Out with the old, in with the new. Gene therapies are ushering in a new age of treating and curing diseases. For several years, cells have been extracted from patients, the cells’ DNA are edited, and then the altered cells are reintroduced into patients. More recently, the CRISPR gene-editing technology has been used systemically in patients with hereditary transthyretin amyloidosis (hATTR) — the CRISPR ribonucleic proteins (RNPs), delivered by lipid nanoparticles (LNPs), are infused into patients, find the right cells, and edit the right genes. Wow! The several approved gene therapies and the tsunami of gene therapies under development raise the hopes of countless patients, caregivers, and providers alike.
Payers make formulary and medical policy decisions so that utilization and costs are as predictable as possible. Their actuarial-based premiums, negotiated in advance, yield an acceptable (and sometimes required) margin. As best they can, payers root out uncertainties, especially those related to high-cost treatments. Yet still, payers struggle with an array of uncertainties related to gene therapies. Here are a dozen uncertainties that certainly keep payers up at night.
Uncertain costs
1. Uncertain pricing: Pricing for current gene therapies range from a few hundred thousand dollars to a whopping $2.1 million for Novartis’s Zolgensma. Payers do not know how future gene therapies will be priced. And it is uncertain if and when the federal government will intervene (e.g., allowing Medicare to negotiate drug prices).
2. Uncertain cost of care: Because gene therapies’ efficacy and durability of effect are uncertain (see #8), it is difficult for payers to make predictions about the need for and cost of retreatment, let alone the costs of any ongoing care. And because gene therapies are so new, payers are concerned about long-term safety and any associated costs of unwanted and potentially permanent genetic damage.
3. Uncertain approvals: Payers and other stakeholders monitor the pipeline of gene therapies under development, and they try to anticipate product launches and new indications.
4. Uncertain prevalence: Currently approved gene therapies (e.g., those for retinal dystrophy or spinal muscular atrophy [SMA]), as well as those on the horizon (e.g., for sickle cell disease and hemophilia), target rare diseases. But gene therapies of the future could treat more common conditions. Payers are less sure of the prevalence of rare conditions among their covered lives, and will likely experience greater fluctuations for conditions with a lower national prevalence (e.g., SMA) than those with a higher national prevalence (e.g., sickle cell disease) because smaller numbers are more unstable. Smaller payers are at greater risk of deviations in prevalence among their covered lives than larger payers, and the addition of several unexpected patients in a year could be a significant financial blow.
5. Uncertain demand: It is typically impossible for payers to size the pent-up demand for a gene therapy and accurately predict the uptake curve, but payers directionally assume initial demand will be greater when no other treatment options have been available.
6. Uncertain financing: Payers try to negotiate favorable contract terms, including payment plans, performance guarantees, and other outcomes-based payments or rebates, with manufacturers. Further, performance-based contracts may incur costs associated with collecting, analyzing, reporting performance. Until contract terms are negotiated, it is difficult to estimate these costs. A federal policy could make coverage and installment payments portable across payers, but the likelihood of such a financing scheme is most uncertain. Currently, payers are not sure how they will pay for future gene therapies.
7. Uncertain financial exposure: Reinsurance might limit payers’ financial risks of gene therapies. But because reinsurers are watching gene therapies carefully with an eye toward beneficiaries who might be considered a “predictable risk,” payers have difficulty predicting the availability, coverage, and cost of such reinsurance.
Uncertain benefits
8. Uncertain efficacy and durability of effect: Payers are not sure about outcomes, especially long-term outcomes. What initially looks like a potential one-time cure, a “one-and done,” may turn out to be an initial treatment cycle. It will take years before payers are more certain about what will happen at Year 5 or Year 10. The benefits (and costs) associated with partial responders are particularly murky. Payers hope that manufacturers will develop registries to track long-term outcomes, but there is no guarantee that this will be sustained and whether there will be sufficient efforts to minimize loss to follow-up.
9. Uncertain cost offsets: Because efficacy and durability of effect are uncertain, cost offsets are also uncertain.
Uncertain ROI
10. Uncertain payback period: Variable annual costs can make it difficult of payers to estimate a payback period, and member churn limits the time payers have to recover their investments. Some payers with high churn rates want to see an ROI within 1 year. Because we don’t yet know what will happen at Year 5 or Year 10, any 1-year ROI calculation may be misleading.
11. Uncertain inflows and outflows: Some members receiving gene therapy may leave the plan. This may be offset by an influx of new members who previously received gene therapy covered by their prior plans. If these inflows and outflows are balanced, then an ROI is more likely. However, if these flows are not balanced, then the probability of an ROI is less certain. Even if all payers cover a gene therapy, the lower the prevalence and the smaller the treated patient population (e.g., SMA), the greater the inflow–outflow uncertainty.
12. Uncertain coverage decisions: If coverage by competing payers and self-insured employers is uncertain, then there is less certainty that any new members will have previously received gene therapy. This is the classic free-rider problem. And while a national policy could require coverage and fix that problem, the likelihood of a national mandate is uncertain. A payer may be concerned about adverse selection and a first-mover disadvantage if it covers a gene therapy that competing payers do not cover.
In the face of uncertainty
Despite the uncertainties associated with gene therapies, many payers will cover them in the foreseeable future simply because they think it is the right thing to do. They covered Zolgensma for SMA, and when a gene therapy for hemophilia or some other condition with high unmet need becomes available, they’ll likely cover that too. Some payers concerned about adverse selection may wait until other payers cover it first, and some may wait for additional evidence of safety and efficacy. But some won’t hesitate, especially when there are no other treatment options and/or their clients want it.
Everyone loves a deal, especially when something is cheaper by the dozen. But these dozen uncertainties about gene therapy stop cost-conscious payers and their actuaries from sleeping well at night. If anything is certain, it is that payers will, as best they can, develop and continuously edit their market-access policies in response to the uncertain, burgeoning gene-therapy market.
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