A new chapter begins
Employers’ top four questions about cell and gene therapies
Baby KJ captured the nation’s attention when it was reported that his rare deadly metabolic disorder had been successfully treated with a CRISPR gene editing therapy. Genetic and cell therapies — cutting-edge treatments intended to cure or significantly improve serious, life-threatening conditions — are providing hope for KJ and others facing grim medical prognoses. While the therapies’ potentially transformative clinical benefits spark excitement, their unprecedented price tags and limited availability raise concerns about access and affordability.
Since the first cell therapy was approved in the U.S. in 2017, the cell and gene therapy market has been expanding at a gradual, yet steady pace. More than a dozen therapies have launched in the past few years, with forays into key therapeutic categories such as sickle cell disease, hemophilia, Duchenne muscular dystrophy, and various cancers. Yet a number of factors make it difficult for stakeholders to understand this still nascent market and plan for the future. Processes, infrastructure and distribution models for gene and cell therapies are still evolving and, within the heterogenous mix of products, clinical attributes and market performance varies widely. Employers are aware that new gene and cell therapies pose extraordinary financial risks, with 57% of survey respondents saying that managing those costs are a top priority in pharmacy benefits in years ahead. This post explores some key questions raised by plan sponsors as they focus on providing access to these potentially life-altering treatments while managing the risk of significant therapy and procedural costs.
How much do cell and gene therapies cost? These complex therapies are expensive, with many gene therapies priced over $1M per treatment (several costing $2-3M) and cell therapies priced at approximately $400K-$500K per treatment. Moreover, considerable procedural and administration costs may also apply. Most gene and cell therapies currently on the market are administered as one-time therapies, target relatively rare conditions, and may be intended for very specific age groups or even be customized to an individual patient. These attributes contribute to more volatile utilization patterns for the health plan, with the associated costs viewed as “lightning strikes” that are difficult to budget for.
What is our risk for a cell and gene therapy claim? We’ve seen an increase in cell and gene therapy claim activity in recent years, but uptake has varied significantly by individual product. The highest market uptake has been for gene therapies that treat conditions that manifest in infancy or early childhood, such as spinal muscular atrophy and Duchenne muscular dystrophy. Cell therapies for treatment of certain cancers have also performed well in terms of market uptake. However, some therapies, for example those targeting hemophilia and sickle cell disease, have had surprisingly low uptake. Barriers to broader adoption include complex clinical journeys; concerns about known and unknown side effects; questions about efficacy; availability of effective maintenance treatments; and access to the limited number of cell and gene treatment centers in the US. While the short-term outlook for the gene and cell therapy market is slow and steady growth, in the long-term we expect significant market expansion as cell therapies are developed to treat more cancers and non-oncologic conditions and gene therapies emerge for additional conditions that have limited or no effective maintenance treatments. Predictive analytics may be a helpful tool in projecting the risk for cell and gene therapy claims.
Does our plan need to cover these therapies? As overall healthcare costs continue to climb, some plan sponsors question the need to cover these high-cost therapies. Excluding coverage for a therapy that may be the only available treatment, or the last resort, may raise legal, ethical, and public relations issues. Financial results will vary by therapy — some may eliminate the need for costly maintenance therapies and result in long-term savings, while others may provide less clinical value and result in increased healthcare expenditures. For now, book-of-business data received from major medical carriers in the marketplace shows that 99-100% of commercial plan sponsors broadly cover gene and cell therapies. As more therapies enter the market, we may see health plans make more targeted coverage decisions based on clinical value and cost. Some innovative payment models, such as value-based agreements and therapeutic warranties, have already emerged as potential solutions to align costs with patient outcomes.
Will our stop loss policy cover these claims? For self-funded sponsors that cover gene and cell therapies under their plan and purchase stop loss coverage, the vast majority of stop loss carriers handle these claims as they would any other claim via the plan mirroring provision. This should always be confirmed with the stop loss carrier. When renewing coverage, watch out for lasers (higher deductibles or lower levels of coverage for high-risk individuals or groups), confirm that gene therapies are included in plan experience ratings, and explore emerging reinsurance options — in certain scenarios. For example, carve-out solutions may make sense for an employer if their stop loss carrier gives an appropriate discount for removing these risks from the policy.
