Preparing for Market: Reimbursement Strategies for Cell and Gene Therapies

In this interview with Regulatory Focus, Ted Slocomb and Michael Werner, two leaders from the Alliance for Regenerative Medicine (ARM), provide insight into future challenges and opportunities for ensuring market access and value-based reimbursement for gene and cell therapies.

Cell and gene therapies represent a new, transformative era in medicine. For many indications, these products offer the promise of durable - even potentially curative – treatments and in many cases, with a single administration.

Policy makers today face the challenge of devising and implementing a reimbursement environment that enables widespread patient access while also supporting and incentivizing continued innovation. Given a highly fragmented, multi-payer system such as the US healthcare system, and the unique nature of cell and gene therapies, this is a task requiring a creative and wholesale adjustment in how medical treatments are valued, paid for and financed.

FOCUS: What is the potential impact of gene and cell therapies on the standard of care and how are they different than other biologically-based products?

ARM: Gene and cell therapies are truly revolutionary products. Their shared mission is to provide durable, even potentially curative, treatments for devastating diseases with just one administration. Many treatments currently under development target orphan diseases, for which there is no cure. Others target more common diseases, including several forms of cancer, HIV, central nervous system and neurodegenerative disorders, hemophilia and other inherited bleeding disorders, ophthalmological disorders, cardiovascular disease, and diabetes.

In some cases, these products require only one or a few administrations to address the root cause of disease, not merely treating the symptoms. These therapies aim to repair, restore, regenerate, augment, establish or re-establish, healthy functioning within a patient's cells, genes and tissues.

These products are unique in their ability to offer such potentially long-term results with a limited number of therapeutic applications, thus greatly improving a patient's quality of life. The impact of such treatment cannot be overstated; they benefit the patient and their families and caregivers, as well as benefit society through reduced healthcare costs and regained productivity.

FOCUS: What are the unique challenges related to market access/reimbursement for gene and cell therapy products? 

ARM: We find stakeholders both see and appreciate the high value of these therapies – that is, the promise of a durable treatment from a single or few doses and a lifetime of improved or completely restored functioning. That said, it is also important to recognize the current reimbursement system poses a number of barriers to the widespread adoption of these therapies, creating delays for patients in need.

The current system is set up to pay for chronic disease management, reimbursing for treatments given over a long period of time. Gene and cell therapies, by requiring perhaps only a single or just a few doses, could represent a higher upfront cost under the current system, but with a much longer potential benefit period. Another unique challenge is that these products can be biologically very complex, sometimes involving the extraction and reprogramming of a patient's own cells. Existing frameworks are not currently set up to optimally code, value and reimburse these therapies. Thus, the existing statutes and regulations governing Medicare and Medicaid may need modifying to accommodate new cell and gene therapies.

FOCUS: How can therapeutic developers minimize payer unfamiliarity and uncertainty? 

ARM: In our outreach to the payer community, we have heard many times that therapeutic developers should engage in proactive communication with payers during development, improving the payers' knowledge and understanding of these products and their potential applications and budget impacts.

Nothing quells uncertainty quite like compelling multi-year clinical data, so companies should strive to develop as much as possible. However, in many cases involving gene and cell therapies, gathering such data is not always possible. Both manufacturer and payer can commit to continued data collection, often from real-world sources, as would be the case with therapies for diseases with very small patient populations.

Communication with payers is also essential to determine which payment and financing arrangement would be ideal for the developer's particular gene or cell therapy product. For example, in the case of a pay-for-performance situation, payers could provide input regarding potential performance endpoints, etc., and any financial risk would be partially offset by the manufacturer.

FOCUS: As described in your recent white papers, what are the different payment and financing models that could be applied to these products?

ARM: There are numerous proposals being discussed that could be viable although there is no clear "one-size-fits-all" approach.

Payment models to properly and appropriately assess value and reimburse potentially curative gene and cell therapies include:

• Annuities/Periodic Payment: the anticipated high upfront cost would be paid in installments over a set period of time. This tackles the "hot potato" concern as patients in the US typically switch insurance providers every few years and no one insurer wants to foot the whole bill only to see that patient (and the years of treatment-free cost-savings) to be realized by another company.
• Pay-for-Performance: the payment would be based on whether treatment is successful, according to a pre-specified definition. As we have recently seen with the FDA's August 30 approval of Novartis' Kymriah (tisagenlecleucel), the first CAR T-cell therapy available in the US, the Centers for Medicare and Medicaid Services (CMS) acknowledge the need for the payment systems to be modernized – and they specifically cite clinical outcome-based pricing as an acceptable innovative payment arrangement.

