The Next Pharmacy Tsunami: Addressing the Risks Posed by Gene and Cell Therapy

If the growth of biologic medications was the earthquake, gene therapy will be the tsunami that does the real damage.?Since Harvoni and Sovaldi started making their way on to plans in the early teens a wave of concern was ushered in around specialty medications.?I recall presenting “1% of claims was 25% of spend and would be 50% within 3 years” back in 2015/2016 – and sure enough that all came to fruition.?Now the new wave is upon us in Gene and Cell Therapy.?To date, there have been only about 10 Cell or Gene Therapy medications launched in the United States.?By the end of 2024 that number will breach 50.?The average price tag of a Gene Therapy launched in the US today is almost $2,000,000.?It is imperative for consultants to start thinking about best practices for managing this risk.?This article covers what Gene Therapy and Cell Therapy are, the major risks to plan sponsors in the pipeline and some best practices for preparing your clients for the storm ahead.?

What are Cell and Gene Therapies?

Gene Therapy and Cell Therapy are similar treatments.?Gene Therapy uses DNA to manipulate a patient’s cells for the treatment of inherited or acquired diseases whereas Cell Therapy is the infusion of whole cells to accomplish this end.?CAR-T is a type of cell therapy where T-Cells are collected from the body and sent to a manufacturing site where chimeric antigen receptors (CARs) are added to T-Cells.?Hence: CAR-T.?These innovative approaches to therapy solve for a myriad of rare inherited genetic diseases, mutations and cancers which previously had no therapeutic solutions.?

Make no mistake, these cell and gene therapies are nothing short of miraculous.?But with an average cost approaching $2,000,000 – its imperative that consultants strategize about pre-emptive measure they can take to protect their clients.

What Cell and Gene Therapy’s are Available Today?

There are 27 FDA approved Cell or Gene Therapy’s today.?Below is a list of some of the most notable. In 2021 there were only 10 therapies approved since the first was launched in 2017. Over the past two years it has nearly tripled and by the end of next year, as mentioned we'll have reached the real beginning of the wave.?

What’s the Concern For the Future?

McKinsey and Co. release a chart in September 2022 showing the potential growth of Gene Therapy and Cell Therapies by 2024 (see below).?The rapid growth of therapies from 2021 to 2023 and 2024 is staggering.?What’s more – there are over 300 Cell and Gene Therapies currently in development.?While the conditions such as inherited retinal dystrophy and beta thalassemia may seem exceedingly rare – it is the sum of all such rare diseases that should give consultants pause.?There are over 7,000 rare “orphan” conditions in the United States impacting over 30 million patients.?So the runway for Cell and Gene Therapies is long, the costs staggering and the probability uncomfortably high.

What’s My Risk?

The good news for most plan sponsors is that these treatments are typically one and done.? From an actuarial standpoint, they look more like a surgery than an ongoing drug treatment. A patient may receive treatment over the course of 30-90 days and in many instances will not need further treatment.?In some cases, it can eliminate or reduce the cost of treatment a patient had been receiving and reduce net costs in the long-run. This means no lasers on stop-loss policies or substantive risks to premiums.?But there are two considerations we need to focus on:

1.??????Preventing an Uncovered Claim

2.??????Getting Value from the Treatment

Preventing Uncovered Claims:

The greatest risk to a plan sponsor from these innovative treatments is an uncovered claim. It's one thing to have an uncovered $100,000 surgery. It's a bankruptcy risk to have an uncovered $3,000,000 Cell Therapy. Preventing uncovered claims in the Gene/Cell Therapy space is not all that different from a any other claim - just with higher stakes.?There are some things you can request that protect your plan:

Plan Mirroring

If a stop-loss policy has plan mirroring it just means that the Stop-Loss carrier agrees to cover whatever is in the plan document.?If a claim is approved in accordance with the plans Summary Plan Description, there is no risk of an uncovered claim.?Many times, a stop-loss policy can have exclusions that are listed separately in the policy which may not reflect the plan document.?The most important in this context is the growing use of specific Gene Therapy and Cell Therapy exclusions.?Consultants must keep a watchful eye for this tactic from stop-loss carriers.?Tactically, a fly by night stop-loss carrier can offer much more competitive rates if they know they are not on the hook for the significant risks associated with this class. Be sure your policies include Cell and Gene therapies with no ambiguity.

No Lasering:?

Lasers should not be much of a risk to a plan sponsor in the gene therapy and cell therapy space.?That said, many Hemophilia A and B patients who are actively taking prophylaxis are going to be known risks to a stop-loss carrier.?Should the patient join the plan mid-year prior to being scheduled for treatment for Hemgenix or Roctavian – it is a near certainty they will be lasered for the upcoming year. ?This is the context that lasers should be considered in - as new drugs are potentially approved, carriers are going to place lasers on patients prospectively - before the therapy is even released. No lasering provisions with max rate caps can be very valuable to employers as they move into the next few years.?In fact, for employers with less than 500 employees I believe No-Lasering provisions are almost a necessity given the uncertain risks.

