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Upcoming regulatory changes to create new opportunity for specialized offerings.
Since the approval of Luxturna in 2017, multiple durable cell and gene therapies launched in the US with record-breaking prices,1,2 and many more are expected.3 Resulting concerns over payers’ reaction initiated interest in evolving the contracting landscape to address payer risks, including actuarial risk (the ability to predict utilization and budget impact); performance risk (uncertainty regarding long-term efficacy, safety, and durability); and payment timing (upfront high-cost payment for treatment).4 In a 2019 survey, over half of payers responded that they were likely to manage the financial risk associated with cell and gene therapies differently than high-cost chronic treatments.5
July 1 changes to Medicaid Best Price rules6 mean that drug developers will have enhanced ability to offer innovative payment models, such as outcomes-based contracts, to address payer risks. New payment models may also enable payers to increase patient access through revised medical coverage policies, formulary positioning, and utilization management.
Implementing new contracting arrangements remains challenging. Payers, drug developers, and providers must negotiate terms, such as the outcomes metrics and payment threshold, and agree on the data collection process. Bundling multiple therapies into a risk carve-out or specialized stop-loss product requires not only scale, but actuarial expertise. Some durable cell and gene therapies require specialized provider networks that must be qualified and contracted. A warranty payment innovation requires compliance with regulations rarely encountered in healthcare. However, these implementation challenges have created opportunities for specialized third-party offerings.
In 2021, MIT’s Center for Biomedical Innovations FoCUS project conducted a request-for-information survey that aimed to identify and describe emerging market solutions for financing and reimbursement of durable cell and gene therapies.7 Twelve companies representing 16 products or services responded to the survey. The products addressed various aspects of payer risk through risk carve out, outcomes tracking and data management, payer aggregation and contract negotiations, provider contracting services, and financial and pharmaceutical company warranty services (see Table 1 below). This survey represents a point-in-time view of an evolving marketplace. Still, all parties can use these insights to shape contracting strategies that reduce payer risk and improve patient access.
Resolving payer risks is a win for all parties—biopharma, payers, and patients. Addressing payer risks will help ensure access to current cell and gene therapies, as well as foster continued innovation of and sustainable access to future treatments. The US market is responding to payers concerns and biopharma desires with solutions that address the financial impact of durable cell and gene therapies. Matching biopharma scientific advances with contracting innovations can enable payer coverage and reimbursement of durable cell and gene therapies that provide the access patients need and expect.
Jane Barlow is senior advisor to the FoCUS Project and chief clinical officer for Real Endpoints. Mark Trusheim is strategic director, NEWDIGS, and visiting scientist, Sloan School of Management, Massachusetts Institute of Technology.