Durable, potentially curative therapies offer great hope for patients and society. Short, even single dose, treatment regimens are expected to yield lasting health benefits. However, there is uncertainty about the volume and nature of therapies that are coming as well as concern that large, single payments for a wave of therapies will challenge the current reimbursement system, more oriented towards paying for chronic treatment over time.

This section provides a concise resource for payer organizations wishing to think through the implications of a particular individual durable cell or gene therapy for their business(es) and the potential precision financing solutions, processes and capabilities they may need to put in place to prepare for patient access to these therapies.

We have structured this resource around a set of key questions. A companion worksheet to assist you in understanding the implications for your organization and potential solutions is provided here:

Download the Individual Indication Worksheet (xlsx)

Please note

Use of the Paying for Cures Toolkit website and its planning tools is subject to our Terms and Conditions

Figure: Key Questions—Payer Individual Indication Assessment

Expected financial impact

Understanding the expected impact of a cell or gene therapy for a payer population requires an assessment of:

a) The expected patient volume the plan may experience;

b) The expected Per-Member-Per-Month (PMPM) impact and its actuarial volatility; and

c) The potential new capabilities required for managing the gene or cell therapy.

The Individual Indication Worksheet contains three tools to support payer decision-making:

  1. Population Estimator Tool to assess potential volume of treatment eligible patients.
  2. Therapy Impact Modeling Tool to help you analyze the financial impact for your plan.
  3. Solution Prioritization Tool to help match financing tools to an organization’s needs.

We advise each company to conduct its own more detailed operational analysis before making final decisions.

What is the estimated patient volume your plan can expect ?

MIT NEWDIGS FoCUS undertook a pipeline analysis (link to pipeline overview) to determine the scale of the financing challenge of curative therapies in the United States. The team developed estimates of the clinically relevant national incidence and prevalence of patients who might benefit from various product-indication launches. We have made available those national estimates (Pipeline assessment -December 2020) within the Population Estimator Tool.

The Population Estimator Tool allows for you to customize your plan’s population size to the national incidence and prevalence estimates determined in the pipeline analysis. Data entries may be for your entire plan or by line of business to estimate the number of potential treatment-eligible patients. The tool also encourages you to further think through the application of particular therapies as seen with different payer types. For example, Medicare plans will likely see a larger share of the oncology cell therapies; Medicaid plans will see a larger share of treatments to address genetic conditions that occur at birth or are diagnosed in early childhood. Finally, not all those eligible for treatment may seek treatment. Users of the tool are guided through environmental considerations impacting the use of a product

What is the estimated PMPM impact and volatility?

The Therapy Impact Modeling Tool can help you estimate the per-member-per-month (PMPM) spend associated with estimated durable cell and gene therapy expenditure. The projected population for treatment will be carried over from the Population Estimator Tool worksheet. Once you enter a product price, the tool estimates a plan-specific expected and maximum potential financial impact statistically based on the Pipeline Analysis model.

There is great uncertainty as to the degree of patient and provider adoption of these therapies and the speed of adoption. This is a new area of science, few products are on the market and those that are, are relatively newly available. As uptake will vary by therapeutic area, and individual product and market dynamics, each organization will need to assess this for itself for the target patient population. The worksheet offers the option to modify the model assumption of percent of eligible patients treated annually to better match your treatment expectations.

Finally, the estimated cost for one patient is included. Statistically, for therapies with small target populations, a given plan may expect to see no patients on therapy in most years, and a PMPM impact that reflects that. However, in the year that that patient does materialize, the plan will have the full cost of the treatment.

What are other factors to consider?

The tools look at durable gene and cell therapies as a product-only, incremental treatment category with the option for the user to enter their own additional costs and cost-offsets. Additional costs would include care required before and /or after administration of the gene or cell therapy. Cost-offsets include existing medicines that might be replaced by these therapies or downstream medical, pharmaceutical or other benefits or cost savings that might be achieved.

Some developers may offer rebates on the cost of their product. The durable gene or cell therapy may also be covered by stop loss or reinsurance, requiring only payment of the agreed upon deductible. The PMPM estimate provided by the tool will be decreased when these offsets are available.

The estimates produced by the Therapy Impact Model tool should be used to inform strategic assessments, but with appropriate appreciation for the challenges of estimating a new-to-world class of therapies. We advise each organization to conduct its own more detailed operational analysis before making final decisions.

Ability to address risks through current approaches

Durable, potentially curative therapies create three potential financing challenges.

  1. Actuarial risk: The number of eligible patients in a payer’s population may be uncertain and could vary significantly from period to period.
  2. Payment timing: Therapies can involve substantial upfront payment for multiple years of therapeutic benefit.
  3. Therapeutic performance risk: Real world efficacy and durability are uncertain at the time of initial regulatory approval and market launch.

Greater detail on these critical precision financing dimensions may be found here.

The Solution Prioritization Tool facilitates your plan assessment of actuarial risk, payment timing, and performance uncertainty.  The tool suggests precision-financing solutions for a particular therapy based on the payer’s assessment of the data generated by the Therapy Impact Modeling Tool.

FoCUS has collaborated with its stakeholders to create and/or evaluate multiple precision financing solutions for the unique financial dimensions of gene and cell therapy. Details on the precision financing tools are found here 

Actuarial Risk Assessment: Can your organization absorb the financial impact in total, given your risk tolerance and current risk management approaches?

The Therapy Impact Modeling Tool illustrates statistically expected and maximum projected results for the number of patients to be treated, total treatment costs and the estimated PMPM for the indication on a year by year basis Based on the impact modeling, you can assess your plan’s readiness to manage the actuarial uncertainty associated with the individual therapy.

