Though Promising, Gene Therapies Face Durability And Reimbursement Headwinds – Forbes

Posted: December 17, 2020 at 7:50 pm

WALPOLE , MA - AUGUST 6: Estelle Lemieux, a 21-month-old with spinal muscular atrophy, practices ... [+] using her new wheelchair outside of her home in Walpole, MA on Aug. 6, 2019. Estelle will be getting a treatment of Zolgensma after her insurer, Aetna, decided to cover the $2.1 million drug. (Photo by Jessica Rinaldi/The Boston Globe via Getty Images)

The promise of gene therapy is to cure diseases associated with faulty or missing genes. Theres enormous potential. Just this month, at the annual American Society of Hematology meeting, it was shown that gene therapy stops bleeding in hemophilia. Researchers reported that a single injection of a viral-mediated gene therapy vector decreases the bleeding rate among patients with Factor IX-related hemophilia B by 91% over a 6 month period.

Ideally, gene therapies address the root causes of disease with a single curative dose. If they can replace a lifetime of expensive maintenance treatments this may lead to cost savings in the long run. Yet, the high upfront costs, uncertainty surrounding long-term durability, and adverse events have led to some concerns among payers and regulators.

Pharmaceutical firms deploy multiple approaches to pursuing curative gene therapy, including:

These approaches build on advances in basic science. Companies involved in gene therapy research and development include mid-size and large firms. Among other large pharmaceutical firms, Bayer is establishing a cell and gene therapy platform within its pharmaceuticals division. The company aims to deploy the platform in as many indications as possible.

Novel drug development is invariably a risky venture. The issue of risk is further amplified in gene therapy. Promising therapies face unexpected challenges. For example, in a surprise decision this fall, the Food and Drug Administration (FDA) rejected BioMarins license application for its gene therapy to treat severe hemophilia A. According to the FDA, valoctocogene roxaparvovec gene therapy, is not ready for approval in its present form. The FDA changed its data requirements for the application. The agency is now requesting that the sponsor BioMarin provide two years of data from the companys ongoing Phase 3 study of the therapy.

While development challenges will persist, payment hurdles may be equally difficult to overcome. Should many of the gene therapies in the pipeline be approved in the coming decade the budgetary impact burden on payers could become overwhelming. Payer concerns stem in part from there being hundreds of gene therapies in clinical development,across a wide range of therapeutic categories, including among others, cardiovascular disease, Parkinsons, various inherited disorders, different types of cancer, viruses such as HIV, and blood diseases like sickle cell anemia.

The churn or turnover at U.S. insurers - as beneficiaries frequently switch plans - lowers the potential return on investment for payers. So, being saddled with high upfront costs without necessarily experiencing the downstream long-term benefits of gene therapies is a considerable problem for which a structural solution has not yet been found.

The payer assumes all the risk with fixed, static pricing. And, the payer isnt able to properly assess that risk, given that clinical development of gene therapies has, thus far, mostly included only very small numbers of patients. Therefore, the real-world benefits and risks remain unclear at the time of approval. Clearly, given the uncertainties regarding long-term durability of gene therapies as well as the potential for toxicity and other adverse effects to patients, a dynamic pricing structure is not only desirable but essentially required for these treatments.

Value-based contracts

In what appear to be harbingers of new ways to finance gene therapies and potentially turn fortunes around of therapies lagging in uptake, drug manufacturers are offering - and in some cases payers have been amenable to - indication-specific pricing arrangements, value-based contracts, and installment plans.

For example, in 2018, the FDA approved the gene therapy Luxturna. This treatment holds the promise to restore functional vision to the blind. The sponsor, Spark Therapeutics, set its products price at $425,000 per eye. Harvard Pilgrim entered into a unique outcomes-based contract with Spark Therapeutics. In the deal, Harvard Pilgrim pays for Luxturna, but gets certain refunds if the treatment wears off after a defined period of time. The full details of the contract are confidential. What is known, however, is that because of federal regulations, known as Medicaid best price rules, the maximum refund cannot exceed 23.1%, or the amount Spark Therapeutics is required to offer Medicaid programs. Spark Therapeutics did request that the Centers for Medicare and Medicaid Services (CMS) offer ways to work around the Medicaid best price requirement, in order for it to be able to accept installment payments and provide insurers deeper refunds or rebates in case the product doesnt meet certain targets.

Novartis Gene Therapies has been working closely with payers to create five-year outcomes-based agreements and novel pay-over-time options for the Zolgensma therapy, indicated for spinal muscular atrophy. The sponsor asserts that the treatment is cost-effective, even when priced at $2.125 million per patient. The installment plans would spread out payments over five years. In addition, the sponsor would offer a refund if a patient dies or the treatment otherwise fails within that period.The current alternative to Zolgensma is BiogensSpinraza, which patients take for the duration of their lifetime. The costs of Spinraza are approximately $4 million over a 10-year span.

In 2019, BluebirdBio told investors it was seeking value-based installment plan contracts to reimburse its sickle cell anemia product LentiGlobin for transfusion-dependent beta-thalassemia. The installments would be paid over a period of up to five years.

After an initial charge, Bluebird Bio would only get reimbursed if the one-time infusion benefits patients. This implies that up to 80% of the cost of LentiGlobin would only be made if there is treatment success. And this success would then be measured and tracked in patient registries maintained by payers.

As part of its contracting preparations, Bluebird Bio has sought ways to bypass Medicaid best price rules; for example, waivers to establish an exemption. The company has also pursued a resolution to the issue of portability - when patients change insurers - by way of a mutual recognition strategy across payers.

But, now the FDA wants Bluebird Bio to provide additional information on the manufacturing process it will use as it transitions the product, LentiGlobin, from clinical trials to commercial production. This will push back the timing of execution of contracts until LentiGlobin gets approved by FDA, which may not be until 2022 or later.

Across the various contract constructs described, payments can be administered in different ways that are not mutually exclusive:

Reimbursement of pharmaceutical products generally happens on a per-unit basis, which spreads out costs over years. But, the cost of a gene therapy is much more concentrated, possibly all upfront in a single payment. Such high upfront one-time costs make it harder for payers to underwrite the risk of full payment for one therapy, let alone the entire range of gene therapies that may be coming to market shortly. Therefore, a combination of installment plans and value-based contracting arrangements will likely be the wave of the future for gene therapy reimbursement.

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Though Promising, Gene Therapies Face Durability And Reimbursement Headwinds - Forbes

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