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 is intended to help individuals developing an overall strategy for addressing the aggregate effect of durable, curative cell and gene therapies in their organizations. It provides a concise resource for payer organizations wishing to think through the implications of the pipeline of durable therapies for their businesses and 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 four key questions. A worksheet is available to assist you in capturing implications for your organization as you read through this resource and interact with the tools provided.
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Figure: Key Questions—Payer Pipeline Assessment
Pipeline: Estimated financial impact
Expected availability to 2030: durable, curative cell and gene therapies
MIT NEWDIGS FoCUS has conducted a unique, detailed, indication-by-indication analysis to estimate the expected volume of durable cell and gene therapies likely to be available on the US market in the coming years. The model has been developed and refined over a period of several years, and continues to be updated on an ongoing basis. Updated results are published periodically.
Currently there are 1,050+ active, durable, cell and gene therapies in development. Slightly over 300 of these are product trials in China by China-based developers. We have excluded these from the analysis to arrive at potential candidates for the US market. Seven individual drugs are already approved for patient use in the US.
Figure 1: Pipeline of active programs in development for durable cell and gene therapies for the US market
Approximately 52% of product candidates in development are for oncology patients, 36% are for orphan, non-oncology indications and 12% are to treat larger therapeutic areas such as cardiovascular conditions.
MIT NEWDIGS FoCUS developed detailed estimates of clinical trial progression rates, disease incidence and prevalence and estimated patient uptake for each product indication.
The current pipeline of US-targeted therapies is expected to result in 60+ product-indication approvals (estimated range 52-74) by 2030; with 30 approved within the next five years (by 2025).
While this estimate reflects the current pipeline, the pipeline will continue to be replenished and added to with new innovations. Thus, towards the back end of this timeframe we may see additional products launch beyond those reflected here.
Within the FoCUS model, the key uncertainty lies in the adoption rates and adoption speed for these new-to-world therapies. The model makes assumptions about two parameters for each disease incidence and prevalence:
- Peak penetration: What percentage of the clinically-eligible population will be treated
- Time to peak: How long to achieve the peak (from 1 to 7 years)
Broadly, we have assumed that conditions with limited treatment alternative and more severe (fatal) consequences will see greater and faster adoption. FoCUS will continue to explore the influence of disease severity as we have greater real-world data on patient and physician treatment choices.
While clinical trial outcomes and regulatory approvals are never guaranteed, by 2023 we expect the following types of products may be available to patients:
- Oncology CAR-T therapies: Abecma, Breyanzi, Kymriah®, Tecartus, Yescarta®
- Currently approved for refractory myeloma, refractory large B-cell lymphoma, acute lymphocytic leukemia (ALL), refractory mantle cell lymphoma and diffuse large B-cell lymphoma (DLBCL)
- Ultra-rare disease treatments
- Luxturna® for Retinitis pigmentosa & Leber’s congenital amaurosis (both RPE65)
- Zolgensma® for Spinal muscular atrophy
Likely available by 2023, assuming clinical trial success
- Multiple Myeloma
- Further therapies for B-cell leukemia and lymphoma
- Rare Disease treatments
- Hematological conditions
- Hemophilia A & B
- Sickle Cell anemia
- Additional treatments for ophthalmological conditions
- Retinitis pigementosa & Leber's congenital amaurosis (other genetic mutations)
- One or more other conditions possible
- Neurological conditions
- One or more probable
- Other conditions
- One or more probable
- Hematological conditions
- Higher prevalence disease treatments
- Macular degeneration possible
Note: Research continues to advance and findings will be updated on a periodic basis.
What is the estimated patient volume and cost over time?
MIT NEWDIGS FoCUS undertook a pipeline analysis to determine the scale of the financing challenge of curative therapies in the United States. While each payer will need develop its own assessment, the team has made available its estimates of the total expected financial impact of the (December 2018 pipeline of durable cell and gene therapies). These estimates are based on a number of assumptions, which are described here.
The worksheet includes a Pipeline Estimator Tool that estimates the direct cost of durable therapies to your plan based on your plan size, which you can further customize. The pipeline will impact plans differently. 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 manifest in childhood. You will want to further think through the age distribution of particular therapies as you refine your assessment of your plan-specific impact.
Based on your plan size, the Pipeline Estimator Tool also calculates your per-member-per-month (PMPM) spend associated with estimated durable cell and gene therapy expenditure.
What other factors to consider?
As noted earlier, the numbers discussed above and in the tools are estimates and solely focused on therapeutic purchase costs. They look at durable gene and cell therapies as an incremental category. They do not take into account any additional treatment costs beyond the direct costs of the durable therapy portfolio or any cost-offsets from existing therapies that might be displaced by these treatments or downstream medical, pharmaceutical or other benefits or cost savings that might be achieved.
Moreover, this is a new area of science, few products are on the market and those that are, are relatively newly available. There is little experience with the extent and speed of patient and physician adoption of these products. Each medicine will need to be evaluated on its own merits.
Therefore, the estimates 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.
- Payment timing: Therapies can involve substantial upfront payment for multiple years of therapeutic benefit.
- Actuarial risk: The number of eligible patients in a payer’s population may be uncertain and could vary significantly from period to period.
- Therapeutic performance risk: Real world efficacy and durability are uncertain at the time of initial regulatory approval and market launch.
The Pipeline Estimator Tool allows you to understand how the emerging portfolio of cell and gene therapies could affect your plan on these dimensions.
Actuarial Risk: Can your organization absorb the financial impact in total, given your risk tolerance and current risk management approaches?
