Pharmaceutical Market Europe • January 2022 • 24-25

GENE THERAPY

Gene therapy – affordability,
access and reimbursement

It is anticipated that in the next 15 years over one million patients may be eligible for or treated with gene therapies

By Brian Huber

In 2021 the FDA anticipated over 200 cell and gene therapy (CGT) IND applications. This growth is fuelled by a robust influx of capital, driven by the potential to generate more sustainable disease-modifying clinical outcomes. The new curative therapies promise to provide a shift from long-term disease management to one-time curative therapies, which may revolutionise the practice of medicine.

From 2019 to 2020, capital investments increased by approximately 100% (from $9.8bn in 2019 to $19.9bn in 2020). The influx of capital has enabled expansion of CGT clinical applications beyond oncology into central nervous system, cardiovascular, metabolic/endocrine and infectious diseases, as well as into ophthalmology, etc. The FDA and EMA predict ten to 20 CGT approvals each year from 2021 to 2026.

In 2020, there were 1,220 ongoing CGT trials enrolling > 90,000 patients. The total clinical trials market for CGT was valued at $9.2bn in 2020. However, this market is expected to expand at a compound annual growth rate (CAGR) of 22.3% from 2021 to 2030. This growth will result in the global CGT clinical trials market reaching $45bn by 2030.

Challenges

Even though gene therapy is one of the most exciting new frontiers in modern medicine, significant challenges have emerged. The exciting expansion of gene therapies intensifies pressure on insurers, health systems and biopharma companies to develop a framework for determining value, pricing and payment options. Two of the biggest and interrelated challenges are cost/affordability and equity access.

Cost structure

The complex US healthcare system currently struggles with:

  • How to determine the cost-effectiveness and pharmaco-economic value of gene therapies
  • How to reach agreement between biopharma sponsors and third-party payers on how to appropriately price them
  • How to pay for them.
  • To establish pricing of gene therapy medicines, all the parameters to establish the price of any drug apply to GT. These parameters can include:
  • Disease burden
  • Development costs
  • Comparative clinical effectiveness – the magnitude of the comparative net health benefit and its level of certainty
  • Incremental cost per outcomes achieved, expressed in cost per aggregated quality-adjusted life year (QALY)
  • Potential budget impact – the estimated net change in total healthcare payer costs over an initial two-year time frame and lifetime.

In addition to the parameters above, gene therapy pricing strategies must also consider a one-time, potentially curative treatment, many of which target rare diseases with small patient populations. The associated costs of gene therapies can be extraordinary – costs of approved gene therapies to date in the United States, on a per dose basis, are approximately 30-fold higher than the median US household yearly income. Annual costs range from the multiple hundreds of thousands to over $2m.

Zolgensma is an example of the challenges associated with cost and access. An oversimplification of cost and value is to simply estimate the long-term cost of a comparator standard-of-care drug to the proposed cost of a one-time curative treatment with the gene therapy. Zolgensma is a one-time gene therapy approved by the FDA to treat spinal muscular atrophy (SMA). SMA is an autosomal recessive neuromuscular disease characterised by degeneration of alpha motor neurons leading to paralysis and death. Zolgensma tops the list of the most expensive marketed drugs in the US based upon the drugs’ annual cost for a typical course of therapy. The only other drug approved in the US for infants with SMA is Biogen’s Spinraza. The price of Spinraza is $750,000 for the first year and $375,000 for every year after for the life of the patient. This analysis can be oversimplified to demonstrate the cost-effectiveness of Zolgensma by assuming long-term cures without long-term safety concerns and does not calculate real patient value.

Another example of oversimplification of comparative value is that of Valrox (or BMN 270), which is a gene therapy approach to treat haemophilia A under clinical development by Biomarin. It is anticipated that, if this therapy is approved, it may cost over $1m. This one-time treatment will be compared to Emicizumab, a bispecific monoclonal antibody that mimics factor VIII (FVIII), estimated to cost $21m for a lifetime of treatment. The conclusion being reached across the industry is that price cannot be solely determined or justified simply by the cost of a less effective marketed drug.
  
Numerous legitimate factors contribute to the high cost of gene therapies:

  • Biopharma companies make massive upfront investments in gene therapy (ie, research or in-licensing, cGMP manufacturing, clinical development including long-term follow-up) and they need pricing to recoup these costs
  • Most current and near-term gene therapies programmes target rare diseases with small patient populations, for example, Spark’s Luxturna, that costs approximately $850,000, will target less than 2,000 subjects in the United States
  • Finally, it is anticipated that gene therapy may be a one-time, potentially curative treatment.

