Daniel S. Levine

Rare disease therapies have been largely immune to the pricing battles over drugs, but controversy over the costs of new therapies are threatening to change that.  

For payers and policymakers, there have been better fights to have. The small population of people with rare diseases meant that these drugs would likely have a relatively small impact on the bottom line of payers, while putting them in a public fight over preventing a child from getting access to a life-saving therapy offered little upside.
With the approval of Kymriah, the recently approved gene therapy for lymphoblastic leukemia from Novartis, that may be changing. Each dose of Kymriah involves taking a patients T-cells, the workhorses of the immune system, and genetically modifying them to attack the leukemia. The cost of the therapy is $475,000.

Last week Steve Miller, chief medical officer for the pharmacy benefits manager Express Scripts, called for new payment models in a piece he authored on his company website. Express Scripts has long been critical of the rising cost specialty pharmaceuticals and warned of the growing share they represent of the overall cost of prescription medicine.
Miller argues that the healthcare system isn’t set up for one-time, costly treatments that gene therapy represents. He said new models for collaboration among payers, pharma companies, and pharmacy benefit managers will be necessary to put these therapies in reach of the patients.

“Pharmaceutical companies have a single opportunity per patient to get paid. And many gene therapies target extremely rare diseases, so there aren’t many patients to share the cost drug makers require to justify the expense of research, development and commercialization,” he wrote. “The result is very high price tags: the first two commercial gene therapies, approved for use in Europe, cost $1.4 million and $665,000. Despite promising clinical results, one failed and the other is struggling to find a market.”

What scares payers and guys like Miller is math. Miller notes that there are about 4,000 gene disorders, most of which lack an effective therapy. There are more than 1,500 experimental therapies in various stages of research and development, including nearly 600 targeted cancers and 500 targeting rare diseases. It’s not hard to imagine there are a number of pricey therapies heading toward the market. It’s one thing to choose not to make a stink about a single therapy because there are only a handful of patients any payer may need to cover. Soon though, they may be facing many handfuls.

Miller said Express Scripts is working with drugmakers, policymakers, patient groups and payers on innovative approaches to make gene therapies accessible for patients. Value-based contracting can ensure that payers and patients aren’t on the hook when a treatment isn’t effective. Consultations involving pharma companies and payers can help set appropriate prices. Discussions with policymakers can help set an appropriate regulatory framework.

Ultimately, the PBM believes gene therapies will require payment and patient care systems which are as novel as the medications themselves. Ideas on the table include paying for a treatment over time, establishing insurer risk pools and financing one-time payments. A successful model must address patients who change insurers or employers, and tracking their health outcomes over time to ensure payments aren’t being made if the treatment stops being effective.

Payment models may be difficult to develop. Early pilot programs around more conventional therapies have proven challenging to administer and measure. What’s more, the health care system in the United States is one where people frequently move from plan to plan, in part because many people obtain their coverage through their employer. That means that a company may still be paying for a gene therapy long after it was administered and many years after it was collecting any premiums from the patient who was covered under its plan. That doesn’t mean it’s not possible, only that it will be challenging to develop an approach that works and makes sense for the different stakeholders.

The rare disease community should pay close attention to the discussion over Kymriah because it is putting a new crack in the wall that once protected rare disease drugs from payers balking over pricing. It’s not the first, but with a large number of therapies advancing in the pipeline behind it, it is economics rather than science that may pose the biggest barriers to patients getting access to life-saving therapies and potential cures that now seem within reach.

September 27, 2017

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