Creating a Sustainable Model of Reimbursement for Ultra-Rare Therapies

While there is growing ability to pursue the development of therapies for ultra-rare diseases, they remain challenging because of economics. One major barrier is the difficulty in getting reimbursement for therapies in the absence of well-powered clinical trials that recruit enough participants to satisfy payors demands for adequate proof of the value of a therapy. The Muscular Dystrophy Association, earlier this year, awarded the nonprofit biotechnology Cure Rare Disease a grant to research novel reimbursement strategies for ultra-rare disease therapies. We spoke to Rich Horgan, founder and president of Cure Rare Disease, about the evolution of his organization, its growing pipeline of therapies, and why developing a viable reimbursement model is essential to creating sustainable development of ultra-rare disease therapies.

Daniel Levine: Rich, thanks for joining us.

Rich Horgan: Yeah, thank you so much for having me.

Daniel Levine: We’re going to talk about your organization, Cure Rare Disease, the development of gene therapies for underserved, rare and ultra-rare populations, and work you’re doing around the issue of reimbursement of N-of-one therapies. I’d like to start, though, with the evolution of Cure Rare Disease, which has transformed itself into a nonprofit biotechnology company. I think you’ve always had a bigger vision than just developing a treatment for your brother. But how has Cure Rare Disease evolved from its early days to what it’s seeking to do today?

Rich Horgan: Yeah, happy to kind of shed some light on that. So, you’re right. Cure Rare Disease very much so started off as an effort to develop a therapeutic to save my brother. And while that’s not what happened, the legacy that Terry leaves behind is one in which we now have a framework to be able to treat patients like Terry—not the same disease, not necessarily the same technology, but the framework that we developed to be able to partner with academics, embed our translational regulatory and manufacturing expertise to help drive the development of a drug from bench to academic bedside. And there’s a lot of Terrys out there. As you well know, 10 percent of the United States is impacted by a rare disease. And as we all know, the challenge with rare disease is that collectively, they’re 10 percent of the population; individually, the population is very heterogeneous. And so, the question is, how can we develop a new system, a new model, to be able to help these folks who have been forgotten, neglected, and overlooked, simply because their disease is too rare? And so, really therein lies the transformation. Over the last few years we’ve since launched a number of other drug development programs, not just for Duchenne muscular dystrophy and no longer customized therapeutics. What we’re really targeting is rare and ultra-rare neuromuscular diseases where we can develop a therapeutic and apply that to a population. And how we do this is by what we did using the framework for my brother’s drug, developing relationships and collaborating with academic institutes, bringing on board our translational expertise to help guide the drug from the early days through preclinical development, manufacturing, which, of course, for gene therapies is very challenging. And ultimately, IND submission and then completion of what would be a phase 1/2a clinical trial. From there, our intention is to sort of basket our technologies depending on the number of patients impacted. So, in our case, there are some therapeutics that we’re developing that do have commercial potential. If we hand them to a larger partner on the proverbial silver platter we’d be able to then take the earned revenue from those therapeutics and then apply them to therapeutics that will simply never be commercializable because they’re too rare. And while it’s not a perfect mechanism, it is a mechanism that at least allows us to continue to expand ultra-rare disease drug development for populations that have just been overlooked and neglected for so long. And that’s a little bit about how we’ve evolved over the last few years, and of course, happy to dive deeper in different buckets.

Daniel Levine: Well, perhaps you can shed some light on how the organization works as a nonprofit biotech relative to the way a more traditional biotech might work.

Rich Horgan: Oh, sure. So, the difference is more in the financing, right? The science is the same. The science is exactly the same as what a more traditional biotech, as you called it, would do. We conduct our pharmacology studies. We conduct our tox studies. We meet with the FDA in different vehicles. We submit our INDs. We conduct our clinical trials with the top leaders in the field. And so, from the R&D perspective, it’s actually very similar. Now, it’s different from the financing perspective. A traditional biotech can go and sell equity in exchange for dollars that they then apply to R&D. For us as a nonprofit, we don’t have equity to trade. And so, how we raise money is through different mechanisms. We raise money more through traditional nonprofit settings, such as event donations, philanthropic gifts, grants, and things of that nature, all in an attempt, really, as we bridge this chasm to get to sustainability, until we’re able to license off some of our promising commercializable therapeutics to accomplish two things. The first, of course is that earned revenue, which makes us sustainable, which allows us to then apply that revenue to diseases which never will be commercializable. And then the second objective is while we intend to treat a limited patient population in a phase 1/2a trial, by partnering that therapeutic off, we allow the rest of the population to either participate in clinical trials or someday potentially take advantage of an approved therapeutic. So, the difference is really more so in the financing than it is in the R&D I would say to kind of summarize everything.

