Million Dollar Drugs Have Arrived: Key Strategies to Consider

As pharmaceutical innovation continues to thrive, novel categories of ultra-high cost drugs called gene and cell therapy are entering the market. Some of the recent entrants have a price tag of $2-3 million per treatment course. By 2025, the FDA predicts they will be reviewing and approving 10-20 gene and cell therapies per year. These cutting-edge products have the potential to drastically improve or even cure certain serious or terminal conditions. Unlike traditional drugs, most gene and cell therapies are given as one-time treatments, fundamentally changing the natural course of the illness and offering hope to many individuals. Plan sponsors should take action today to build a sustainable, long-term strategy that mitigates plan cost exposure and ensures member access to these therapies in years to come.

Spectrum of strategies for plan sponsors

Given there is no silver bullet for this complex issue, plan sponsors need to pursue a range of actions plan sponsors can take. Here’s how to get started:

Understand your plan’s current coverage of these products.

Are gene and cell therapies covered under the plan? Do these therapies flow through the most clinically appropriate, cost-effective part of the benefit? Confirming these coverage details with medical and pharmacy vendors and ensuring coverage aligns with the plan’s philosophy and goals is the first step in building successful management strategies.

Ensure therapy access through clinically superior, cost-effective treatment facilities.

Gene and cell therapy administration is very complex and requires high-touch clinical support. You should confirm your medical carrier’s long-term network strategy, including availability of programs that may enhance clinical care and control claim costs for gene and cell therapies.

Evaluate your stop loss coverage options.

Currently, most traditional stop loss policies cover gene and cell therapy claims as long as the treatments are covered under the medical/pharmacy plan. That said, as these therapies continue to gain attention, the market is beginning to introduce alternative approaches to funding claims that will be worth considering.

Stay up to date on the development of alternative payment models.

Since long-term efficacy data for gene and cell therapies is limited but the corresponding price tags are staggering, plan sponsors may worry about paying a fortune for treatment that will fail. You should request regular updates from medical carriers on outcomes-based reimbursement and other payment models.

Continuously reevaluate your risk and evolve your strategy.

Last, but not least, a key pillar to a sponsor’s overall strategy is realizing that a plan’s propensity for incurring these claims may vary based on its unique member population and the drugs available on the market. Plan sponsors should regularly assess their risk level and update their strategy accordingly. Mercer has developed predictive analytics tools that may help you understand your plan’s risk for these ultra-high-cost claims

As more of these costly therapies enter the market and reshape the drug treatment landscape, key stakeholders in the healthcare system will be pressured to evolve their approach to reimbursement and clinical care. By building a comprehensive strategy today, you will be more prepared to mitigate costly gene and cell therapy claims while preserving member access to these life-altering therapies.

To learn more, read our white paper

Alina Belousova
by Alina Belousova

Principal, Managed Pharmacy Practice, Mercer

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