Cell and gene therapies are 'incredible' but pose a defining challenge for U.S. healthcare, says Aradigm CEO Will Shrank, M.D.

The therapies are incredible, says Will Shrank, M.D. They can “totally transform the lives of those who can benefit.”

But Shrank says the arrangements for paying for cell and gene therapy and shouldering the financial risk involved are at a breaking point and that “pretty much everyone in the ecosystem is struggling with this category.”

“My sense is this is absolutely a defining moment for our healthcare system,” Shrank shares in an interview with Managed Healthcare Executive (MHE). “If we can’t figure out how to get cures to patients, then it’s going to be really hard for us to continue to invest in the research and the development to be able to continue to create these incredible therapies.”

Shrank, a longtime member of the MHE editorial advisory board, was an assistant professor at Harvard Medical School early in his career. He went on to hold leadership positions both at CMS and in the private sector, including at CVS Health, the UPCM Health Plan and Humana.

Now Shrank is CEO and co-founder of Aradigm, a startup company that, in simplified terms, is positioning itself as a benefits platform for cell and gene therapies. But Shrank describes Aradigm, organized as a public benefit corporation, as a risk-bearing entity that will network with payers, patients, providers (health systems) and manufacturers to manage the payment and financial risk of cell and gene therapy, as well as care management and tracking of patients. Aradigm is backed by $25 million in investment from Frist Cressey Ventures, Andreessen Horowitz and Morgan Health, a division of JPMorganChase.

In this segment of his interview with MHE, Shrank described the cost and risk problems of cell and gene therapy from different vantage points.

“From the purchaser’s perspective, whether it’s an insurer or a self-insured employer, you’ve got to dish out a lot of money up front. You don’t know how long that employee or member is going to stay with you. You don’t know a lot about the durability, the real-world effectiveness, of these therapies. With all of the long-term value that’s created out of these therapies, you don’t know how much of that’s going to accrue to you, and you don’t really know what the rest of the marketplace is doing at any given time in terms of the kinds of coverage that they’re providing. It makes it really, really hard to put your chin out and do what’s right for your employees or your members without some sort of sense of what the rest of the market is doing,” Shranks says.

“Similarly,” Shrank continues, “if you’re a provider right now in this space, it’s really hard to anticipate how much volume you’re going to have for these therapies. Payers are paying providers generally on single-case agreements. They don’t know what they’re going to get paid, and they generally get paid well after the therapy is administered. And these are drugs that you buy-and-bill, so they’re carrying these huge sort of deficits on their P&Ls [profit and loss statements]. Providers are worried about making the necessary investments and really advocating for patients to get these therapies if they don’t know how sustainable the business model is for them.”

Shrank noted that manufacturers have seen “some pretty awesome therapies go relatively unused or had much slower than anticipated launches.”