Insights on payer management of cell and gene therapies

By Zachary Solomon, Creative Director, Mosaic

As medical research has evolved over the past few years, we’ve seen a steady growth in the number of cell and gene therapies (CGTs) available.¹ These products deliver lifesaving and disease-modifying therapy, often in a one-and-done fashion. However, many of these products carry multimillion-dollar price tags, with new approvals in 2023 and 2024 ranging from $300K (gene therapy, type 1 diabetes) to $4.25 million (gene therapy, metachromatic leukodystrophy).^1-12 These prices have made these therapies challenging for health plans, leading to new pathways and management approaches.

Currently, there are more than 20 gene therapies in Phase 3 and more than 70 in Phase 2.¹³ Preparing for these upcoming approvals was a key discussion topic at AMCP 2024, with several sessions focused on how stakeholders are evolving their approach to managing these high-cost medications.

Recent publicly identifiable outcomes-based agreements (OBAs) in the US

In 2022, my colleague Jessica Conlin (Cherian) authored a POV on OBAs for CGTs. Since the publication of that perspective, several new product launches have led to additional contracts, including two with details that are publicly available. Beyond the OBAs listed below, manufacturers are continuing to explore additional models.^7,14,15 These new contracts show a continued focus on medical outcomes (in the case of Lyfgenia) and clinical endpoints demonstrating durability of effect (in the case of Roctavian), key areas of focus for CGTs.^7,14

Bluebird Bio:¹⁴ Lyfgenia (lovotibeglogene autotemcel [lovo-cel])

Indication covered in agreement: Sickle cell disease (SCD)
Contract time frame: 3 years
Agreement details: Offered rebates in the event a patient was hospitalized for a pain crisis (ie, vaso-occlusion crisis), a common complication of SCD, using medical claims data

BioMarin Pharmaceutical:⁷Roctavian (valoctocogene roxaparvovec-rvox)

Indication covered in agreement: Hemophilia A
Contract time frame: 4 years
Agreement details: Warranty reimbursement up to the full WAC of Roctavian on a prorated basis if a patient does not respond or response is not durable

Additionally, the Centers for Medicare & Medicaid Services (CMS) recently released their model for CGT access, which focuses on the negotiation of OBAs in Medicaid. Anticipated to rollout in January 2025, this multiyear model run by CMS is a voluntary program allowing states and manufacturers the opportunity to participate and test an OBA for CGTs with the ultimate goal of improving patient outcomes.¹⁶

While the CMS model will initially focus on establishing OBAs for gene therapies that treat sickle cell disease, additional conditions could be added to this model over time.¹⁶

CMS cell and gene therapy access model process¹⁶

CMS negotiates the terms of the OBA with manufacturer
States decide if they want to enter into an agreement reflecting the set terms
CMS provides support with implementation, including data collection, and funding

Evolving approaches to managing high-cost medications

In addition to OBAs, stakeholders at AMCP also discussed several models that their organizations are exploring for managing the cost of these medications.

Stop-loss insurance/reinsurance^17,18

Particularly for self-funded insurers, the rise of CGTs has led to an increased risk for the plan–even one patient on one of these medications could break the bank. As a result, small- to mid-sized employers have been increasingly leveraging stop-loss insurance to help cover the risk of these high-cost medications. In addition, some payers have also begun carving out certain conditions and therapies, increasing the concern of how these therapies would be covered.

With the growing use of stop-gap insurance/reinsurance, manufacturers of CGTs should explore providers of stop-gap insurance/reinsurance as potential secondary influencers with distinct needs vs typical health plans.

Amortization^19,20

Because many CGTs are one-time treatments with a high up-front cost, manufacturers have also been exploring amortization, where the payment for these products is spread over a period vs as an up-front cost. While this model has been used before for CGTs, one concern that is often raised is portability—meaning what happens if the patient changes health plans before the plan has made the full payment.

Manufacturers and payers are exploring how to make these payments more portable, so if a patient moves to another health plan, the payment responsibility would move with them.

Novel trends

Emerging therapy subcommittee²¹

Based on the growing number of CGT approvals, UC Davis Health—a California-based health system—developed a new subcommittee tasked with reviewing these medications. The committee focuses primarily on the financial and operational aspects of these treatments (clinical review was initially included but has since been moved to a separate committee), and as such, includes more non-clinician stakeholders (e.g., procurement, finance).

Based on their success, UC Davis believes that this model could be used by other health systems to support the review and operationalization of CGTs. In the event that additional health systems look to mirror this approach, manufacturers should be prepared to market to this new target, and potentially support systems in operationalizing this model.

Increased Medicare reimbursement^22,23

As part of CMS’s Inpatient Prospective Payment System (IPPS) proposed rule for fiscal year 2025, CMS has identified several ways to increase reimbursement for cases involving CGTs. For chimeric antigen receptor T-cell (CAR-T) therapy specifically, CMS is proposing to increase Medicare Severity Diagnosis Related Group’s (MS-DRG) base payment. Additionally, CMS is proposing to increase the rate for CAR-Ts used in clinical trials. Finally, CMS is proposing to increase the maximum New Technology Add-on Payment (NTAP) for gene therapies that treat sickle cell disease from 65% to 75% (similar to how CMS has approached treatments for infectious diseases). While these initiatives can help hospitals manage cost for CGTs that are given in the inpatient setting, it’s important to note that reimbursement may still be higher in the outpatient setting.

Health systems will need to understand the financial impact of using CGTs based on settings of care as they establish their policies for these therapies.

Takeaway

With the field of CGTs continuing to evolve as new multimillion-dollar products enter the market, it will be important to track how payers and manufacturers continue to approach this category. Evolution of value-based contracts in this space could provide learnings for new CGT launches, as stakeholders look to these initiatives to guide future approaches in OBAs. This could also in turn provide learnings for non-CGT treatments, as both payers and manufacturers increase their level of sophistication regarding the implementation of these agreements.

The Mosaic team continues to monitor these trends as new CGTs come to market to understand how payer management is evolving and help manufacturers communicate the value of their products and services.

If you have any questions or would like to discuss this topic further, please contact hello@mosaic-mm.com.