Assessments should consider the cost impact of treating one patient as well as the unlikely scenario of treatment volume represented by the Impact Modeling Tool’s maximum cost scenario, as it is difficult to predict which of the two scenarios would transpire. The risk of incurring these costs can be further informed with the Impact Model’s annual probability of treating one patient.

A significant part of the assessment includes evaluation of existing mechanisms for managing potentially curative therapy costs and may include stop loss/ reinsurance, the practice of establishing cash reserves and others. Assessments should include confirmation of coverage under stop loss or reinsurance policies when determining if existing mechanism for financing gene and cell therapies are sufficient.

Payment Timing: Can your organization absorb the financial impact in the timeframe it is expected?

The Therapy Impact Modeling Tool provides an annual estimated PMPM for the indication and projects a likely maximum cost that the plan could experience. For potentially curative therapies, payment timing needs to be taken into consideration in financial planning.

Potentially curative products differ from traditional pharmaceutical products in that there is a one-time payment wherein chronic treatments’ reimbursement occurs over time. Payment timing thus becomes a risk to existing budgets and cash flow.

The PMPM cost presented in the Therapy Impact Model represent a 12-month distribution of the total cost over the payer population. Financial planning should include an assessment of incurring a claim at various points in the budget year. A payer incurring a claim for a curative treatment in March may have the ability to make operational adjustments to still meet the calendar financial plan whereas that is less likely for a payer incurring a claim in November.

The Therapy Impact Model also illustrates a different type of payment challenge – the market launch of a therapy to treat individuals currently living with a disease/conditions such as sickle cell disease or hemophilia. Within the first few years of launch the number of individuals eligible and seeking the treatment will be greatest, increasing the likelihood of multiple claims. The initially high PMPM will eventually decrease to only those newly diagnosed as treatment eligible. The plan will need to make assumptions regarding the rate of adoption of the new therapies by providers and treatment eligible individuals to inform their financial decisions.

Performance Uncertainty: Does your organization wish to include performance requirements for the therapy?

As noted earlier, real world efficacy and durability are expected to be uncertain for a number of these therapies at the time of initial regulatory approval and market launch. Performance guarantees between payers and developers can help address concerns of performance related to efficacy and durability and assist in patient access to medicines.

Some payers may request developers to address the risk of product performance failure with some type of performance guarantee. Other payers may feel a performance guarantee is unnecessary given their confidence in the product results from clinical trials and current market performance. The FoCUS outlined precision financing solutions for durable and curative therapies may or may not include a construct for product performance. Other solutions presented by FoCUS directly address performance risk without a financing solution.

Possible precision financing solution(s)

Insights from the Therapy Impact Modeling Tool and your organization’s preferences are used to help you assess precision financing needs for your organization. Based on the plan’s assessment, the Solution Prioritization Tool suggests possible financing solutions.

Beginning with a payer’s consideration of actuarial, payment timing and performance risk, the Solution Prioritization Tool asks the payer:

  • Does your assessment of actuarial and payment-timing risks based on the Therapy Impact Model indicate your organization has the ability to manage the financial impact from the curative/durable therapy being evaluated?
  • Are you evaluating a therapy with a known group of treatment eligible patients?
  • Does your organization desire to address therapeutic performance risk?

Suggestions are made for possible financial solutions based on the answer to these three questions. Hyperlinks within the tool have been created to enable you to read descriptions of each solution.

Assessing a total solution approach

In addition to financing needs, FoCUS identified a number of solution design considerations required to administer gene and cell therapies. Key issues for providing patient access and employing precision financial solutions are found here.

The design considerations roughly fall into two categories – those related to administration and management of a therapy and those related to implementing precision financing solutions.

Key therapy administration and management topics to consider:

  • Treatment facility requirements
  • Center of Excellence requirements
  • Geographic coordination challenges
  • Provider reimbursement development and contracting
  • Pre- and post-treatment clinical care requirements

Key financing solution topics to consider:

  • Actuarial capabilities and risk acceptance
  • Developer performance based contracts
  • Identification of performance metrics
  • Collection of performance data
  • Patient tracking over time
  • Patient mobility management
  • Evaluation of collected data to performance criteria
  • Collection of any performance based rebates and/or payments

Each organization will want to consider whether it has the in-house capabilities required by these therapies and financial tools. An assessment of the ability to support therapy administration and management requires a unique organizational evaluation. Insights on an organization’s requirements to implement various financial solutions are provided in The Solution Prioritization Tool.


Characteristics of the products

Payer reinsurance/stop-loss/
risk carve out solutions

  • Carve out of financial responsibility or risk for specified cell and/or gene therapies, or other specified high-cost therapies.
  • May or may not have financial attachment points; carve out is specific to the covered therapy and not total patient medical and drug costs
  • Do not offer performance guarantees, but assume all actuarial/financial risk

Contract negotiation and data management services for payers and pharmaceutical companies

  • Act as third parties to negotiate contracts for cell and gene therapies
  • Provide data/outcomes tracking services
  • Contracts may include performance guarantees, but the service company themselves do not assume financial risk

Provider contract negotiation services

  • Oriented towards providers and patient care pathways
  • Multiple services offered, including COE network creation and contracting, data analytics and cost containment
  • Performance guarantees are oriented towards clinical services and outcomes rather than financial guarantees

Financial and pharmaceutical company warranty services

  • Include payment plans, with or without performance guarantees, and warranties for purchase by pharmaceutical companies that can provide protection to payers for suboptimal product performance

It may not be efficient for all payer organizations to build capabilities internally to serve patients treated with durable therapies or to establish their own contracts with treating providers and developers. Market solutions are emerging to efficiently address the required capabilities. A white paper based on a survey of currently known market solution providers was published in June 2021 and can be found here.