Financing models include:

• Re-Insurance: limits the risk an insurer takes on with a high-cost, single-administration treatment or claims over a certain threshold.
• Risk Pooling (with carve-out): payers place a set amount into a fund for high-value, high-cost treatments. If a patient's costs exceed a certain amount, funds from this pool will cover those costs.
• Patient Assistance/Subsidy and Co-pay Reform: assistance programs to help patients cover their expenses until they reach their out-of-pocket maximum as well as co-pay reform to enable coverage of specialty care costs not traditionally covered by insurance.

Each of these payment and financing models addresses at least one, or some, of the unique challenges associated with these therapies. However, given their complexity, it is not beneficial to declare one model appropriate for all treatments.

FOCUS: How do you recommend these models be implemented?

ARM: Our upcoming white paper, the third in our series, will outline specific policy, regulatory and legislative recommendations needed to support implementation of alternative payment and financing models and driving access to curative gene and cell therapies. Our recommendations will focus on market-based solutions as well as propose statutory and regulatory changes to public insurance programs.

FOCUS: Any closing thoughts?

ARM: It is an exciting time in healthcare as new innovative curative therapies make their way to the marketplace. Ensuring payers have the tools needed to quickly cover successful technologies and ensuring patients can access them, will bring changes to how our healthcare system operates.

At ARM, we are engaged at all levels to support the development and proliferation of regenerative medicines. Going forward, we plan to work with our membership and key stakeholders to "seed" the landscape on which gene and cell therapies can flourish. We anticipate a number of these products are headed to market in the very near-term: this week with Novartis' Kymriah and Kite's CAR-T product likely soon to follow, as well as Spark's gene therapy product for inherited retinal blindness. With these approvals will come rapid change to the system, as patient demand warrants swift modernization of these payment models.

At the same time, it is essential for the reimbursement environment to be supportive of all stakeholders and alternative financing models must capture and adequately assess the value these therapies pose for patients, their communities, the healthcare system, and society overall. For regulatory professionals, this is an incredibly exciting time to witness, assist in and contribute to such meaningful progress.

About the Interview Candidates

Ted Slocomb is vice president, commercial planning at Audentes Therapeutics. He has more than 24 years of experience in new product and portfolio planning, marketing, corporate development and venture capital in the biotechnology and pharmaceutical industries, including significant experience developing and executing commercialization strategies for biopharmaceuticals in rare diseases. He is the reimbursement committee co-chair of the Alliance for Regenerative Medicine (ARM). He earned an MBA from the Leonard N. Stern School of Business at New York University, where he was a Stern Scholar. He can be contacted at [email protected].

Michael Werner is executive director of ARM with almost three decades of healthcare law, lobbying, regulatory, reimbursement and policy development experience. He is the co-founder of ARM and a partner at Holland and Knight, LLP. The firm focuses on legislation and implementing FDA regulations regarding drug/biologic review, approval and distribution; reimbursement strategy and issues; FDA and NIH oversight of clinical trials; approval and marketing of orphan drugs; stem cell research and regulation of cell therapy, gene therapy, tissue engineering and regenerative medicine products; human subject protection issues; conflicts of interest and other bioethics issues. He can be contacted at [email protected].

About the Alliance for Regenerative Medicine

The Alliance for Regenerative Medicine (ARM) is a multi-stakeholder advocacy organization representing the global gene and cell therapy and regenerative medicine sector. ARM is covering these issues in a three-part white paper series, two of which have already been published in In Vivo. The first paper provided an overview of the sector, detailing the impact these therapies stand to have on patients, healthcare system costs and society. The second paper identified and evaluated potential payment models that could be applied to these products, and what barriers exist that might prevent implementation. ARM's third white paper is currently underway and will be published shortly, outlet to be determined. This final paper will wrap up the series with specific recommendations regarding policy changes required to enable new payment and financing models.

Cite as: "Preparing for Market: Reimbursement Strategies for Cell and Gene Therapies." Regulatory Focus. September 2017. Regulatory Affairs Professionals Society.