Four months after announcing the Cell & Gene Therapy Access Model for Medicaid, the Centers for Medicare & Medicaid Services (CMS) has proposed increasing the New Technology Add-on Payment (NTAP) for cell and gene therapies for Medicare (a government health insurance program for seniors).

This outcomes-based reimbursement proposal aligns Medicaid and Medicare reimbursement plans for cell and gene therapy (CGT) for sickle cell disease. Eventually, this approach may expand to cover additional conditions.

Basically, the Medicare proposal calls for increasing the payment to 75% of the cost of gene therapy, up from the current 65%. However, increased payments are predicated upon the therapy being considered new. After the two-to-three-year “newness period” ends, reimbursement will return to usual levels for the indication.

Together, this proposal and the CGT Access Model—scheduled to roll out in early 2025—herald the beginning of what, finally, may be a practical reimbursement strategy for ultra-expensive cell and gene therapies.

Value-based medicine

Drug developers and insurers have grappled with the thorny question of reimbursement for nearly as long as CGT therapies have been possible. CGTs may resolve the underlying condition, halt disease progression, or even reverse symptoms, often with a single treatment or a short series of treatments. While the expense may be less than that of a lifetime of standard therapies and achieve significantly better outcomes, that cost is incurred upfront, placing a significant burden upon individual payers.

The Medicare and Medicaid models initially apply only to sickle cell disease patients. They aim to address the $2.2 million treatment cost of Casgevy (developed by Vertex Pharmaceutical and CRISPR Therapeutics) and the $3.1 million treatment cost of Lyfgenia (developed by bluebird bio). Both therapies were approved December 2023 by the FDA.

Sickle cell disease is a genetic blood disorder that affects about 100,000 Americans, many of whom are on Medicaid. Patients are mainly people of African descent and, to a lesser extent, Hispanics. It is an extremely painful disease that impairs quality of life, and shortens lifespan to an average of just under 53 years. Before CGT, the only treatments were bone marrow or stem cell transplants.

For CGT reimbursement plans, “Sickle cell disease is a great place to start,” Fran Gregory, vice president of emerging therapies at Cardinal Health, says. “It’s a rare disease, but is less rare than some of the other treatment options in the CGT space.”  “It’s important that we focus on underserved populations and communities, so that all groups will benefit from treatments,” Gregory says. “This is critical.”

Lowering prescription drug costs

“The CGT Access Model was developed in response to President Biden’s Lowering Prescription Drug Costs for Americans Executive Order, back in 2022,” she points out.

“What I like about this model is that it’s being executed at the highest level of visibility in the U.S. government. It puts the U.S. in a central, focused position around this innovative space of new treatment options.”

The plan focuses on “affordability, accessibility, and feasibility,” Gregory says, noting that cell and gene therapy costs range from about $300,000 to more than $4 million. Such high price tags make these therapies “extremely controversial,” she says. “The CGT Access Model is the beginning of something that will continue to grow over time.”

If the reimbursement plan is as effective as proponents hope, it seems feasible to perhaps extend it to other rare diseases. Likewise, commercial insurers may develop similar plans.

At the end of March 2024, the FDA’s Office of Tissues and Advanced Therapies listed 36 approved cell and gene products. “Depending on the analysts reports you read, we expect there to be around 75 to 100 CGT products on the market by 2028,” Gregory says. “That’s an extremely rapid growth rate. That’s an exciting development as many of these therapies will be used to treat diseases for which there are currently no treatment options.”

Model assessment

First, however, the CGT Access Model must prove itself. Outcomes will be measured against cost and payments between manufacturers and participating states, Gregory says. The details of those metrics haven’t been released yet.

When applying outcomes-based reimbursement to the broad field of CGTs, a therapy’s performance during and after clinical trials must be considered, as well as the treatment pathways months and years after the therapy is delivered. In that way, insurers may begin to compare the overall costs of CGT with those of standard-of-care therapies, and also begin to identify other factors, such as reduced hospitalizations and lifetime productivity gains, that may affect the cost-effectiveness and holistic value of a therapy.

What the CGT Access Model gets right

Perhaps the best aspect of the CGT Access Model is its focus on outcomes. “It’s important to understand what we’re getting out of a multimillion-dollar therapy,” Gregory underscores. Specifically, “What outcomes are being measured and what is happening to the patients after treatment?”

Once the CGT Access Model is rolled out, the CMS will be able to better manage the data and access real-world evidence related to CGT therapies. Those findings may inform further outcomes studies. “It’s great that it’s starting with a [relatively] large population,” she says.

CGT reimbursement challenges

Health insurance portability is an issue within the insurance industry that is particularly exigent for cell and gene therapies because of their high costs.

For Medicaid’s CGT Access Model, Gregory notes, “Many Medicaid patients switch plans frequently [as their jobs and health change], like some commercial insurance or Medicare patients. Therefore, they are extremely difficult to track.”

Currently, some states are using CGT carve-outs or reinsurance programs to help protect managed care organizations from financial hardships that occur when treatment costs substantially exceed reimbursements.

Commercial payers are considering a variety of reimbursement options. Outcomes-based reimbursement plans like the CGT Access Model are popular and may include rebates or milestone-based payments. Other options for payers include amortizing payments (like a mortgage) to manufacturers, forming a multi-payer risk-sharing pool for high-cost therapies, payer/manufacturer risk-sharing, and cost-caps.

Transparency is vital

“Transparency is so important in healthcare,” Gregory says, but it often is lacking.  Yet, improving transparency will help improve the reimbursement process for stakeholders across the continuum. “We don’t know what we don’t know,” Gregory points out.

The CGT access model is a great first step in getting more visibility into the reimbursement process and how to work through challenges that arise, she says. “We need to start somewhere.”

The CGT Access Model won’t begin to roll out until January 2025, and only in states that apply to the program. As of this writing, the number of participating states was not available, so there is no indication of how well this model is being accepted.

With so many factors involved in treatment and reimbursement decisions, the success of the CGT Access Model “…isn’t a slam dunk by any stretch of the imagination,” she cautions.

Gregory says she is confident the challenges will be worked out. “The involvement of CMS and other stakeholders in the discussion around CGTs should give us the confidence that these issues will be addressed, and that systems and procedures will be put in place to ensure that these treatments get to the patients who need them the most.”

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