Eligibility/Leave Management:

Coaching HR personnel about properly handling FMLA and COBRA participants is perhaps one of the greatest risks?in self-funding.?A patient who should not be eligible for the plan due to expiration of FMLA or COBRA that has been left on the plan and incurred a claim can easily turn into a coverage dispute.?Making sure that HR personnel are keeping patients covered in accordance with their plan documents eligibility language is absolutely critical to avoiding this pitfall.?

How Do I Ensure the Plan is Getting Value?

Addressing these high cost therapies is going to require a paradigm shift in how plans consider coverage for high cost medications.?The FDA considers only efficacy and safety in its approval process. ?A recent JAMA article showed from 2017-2020 the FDA approved 206 new drugs of which 5 were not approved due to unfavorable benefit/risk assessments and 42 were not approved due to uncertainty of benefits or unacceptably high prices.?Unfortunately, once a drug is FDA approved there are no pricing constraints on a manufacturer unless there is a therapeutic substitute that PBM’s can use for negotiation purposes.?It's time for employers to start taking control over medications with excessive costs in their plan documents.?This means building plan document language and coverage conditions that use independent evaluation on price as a determinant for coverage.?A great resource for this is the Institute for Clinical and Economic Review (ICER).?While there are some who disagree with the methodology of ICER it is the only organization in the US that is an independent resource to assess cost/benefit analyses on high cost medications.

Consider Hemophilia treatments recently launched and pending approval – Hemgenix and Roctavian respectively.?In ICER’s Final Report they found an evidence rating of B+ for Hemgenix vs. Factor prophylaxis and C++ for Roctavian again Factor Prophylaxis.?This is mainly due to the fact that Roctavian’s impact has been shown to decline over time – meaning the benefits could be short-lived.?In my opinion, until further research is available it would be advisable for a plan sponsor not to take such a significant risk to incur a multi-million dollar expense should Roctavian receive approval.

A strategy moving forward should be to incorporate ICER findings when available and to not cover medications with less than a B or B+ rating.?There are certainly shortcomings to this approach – mainly that ICER may not have a rating available for a medication as soon as it is released – or for years thereafter.?A manufacturer may change the price of a medication to make it fit into scope of ICER’s suggested ranges and adaptations should be made to address that.?But it is clear to me that plan sponsors will need to take cost/benefit analysis into their own hands as the responsibility is not something the FDA takes into account.

What About Gene Therapy Carve-Out Programs?

Several programs have been launched that are intended to "carve-out" gene therapy risks from a plan. These programs are designed to work similar to a transplant carve-out, which is to take the most volatile of risks and essentially create a fully insured solution for it. The risk associated with carve-out programs is that the landscape of gene therapies is rapidly evolving - and these programs today are very narrowly scoped to the known risks in the industry. For example, the most notable program today is "Embarc" from Cigna/ESI. The Embarc program only covers Luxturna, Zolgensma, Zynteglo and Skysona. Valuable to be sure, but the ambiguity of other newly available therapies is still scary. What's more, more often than not these treatments are provided to patients shortly after FDA approval, before a review can be done and premium adjusted to add them to the carve-out programs. Once the initial patients have been treated, the risk to plans drops precipitously as only newly diagnosed patients are at risk - which can effectively be tied to the frequency of the condition in newborns, a much lower risk than addressing the past 15-30 years of untreated patient accumulation when a therapy is first launched.

Excluding Coverage:

Some small self-funded employers may want to exclude Cell and Gene Therapy altogether from their plan document. There are potential issues with this tactic, but some of the risks of uncovered claims fall disproportionately onto small self-funded employers who are not in a consortium or captive stop-loss arrangement. As a preventive measure - it may be best for those employers to remove coverage altogether from their plan document and ensure their TPA will properly apply that exclusion.

Hope for the Future

Along with these therapies, innovation in the growing field of personalized medicine called, pharmacogenomics, lends hope to how plan sponsors will address these challenges in the future. Pharmacogenomics is the ability test the genome of an individual to identify the effectiveness of therapies prior to their use - removing many of the risks of ineffective treatments or compromising side effects to ensure the right drugs are provided to the right patients. Pharmacogenomics is in its infancy, however I do believe the future of managing drug spend will be a hybrid solution of cost/benefit analysis and personalized medicine. Pharmacogenomics may ultimately eliminate the need for PA's, Formulary's and the like as we tailor medications specifically to patients.