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 animals; 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 expensive and resource-intense propositions. 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; Paul Lammers, M.D., MSc, 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
Prices for cell and gene products represent the value that the therapies bring to patients and to healthcare systems over time, and they 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 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.
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 toward providing this type of chronic care, and may be unable to cope with the high up-front 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 payors.” Therefore, ensuring patient access to these therapies relies on the development and implementation of payment models that help payers to absorb the costs of these therapies as well as offset the perceived risks.
WHY COSTS WILL COME DOWN … EVENTUALLY
At this year’s BIO conference in Philadelphia, I attended a session titled “Gene Therapy 2.0: No Longer Science Fiction.” I noticed that when the topic of pricing came up, some panelists at this session became noticeably quiet — except for Eric David. In fact, his passion for the topic was so palpable, I decided to contact him after the event to pick his brain.
“The challenges to the industry regarding gene therapy pricing are twofold,” 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. This 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 payors 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 stand-alone, 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 payor to the developer, which may make payors more confident.
Other innovative models are already in place to help mitigate the costs of existing expensive therapies. For instance, 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 are 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. Lammers, of Triumvira Immunologics, says one strategy that could reduce the costs of these therapies involves fully automating T-cell therapy production. “There is a strong movement in the T-cell manufacturing world to move toward the use of fully automated systems, (i.e., you put the patient’s leukapharesis 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.” Dr. Lammers and David note that increased manufacturing capacity also will drive down costs.
CEO, Aspa Therapeutics
INVOLVING THE PATIENT IN THE PROCESS
We all know that, from a patient’s perspective, it can be hard 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.”
Simply put, cell and gene therapies are expensive to develop, manufacture, and commercialize, and they will continue to be for the foreseeable future. As industry and payors continue to pursue 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 payors.