Equity access

How do healthcare systems ensure that all patients, not just a select few, have access to these potentially disease-curing, but very costly, therapies? This pertains not only to disadvantaged communities in the US, but also disadvantaged countries throughout the world.

It is well documented that disadvantaged communities have restricted access to healthcare. A likely challenge of equity access to gene therapies will be found in sickle cell disease. Sickle cell is a disease soon to be treated with a gene therapy approach since it results from a single mutation in a single gene. In fact, nine gene therapy clinical trials are currently underway. It is anticipated that if successful, a cost of $1m per one-time dose is likely.

The conundrum for access is that sickle cell disease affects 100,000 people in the US, half being on Medicaid. Full access would severely cripple the current Medicaid system, so alternative and innovative reimbursement systems are needed to prevent restricted access.

Technological advances are also part of the solution. Ex vivo, genetic modification of autologous cells, is a very expensive and technically demanding process. As gene therapy approaches evolve, in vivo gene therapy options will enable greater accessibility.

Paying for gene therapy – models for reimbursement

Reimbursement processes have been developed over the years directed at chronic treatment to help medically manage chronic diseases, such as high blood pressure, diabetes, hypercholesterolaemia, osteoarthritis, and haemophilia. After rigorous controlled clinical studies to confirm safety, efficacy and pharmacoeconomic value, reimbursement strategy has traditionally been a ‘pay per pill’ process that may include some negotiation based upon cost vs medical value.

Gene therapy is fundamentally different, since it has the potential to be curative after one or a small number of administrations. A different and new concept for the industry is a higher, one-time upfront payment for curative therapy compared to drug treatments to manage a disease over a lifetime. This has highlighted the need to develop alternative reimbursement mechanisms aligned with value-based reimbursement.

More and more biopharmaceutical companies and payers are now partnering to make drug reimbursements predicated on drug performance based upon agreed clinical metrics – often called Pay for Performance (P4P) or Value-Based Pricing. This shift is helping the transition from a volume metric to a value metric, based upon clinical outcomes. In many cases, there are agreements between third-party insurers and drug companies that the drug company will be reimbursed at a set price, provided the drug meets or exceeds a clinical value metric. P4P is aligned with the Patient Protection and Affordable Care Act (ACA) of 2010. A central tenant of the ACA is that reimbursement should not be based upon volume (ie, how many pills you sell) but rather value (ie, differential clinical outcomes compared to current standard of care).

In principle, P4P based upon clinical value creation is helping to drive patient value, but there are two current challenges that must be addressed in the context of gene therapy:

  1. Calculating value – comparing the one-time cost of the gene therapy to the lifetime of costs associated with the current standard-of-care (SOC) drug is an oversimplification of value and is not appropriate in disease indications where a gene therapy cures a condition that is typically fatal early in life. A more sophisticated method used to assess the value of gene therapies utilises the quality-adjusted life year (QALY). The QALY is a measure of therapeutic impact on disease burden, considering both the quality and the quantity of life lived. One QALY equates to one year in perfect health. However, this value-based approach needs to evolve further to address the full value of curative therapies, such as enabling a patient to make a substantive financial, social or cultural contribution to society.
  2. Results of early efficacy – the QALY value proposition may assume that early efficacy seen in clinical trials will persist for curative therapy with an acceptable safety profile. At this time, it is not known if early efficacy will result in curative therapy over decades, despite initial pricing and reimbursement made under this assumption.

An alternative payment system may involve staggered payment, where the therapy is reimbursed over time in tranches. However, this does not reduce overall cost; payment is not directly linked to clinical value and the portability of health insurance creates other challenges. Continued innovation creating hybrid reimbursement systems is likely.

Cellular and gene therapies have the potential to change the way we deliver medical care, often to the patients who are most vulnerable and who have the most to gain from seeing the successes of new therapies. Now is the time to work out many of the issues around equitable access, cost structures and payment systems, in addition to the standard safety and efficacy measures. These therapies have the potential to save and change lives, and it’s up to us – the researchers, the biopharma companies, the payers and our communities – to determine how best to seize the opportunities that they present. As this segment of the biopharma market expands, we will see extensive growth and more lives will be saved. But if we are not careful in our approach and steadfast in keeping patients at the top of our minds, we will also see extensive growing pains.

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Brian Huber is
Vice President,
Drug Development Services at ICON