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At gene therapy meeting, insurance execs grapple with expected cost

WASHINGTON, D.C. — One gene therapy is currently approved in the U.S., a milestone achieved 16 months ago by Spark Therapeutics and its eye disease treatment Luxturna.

Several others from Novartis, Bluebird bio and BioMarin Pharmaceutical could soon join — a prospect worrying insurance executives who are still grappling with how to pay for the potentially one-time treatments in a system designed for chronic therapy.

“There’s a lot of opportunity to change things and to improve,” said Michael Sherman, chief medical officer at New England-based insurer Harvard Pilgrim Health Care, speaking on a panel at this year’s meeting of the American Society of Gene & Cell Therapy (ASGCT).

Sherman, who has helped to lead Harvard Pilgrim’s frequent experimentation with new coverage arrangements, pointed in particular to the challenge of creating a framework for installment payments.

Several companies, including Spark, Novartis and Bluebird, have discussed the possibility of spreading out the high upfront cost of a gene therapy over time. While appealing, such deals are made difficult by regulatory restrictions as well as the frequency with which Americans change insurance plans.

“There is no force for change like coming out with some high-cost therapies to show the world that current regulations are barriers,” Sherman added.

Such considerations are newly on the agenda at ASGCT, which convened its 22nd annual conference in Washington, D.C. this week. For much of that two-decade span, the gene therapy field has labored in the background, working through challenges that set back initial efforts in the clinic years ago.

With Luxturna and two CAR-T cell therapies now approved in the U.S., the field is ascendant as are concerns around cost and reimbursement.

“The first two introductions of gene therapies in the world actually were failures,” said Cigna’s chief clinical officer Steve Miller, referring to the commercially unsuccessfully launches of Glybera and Strimvelis in Europe.

“We owe it to patients and their families to make sure [gene therapy] products go into the marketplace and that they survive in the marketplace,” Miller said at the ASGCT panel. “What can we learn from those failures and what can we do differently in the United States?”

So far, Luxturna and the cell therapies Kymriah and Yescarta have enjoyed modest success. Yet the small patient populations these therapies treat have somewhat kept in check broader consequences for the healthcare system.

That will change if more treatments win approval for broader indications.

“I do believe it is going to take a couple of launches to really demonstrate to various stakeholders why these are issues that need to be solved,” Sherman added.

Novartis could be next up with Zolgensma, a treatment for a severe form of spinal muscular atrophy that it bought last year in a $8.7 billion deal for AveXis. Behind Zolgensma are others for conditions including hemophilia and muscular dystrophy, which affect far more Americans than SMA or the inherited retinal dystrophy Luxturna treats.

Luxturna costs $425,000 per eye and, while Novartis has not set a price for Zolgensma, the Swiss pharma has claimed the therapy would be cost effective at a price as high as $4 million. (Although Novartis is likely to set a price below that upper bound.)

For insurers, those figures are worrying numbers.

“Our insurance system is not designed for one-time, very large payments,” Sherman told ASGCT attendees at Monday’s panel.

Installment payments would help mitigate that risk, especially for treatments that come with question marks on durability of benefit.

Federal price reporting requirements, however, make implementing such arrangements difficult. Through a law known as Medicaid Best Price, drugmakers are required to offer the government health program a minimum 23% discount, or the lowest price negotiated with other private or public payers.

This carries consequences for installment-based contracts. If an insurer stopped paying for a gene therapy after an initial installment — if the treatment stopped working, for instance — that would be essentially viewed as a discount.

“So companies are reluctant to provide those guarantees if that would reset the price for an entire population,” Sherman explained.

Both Harvard Pilgrim and Cigna’s Express Scripts have worked with Spark on reimbursing the cost of Luxturna. The biotech has put in place an outcomes-based rebate arrangement designed to gauge the effect of the therapy between 30 and 90 days, and again between 30 and 33 months following treatment.

If efficacy measures aren’t met, Spark will provide rebates up to 20% of Luxturna’s cost.

“We’d like to be able to do more but we are limited by a number of federal regulations that would severely impact our overall business if we were to discount more than 20%,” said Joe La Barge, Spark’s chief legal officer, at the ASGCT panel.

Spark has proposed to the Centers for Medicare and Medicaid Services a plan that would go further, providing an option payers could choose whereby 50% of Luxturna’s price is tied to efficacy and durability measures over a three- to five-year period. Payers could opt for an installment option, where payments would be due if those measures were met, or a rebate option where Spark would pay back a portion of Luxturna’s cost.

The biotech is still awaiting a response from CMS on the proposal, which it submitted about a year and a half ago.

“We do believe that the time has come to move from discussion to action, especially given that we will likely see a significant uptick in gene therapy approvals over the next several years,” a spokesperson for the company wrote to BioPharma Dive.

Another potential area of disagreement could come in determining what constitutes treatment “failure” in such outcomes-based arrangements.

Clinical tests used to assess efficacy, such as the eyesight test Spark used in its application to regulators, may not always be feasible in a real-world setting — a challenge for payers looking to assess efficacy.

Sherman sees this a potential sticking point for several of the gene therapies nearing market, and floated an idea where companies with a broader therapeutic business might include existing treatments as part of a package. A drugmaker that makes a hemophilia gene therapy, for instance, could include factor replacement therapy at no additional cost if a treated patient still needs additional treatment to control bleeds.

Other ideas, such as age-specific pricing or “export-import” between payers for patients who change insurance, are less likely but among those being suggested to handle gene therapies in the future.

Challenges aside, Cigna’s Miller remains an optimist that insurers and drugmakers can find ways to pay for those therapies that show compelling benefit.

“We don’t have a lack of money in the U.S. healthcare system,” Miller said. “We may allocate that money poorly, but we have more than enough capacity to pay for these new products.”