Our conversation with Will Shrank, M.D.

Will Shrank, M.D., is CEO and co-founder of Aradigm, a cell and gene therapy management and benefits company that announced its existence in 2025. The company has $25 million in venture capital funding. Shrank, a longtime member of the Managed Healthcare Executive (MHE) editorial advisory board, is a nationally recognized leader in U.S. healthcare who has held leadership positions at CVS Health, UPMC Health Plan, Humana and CMS. He started his career as an assistant professor at Harvard Medical School.

Peter Wehrwein, the managing editor of MHE,conducted this interview. The transcript has been edited for clarity and length.

Congratulations on the new gig! That’s what I wanted to talk to you about today, of course. But I was reading the transcript of an interview you did recently with NPR, in which you said something along the lines that the fragmented way that care is delivered and paid for in the U.S. is perfectly misaligned with equitable access to these expensive gene and cell therapies. What did you mean by “perfectly misaligned”? And what is it about these cell and gene therapies that maybe accentuates that misalignment?

It’s interesting. We’ve talked about this together in the past, about sort of the challenges associated with really a fragmented way that we pay for and deliver care and how it creates and introduces lots of waste in the healthcare system.

When it comes to these very high-cost, transformative therapies, it is a bit of a breaking point. And it’s not as though there’s just one single locus of the break. It comes from a number of different sources, and pretty much everybody in the ecosystem is struggling with this category.

These therapies are incredible. They can totally transform the lives of those who can benefit. They can cure things that nobody thought were curable when I was in medical school, diseases that have really defined the lives of the patients that experience them. They can cost 3 or 4 million bucks a pop. They’re charged all up front.

It’s really hard for everybody in the ecosystem. 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.

Similarly, 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.

If you’re a manufacturer, you’ve seen some pretty awesome therapies go relatively unused or had much slower than anticipated launches. The investment to bring these therapies to market is considerable. We’re seeing, probably not surprisingly, that this remarkable elevation in list prices at the point of launch creates a negative reinforcement for the purchaser.

This is one of these unique opportunities where you’ve got this incredible technology, but nobody really knows how to manage it, or nobody’s really successfully navigating the complexity. It just feels like this is a time ripe for disruption. My sense is this is absolutely a defining moment for our healthcare system. 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. It does feel like this is the moment to make sure that the innovation in terms of how we pay for and deliver care matches up with the innovation around how we design and develop these new therapies.

Don’t expensive procedures present the same kind of issues? They are also a big expense. Also, the benefit from them is experienced over many years. It is just the expense, which can be orders of magnitude larger, millions of dollars instead of 10s or 100s of thousands of dollars

I think that’s right. I think you’re totally right. But from the perspective of an employer, they have business to run. The uncertainty, unpredictability, the spikiness — with any given year if you have a handful of your employees who need these therapies, it can have a material impact on your business. I think it’s that magnitude of the difference of the cost of therapy, and the fact that it’s all up front is probably the breaking point for many. If you’re an employer and you’re not Microsoft, you’re not Apple, you don’t have billions of dollars to throw around. These kinds of therapies pose an existential threat to the success of your business.

I spoke to someone recently about gene therapy and the cost, and he made the same point — that is gene therapy could really swamp the boat of the midsize employer, but the jumbo employers could take it on. A definitional question. Cell and gene therapy often get mushed together. Would it be useful to tease them apart? Gene therapy that’s priced in the six-figure realm that presents a possibility of cure in some cases seems to belong in a different category than, say, CAR-T [chimeric antigen receptor T cell] and some of the cell therapies?

I agree entirely with that observation. I don’t think that cell and gene should be thought of as sort of a monolith. I do think there are really important distinctions between CAR-T, as an example, and many of the gene therapies, as you noted, but also across the different gene therapies.

CAR-T is a really different modality, in part, because we know a lot about that. That’s sort of the one that’s landed, and it works. We now are seeing really considerable growth in the use of CAR-T as an earlier line of therapy for hematologic cancers, but also just really extraordinary evidence around the ability to use these therapies for new indications — solid tumors, autoimmune conditions — which will massively expand their use. These are therapies that
10 years ago, seven years ago, seemed very experimental and had all kinds of FDA requirements around monitoring. Those have been lifted. And these therapies are going to be delivered in community settings and will be much more accessible. The prices are now much more predictable. So they are different.