The Pipeline Estimator Tool highlights an estimated per-member-per-month (PMPM) therapy cost for your plan. A key question is whether your plan is likely to be able to manage the actuarial uncertainty associated with the potential number of patients and the cost of the medicine in the timeframe they are expected. Such actuarial uncertainty will be larger for health plans with smaller books of business.
While the largest payers may be able to handle the risk internally, additional risk management solutions could help other payers mitigate their actuarial risk, reducing variability by increasing the effective number of covered lives across which risk is spread.
With the advent of durable therapies, payers will want to consider whether their current actuarial risk management and risk pooling strategies will meet their future needs. Commercial insurers and self-insured employers who pool through total cost reinsurance will want to reassess their current level of risk coverage and ensure that their reinsurance carriers do not exclude such transformational treatments or the patients that could benefit from them from their offerings.
For actuarial risk, the Pipeline Solution Prioritization Tool will ask you to evaluate:
- Does your organization expect to have significant actuarial risk that will not be managed through your existing mechanisms (risk premium, stop loss, reinsurance, risk pooling, etc.)?
Payment Timing: Can your organization absorb the financial impact in the timeframe it is expected?
The Pipeline Estimator Tool allows you to estimate the expected per member per month (PMPM) impact on your plan for the medicine. Based on this, you can assess whether your plan is likely to be able to manage the financial impact of the medicine in the timeframe it is expected.
Note, that these estimates do not take into account any cost-offsets from existing therapies that might be displaced by these treatments or subsequent medical, pharmaceutical or other benefits or cost savings that might be achieved. We have not added this calculation as it would require meaningful user input. However, as you further analyze these questions internally, this would be something to consider.
The Pipeline Solution Prioritization Tool will ask you to evaluate:
- Given the costs/PMPM, would the financial impact be higher than your organization can absorb in any year?
- Would any short-term surge effect due to treating a significant prevalent disease population be a challenge for your organization?
Therapeutic Performance Risk: Does your organization wish to include performance requirements for durable gene and cell therapies?
There are two reasons why organizations may wish to establish performance guarantees for therapies. First, there may be uncertainty as to the expected value of a new treatment and payers and developers may disagree about that value. A performance guarantee can help bridge this gap. Second, payers may want a performance guarantee in the event of failure to secure some “money back.” The latter is more of a cost containment strategy than a precision financing solution, but we have included both in the flow chart below that highlights some of the elements raised by FoCUS participants in considering performance guarantees.
Consideration for Performance Guarantees
Based on these considerations, for therapeutic performance risk the Pipeline Solution Prioritization Tool will ask you to evaluate:
- Will performance guarantees be desired to provide/secure access for certain therapies?
Executional Risk: Does our organization need executional support?
It may not be efficient for all insurers to build capabilities internally to serve these patients or establish their own contracts with treating providers and manufacturers. FoCUS identified a number of capabilities required to administer gene and cell therapies, as noted below.
Capabilities required to manage durable therapies
Carve out/Pool risk
- Underwriting: Premium setting
- Pool and bear actuarial risk
- Payment financing
- Claim adjudication & reimbursement
- Contracting with developers
- Patient eligibility and utilization management
- Product reimbursement
- Patient data collection for performance contract
- Adjudication of any performance criteria
- Collection and distribution of performance-based rebates and/or payments
- Patient mobility management/contract
Care Coordination Services
- Provider network management
- Provider reimbursement
Each organization will want to consider whether it has the capabilities to manage these therapies in house.
For executional risk, the Pipeline Solution Prioritization Tool will ask you to evaluate:
- Does your organization need external support to manage these therapies appropriately?
Preferred precision financing solution(s)
The stakeholders with whom we have worked with requested a simple tool to help stakeholders identify preferred financing solutions for different situations based on the experiences of FoCUS members and pilots.
The Pipeline Solution Prioritization Tool builds on the insights from the expected financial therapy impact, and on your organization's preferences to help you assess precision financing needs for your organization. Based on the choices you make the Pipeline Solution Prioritization Tool suggests preferred financing solutions. You may follow hyperlinks in the highlighted financing solutions to read descriptions of each solution, and considerations for different therapy and payer types. The same content may be accessed here.
Broadly, we expect that all payers, with the exception of large commercial plans and Medicare fee-for-service, will want to review their actuarial risk management approaches. Payers may wish to consider:
- For those who are self-insured, is there value to moving from self-insured to fully insured?
- Do current reinsurance/stop loss policies appropriately address your needs with respect to durable, transformative therapies, both in level of coverage, and inclusion of both therapies and patients?
- Do any multi-year payment models you might consider with developers work effectively under your current reinsurance/stop loss policies?
With respect to individual therapies, payers may consider adding a variety of potential precision financing solutions to their toolkits, including milestone-based contracts, multi-year milestone-based contracts, performance-based annuities, and payment over time. Each solution addresses specific therapy and payer needs.
Finally, your organization will want to consider whether it has the capabilities to manage these therapies in house. While initial, small-volume therapies may be addresed as one-offs, as the number of therapies grows, organizations may wish to consider external assistance.
Other solution design elements
Ensuring smooth patient access as durable cell and gene therapies receive regulatory approval requires a number of enablers. Identifying these in advance and laying out some general internal expectations and policy principles may help enable operational preparation and resource availability.
Below are operational elements FoCUS participants have identified for consideration.
Performance Contract Design
Delivery Networks and Policies
Benefit Design and Coding
The buttons below will take you to additional detail on the topics.
Outcomes tracking over time Patient mobility Provider accreditation / Centers of Excellence Provider financial considerations Out-of-state networks Buy and bill State plan amendments Patient financial implications