High-Cost Gene Therapies Present Reimbursement, Access Challenges

Since its approval by the FDA in November of 2022,¹ etranacogene dezaparvovec (Hemgenix, CSL Behring), a gene therapy, and the first, indicated to treat adults with hemophilia B, has retained its top spot as the world’s most expensive drug. The price is $3.5 million for a 1-time intravenous infusion personalized to each patient per 2 mL/kg of body weight.²

With 16 gene therapies approved in the United States and projections for an additional 60 projects to be approved by 2030, plus prices that range from 5 figures through the millions, authors in Health Affairs wrote, “Such unprecedented high prices have raised concern about the affordability of gene therapy treatments for patients and health care systems.”³

For example, through July of 2023, 8 oncologic gene therapies have been approved by the FDA, ranging in price from $65,000 to $475,000, and 8 nononcologic gene therapies have been approved, with prices ranging from $630,000 to $3.5 million.

Searching across secondary sources, the NAVLIN database of managed entry agreements, and Google for alternative payment models that have previously been used to pay for gene therapies around the world, the investigators consolidated their findings under 3 payment methods: amortization, risk spreading, and performance-based payment. Together, these payment models consider both equitable patient access and payer reimbursement.

Insurance management planning and risk reduction | Image Credit: chaylek - stock.adobe.com

Amortization

This payment method involves installment payments and is meant to reduce economic impact by spreading payments out. For payers, their installment payments would go directly to manufacturers, or the authors proposed an external third-party loan in instances where payment upfront is non-negotiable. Spreading out payments also helps to facilitate yearly budgeting, for those with a fixed annual budget, and can allow more patients to be treated within capped budgets. However, the authors highlighted several challenges to this approach, including budget restrictions that would require legal changes in order to use an installment approach and the United States’ multipayer system.

Risk Spreading

Under this payment method, payers hope to make treatment costs for their patient populations more predictable by either completing or partially setting a payer’s total spending up front, thereby reducing actuarial risk, or potential for economic loss.⁴

Sharing costs with other payers is one proposed approach. With this, multiple payers contribute a percentage of their member premiums into this risk pool, which is then used for high-cost drug claim reimbursement. Also, each payer could purchase a third-party reinsurance policy that works to reimburse in the instance of catastrophic costs or unexpectedly high spending. As with health insurance, payers are responsible for a fixed monthly premium for each covered patient.

A second approach is to cap costs based on expected volume using a structured payment agreement, in which manufacturers would absorb some of the risk for overuse. A price-volume agreement would see increasing sales influence a lower price per unit, and an expenditure cap model would have a standardized price per unit up to a certain limit reached, after which remaining units are free.

Performance-Based Payment

Under this payment method, uncertainties surrounding clinical efficacy are addressed by risk partially shifting from payer to manufacturer, with payment determined on an individual- or population-level outcome.

Outcome-based agreements would adjust treatment price for an effective treatment—which can be done on a prospective or retrospective basis—and manufacturers are only paid if patients achieve specified outcomes. With an outcome-based rebate, however, the payer makes an upfront payment that is then partially or fully refunded by the manufacturer according to prespecified patient outcome measures. Lastly, under population outcomes–based agreements, price adjustments are made as population-level data become available; these adjustments can change future reimbursements or provide back pay for underperforming therapies.

The authors noted that with these proposed payment models comes the need to consider the various concerns and payer priorities that accompany gene therapies. These include a high budgetary impact, clinical uncertainty, multiple types of risk, payment agreements that benefit both payer and manufacturer, and equitable patient access.

“More work is needed to test and implement alternative payment models,” they emphasized. “Efforts to secure lower prices and further exploration of these innovative payment models can help ensure that patients can receive the potentially life-changing benefits of gene therapies.”

References

1. FDA approves first gene therapy to treat adults with hemophilia B. News release. FDA. November 22, 2022. Accessed November 8, 2023. https://www.fda.gov/news-events/press-announcements/fda-approves-first-gene-therapy-treat-adults-hemophilia-b

2. Dosing and administration for Hemgenix. CSL Behring. Accessed November 8, 2023. https://tinyurl.com/mwunssr5

3. Horrow C, Kesselheim AS. Confronting high costs and clinical uncertainty: innovative payment models for gene therapies. Health Aff (Millwood). 2023;42(11):1532-1540. doi:10.1377/hlthaff.2023.00527

4. What is actuarial risk? SmartCapitalMind. September 10, 2023. Accessed November 8, 2023. https://www.smartcapitalmind.com/what-is-actuarial-risk.htm