3 Gene Therapy Reimbursement Models on Horizon

October 15, 2019
Tracey Walker
Tracey Walker

Effective reimbursement models are the key to the future success of gene therapies, a new PwC report shows.

Navigating the emerging challenges of gene therapies can be a daunting task across the entire healthcare space, and not just for biopharmaceutical companies.

For provider executives, the challenge is how to get adequate reimbursement for administering these therapies, and even to determine whether your facility should be involved in the development of gene therapies, according to one industry expert.

“For payer executives, the challenge is determining how to pay for gene therapies and whether outcomes-based models can help alleviate costs or help to ensure greater predictability for premiums,” says Ben Isgur, PwC Health Research Institute Leader. “And for biopharmaceutical executives, the challenge is to make, distribute and market gene therapies.”

PwC Health Research Institute’s new report, Beyond the hype: Gene therapies require advanced capabilities to succeed after approval, investigates the three main challenges and their impact on the industry. One of those challenges is planning to design novel reimbursement models for patients receiving this treatment.

“Reimbursement models are crucial to the commercial success of gene therapy,” Isgur says. “The industry needs to satisfy payers and providers with novel payment models to make sure these therapies are viewed as affordable for patients. Gene therapies often come along with a six- or seven-figure price tag, so companies need to think through payment models that spread out costs over time and guarantee outcomes for patients. Without functional reimbursement models, it will take longer for patients to realize the full potential of gene therapies.” 

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Isgur sees three main gene therapy reimbursement models gaining prominence in this space:

  • Outcome-based models that offer rebates if a patient fails to achieve a promised outcome.

  • Mortgage-based models that spread the cost of a drug out over time to lessen the shock of paying for an effective therapy.

  • Financial support models that help healthcare providers to avoid paying for a gene therapy before administering it to a patient.

“We could also see additional models in this space depending on its evolution, including capitation models to limit the overall cost associated with a therapy and indication-based pricing to allow for a therapy to be paid for based on the disease being treated,” Isgur says. “While interviewing payer executives for this report, what we heard loud and clear was the need for flexibility to help payers afford these treatments, so biopharmaceutical companies may not just offer one model-they may offer several of them.”

There are three things healthcare executives need to know about gene therapy reimbursement, according to Isgur. They are:

  • Patient affordability. “The expense of a patient meeting their insurance deductible, paired with the costs of out-of-network providers, time off work for treatment, travel and lodging for treatment, and other lifestyle adjustments could make treatment unaffordable even for some insured patients,” Isgur says. “Especially when 28% of consumers surveyed by HRI who have employer-sponsored insurance said they had $500 or less in emergency savings.”

  • Supply chain complexity. Gene therapies rely on precise, temperature-controlled supply chains to get safe and effective products to patients, according to Isgur. “But unlike traditional drugs, the shelf-life of products can be extremely short, requiring advanced capabilities to get a treatment to a specific patient since even a short delay could ruin a product,” he says. “It also requires a great deal of patient coordination, since some patients require medical treatment before being administered a gene therapy, or the gene therapy may involve the patients’ own cells. Executives should think about how to keep track of products and keep patients and providers informed throughout the treatment process.”

  • Heightened competition. Academic medical centers are experiencing a decline in revenue and are actively looking for new ways to bring in money, according to Isgur. “In some cases, they actually have the capabilities to research, develop, test, manufacture, and administer their own gene therapies to patients,” he says. “If hospitals can develop and offer gene therapy at a lower price point through reimbursement models, insurers could see them as a more attractive option to lower cost.”