But it’s also important to recognize that the sickle cell [gene therapy] treatment looks really different from spinal muscular atrophy [gene therapy], which looks really different from Duchenne muscular dystrophy, which looks really different from hemophilia. In some ways you almost have to look at each of these treatments, indications, modalities as its own entity that we try to manage. We have to think about how we partner with providers in different ways for each of them. We think about how we partner with manufacturers in different ways for each of them. It is the uniqueness of this category that requires a truly bespoke, indication-by-indication approach to really helping make sure that patients have affordable, sustainable access to these therapies.

So let’s talk about Aradigm. I breezed through your website. You’re nice and small. I counted six pictures of employees. You sort of referenced that you’ve created this company to solve a problem, this misalignment.

You are right. We started this company to solve what we think is a really important problem for the healthcare system, and we believe that there’s a really important mission and purpose here.

We organized as a public benefit corporation for that reason, with explicit goals around improving access and doing so equitably. We started this company about a year and a half ago.

This is a problem I’ve been thinking about for a long time, all the way back to my research. It’s sort of an extension of work I had done in academia, in the federal government, and in different stops in the private sector. The problem has really peaked when it comes to this category.

Our customers are self-insured employers or payers — folks that are bearing the risk for the cost of these therapies. Our approach is to create a platform that allows us to pull risk across many customers and leverage that risk to both cap and to protect against financial calamity and to do so in a way that’s very transparent. It’s a cost-plus model, and we pass back savings. We engage everybody across the ecosystem to try to create deeper alignment of incentives to drive better care for patients.

I’ll describe to you what the product is. For self-insured employers, we will charge a per-member, per-month, risk-adjusted premium. We take full risk for managing the cost of the therapy and associated medical care for cell and gene therapy. We pool the risk across our customers, so we have a big risk pool that allows us to have much more stability and predictability. We cap the risk with a reinsurance syndicate as a backstop. We just take a very modest preset admin fee, and we pay out all the claims over the course of the year. At the end of the year, any dollars that we haven’t spent, we return in their entirety to the purchasers, pro rata, based on their participation in the pool. So it’s a cost-plus model, totally transparent. With the strength of that pool, there are a number of ways to really engage everyone across the ecosystem to try to create both higher quality, higher value, better care and better experience.

There are a couple key levers. One is by partnering more deeply with providers. We’ve created a national network of preferred providers to drive care to high-quality, high-performing, high-value providers. They’re enthusiastic about participating because we can drive more volume to them, so that’s more predictable but also addresses some of the complexities around the current payment system. We pay them a predictable case rate; we establish global case rates up front, and we pay them up front so they don’t have to carry the risk on their P&Ls. As a result, we’re able to partner more deeply with providers around caring for our members, their patients.

The second is we’re contracting directly with manufacturers for value-based contracts. So we’re holding manufacturers accountable for the outcomes of these therapies. If you’re paying $3 million for a cure, and that cure doesn’t work, some of those dollars should be returned back to the purchaser. We, as a third party, can track patients, even if they change employer or insurer, and see if those prespecified outcomes are met. If they’re not, we claw dollars back to the pool and then ultimately back to the purchaser.

We have put a world-class clinical team together to establish and to continually refine our clinical policies. As you know well, these are therapies that generally get approved with not that much evidence, often in an accelerated fashion, and we don’t know a lot about the durability or real-world effectiveness of these drugs. We really need to be vigilant about — as new evidence becomes available — driving care to those patients most likely to benefit.

And we’ve wrapped around a care management partner that allows us to really give patients a bear hug through this process because it can be complicated. It often requires travel and logistics and lodging, and for not just a patient but their family members. For most patients, this is the most important care they’ll get in their lives, and being able to really support them through that is important.

The whole idea here is not just to a single point solution within this complex ecosystem problem but to try to really bring all the key players together, pooling risk across employers — you create collective action across those employers — engaging providers in a more collaborative way, engaging manufacturers in a more collaborative way, making sure that we’re constantly assessing the evidence and updating our interpretation of that evidence to establish our clinical policies, and being really thoughtful about how we support patients through the process.

There is a way here to create a much more sustainable model, and our goal is not to stop the growth in this category. Just the opposite. Our goal is to figure out a way to bend this cost curve and create a more predictable path so that we can support this innovation over time.

Can you share any information about the number of employers or payers, health systems and manufacturers you are working with? And which ones?

We haven’t shared that information publicly. We’re going live with our first set of customers soon, and our second cohort begins in July. We expect we will have many millions of members on our platform this year. When you add both of those, we will have sufficient scale to really drive both the improvements in quality and the cost savings necessary to create a meaningful source of value for our customers and for patients.

