Cell and gene therapy approvals will target much larger populations by end of decade

Forty cell and gene therapies may be launched in the coming five years. They could target as many as 33 million patients by the end of this decade. When a single dose of a gene therapy can cost millions of dollars, finding feasible and equitable ways to price and reimburse these products is a major challenge.

Cell and gene therapies began mostly in the ultra-orphan space, but with technological advancements in drug development, therapies are expanding into much larger populations. This evolution began last year with the approval of the CAR-T therapy Carvykti, which may be prescribed to more than 80,000 multiple myeloma patients annually by 2025.

In the gene therapy space, recent approvals of hemophilia A and B products, as well as the imminent launch of sickle cell disease therapies, expand new therapies reach to potentially hundreds of thousands. Then, as we look forward to a few years from now, gene therapies may enter the massive diabetes and osteoarthritis markets, which pushes their impact exponentially to millions of patients annually.

Most cell and gene therapy products are intended as one-time injection treatments, which in turn may offer durable cures. But the up-front costs are very high on a per-unit basis. And questions around the durability of novel gene therapies persist. As such, there are serious concerns about how to manage the considerable costs while ensuring equitable access.

Independent watchdog organization, ICER (Institute for Clinical and Economic Review), is helping to push the movement toward fair pricing and fair access forward—and it’s been shown that cell and gene therapies can be cost-effective. However, for this value proposition to become a universally accepted practice, payers must adopt a view that systematically incorporates the concept of value-based pricing. Traditional methods of reimbursement won’t work. As a consequence, payers will need to implement value-based pricing arrangements, such as pay-for-performance schemes or warranty programs, in which evidence is gathered and analyzed to assess whether cell and gene therapies prove their worth and are durable over time. Policymakers will need to turn to value-based contracting solutions, such as the ones Lyfegen offers.

Both pharma companies and payers are faced with the complex challenge of navigating the uncertainties of drug pricing agreements for cell and gene therapies. Lyfegen is an independent resource that provides powerful tools and resources for pharma and payers to leverage so that the right type of reimbursement model can be identified for a specific cell and gene therapy. The Lyfegen Model & Agreement Library contains more than 2,000 real-world, value-based agreements and 18 drug pricing models from around the world. And the Lyfegen Platform leverages intelligent algorithms to capture and analyze patient-level drug cost data that can then be run through a platform-based simulator to help customers negotiate the best agreements possible.

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Study: Out-of-pocket drug costs increasing 5.8% per year

A new study investigated how drug rebates affect out-of-pocket costs for health plan beneficiaries. Rebates lower costs for payers, but depending on the health plan, they can raise costs for the patient.

There is a lot of secrecy surrounding the final price paid for a drug at the pharmacy, as official data on drug prices does not factor in rebates or the end price for the patient. The rebates paid by manufacturers to pharmacy benefit managers is not publicly available. The study therefore sought out to understand the relationship between rebates and the prices paid by insurers and beneficiaries.

Results: The negotiated price, defined as the price paid by the beneficiary at the pharmacy and by the payer after rebates are taken into account, rose 4.3% from 2007 to 2020. However, the out-of-pocket price, or that paid by the patient at the pharmacy, rose 5.8% annually. Retail pharmacy prices increased 9.1% annually.

Implications: Low-income families may be especially impacted by plans with higher deductibles and lower premiums, as they are not prepared for surprise costs associated with cost-sharing. As the authors stated: “consumers with a low deductible or capped copays appear to be shielded from steep pharmacy price increases.” The main contributor to increases in out-of-pocket expenses were increasing deductibles and co-insurance payments.

The authors emphasize that drug price transparency is important for health policy recommendations and more work needs to be done to understand drug price inflation.

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Ongoing debate around GLP-1 drug coverage

Payers are seeing increased costs due to the demand of GLP-1 drugs. It’s estimated that 57.4 million adults under the age of 65 could be eligible for this class of drugs, based on currently approved FDA indications. There are 36.2 million people with an obesity diagnosis alone in the US.

If 10% of eligible adults take GLP-1 medications for weight loss, a $15 increase could be seen in the per-member-per month costs. This number rises to $50 if one-third of eligible adults start taking these drugs. Zepbound, manufactured by Eli Lilly, has a list price of $1059 per month, whereas Novo Nordisk’s Wegovy costs $1349 for a one month supply. However, last month, Eli Lilly announced a major price cut for their weight loss drug. Now, a 4-week supply of their drug at 2.5 mg will cost $399, whereas 5 mg vials will cost $549.

The measure is aimed at improving patient access, while reducing the risk of counterfeit medications. This price reduction was made without changes to insurance policies, and the drugs are available through LillyDirect, the company’s online pharmacy.

Not all insurers want to cover weight loss drugs like Zepbound, Wegovy, Mounjaro, and Ozempic, and innovative strategies are being explored to manage costs while keeping them available. One strategy is a utilization cap, which sets stricter standards for who is eligible. Another strategy is mentioned in Evernorth’s EncircleRX plan, which provides a 15% cost cap or a 3:1 savings guarantee when the medication is covered for weight loss.

The value of these drugs is still being investigated. If these medications can provide additional health benefits, there could be additional savings for payers down the road. Of note, studies have found reductions in cardiovascular death and sleep apnea when the drugs were used for weight loss.

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