Daniel Levine: You’re not a company that’s looking to take therapeutics all the way to commercialization. I think many people would be surprised to see how large a pipeline you already have. You have about 20 candidates in development, most of which are preclinical. In terms of a typical pipeline, you’d see a biotech show a candidate either being preclinical, phase 1, phase 2, all the way through, but you’re using a different set of milestones in laying out your pipeline. What are the milestones you focus on?

Rich Horgan: Yeah, it’s a good question, and you’re right, we do use a different set of milestones and that’s for two reasons. First the prevailing reason is that we really try to be transparent with the community. We really try to show the community where things are at, what the next step is, at a greater level of granularity, I would say, than just preclinical development. Preclinical development can be super long and there’s numerous challenges throughout preclinical development that we just want to make sure patients understand and appreciate. And also being transparent with donors, being transparent with partners is a pretty big theme. The second reason is what we’re good at is advancing novel technologies from bench to limited patient bedside. We are not an organization that’s set up to commercialize a therapeutic across the U.S., across the world. That’s not what we’re good at. And so, we like to focus on what we’re really good at and really becoming a master of what we do in our own domain. We break down the process for families and other researchers, other stakeholders in a sense, to be able to understand, okay, where do we start? Okay. We generally start with the assays, a cell line an engineered animal model if one needs to be engineered, or if there is one available to use or engineer. And then developing the therapeutic prototype, taking that through the early development in vitro and in vivo efficacy and pharmacology studies. And then showing people where and when we generally meet with the FDA—once we’ve got early in vivo and in vitro data, then we have a pre-IND meeting with the FDA, because resources are limited. And so, we need to make sure that we’re doing the studies that are critical and necessary to do both from our own team, but that we also have regulatory buy-in as much as possible along the way. And so, you’ll often hear me say early and often engagement with the FDA. We really like to treat the FDA as much of a collaborator as we’re able to and then that ultimately coalesces into an early clinical trial. So, that’s generally why we do it a little bit differently. We’re sort of “know who you are and be good at what you do” is my theme.

Daniel Levine: The last milestone on your pipeline chart is “ready for out-licensing.” Would you expect to out-license to a commercial company, or do you envision some other endpoint at which patients who need a therapy can access it, such as an open-ended clinical trial?

Rich Horgan: Oh, that’s a really good question. I’m glad you asked that. Our general intention is to help as many patients as possible and so, to do that out-licensing to a larger biotech, a larger pharmaceutical company, takes advantage of existing infrastructure that we just don’t have. And so, while we could maybe dose one or two or three patients a year, a larger company can scale up faster once the technology’s known, once there’s convincing clinical trial data, and then really run with the ball to treat as many patients as possible. For us, I think the question really gets at how do we make sure we enable access as much as possible? How do we make sure that these drugs don’t end up on shelves somewhere deprioritized? And that is really in the art of the negotiation where making sure that we have the ability to claw back the technology if development isn’t continued, and also negotiating how do we enable compassionate use and compassion access or expanded access depending on the program in question and the population in question. That’s really important. I mean, that’s why I started this, well, first to help my brother who had another option, but then, in discovering so many other quote-unquote Terrys out there, to be able to help those folks as well, and really paint a path and an ecosystem where even the rarest of rare patients can be treated. I hope that answers the question a little bit. Happy to dive into that deeper if I’ve left anything out.

Daniel Levine: Your pipeline is focused on neuromuscular conditions. Is the plan to continue to focus on these conditions, or do you eventually see expanding beyond those?

