While the novel payment models for expensive cell and gene therapies have been effective, they need to continue evolving, said Joe DePinto, MBA, of McKesson.
As more curative and expensive cell and gene therapies launch, the payment mechanism will need to continue to evolve, explained Joe DePinto, MBA, head of cell, gene, and advanced therapies, McKesson. He also discussed successes and challenges of launching these products and how adoption is being tracked.
These therapies can cost well over $2 million. In March, a new gene therapy to treat a rare, life-threatening genetic disease was approved and priced at $4.25 million.1 The therapy treats metachromatic leukodystrophy, which affects 1 in every 40,000 individuals in the US.2
Novel payment models for these expensive therapies typically take 3 approaches: amortization, which spreads payments out over time; risk spreading, which pools costs with other payers or caps costs based on expected volume; and performance-based payment, which ties the price to outcomes.3
DePinto presented on innovative payment models for cell and gene therapies during a session at Asembia’s 2024 Specialty Pharmacy Summit, held April 28 to May 2 in Las Vegas, Nevada. During his sessions, he was joined by Eddie Albers, MBA, managing director, US Life Sciences Practice Leader, Marsh, a global insurance broker; and Emad Samad, president, Octaviant Financial, a provider of novel drug warranty and payment models.
Transcript
New payment and financing models for curative gene and cell therapies have been discussed for years now. What do they look like, and have they been successful?
So, upon launch of many of the cell and gene therapies in the market, we typically see an announcement of a value-based agreement or some kind of unique innovative payment model. I think some of these products that have come out have utilized this as a vehicle to help enhance patient access—really looking at ways in which we could unlock the value of the payment model to really allow for the patient to navigate the system to be able to get treatment.
So, I think it's been highly effective, but it needs to continue to evolve as these new groundbreaking drugs come out. I think biopharma companies and payers alike are really focused in this area and that will really help to continue to allow cell and gene therapy to scale.
At launch, what is the initial adoption like for cell and gene therapies given the administration and cost challenges associated with them?
I think at launch the adoption varies and [it] varies for a variety of factors. One is the launch readiness approach, the commercialization tactics, the clinical data that's reported, as well as the manufacturing processes and the ability to supply the product. It's multifactorial, the impacts of these individual components on a launch.
So, I would say that it's highly variable. Some launches have been really successful, some have struggled it. You can't say one way that it's all been great or all been poor. Now that we're at 17, 18 commercially available products in the market that are launching and in recent times—last year, I think—10 approvals were put out there. And it's still early days because sometimes these manufacturing processes are longer. We typically like to look at launches 6 quarters out of launch to see what that trajectory looks like.
So, it's still early and we're tracking that, but I think some are really good and some are challenged. But those challenges aren't all the same it. Tends to be dependent on the product type, the therapeutic category, and like I said, I think it's multifactorial.
References
1. Shaw ML. FDA approves arsa-cel for metachromatic leukodystrophy. The American Journal of Managed Care. March 19, 2024. Accessed May 2, 2024. https://www.ajmc.com/view/fda-approves-arsa-cel-for-metachromatic-leukodystrophy
2. Kyowa Kirin’s gene therapy most expensive US drug with $4.3 million price tag. Reuters. March 20, 2024. Accessed May 2, 2024. https://www.reuters.com/business/healthcare-pharmaceuticals/kyowa-kirins-gene-therapy-most-expensive-us-drug-with-43-mln-price-tag-2024-03-20
3. Horrow C, Kesselheim AS. Confronting high costs and clinical uncertainty: innovative payment models for gene therapies. Health Aff (Millwood). 2023;42(11):1532-1540. doi:10.1377/hlthaff.2023.00527
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