Understanding Coverage, Financing, and Future Trends of Gene Therapy in Employer Health Plans

Cell and gene therapies have the potential be transformative for patients and it's important employers are prepared for them, according to a 2-part webinar from the Greater Philadelphia Business Coalition on Health (GPBCH). Sponsored by Johnson & Johnson Healthcare Systems, the GPBCH series provided an in-depth framework of the advantages of including cell and gene therapy coverage in employer health plans, along with the challenges brought by manufacturing complexities and the need to address accessibility to treatment.

In the first webinar, Understanding the Future of Cell and Gene Therapy, Rebecca Hulinsky, MS, CGC, director, health plan genomics strategy and solutions, Quest Diagnostics, explained genetic testing from a diagnostic standpoint.¹

With therapies often costing between $1 million and $3 million or more, the webinar detailed innovative approaches to manage these expenses effectively for employers.

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"When we start talking about genetic therapies, we have to put 2 things together, the genetic testing piece, plus the genetic therapies," Hulinsky said in her presentation.

Then, Jennifer Malinowski, MS, PhD, director, access policy and research, Johnson & Johnson, shifted to the medical implications from a therapeutic perspective and the revolutionary impact of these therapies on health care, emphasizing the benefits of targeted treatments in improving health outcomes.

"The goal of gene therapy is to actually fix the genes entirely, in the body, Malinowski explained, “where cell therapy is: let’s fix these cells to do something for us.”

Marnie Bute, RN, managing director for Reinsurance Solutions at Aon, and Ryan Siemers, CEBS, principal at Aegis Risk LLC, delved into the complexities of employer coverage decisions and financing strategies for high-cost therapies.² The second webinar, Coverage and Financing of Cell & Gene Therapies, explored essential criteria employers should consider when evaluating individual therapies for coverage, strategies to ensure appropriate utilization, and the evolving landscape of the stop-loss market, offering new options to help employers manage risk effectively.

Market Dynamics and FDA Approvals

Gene therapy involves inserting a corrected copy of a defective gene into a viral vector, or an "envelope," which is then infused into the body, Bute explained, summarizing the overview of the first webinar. This process is primarily targeted towards treating cancers, and its benefit structures are generally straightforward from a coverage standpoint, according to the presentation.

The substantial costs involved with gene therapy necessitate market solutions available to employers. With therapies often costing between $1 million and $3 million or more, Bute and Siemers detailed innovative approaches to manage these expenses effectively for employers. The significant growth within the field is driven by the continuous approvals and development of gene therapies and cell therapies despite the varying adoption rates post-approval.

“The market continues to indicate that by 2030 we're probably going to see to the upwards of $16 billion in this market, as well as by 2032 they're anticipating that we're going to be seeing a treatable population of well over 100,000 individuals,” she said.

Unique Cases in Gene Therapy

Bute highlighted a couple of FDA-approved therapies that represent aspects of this innovative treatment landscape that need to be addressed. In 2021 allogeneic processed thymus tissue (Rethymic) became the first thymus tissue product approved by the FDA.³ The tissue transplant offers treatment for babies with congenital athymia, a rare immune condition in those born without a thymus. She pointed out that although allogeneic processed thymus tissue is not a gene therapy, its high cost and classification by some insurers have raised concerns about access.

Similarly, beremagene geperpavec-svdt (Vyjuvek) was the first herpes-simplex virus type 1 (HSV-1) vector-based gene therapy, FDA approved for the treatment of wounds in patients 6 months of age and older with dystrophic epidermolysis bullosa (DEB) with mutation in the collagen type VII alpha 1 chain (COL7A1) gene.⁴ The estimated lifetime expense for a patient receiving the therapy is $15 million, according to results published in JAMA Dermatology.⁵

In Vivo vs Ex Vivo Gene Therapies

In vivo therapies involve outpatient procedures where the corrected gene is infused directly into the patient. In contrast, ex vivo therapies require hospitalization, where the patient’s cells are extracted, modified outside the body, and then reintroduced after a series of treatments. The cost and complexity of these procedures vary significantly, impacting the overall treatment and hospitalization costs.

Market Challenges and Payer Concerns

The presentation demonstrated the rapid approval of gene therapies has led to several challenges and concerns for payers:

• High Costs: Gene therapies are often one-time, high-cost medical treatments, creating financial uncertainty for payers.
• Durability of Treatment: There is ongoing debate about the long-term effectiveness of gene therapies, as seen in the hemophilia space, where some patients need to return to traditional therapies after a period.
• Beneficiary Turnover: Concerns about patients selecting plans with gene therapy coverage and then switching plans after receiving treatment.
• Administration and Tracking: Effective tracking systems are needed to manage the long-term follow-up and monitoring of patients who receive gene therapies.

As the market faces significant challenges with gene therapies, primarily due to their high costs and limited coverage, Bute said this creates financial uncertainty for payers. With rapid FDA approvals increasing, she described a "gene therapy tsunami," highlighting a notable lag in patient adoption and availability due to manufacturing delays and other barriers, resulting in fewer individuals receiving these therapies immediately after approval.