Rich Horgan: Yeah, interesting question as well here. I would say for now and in the immediate future, our focus is pretty heavy on neuromuscular and neurodegenerative conditions. That’s where our team’s experience is. That’s where our relationships are. What we hope to help others with is by being transparent and by sharing our process and by having conversations like these, we hope to be able to educate and inspire other people in other disease areas, whether it be cancer, whether it be maybe a GI disease or fill in the blank disease that’s not neuromuscular, neurodegenerative. And that’s really what we’re hoping to do here by sharing the playbook, encouraging others to participate and really start their own journey. So, you look at our relationship and partnership with Sick Kids Hospital in Toronto, and a big motivator for that partnership was okay, how can we learn from the neuromuscular development efforts that we’re working on with that institution, and then draw those over to cancer? And so, that’s a motivation of Sick Kids in Toronto. And really that gets at the framework, I would say, the framework that this is drug development not necessarily akin to a neuromuscular disease, but it’s a process and a framework that involves drug development, but then also involves downstream things that I’m sure we’ll talk about, like reimbursement or financing. How do we pay for the ultra-rare types of therapeutics and who pays for them.

Daniel Levine: One of the compelling aspects of the emerging area of genetic medicines is the potential to compartmentalize aspects of a therapy and I’m wondering to what extent you’re able to leverage the work on one therapy to accelerate the development of others. Is there anything you’re doing to shorten the path to a clinical trial by using things like the same vectors or in any other way?

Rich Horgan: In short, yes. So, there’s a couple of different ways to do this. I think, as you asked the question, there’s a couple points that come to mind. The first is, how do we use a platform such as the same delivery vector? We have identified a next generation AAV that we’re starting to bake into all of our programs as we fully characterize it. And so, that is a nice way to be able to speed up the development cycle. When we do a GLP tox study with the next generation AAV, that will then inform virtually all of our other gene related neuromuscular programs, which is really convenient because then we know the behavior of the capsid, we know the biodistribution, we know the safety of it at least in a preclinical setting. And so, that’s one way. The other way is, for instance, we’ve got mouse engineering work underway where getting to common models or learning from lessons previously used to generate one mouse or animal models able to inform other ones—that’s another nice way to do it. We also get more familiar with the FDA’s expectations as we go in front of the agency for more pre-INDs and eventually IND meetings, where’s their mind at? We see things starting to bubble up, like what was announced the other day by Dr. Marks with how do we expedite rare disease drug development by using biomarkers and things like that. So, I think drug development gets at least more educated over time. I don’t want to say it gets easier over time because each disease has its own nuance.  Each disease has its own unique challenges that we may not learn, we may not be able to apply learnings from one disease to another in that way, but wherever we can, we certainly do. And also, just getting in the same rhythm of, okay, we’ve got a couple of our DMD drugs going into pre-IND conversations in the coming months. Okay, we know how to do this now. Then it becomes more of a scale up rather than invent and create, whereas with my brother’s drug, it was very much like, okay, we as a collective are trying to figure out how to fly the plane as we build it because it was a first in human and there were a lot of other unique nuances to that program.

Daniel Levine: And if you take something like being able to use the same tox study over and over, what might that translate to in terms of cost savings or time savings?

Rich Horgan: I mean, we’re always going to need to do some tox study, I think, at least currently, because although you may have characterized the vector, the transgene could still have some toxicity to it. Maybe the study’s shorter, maybe the study isn’t in a large animal model, maybe it’s in a mouse, which of course would save hundreds of thousands of dollars. Maybe the tox study can be a little bit shorter if we’ve characterized the promoter, we’ve characterized the capsid, and just we’re changing the transgene here. So, there are very real savings—just the simple idea of, okay, if we can do it in mice instead of NHPs [non-human primates] or pigs, that’s a lot of time saved to be able to acquire them since there’s an NHP shortage, and actually conduct the study in between getting all the logistics squared away, at least from the tox perspective, which I think is where your question was coming from.

Daniel Levine: As you think about efforts around N-of-one therapies and therapies for ultra-rare diseases, how big a need is there? Is there any way to quantify that?

