From The Editor | October 7, 2019

Potential Solutions To Current Pricing Models For Cell And Gene Therapies


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


Curative cell & gene therapies are changing modern medicine as we know it, but are their high price tags fair to the patient?

Move over, religion and politics. Drug prices are one of the new polarizing topics on the minds of anyone paying attention. Headlines about high-priced cell and gene therapies specifically can cause sticker shock for the patient; exhibit A — Novartis’ Zolgensma, the spinal muscular atrophy (SMA) gene therapy treatment priced at $2.125 million is the world’s most expensive drug to date. But cell and gene therapies are their own animal; the differences between them and traditional biologics are too numerous to count. Their innovative and life-saving properties are unmatched, and make no mistake, these therapies are changing modern medicine. As a result, the often one-time, personalized therapies are an expensive and resource-intense proposition. Attend any industry conference that broaches the pricing subject, and you’re likely to hear the following: competition will eventually drive down costs, or it’s simply too early to tell what’s next. Both statements are true, but they’re not very actionable. Therefore, I turned to Eric David, CEO of Aspa Therapeutics; Dr. Paul Lammers, president, CEO, and Director of Triumvira Immunologics; and Janet Lambert, president of the Alliance for Regenerative Medicine (ARM) for their take on current pricing models for cell and gene therapies and potential solutions to drive down costs for the patient.

The State of Current Pricing Models

Cell and gene therapies represent an important scientific and medical advancement for patients suffering from a variety of serious disorders. Products including Kymriah, Yescarta, and Luxturna have been launched, and many others are advancing to late stage development. With this progress, payers, government agencies, manufacturers, and other stakeholders are focusing on the development of workable pricing models to support these therapies. Prices for these products represent the value that the therapies bring to patients and to healthcare systems over time and help to drive further innovation across the sector. “The therapies have the potential to provide a durable or possibly even a curative effect, often with a single administration, and represent a significant improvement in standard of care for many patients,” says Lambert. She goes on to say that this method of treating disease by addressing its underlying cause has the potential to provide cost savings to the healthcare system, both through decreased direct medical costs, as well as through improved patient quality of life, increased productivity, improved caregiver quality of life, improved social integration, and other indirect cost-savings.

“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,” she says. But, how is that accomplished? Lambert states that 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,” says Lambert. “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.” Therefore 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.

Why Costs Will Come Down … Eventually

Back in June, I attended BIO 2019, which was held in Philadelphia. One of the sessions titled, Gene Therapy 2.0: No Longer Science Fiction, featured accomplished industry leaders from the likes of Spark Therapeutics, Aspa Therapeutics and more, who are taking diverse approaches to competing in the new era of gene therapy. Among the many topics discussed during the session, pricing took center stage for a few minutes. Each of the panelists provided thoughtful, detailed data throughout the session, but some panelists became noticeably quiet when the topic of pricing came up — except Eric David, CEO of Aspa Therapeutics. To corroborate my earlier comment about the topic of pricing at industry conferences, some of the other panelists stated that it’s too early to tell what will happen with pricing. Yet, David’s passion for the topic was palpable, so much so that I contacted him after the event to pick his brain.

“The challenges to the industry regarding gene therapy pricing are two-fold,” explains David. “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.”

David went on to explain that current pricing models spread out the payments for a gene therapy over several years, assuming efficacy remains durable, ensures that payors do not have to bear the entire cost of a gene therapy up front. “Over time, costs will come down significantly as they did for monoclonal antibodies, driven by increased manufacturing capacity, greater commoditization of bioengineering and manufacturing resources, and efficacy-based pricing models,” says David.

Reimbursement Models: Payment-Over-Time and Pay-for-Performance

According to Lambert, 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,” she says. “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.

Other innovative models are already in place to help mitigate the cost of existing expensive therapies. Lambert explains that re-insurance, a process by which risk is shared by multiple insurance companies, has been adopted by insurers in the U.S. to help pay for expensive solid organ and stem cell (bone marrow) transplantation procedures. “Risk pools have been used successfully by private insurers in Canada and is the basis for the UK’s government-sponsored Cancer Drugs Fund,” Lambert explains. “The so-called ‘Netflix Model,’ which has been adopted by two state Medicaid programs (i.e. Louisiana and Washington) to pay for high-cost treatments for Hepatitis C can help normalize costs when demand for a therapy fluctuates significantly from year to year.”

A Strategy to Bring Down Costs: Manufacturing Improvements

Dr. Paul Lammers, MD, MSc, president, CEO, and Director of Triumvira Immunologics explains that the advent of T-cell therapies is providing hope for a potential curative treatment for patients facing life-threatening diseases such as leukemias and lymphomas. “However, the current price tags for these therapies (Novartis’ Kymriah $475,000, and Kite Pharma/Gilead’s Yescarta $ 373,000, per treatment, respectively) coupled with increased use and variable response rates, begs the question: what strategies might be followed to reduce these costs and allow broader patient access to these promising therapies?”

One strategy employs the development of allogeneic (“off-the-shelf”) instead of autologous T-cell therapies made specifically for each patient and taking more than three weeks of lab work to make. An allogeneic approach could therefore reduce manufacturing and processing costs. 

Another strategy would focus on the full automation of T-cell therapy production to minimize cost by reducing the necessary footprint in manufacturing facilities. Dr. Lammers and David agree that increased manufacturing capacity will drive down costs. “There is a strong movement in the T-cell manufacturing world to move towards the use of fully automated systems, (i.e. you put the patient’s leukaphoresis material in, and 10-14 days later, the finished CAR-T or TAC-T cells are ready to be re-infused into the patient),” says Dr. Lammers. “Then, you insert a new cartridge, and the system is ready to process the next patient’s materials. These systems are small, about the size of a small microwave and can be stacked, so the actual footprint needed would be far smaller than the current process used.”

Involving the Patient in the Process

Patient advocates continuously state the importance of having the patient be an active participant in their care. When the patient is given an opportunity to express preferences and values before, during, and after treatment, various stakeholders can make informed decisions that better advance the industry — and that includes cost of treatment. “From a patient perspective, it can be hard for people to swallow the published price of a therapy, but payors understand the why behind high costs of gene therapy as well as how few patients will be treated, and most patients and their families will never have to pay the whole price of a therapy,” says David. “In addition, the tremendous innovation occurring across scientific, regulatory and commercial models is enabling investment in these areas of profound unmet medical need. Without this innovation, which is stimulated in part by the market’s acceptance of the current pricing models, there would remain absolutely no investment in these diseases, as had been the case for decades previously.”

David explains that patient advocates have struggled to find ways to treat patients — very frequently young children. “Patients have been waiting for years for any investment in key disease areas, and now we are seeing not just one but sometimes multiple programs coming to the clinic for their loved ones,” says David. Indeed, the bottom line is accessibility and affordability for the patient. “Going forward, it is essential that sector stakeholders work together to ensure that patients can access these transformative therapies as quickly and affordably as possible,” says Lambert.

Simply put — cell and gene therapies are expensive to develop, manufacture, and commercialize, and they will continue to be for the foreseeable future. According to Lambert, as industry and payers continue to pursue these and other innovative financing models, it is important for policymakers to identify and reduce the legal and regulatory barriers to the adoption of these programs, particularly for public payers. “As the field advances, the market access landscape for cell and gene therapies will continue to mature,” she assures. “The eventual availability of long-term follow-up data will help to alleviate some of the perceived risk for insurers. Increasing numbers of cell and gene therapy approvals will ensure that patients and providers are able to select therapies that will be most effective for each individual patient.”