This is a carve-out of a certain sort. Is this uncharted territory or are you bringing something special into charted territory?

It is not uncharted territory. A lot of folks are thinking about this problem. The alternatives in the market today [include] from stop-loss insurance, which gives you financial protection but doesn’t offer that sort of platform to manage cost and quality. You pay a premium for that financial protection because they don’t have mechanisms to actually manage the cost of quality.

There are the large PBM [pharmacy benefit manager] incumbents that have designed and developed products, as have some of the large carriers. We
anticipate that by the summer, we will be the largest cell and gene-focused platform in the U.S. and that we’ll have more folks on our platform than those incumbents.

Uptake has been slower than many would have expected for those incumbents, and I’m not here to speak to the reason why that might be. I think there have been challenges in sort of public perception around PBMs and the tactics and approaches that they use. I do not mean to denigrate or say anything bad the way in which they are approaching these problems. But I do think that this is a moment that calls for something that has a bit of a new car smell and is trying to create a more deeply aligned ecosystem around doing what’s right for patients.

You had to be capitalized to start Aradigm. So where’s the capital coming from? And a related question, why a public benefit corporation, other than to virtue signal?

We raised capital from three venture partners: Andreessen Horowitz, Frist Cressey and Morgan Health. We raised a total of $25 million.

We believe strongly that, in addition to being a virtue signal, it’s just really essential for us to have clarity with our board that this is a truly a mission-driven company that’s focused on solving a really important problem. We wanted to make sure that our investors were really aligned with those goals. That was an important way for them to demonstrate alignment around that set of goals, so that we can really all march in the same direction.

I have spoken with Michael Sherman* about payment for expensive drugs. It was awhile ago, but Sherman said uptake of these. value-based arrangement just wasn’t there. So a two-part question. First, as far as working with the manufacturers, are you pulling ideas off the shelf, or are you doing something new? Second, do you expect to be successful because of scale and the fact that you’re working with all three parts of the triangle — the payer, the provider, and the manufacturer?

First of all, I have the greatest respect for Michael Sherman, who is truly a leader in this space and really did push the industry to think hard about paying for outcomes when it comes to drugs.

Historically, it’s been hard, because it’s really hard — and I’ll say this with a lot of humility, because I participated in and tried to lead these negotiations at both UPMC and Humana — it’s hard to get much value out of those contracts,
in part because it’s hard to align on measurement and understanding the counterfactual can be really challenging.

This category, when you’re talking about something curative that has more of a binary outcome, is easier to get alignment around what the outcomes are. If somebody receives curative therapy for a condition and then gets admitted to the hospital for that condition, we know that therapy didn’t work. So that’s one thing that’s changed meaningfully with this category. A second thing that’s changed, just in terms of timing, folks that have really been sort of running at this problem, the cell and gene problem, have encountered a timing problem. Purchasers hadn’t seen a lot of claims or felt the pain, and it made it harder for them to act. In part because of the rapid growth of CAR-T but also because we’re seeing meaningful uptake of Zolgensma for spinal muscular atrophy, we are seeing projected growth of the sickle cell therapies, and there was a rapid uptake of Elevidys for Duchenne muscular dystrophy, despite the subsequent regulatory challenges. It’s much more of a salient problem right now, and it’s a category that’s hit an inflection point. The pipeline is pretty extraordinary. The word that is often used is that there is a tsunami of these therapies that could be used to treat many, many, many more people.

The timing has changed. Our ability to measure outcomes has changed, and I think there’s just a different kind of sense of urgency — that folks need to come up with a solution. I think that even the GLP-1 [glucagon-like peptide 1]
experience where purchasers are a bit caught on their heels is calling for a more proactive approach to managing this next likely tsunami. So I think there is more momentum at this moment for disruption.

You published a famous paper in 2019 in JAMA about waste in the healthcare system. You and your co-authors calculated that about a quarter of U.S. healthcare expenditures are wasteful. Is there any relationship between that paper and what you’re working on now?

I believe so. I believe that by asking sort of all the players in the ecosystem to give a little, at this moment, there’s an opportunity for us to get a lot and deliver the same, actually better quality care at lower cost. By definition, that means there’s waste that’s being removed from the system. I do think this is a pretty good manifestation of some of those themes we were trying to unearth or trying to describe in 2019.

By the way, Aradigm? Where did the name come from?

It is the new paradigm. The “p” is removed because we’re lowering the price.

*Michael Sherman, M.D., is former medical director of Point32Health, a lecturer at Harvard Medical School, and a healthcare consultant.