessment boards, who will quantify value in different ways, making the alignment process complex and potentially limiting the chances for commercial success. Moreover, even among gene and cell therapies that are broadly deemed to deliver value, many still may be considered unaffordable by government or private payers and cause sticker shock in the court of public opinion.

The impact of gene and cell therapies and the need to consider new payment models also may be based in part on the number of patients eligible for treatment. While per-patient costs are high, the budget impact of therapies for rare diseases on a health system may be limited. But payers may face significantly higher costs with therapies that target diseases in larger patient populations, such as heart disease, diabetes, and sickle cell disease. In some disease states, total costs for gene and cell therapies could be unprecedented. The Institute for Clinical and Economic Review estimates that the cumulative budget impact for gene and cell therapies alone could rise to $3 trillion in the U.S. when only about 10 percent of eligible patients are treated with these therapies.2

To help mitigate overall healthcare costs, payers and other industry insiders are looking at several innovative payment options, including models based on clinical outcomes, annuity payments, and expanded risk pools.

Payment Options For Gene And Cell Therapies

Value-Based Agreements

Value-based payment models have been considered by industry stakeholders for more than a decade and were used with both Kymriah and Luxturna at launch. In these models, products must meet predetermined target outcomes at preset time periods to earn reimbursement. If the endpoints are not met, products are not reimbursed by payers.

For Luxturna, a treatment for inherited retinal disease, manufacturer Spark Therapeutics created a value-based rebate program with Harvard Pilgrim, in which the product must demonstrate short-term efficacy (30 to 90 days) and long-term durability (30 months) to earn reimbursement.3 To avoid potential price markups, Spark also agreed to sell Luxturna directly to Harvard Pilgrim, which will receive the rebates even in cases where a patient has moved to a different insurer.4 This approach can help reduce the risk that payers will be positioned to cover unsuccessful treatments and can help address a lack of long-term efficacy data. Payers still may be burdened with related hospital and other administration costs. In addition, the efforts to get all stakeholders to agree on what constitutes a successful outcome and then to track the outcomes also could be major challenges.

Amortized Payment Models

Another key element of Spark’s strategy was a plan that would allow payers to reimburse Luxturna in installments spread over several years.5 This approach is one of the most popular models under consideration for gene therapies and could help soften the near-term impact on healthcare budgets while providing sufficient returns for innovators.

Some gene and cell therapies, especially potentially curative therapies administered in a single dose or short course of treatment, may be better candidates for amortization payment models than others. These models can be adapted to individual therapies by adjusting which stakeholder will absorb different levels of risk. One option is for innovator companies to become de facto banks – comparable to a car manufacturer with its own financing arm. In other cases, third parties, including financial institutions, could provide loans to payers with interest rates that reflect the associated risk. If a treatment does not demonstrate efficacy or durability, the payer might have the option to stop repayments. The government also could issue loans or bonds to private payers and set repayment terms that consider factors such as target outcomes, population size, and patient age.

Alternatively, pharmaceutical companies might take on the role of insurers and, for a premium, cover the payer’s risk associated with a gene or cell therapy. Annuity payments are one example of this approach, which could reduce the annual budget impact for payers while accounting for long-term value. As with value-based agreements, this model would require stakeholders to agree on what constitutes a successful outcome and centralize outcomes data management and reporting, which could be major challenges. New policy initiatives, such as reforming U.S. Medicaid Best Price regulations, also might be essential as patients move between and within private and government plans.

Carve-outs And Risk Pools

Gene and cell therapies also might become more affordable through disease area carve-out plans or by expanding risk pools. Carve-out plans typically involve one payer or care provider that excludes specific diseases while another provider supplies coverage for those excluded diseases. This approach often leads to the creation of payers or vendors with deep clinical expertise in specific therapeutic areas that are well positioned to consider unique payment structures while establishing specialized legal protections for sensitive data. Many payers have implemented carve-out policies for high-cost services such as organ transplantation and mental health.

With expanded risk pools, a combination of public and private funding from stakeholders such as charitable foundations could help keep premiums and cost sharing at relatively manageable levels. This model could require private payers, employers, and governments to allocate a portion of healthcare budgets to a dedicated fund for gene and cell therapies. Funds would be withdrawn and paid out if the cost of therapy exceeds a predetermined threshold. In Canada, a nonprofit called the Canadian Drug Insurance Pooling Corporation manages this type of risk pool, in which employer group plans agree to spread the burden of high-cost therapies, including gene and cell therapies, across multiple payers. Risk pools have been used for many years and offer advantages including budget predictability and more balanced risk among payers.6 However, payers anticipate this model could face challenges in achieving the necessary levels of broad alignment among U.S. payers to be commercially viable. With a small number of approved products and limited efficacy data for most gene and cell therapies, reliable cost estimates also may be difficult to develop.


Our analysis strongly indicates that resolving complex financing and risk issues that can delay market access and reimbursement is paramount to the success of gene and cell therapies. It is likely that there will be no simple solution and that the most effective approaches may require elements from several of the models outlined above. We are likely to see new levels of collaboration among governments, payers, manufacturers, nonprofits, and other stakeholders. The development of workable payment models for these therapies is already a critical issue in healthcare and will become increasingly time sensitive as more gene and cell therapies advance toward commercialization.


  1. Gina Kolata, “New Gene-Therapy Treatments Will Carry Whopping Price Tags,” New York Times, September 11, 2017, available at
  2. ICER Membership Policy Summit Report March 2017, “GENE THERAPY: Understanding the Science, Assessing the Evidence, and Paying for Value,” available at
  3. Arlene Weintraub, “Payers point to Spark’s gene therapy as a model for innovative pricing plans,” FiercePharma, January 12, 2018, available at
  4. Alex Lash, “First U.S. Gene Therapy, Approved for Vision Loss, to Cost $850,000,” Xconomy, January 3, 2018, available at
  5. Ben Fidler, “Spark CEO Marrazzo on Gene Therapy Pricing & Paving the Way for the Field,” Xconomy, January 12, 2018, available at
  6. Ted Slocomb, Michael Werner, Ted Haack, Satish Valluri, and Beth Rader, “New Payment and Financing Models for Curative Regenerative Medicines,” In Vivo Pharma Intelligence, July/August 2017, available at

About The Authors:

Walter Colasante, Pascale Diesel, and Lev Gerlovin are VPs in CRA’s Life Sciences Practice. Colasante has worked extensively in both the pharmaceutical and consulting industries and across a range of therapeutic areas including oncology, the central nervous system, and rare diseases. Diesel has worked in global development, marketing, planning, and business development and has over a decade of strategic consulting experience focusing on portfolio optimization and valuation. Gerlovin has more than 11 years of experience in life sciences strategy consulting, focused on commercial and market access strategies. The authors wish to acknowledge the contributions of Stephanie Donahue and Michael Krepps to this article.

The views expressed herein are the authors and not those of Charles River Associates (CRA) or any of the organizations with which the authors are affiliated.