BioPharma, Payers

Innovative payment models to support cell and gene therapies on the rise (video)

As precision medicine gains steam, the question arises: how can reimbursement models evolve to support these often costly therapies and ensure patient access is not blocked? Drugmakers and payers are working together to find some answers.


As the precision medicine field evolves and the science behind personalized therapies for complex conditions surges ahead, reimbursement models are racing to catch up. Precision medicine treatments, like cell and gene therapies, tend to have high price tags and novel delivery mechanisms. This makes creating effective payment models for these therapies a challenge, but drug developers and payers are working together to create out-of-the-box solutions.

Determining prices for breakthrough cell and gene therapies is a complicated process, said Laura Okpala, director of reimbursement policy at Gilead Sciences, at the MedCity INVEST Precision Medicine conference. Though there is a strong belief that the pricing process needs to be driven by value — value means different things to different people. Biopharmaceutical companies, like Gilead Sciences, must consult with various stakeholders, including patients, caregivers and payers, who all have different perspectives on value.

“Part of why the pricing is so difficult is because of the inherent complexities in the healthcare system,” Okpala said. “When we think of traditionally how drugs are paid for, we’re thinking about chronic treatment, we’re thinking about treatment over a long, extended period, treatment over and over again, reimbursement every single time, and that adds up.”

“But when you think about cell and gene therapies, all those costs and all of that treatment happens upfront,” she added. “And then you get that durable response, up to four years at this point. And that is really a paradigm shift when you think about [a] healthcare system that really isn’t set up to deal with that upfront cost and that value delivered over time.”

But the upfront payment is just one of many challenges. Mark Trusheim, strategic director of the NEWDIGS initiative at the MIT Center for Biomedical Innovation, said at the virtual conference that there are two more key challenges that arise: the performance uncertainty regarding these therapies, particularly around their durability, and the actuarial uncertainty it causes for payers. Most of these therapies are for rare conditions, so a single high-cost therapy in any given month can have a negative impact on payers’ income statements.

To combat these challenges, several innovative reimbursement models have been developed.

One is a model based on treatment milestones. Per this model, a certain amount of money is paid upfront, and if the therapy doesn’t show the intended effects in certain predetermined timeframes, the drug developer pays back a portion of the initial payment.

“[The model allows] some risk sharing between the developer and the payer, so they don’t have to argue quite so much up front,” Trusheim said. “And the actual product performance [resolves] how much [is] finally the net reimbursement or the net price for that therapy.”

This model helps manage the different expectations and fears of both parties, he added.

Another is a subscription-based model, which includes a fixed fee for unlimited access to certain therapies, Trusheim explained. Cigna has an insurance product that offers this reimbursement model, where plan members contribute a certain amount each month that is used to pay for therapies as needed. Cigna takes on the risk, guaranteeing that they will provide as much therapy as the members require.

This model is a great example of how payers can manage the actuarial fluctuation that occurs when funding cell and gene therapies, Trusheim said. But it comes with its challenges, because in some cases, it’s difficult to ascertain the eligible population for a particular therapy — especially if there are alternate therapies already available.

But Trusheim is confident that innovation in reimbursement will catch up to clinical innovation in the precision medicine arena.

“We’re now in an era where innovation in payment structures and approaches are beginning to match the kind of innovation we have in the transformative science for patients,” he said. “Successfully providing patient access and benefit requires both kinds of innovation, not just scientific innovation. The creativity is there — we are going to succeed. Just as the science has succeeded, the payment innovation is also moving forward and having success.”

Featured Photo credit: Devrimb, Getty Images