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Expensive new gene therapies for rare diseases that aim to cure1 by correcting the underlying genetic abnormalities are also causing sticker shock among the nation’s self-insured employers, payers, and plan sponsors. The first shot across the bow came in 2013 when a cure for hepatitis C cost $85,000 for a 24-week course, which prompted a battle between manufacturers all vying for their own therapies.
Since then, payers have learned valuable lessons and are preparing for the introduction of other ultra-high-cost therapies that now reside in drug manufacturer pipelines with a handful recently launched into the marketplace. These include a new spinal muscular atrophy gene therapy that comes with a one-time price of $2.12 million, while a one-time DNA-altering gene therapy for curing an inherited retinal disease costs $850,000. In both cases, these novel therapies add substantial additional costs to the standard medical benefit. As a result, payers have become hyper-sensitive to the reimbursement strategies manufacturers design around high-cost therapies and are seeking the best approach for managing high-priced cures for orphan and rare diseases.
In particular, payers are watching the hemophilia and sickle cell disease landscape very closely for several potential curative gene therapies in late-stage development. The winners in these markets will be companies that offer the strongest efficacy claim, make the best case for value, and have the most attractive financing arrangement with an assurance for durability. The holy grail is figuring out how to make any associated “pay-over-time” liability portable.
Several companies are in late-stage trials with single-dose cures for hemophilia—with therapies starting at $2 million or higher. Payers want manufacturers that offer clear efficacy and can convert the payment model of their therapy to look more like chronic therapy treatments: steady, manageable payments that conform to current operating budgets.
Payers also recognize that once they pay for a therapy upfront, they completely own the liability, and that another plan will benefit if the beneficiary switches insurance companies or employers. A single manufacturer who has an arrangement to somehow share the liability across payers will also have a competitive edge in the marketplace.
Fortunately, the introduction of alternative payment models and specialty pharmacy benefit management (SPBM) is poised to usher in a new era of affordability.
Gene therapy2 is a type of highly targeted treatment that uses genetic material with the goal of changing the course of a disease.Most often, gene therapy works by introducing a healthy copy of a defective gene into the patient's cells. The idea is to modify the genetic information of the cell responsible for a disease, and then return that cell to normal conditions.
There are approximately 7,000 identified rare diseases, yet only a few hundred have approved treatments. Gene therapy is particularly relevant to rare disease patients because more than 80% of rare diseases have a known single-gene cause. Traditional small-molecule drugs often work by minimizing symptoms rather than curing the disease. When treating a chronic condition, this often means frequent administration of the drug. In contrast, gene therapy can potentially correct underlying genetic defects and cure the disease rather than simply manage symptoms. What’s more, gene therapy may require only a single dose rather than a lifetime of ongoing treatment, thereby producing significant long-run savings for the healthcare system.
To improve outcomes and impact costs for gene therapies, the understanding, expertise, and experience of clinicians and healthcare business executives at specialty pharmacy partnering organizations have been successful in drastically reducing costs for ultra-expensive gene therapies and other specialty Rx therapies.
Some of the one-gene group of rare genetic disorders being studied for gene therapies include:
Hemophilia is an inherited bleeding disorder in which the blood does not clot properly due to a lack of or decrease in a protein called clotting factor. The two most common types of hemophilia are hemophilia A, which results from a lack of clotting factor VIII and hemophilia B, which is due to a lack of clotting factor IX. Either type can lead to spontaneous bleeding into muscles, organs, and joints, as well as prolonged bleeding following injuries or surgery. The condition primarily affects males.
The current number of males with hemophilia living in the US is estimated to be between 30,000 and 33,000. The estimated prevalence of hemophilia in the US is 12 cases per 100,000 men for hemophilia A and 3.7 cases per 100,000 men for hemophilia B.
Over the past several years, drug manufacturers have conducted rigorous scientific research and clinical programs to address the unmet medical needs of people with severe hemophilia A, putting the aspirations of the hemophilia community at the forefront of investigational gene therapies. Novel therapeutic approaches such as gene therapy offer the prospect for both complete prevention of bleeds and subsequent joint damage, which eliminates the burden associated with current treatments resulting in an improved quality of life for people with hemophilia.
For many patients and stakeholders, SPBM has been critical for helping to contain costs through inventory and assay management, and partnership with the patient and their treating physicians to help promote adherence.
Sickle cell disease is caused by a genetic defect that leads to normally pliable red blood cells becoming hard and sticky, forming a sickle shape. These abnormal blood cells cause anemia and can trigger a wide range of painful and life-threatening complications.
It is estimated that sickle cell anemia affects approximately 100,000 Americans and occurs in about one out of every 365 Black or African-American births and one out of every 16,300 Hispanic-American births.
Two new gene therapies3 demonstrate a potentially lasting cure for sickle cell disease by subtly altering the genetic information in patients’ bone marrow cells. In both therapies, samples of a person’s bone marrow are removed and then genetically edited to switch off BCL11A, a gene that normally suppresses fetal hemoglobin production. The newly edited bone marrow stem cells are then put back into the patient after they have undergone chemotherapy to mitigate the amount of faulty bone marrow cells in their system—much like a bone marrow transplant.
Gene therapy for severe sickle cell disease is likely to offer substantial benefit to patients, but also puts considerable pressure on payer budgets, in particular Medicaid plans. This will likely prompt payers to adopt innovative approaches to ensure affordability and access to combat the financial challenges associated with this emerging drug class.
The reality of gene therapies raises a number of key questions, such as how durable are these products? Do they eradicate the disease or simply minimize the disease? How long will the member who is suffering with a particular disease be on a health insurance plan? With large upfront payments for single-dose gene therapy, what happens when the employee leaves and the next company gets the benefit of the reduced medical costs?
