New Payment Strategies for Gene Therapy

To realize the clinical benefits of gene therapy, “outside the box” payment models may be needed.

As clinically transformative gene therapies advance, payers are considering the potential economic impacts and their likely coverage and reimbursement responses. Though the probability of having an eligible patient may be low, upfront payments may be high. In addition, there may be uncertainty about long-term clinical effects, and the possibility of patients switching insurers.

Several alternative payment strategies have been proposed to help mitigate these concerns and address potential access barriers. These include long-term financing agreements that smooth payments over time, and performance agreements that link payments to certain clinical milestones. But are payers prepared to adopt these new mechanisms, or will they instead rely on existing strategies – or simply exclude gene therapy from coverage altogether?

To answer this question, an Analysis Group team worked with researchers from the National Pharmaceutical Council to conduct an online survey of payers about the roles that existing and new alternative payment approaches could play in managing the financial risk of gene therapies. Respondents included pharmacy directors from 21 national and regional managed care organizations covering 123 million lives in the US. Among our findings were:

• Payers would consider alternative payment models to manage plan risk under the right circumstances. All of the national plans and half of the regional plans said they were somewhat or highly likely to enter into at least one alternative payment arrangement for gene therapy within the next three years.
• Given uncertainty about the magnitude and duration of clinical effects, payers will likely require performance guarantees with alternative payment approaches. Some 95% of respondents said that paying for patients who are no longer responding to therapy would be a major barrier.
• Payers expected to use a combination of new and existing approaches to manage gene therapy, but recognized they may face challenges in combining traditional and alternative approaches. In addition, many payers were uncomfortable with “patient portability” proposals, where a long-term payment obligation followed the patient from payer to payer.
• The greatest patient access challenges may be encountered at smaller employer plans and managed Medicaid plans. Nearly a third of such plans indicated that they were likely to exclude coverage for gene therapies. ■ 

Noam Kirson, Managing Principal
Michaela Johnson, Vice President

Adapted from “Are Payers Ready To Address The Financial Challenges Associated With Gene Therapy?” published in Health Affairs Blog, June 28, 2018