Rich Horgan: Yeah, I would say the need is massive, right? When you look at the heterogeneity of the rare disease population, you’re already talking about a big number, right? You’re talking about what 30 million plus Americans impacted by rare disease. Now, let’s remove out the more common rare diseases, maybe ALS, cystic fibrosis, Duchenne muscular dystrophy—the more common rare diseases—that leaves this very, very long tail of millions of people that maybe it’s a gene coded disease, maybe it’s not even discovered yet what the causal gene is. And so, it’s certainly in the millions in terms of the number of people that are impacted. And this is a tough one because this is a group that is really overlooked. I mean, when you look at the individual diseases and say, okay, what about, you know, make up one, whatever ADSSL1 for instance is a good one, because it’s like one in a million in terms of the number of folks it impacts. Unless there’s more patients identified and the prevalence changes, that’s a disease that’s just not going to attract commercial drug development effort. But when you think about the people behind the disease, the people, the families, the patients, their hopes, their dreams—patients don’t care how common their disease is, they don’t care how rare it is. They just know that they want a treatment, and that’s fair. That’s totally reasonable. So, we need a shift in thinking. Instead of going disease by disease, which will take forever in a day, I think we need to think about how can we apply a systems kind of solution to this. I think of Amazon. Right before Amazon, before you could order something and get it in two days, you know, you had to go to 17 different stores or you had to go to the store. It was a very inefficient process. And there the stakes are lower, right? It’s a bad example. And the stakes that if you don’t get your widget, you’re going to be okay in the case of rare disease. I think not being able to look at it from a systems-based solution, systems in terms of how do we make a system out of drug development? How do we make a system out of financing? There the costs are way higher. There, the cost is death in some cases. And that’s a very sobering, sobering thought, at least for me, in the sense that we can’t just keep tackling this from disease to disease to disease to disease. It just doesn’t work.

Daniel Levine: So, let’s talk about what are two big challenges for developing therapies for either N-of- 1 or ultra-rare populations? The first of those would be how do you scale development of these therapies and provide a mechanism for patient access to get them these medicines affordably? So, how do you think about scaling? What’s the challenge there?

Rich Horgan: Yeah, I think it depends on where you’re asking the question from. For us, the challenge in scaling is how do we continue to raise enough capital to be able to apply this to more diseases and really expand the scope and scale of the mission. That’s one big reason why it’s helpful to teach others how to do this process and be very transparent so that we encourage and inspire other institutions, other foundations, other families to follow this track and really take ownership and control, I would say, over the process to make sure that it does end in the hands of patients, assuming it’s FDA approved and safe and efficacious. The other challenge with ultra-rare disease is that the traditional drug development process, even for a rare disease, involves well powered clinical trials. And with well powered clinical trials, the challenge is you need enough patients. And so, it’s kind of a paradox problem where you don’t have enough patients to run a well powered clinical trial, which if you don’t, then you won’t get commercial approval. And then if you don’t get commercial approval, the insurance company isn’t going to pay for it because they’re going to say, well, you don’t have a well powered trial, you don’t have commercial approval; sorry, come back when you do. And so, it’s very much this catch 22 of how can we run smaller clinical trials with ultra-rare populations and get that approval. That’s the sort of thinking I think we need to start to pursue as we think about treating the really the rarest of the rare. And there’s a slew of other challenges, but those are two of the most common ones that at least I think of on a day-to-day basis—and a real pragmatic challenge, too. I think you need regulatory changes to be able to support clinical trials that have more biomarker-driven data potentially, or biomarker driven endpoints potentially, and then you also need to work with the payers to say, hey, this isn’t going to be a type 2 diabetes clinical trial. This is a small population, albeit a very expensive, in all likelihood, population to the payers. So, how we potentially reimagine either a financing or a reimbursement mechanism to treat these patients depends on if we think we can ever get commercial approval. And if not, then we need to look at it a very different way. And so, right now it isn’t really possible to get commercial approval for the really ultra-rare diseases because there’s not enough patients. And so our approach has been how do we reimagine a financing process or begin to do that wherein these patients could still get treatment, they don’t have to mortgage their house, it’s not inherently inequitable, and at the end of the day, the patient can still get help.

