Gene and Cell Therapy: The Rise of Million Dollar Drug Treatments

Less than two decades ago, an international collaborative of scientists completed the Human Genome Project, an endeavor that involved identifying and mapping all the genes that make up a human being. The result was a “genetic blueprint” that included the sequences and locations of genes associated with a myriad of serious and chronic diseases and unlocked insights into disease development and progression. Today, drawing on this breakthrough research, scientists have been able to manipulate the genes of people with certain diseases to significantly improve their condition or even cure them. What sounds like the premise of a sci-fi movie is becoming a reality as pharmaceutical products that can accomplish these feats actually reach the marketplace.

These novel products – gene and cell therapies – offer new hope for many individuals. As potential cures for previously incurable diseases, they also carry extraordinarily high price tags. One prominent example is Zolgensma, a gene therapy which was approved in late 2019 for treatment of a rare neuromuscular disorder in children, and made a splash in the news for being the most expensive drug in history at a jaw-dropping $2.1M per single treatment course. With various other gene and cell therapies already available and many more in the pipeline, plan sponsors should develop strategies now for managing this new financial exposure.

What exactly is gene and cell therapy?

Gene therapy involves the transfer of genetic material into a person’s body with the goal of treating or curing a disease. In the case of Zolgensma, for example, a functional version of a gene is introduced into the body via an infusion to replace a dysfunctional gene that causes the neuromuscular disorder.

Cell therapy, a closely related group of products, involves the transfer of live cells into a person’s body to help treat or cure a disease. Cell therapy is often used to treat advanced stages of certain blood cancers and involves harvesting a person’s immune cells, genetically modifying them in a lab to provide the ability to attack cancer cells, and reinfusing them back into the person’s body. Some products may possess characteristics of both gene and cell therapy.

Gene and cell therapy products are administered by healthcare professionals in specially designated treatment facilities and require high-touch clinical support for optimal health outcomes. The administration process for these therapies is more complex than other high-cost treatments, such as specialty drug infusions; in the case of cell therapies, for example, the process somewhat resembles a stem cell transplant. Accordingly, gene and cell therapies are typically billed through the medical benefit, and in addition to the high cost of the drug itself, often come with substantial administration and procedural fees.

Unique challenges for plan sponsors

Unlike most traditional treatments, which are often taken on an ongoing basis, gene and cell therapies are viewed as one-time, ultra-high-cost treatments intended to cure or significantly alter the trajectory of a disease. In essence, these therapies are the pharmacy equivalent of a “shock claim.”

Instead of paying for disease treatment over time, plan sponsors absorb the entire cost at once. Cell therapies are typically priced close to $500K per treatment course and gene therapies may approach or exceed $1M per treatment course. This paradigm shift in treatment and payment for rare and serious conditions presents plan sponsors with unique budgeting and stop loss challenges.  Accordingly, existing reimbursement models must be reinvented to address the costs of these breakthrough therapies while preserving access to care.

As of now, most plan sponsors are choosing to cover these therapies under their plans. Because they are often the only treatment choice or a last resort option for a serious or life-threatening disease, excluding these products from coverage may raise legal, ethical, and public relations issues. Additionally, these therapies may yield plan savings in the long term by curing or improving a chronic disease and reducing the need for other ongoing costly treatments. For the great majority of sponsors that don’t see exclusion as an option, the crucial first step in building an appropriate cost-management strategy is to understand the likelihood of these high-cost therapies appearing in their member populations.

Anticipating a wave of new treatments

To date, the FDA has approved 22 gene and cell therapies primarily targeting rare genetic disorders and certain rare forms of cancer. Due to the low incidence of currently targeted conditions, the risk of experiencing these claims remains relatively low for many plan sponsors. However, the gene and cell therapy pipeline is growing rapidly; in 2018 alone, the number of products in development rose by 25%, from 289 to 362. By 2025, the FDA estimates they will be approving 10 to 20 gene and cell therapy products per year.

In addition to the overall expansion of the pipeline, with time the focus of pharmaceutical manufacturers may start to shift from rare genetic conditions and cancers to more common conditions, such as HIV and heart failure, increasing the number of therapy-eligible individuals. By building a foundation of robust management strategies today, plan sponsors will be more equipped to keep pace with the continuous evolution of the gene and cell therapy market in years to come.

Reinventing the current drug payment model

While the gene and cell therapy market is still in early stages of development, targeted strategies to address cost of care and support clinical outcomes are just beginning to emerge. Some medical and pharmacy vendors are developing programs to assist plan sponsors in managing the costs, typically, some form of reinsurance with may include clinical components such as prior authorization and case management. Sponsors should consider any potential overlap with existing stop loss or reinsurance solutions and -- importantly – evaluate the cost of these programs relative to the specific risk level for these high-cost claims in their populations.

Other strategies, such as installation payments and outcomes-based reimbursement, may also be available. Evolving our current drug payment model into an outcomes-based model would seem to hold the most potential, as it ties reimbursement to the success of therapy, offsetting costs in the event of therapy failure and promoting clinical outcomes.

Of course, as with management of other high-cost therapies, there is no one silver bullet. Plan sponsors will likely do best with a comprehensive approach that spans the full spectrum of management strategies – and they should regularly engage with their vendors to stay up to date as other solutions emerge. As the gene and cell therapy market continues to evolve, cooperation between manufacturers, payers, and healthcare providers will be necessary to ensure access to these products and maintain affordability. While federal and state policymakers have taken notice of these breakthrough medications, at this point there is no consensus as to whether, or how, they will address their impact. Simply stated, the rise of gene and cellular therapies will be among the biggest challenges that health plan payers of all types will face in the next decade.

Alina Belousova
by Alina Belousova

Principal, Managed Pharmacy Practice, Mercer

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