Such questions make it critical to enlist a SPBM partner to manage the specialty pharmacy spend to ensure that patients get the right therapy at the right time, and the right treatment plan with the least amount of waste. It’s also important to examine patient compliance with their treatment regimens, so that they're considered appropriate candidates when gene therapy becomes available.
While million-dollar therapies are promising, there is always the possibility that they won’t work. Simply re-packaging existing services or negotiating value-based contracting measured against predefined outcomes may not suffice.
New alternative payment models are designed to make costly human gene therapies financially feasible for employers and plan sponsors. Gene therapy manufacturers have high market expectations for increased utilization of these exciting new interventions that provide patients and providers with expanded therapeutic choices. Long-awaited, timely solutions that go beyond the traditional pharma-payer/PBM frameworks to enable affordability will help payers to manage the extraordinary costs for such novel products.
The goal of these new alternative financing models is to assist in the management of value-based relationships between manufacturers and payers, including price monitoring and tracking trends for high-cost therapies.
SPBM programs have been successful in drastically reducing costs for specialty and high-cost therapies, and this deep expertise will be applied to emerging gene therapies. A suite of financial and insurance products is likely to become the industry standard for how high-cost medical care is delivered and paid for.
By treating each situation individually to maximize the outcome for patients and payers, this approach increases the quality of care and makes even the latest medical breakthroughs more accessible and affordable.
SPBM helps payers to identify ways to ensure that patients receive the quality care they need in the most cost-effective manner. Proper inventory and assay management make sure only what's being dispensed compared to what's being prescribed is reasonable, but also that patients are receiving the appropriate number of doses they need. The SPBM’s role is to verify how much product individuals have on hand and to determine how many additional doses need to be sent each month to ensure patients are covered.
SPBM companies serve as a hybrid of traditional and innovative approaches that target specific populations which have an acute or chronic condition. They ensure that individuals and caregivers are aware of programs and are empowered after diagnosis and referral, taking a personalized approach that provides a preferred formulary, evidence-based clinical policy bulletins and pathways, step therapy, and lab and other clinical assessments.
Some of the targeted therapy areas for SPBM include:
SPBMs facilitate ongoing positive patient outcomes through persistence, adherence, compliance, and just-in-time collaborative patient management. Professional teams regularly measure and track program effectiveness and, across the continuum of providers, validate savings and opportunities for continuous improvement and best practices outcomes.
Unlike typical PBMs, SPBMs offer the additional benefits of technology, analytics, and clinical services designed for specialty and gene therapy cost containment. As a result, they are better able to manage these drugs covered under the pharmacy benefit, including some that may be going through retail pharmacy, and those that are prescribed and covered under the medical benefit. Innovative SBPM programs help to reduce prescription drug costs and improve care quality for the benefit of patients and payers alike.
The best SPBMs serve as partners for cost containment, making them the natural go-to for innovative financing programs. They already deliver significant value for patients, payers, and manufacturers, offering specialty pharmacy and infusion networks that specialize in data, analytics, and cost modeling, as well as real-time front-end prescription triage to help patients receive the right care at the right time. These programs also utilize technology to manage and streamline the specialty Rx prescription process among the physician, patient, specialty pharmacy, and health insurance plan—which means more coordinated care and cost savings.
Take for example a SPBM hemophilia program that is based on an all-encompassing data analytics interface technology solution. This allows the program to capture, integrate, and provide unlimited amounts of prescription data and healthcare outcome analytics in a real-time platform, providing accurate insights into patient care, provider Rx value, Rx trends, specialty pharmacy performance, dose optimization, treatment paths, and other clinical intervention reports. The hemophilia program’s therapy optimization for a 55-year-old man led to savings of $284,000per year. For a 25-year-old patient changing drugs in the middle of the month, the program discovered $27,000in drug waste and inappropriate therapy.
The same SBPM’s infusion management program delivered significant cost savings while maintaining optimal patient care by using proprietary financial models combined with superior technology and analytics. This translated into a flexible, tailored drug management solution driven by actual client needs.
These types of programs increase patient safety, improve patient health outcomes, identify appropriate sites of care for treatment, reduce waste and cost with effective medication management, and offer negotiated dispensing rates as well as increased transparency.
For instance, annual savings by condition for this program include: hereditary angioedema, $708,000; spinal muscular dystrophy, $466,232; hemophilia, $99,480; cystic fibrosis, $18,012; and hypophosphatasia, $392,124. What’s more, the average cost savings case-by-case with this SPBM program is 10% to 42%.
Furthermore, stakeholders should partner with a SPBM that demonstrates specialized expertise, delivers value throughout the care continuum, takes a patient-first approach, and provides specialty pharmacy carve-outs.4 A patient-centered approach provides clinicians, patient/members, and payers with high-quality information designed to enhance patient care, clinical outcomes, and cost-management approaches.
Such an approach is ideal for value-based pharmacy management because it delivers innovation and customization to meet the challenges of reimbursement based on outcomes, as well as the need for payers to track real-world outcomes associated with specialty products to ensure efficiency.
Specialty pharmacy carve-outs focus on specific diseases, such as diabetes, cancer, and other specialty treatments. This gives payers better control over pharmacy benefit costs, which is critical given that the costs of prescription drugs continue to rise.5 It also provides transparency into a payer’s pharmacy benefits so that it can mitigate risk, optimize plan performance, and generate savings for the plan and its participants.
Dea Belazi is President and CEO of AscellaHealth.