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September 9, 2014

Novel Gene Therapy Payment Model Proposed

  • A gene therapy pioneer and the chief medical officer of CVS Health have come up with a plan for a new method to pay for expensive gene therapies. They also think their idea will encourage pharma company investments in the rapidly developing gene therapy field.

    Writing in Nature Biotechnology, James M. Wilson, M.D., Ph.D., professor of pathology and laboratory medicine, Perelman School of Medicine, University of Pennsylvania, and CVS’ Troyen A. Brennan, M.D., J.D., suggest annuity payments over a defined period of time and contingent on evidence that the treatment remains effective.

    “What is unique is the combination of the long duration of efficacy following a single treatment together with the small markets associated with most current clinical targets,” Dr. Wilson told GEN in response to a question on why the novel payment model is suitable for gene therapy. 

    “Under current reimbursement policies, private insurers and the government typically pay for this therapy once: when it is administered,” wrote Drs. Wilson and Brennan. “But these individual payments could reach several million dollars each under current market conditions. We’re proposing a different approach that spreads payments out and only keep coming if the patient continues to do well.”

    Gene therapy breakthroughs may face substantial obstacles in the U.S. healthcare system if not thoughtfully reimbursed, according to Dr. Brennan. Currently these therapies, which represent high development costs but have the potential to deliver therapeutic breakthroughs, although for relatively small patient populations, would be extremely expensive under current reimbursement systems.

    “Solving the reimbursement dilemma for these therapies could help reduce the perverse incentive to prioritize investment in a repeatedly administered drug, with all the attendant costs to patients, families, and the healthcare system, versus a one-time therapy for the same disease that produces better health outcomes and ultimately lower costs over time,” explained Dr. Brennan.

  • Assurances Needed

    Drs. Wilson and Brennan note that while a liver transplant, for example, can cost up to $300,000, physicians and hospitals that “transplant livers know they will be compensated at market rates through existing contracts. Gene developers lack that assurance.” Annuity payments, they say, could help address these problems.

    An example of an annuity-type disbursement could be a hypothetical payment of $150,000 per year for a certain number of years for gene therapy-based protein replacement for patients with hemophilia B—so long as the therapy continues to work. According to the authors, the cumulative amount should be less than the cost of a one-time payment of $4–6 million, which would be the expected rate for a gene-based therapy to be comparatively priced to existing, conventional therapies for hemophilia B. “One would presume,” they write, “that gene therapy will have to represent a discount in order for insurers to approve its use.”

    A key issue is what metrics could be used to determine the effectiveness of a one-time gene therapy over a number of years.

    “These metrics will need to be tailored to individual diseases and would likely rely heavily on biomarkers that reasonably predict ongoing efficacy,” explained Dr. Wilson. “An example is the presence of factor 9 levels in the blood greater than 5% of normal following gene therapy for hemophilia B.”

    So far only one gene therapy product has been approved in the Western world. The European Commission gave its OK to UniQure’s Glybera two years ago for the treatment of lipoprotein lipase deficiency, which can cause pancreatitis. Other promising gene therapy products are in the pipeline.

    “In terms of in vivo gene therapy, substantial progress is being made in the areas of inherited retinal dystrophies, liver diseases such as hemophilia, and neurodegenerative disorders such as spinal muscular atrophy,” said Dr. Wilson. “Equally impressive clinical data are being generated in the area of bone marrow gene therapy for inherited diseases of immune function, globin production, and lysosomal storage.”

    “Gene therapy offers enormous potential for helping very sick patients,” he continued. “But we have to keep in mind that the economic factors associated with these interventions are significant on both sides of the equation. Annuity payments represent a way of ensuring that nonmedical factors do not impede access to assistance for those desperately in need of these treatments.” 

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