As Gene Therapies Become a Reality, So Do Unprecedented Costs

Innovative Partnerships & Pharmacy Benefit Design are the

Future of Cutting Edge Gene Therapies

After decades, we are entering a new phase of drug development and treatment as gene therapies offer successful results in clinical trials, putting them on the forefront of innovative measures to treat various diseases.

Watch our November 2020 webinar on Gene Therapies

While this is good news for those suffering from various medical conditions, it also means that there will be unprecedented costs in order to offer these gene therapies to individuals across the world. Thus, it will be critical to implement new ways of providing health insurance and pharmacy benefit design. Let's walk through this at a high level...

What are gene therapies?

Gene therapy has most recently been defined as an experimental technique that uses a single gene or a set/series of genes to treat or prevent a disease. New scientific evidence is supporting this technique and showing that doctors may eventually be able to treat a genetic disorder by inserting a gene into a patient's cells instead of using drugs or performing surgery.

Essentially, they would replace a mutated or "unhealthy" gene that is the cause of the disease or disorder with an unmutated or "healthy" version. This gives the receiver of the therapy the ability to replicate this gene over and over, helping them fight off or cure their genetic condition.

What is the cost of gene therapy?

In these early stages, it is hard to tell how expensive gene therapy can or will be. However, there is a recent example that demonstrates high cost treatment.

A gene therapy, called Zolgensma, a treatment for spinal muscular atrophy (SMA), broke the record for the most costly single-dose medication in history, at $2 million per treatment, per patient. Though it is too early to tell what the ultimate cost will be for different gene therapies targeting various detrimental diseases, a simple extrapolation of the costs to the general insured population in the United States illustrates the problem plainly. There needs to be a way to use these new gene therapies without bankrupting health plans or the companies that provide them.

What can be done at the employer level to help with the cost of gene therapies?

Again, though the gene therapy revolution is just around the corner, a lot of unknowns still exist. But, going off of what we know, there are two strategies that can help in paying for the cost of gene therapies.

First off, innovative payment mechanisms -- restructuring the traditional, transactional payment models to spread payments across the lifetime of a patient. This way, the therapy may be offered without the unprecedented cost due all at once, which could negatively impact the employer.

The second strategy is called "value-based contracting." Basically, even though gene therapy manufacturers are highly confident in their treatments, it doesn't mean that the effect of the therapy will last long-term. And until long-term studies are performed on patients who received gene therapies, the unknown on the sustainability of the treatment will remain. That's where "value-based contracting" comes in. Value-based contracts will refund a portion of the therapy if the patient fails to achieve and sustain an "expected" clinical response based on the therapy they received. This reimbursement is then tied to the expected outcome.

This second strategy does mean that patients must be monitored over a long period of time to properly identify whether the therapy was effective. And, any movement between insurance carriers could void the original insurance relationship. These details illustrate the importance of new contracts between carriers, employers, and patients.

These new gene therapies are an exciting development and will help cure thousands of people in the United States from genetic disorders and diseases in the future.

To learn how we can help your organization strategize for the future of offering complicated pharmacy benefits and controlling your cost, please reach out to the Pharmacy Benefits Consulting team, Arxcel, at Lawley.