Preparing for the Future

To address these challenges, Butte recommended several best practices for payers:

• Assess Risk and Plan Design: Understand the population’s risk and ensure that benefit plans are designed to cover FDA-approved gene therapies.
• Network and Access: Establish partnerships with centers of excellence to ensure patient access to necessary treatments.
• Patient Education: Educate patients about gene therapies and their potential impacts, given the complexity and evolving nature of these treatments.

"The gene therapies are being approved but I think we're at a point where with the continuous rapid adoption of those approvals, we are not seeing the rapid adoption of individuals receiving them," Bute said. "I do feel that in these next, probably 3 years, this tsunami potentially may be coming. Right now, I would say it's more of a lake wave."

The Impact of Cell and Gene Therapy on Health Plans and Insurance

Siemers, who specializes in medical stop-loss insurance, highlighted the importance of understanding the intricacies of cell and gene therapies, their costs, and their implications for health plans. He explained that gene therapies typically come with higher price tags than cell therapies, often exceeding $1 million, with future therapies potentially costing up to $5 million.

So far, the FDA has approved 37 cell and gene therapies, with many more in the pipeline. Echoing Bute's message, he explained that despite their high costs, the uptake of these therapies has been slow. Factors contributing to this include physician hesitancy, patient resistance, lifestyle impacts, and the existing treatment infrastructure.

The Influence of the Affordable Care Act

Because cell and gene therapy are medical expenses, not drug costs, they often require administration by highly skilled clinicians in hospital settings, Siemers explained. The price of these therapies includes not only the cost of the therapy itself but also additional provider costs for preparation, administration, and follow-up care.

He also highlighted the significant role the Affordable Care Act played in the development of these costly therapies by removing lifetime dollar limits on health plans. The removal provided a financial runway for the development and coverage of high-cost therapies.

Stop-Loss Insurance and Cell and Gene Therapies

Stop-loss insurance acts as reinsurance for high-dollar claimants, mitigating the financial risk for health plans. For many plans, if cell and gene therapies are covered under the plan document and not excluded by the stop-loss policy, they are likely covered by stop-loss insurance, Siemers said.

The stop-loss market is actively managing the risk associated with cell and gene therapies. Some underwriters are more willing to cover these therapies, leveraging their larger books of business to absorb the risk. They may increase pricing slightly to account for the potential high costs of these therapies but are generally prepared to handle these claims.

"While we have several hundred million, if not billions, of stop-loss business on our books every year in annual premium, with our actuary, we can take a look at how many we can expect reasonably to hit our book and pricing it within the book," he said. "And when they do that, they realize that they're not hitting a whole heck of a lot right now."

Carve-Out Solutions

Siemers discussed the option of carving out cell and gene therapies from the stop-loss policy. These carve-out programs typically charge a per-member, per-month fee and cover select therapies. However, they may require specific conditions, such as having a particular pharmacy benefit manager (PBM) or health plan administrator. Additionally, multi-year payment agreements with warranties and outcome-based agreements with manufacturers may be on the horizon.

"Manufacturers are developing them," he said. "I have not yet heard of any that have actually been leveraged yet, but the manufacturers are eager to do it."

As these therapies become more prevalent, health plans and stop-loss insurers must adapt to manage the associated risks and costs effectively. This includes ensuring plan documents authorize the expense, having strong genetic and rare disease capabilities, and ensuring stop-loss policies mirror the health plan provisions. He also mentioned the potential for multi-year payment agreements and outcome-based agreements with manufacturers, although these have not yet been widely implemented.

Siemers emphasized that by staying informed and prepared, they can ensure they are ready to handle the rising tide of these innovative treatments.

References

1. Hulinsky R, Malinowski J. Understanding the Future of Cell and Gene Therapy. The Greater Philadelphia Business Coalition of Health (GPBCH) webinar series.

2. Bute M, Siemers R. Coverage and Financing of Cell & Gene Therapies. The Greater Philadelphia Business Coalition of Health (GPBCH) webinar series.

3. FDA approves innovative treatment for pediatric patients with congenital athymia. News release. FDA. October 8, 2021. https://www.fda.gov/news-events/press-announcements/fda-approves-innovative-treatment-pediatric-patients-congenital-athymia

4. FDA approves first topical gene therapy for treatment of wounds in patients with dystrophic epidermolysis bullosa. News release. FDA. May 19, 2023. https://www.fda.gov/news-events/press-announcements/fda-approves-first-topical-gene-therapy-treatment-wounds-patients-dystrophic-epidermolysis-bullosa

5. Raymakers AJN, Kesselheim AS, Mostaghimi A, Feldman WB. Estimated spending on beremagene geperpavec for dystrophic epidermolysis bullosa. JAMA Dermatol. 2024;160(3):297–302. doi:10.1001/jamadermatol.2023.5857