Daniel Levine: I think from the earliest days you were talking about the issue of reimbursement for these therapies. What’s the case for making these therapies reimbursable?

Rich Horgan: I even caution to use the word reimbursement at this point because if you think about reimbursement, that means you need to shell the money out to then get the money back. And so, if you’re a family that has one or two kids impacted by an ultra-rare disease, you still need to go raise the three plus million dollars it’s going to take to go from academic bench to patient bedside. And so, while reimbursement might be promising there, it’s like, okay, you still have a serious working capital problem. So, what we’re beginning to look at and start to develop thinking around is this idea of would it be possible to have some sort of federal funding mechanism that (a) was fast, and I think fast is a very important word there, and then (b) not contingent upon a successful clinical trial because then you would still have the reimbursement problem. And so, what does it look like if a promising therapeutic effort had all the preclinical work done as it should, received IND approval and then that would trigger a payment of some sort either direct to a manufacturer or direct to a hospital to cover the cost of the drug and the clinical trial. Because that’s really the expensive part. When you look at the breakdown of these costs, the preclinical academic work is not the most expensive bucket in this; it really is the drug product and the clinical trial.

Daniel Levine: And are you focused solely on the federal government or do you see a role for private payers to play in funding the use of experimental therapies?

Rich Horgan: Yeah, I would say it’s definitely too early to say. I think we’re in the stage of developing—just recently bringing on a payments executive onto the team to be able to help us think through and develop what could a blueprint look like. So, I think it’s too early to answer that question. It’s going to take everybody, right? It’s not going to be one group that we can pick on. I think this really needs to be the type of blueprint and model that has the buy-in from the privates and from the publics so that this can work as a rising tide to lift to all boats, not just cure diseases boat, but other diseases outside of neuromuscular. But, potentially, and I underscore potentially because I said it’s early still in the thinking, but potentially draw the line around non-commercializable, act less than X number of patients, that type of thinking where you draw the fence posts around what this would cover. And that’ll be very important to public and private payers downstream. It’s still pretty early in this process, but we’re really taking off efforts now with adding some support to the team to really sketch out what a model could look like and then pressure testing that model with various stakeholders.

Daniel Levine: And how critical do you think finding such a mechanism will be for the sustainability of N-of-one therapies and making them a viable therapeutic route?

Rich Horgan: Yeah, it’s critical, right? Because when you look at the cases so far for us, for other efforts that have gone on—N-of-one or N-of-a-few, right? It’s not just N-of-one, – it’s really the ultra-rare non-commercializable type -patient populations that we’re looking at here. It’s critical because you can’t expect people to raise three, four, five million when they’re trying to provide care for their kids. They’re trying to keep a job. You can only stack so much on people’s backs before it’s like, enough is enough, you know? So, I think in order for this field to blossom, this field of ultra-rares, we need a clear path to payment. We know the technology is there for the most part, right? We’ve got ASOs, we’ve got Crispr, we’ve got gene replacement, we’ve got all sorts of different RNA-based therapeutics that are popping up. And so it seems like for many of these diseases—not all—for many of these diseases that the technology question is there, the pieces are there, now it’s up to the individuals behind the different diseases to bring them together in a way that ushers a drug from idea to the bench side. But the piece that’s still really not there is the payment mechanism. There’s some programs like the NIH’s Urgent program, but you’ve got a nine month waiting period almost between when you drop the application to when you may get funded and I underscore may because it’s competitive and it’s the NIH, and in nine months the patient could be dead. To me, programs like that suffer from a lack of reality where there’s a huge gap there, and that’s a huge problem.

Daniel Levine: In February, the Muscular Dystrophy Association awarded Cure Rare Disease, a $30,000 grant to support research of novel reimbursement strategies for drugs developed for ultra-rare diseases. In today’s world, what does it take to get reimbursed for a therapy?

Rich Horgan: So generally, we’ve spoken to a number of executives at the big private payers here in the United States. And generally, it’s two things. The first is, like I mentioned before, well powered clinical trials. They want to see convincing data from trials that convince them that, okay, we apply therapeutics, something good happens. The other thing, from a regulatory perspective as well, is that BLA or NDA to enable the commercialization, to enable that to be sold as a product and then eventually to be reimbursed by payers. And you can clearly see the challenge with putting ultra-rare diseases through that same model. This model was literally never designed for that, but now we have the tools to go in and be able to change, even for a single patient’s mutation, potentially the outcome there. And so, it’s really the human made elements that need to catch up with technology, as it usually is.

Daniel Levine: And as you think about some kind of a funding model for these conditions, are you imagining funding therapies that don’t necessarily go through a regulatory approval process?

Rich Horgan: I wouldn’t go that far. I think, above all, the United States does a really good job at making sure that drugs are generally safe and so I definitely would caution any attempt to skirt the regulatory approval process. Things still need to be safe and they still need to have potential benefit of advocacy at the end.

Daniel Levine: I’m not suggesting skirting the process, but the reality is that for many of these drugs you won’t be able to justify the expense of what is now understood to be a clinical trial to gain enough broad evidence without, you know, where patients may be treated in a long-term ongoing never ending clinical trial, I imagine.

Rich Horgan: Yeah, it’s a good point and I agree no shortcuts on safety is key. It’s curious, how can we get away with potentially smaller clinical trials or can we follow patients over longer durations of time to see how the therapeutic works. I don’t know that there’s a clear answer there today. And I think a lot of it depends on the technology at hand, too. What are we looking at here? Is this a gene replacement? Is this a gene editing? And what downstream effects can we expect from that? So, there’s not a clear answer today, but starting to think about can we do smaller clinical trials. Can we follow patients differently? Things like that may help reduce the burden on needing so many patients. And there’s people far smarter than I that think about this in a way that we can develop creative solutions.

Daniel Levine: You mentioned just bringing on a payment expert. How are you going about the project that you’re doing with the Muscular Dystrophy Association funding?

Rich Horgan: Yeah, the first piece was to really identify the key talent. I’m a big believer in get the right people in the room and good things will happen. And so, while we’ll share more details around this in the coming days or coming weeks, getting somebody who’s well versed in really ideating, brainstorming, practical novel solutions of payment was key. So, that was the first piece. Then the second piece is, “okay, what could something look like” and “what could something look like” really derives from the expertise that we bring on. And then more importantly, what does this look like to others? So, taking this to big payers, private payers, public payers, regulatory stakeholders, trying to define the universe of stakeholders and then taking this in front of them and getting their feedback.  You know, I think it’s about trying to keep the tires on something so at the end of the day, what we have is a straw man, and then that straw man is pressure tested, and then out the other end comes a system that, okay, now we need to politic this. Does this require legislation? Does this require changes in policies at different organizations? That sort of detail, I think, will become much clearer as we develop pressure tests and then try to roll this out over the coming years. And it’s a start, right? I have no illusions that this is a one team or a one person sport. This will very much take a collaborative effort between multiple rare disease organizations all vying for very similar things. At the end of the day, nobody’s going to argue that redefining a payment mechanism for ultra-rare diseases is really important.

Daniel Levine: And what’s the anticipated end product of the initial project and what’s the timing for it?

Rich Horgan: Yeah, we anticipate basically, more or less, a blueprint, a PDF, PowerPoint to put it practically, that really lays out what something could look like, what are the requirements, what are the expectations from the drug developer, when and how would payment be triggered. When and how and who would payment be triggered for? Where does payment come from? These sort of nitty gritty little details that from a 30,000 foot view don’t matter, but when you get into the everyday trenches of it matter very greatly, especially when it comes to capital exchanging hands. And so, in terms of the timing, we’re expecting to roll this out over the coming months and then we’ll look to pressure test that in the ensuing months after that. So, this is not an overnight project. This is not a quick hit. I mean, this is a big challenge but it’s something that it’s very worth investing time into because there’s a lot of suffering out there. And a lot of it’s, you know, life is anything but fair, but if we can introduce and usher into the world collectively a way to finance ultra-rare disease drug development, then you can sleep pretty soundly at night knowing you helped a lot of people.

Daniel Levine: Rich Horgan, founder and president of Cure Rare Disease. Rich, thanks as always.

Rich Horgan: Thank you very much.

This transcript has been edited for clarity and readability.