Are Value-Based Contracts the Answer to Ultra-High-Priced Gene Therapies? | AMCP 2024

Last month, the FDA approved a gene therapy that will have the highest ever price for a new treatment: $4.25 million. Lenmeldy (atidarsagene autotemcel) is a one-time treatment and the first approved gene therapy to treat children with juvenile metachromatic leukodystrophy, a life-threatening inherited disease of the body’s metabolic system.

Over the past two years, gene therapies have been approved by the FDA with list prices that are high and higher: Roctavian (valoctocogene roxaparvovec) for hemophilia A at $2.9 million; Lyfgenia (lovotibeglogene autotemcel) for sickle cell disease at $3.1 million; Elevidys (delandistrogene moxeparvovec) for Duchenne muscular dystrophy at $3.2 million; Hemgenix (etranacogene dezaparvovec) for hemophilia B at $3.5 million.

Omar Ali

“Do we know where the ceiling is for gene therapies?” asks Omar Ali, head of payers at Verpora, a consulting company that assists with value-based contracting. “Will manufacturers keep putting higher prices each time another one comes out? Who wants to say no to access?

“This bubble is going to burst,” he said at a keynote presentation today at the annual meeting of the Academy of Managed Care Pharmacy in New Orleans.

There is no precedent for managing such high-cost therapies. Payers in the United States and around the world are working to find some answers on how to cope with what Ali says is a tsunami of cell and gene therapies while healthcare systems figure out ways to manage and deliver the ultra-expensive treatments. One study indicates there are 147 cell and gene therapies in phase 3 trials alone.

But there is an eye-of-the-beholder problem among stakeholders on how to value innovations such as cell and gene therapy. For payers there is a lack of evidence about the long-term outcomes of gene therapies. Manufacturers come to the table talking about cure and disease reversal and want a premium for these innovations.

“What do we even mean by value?” Ali asked. “Both are looking at the same data but they have a different opinion and conclusion from the same data set. That's the gap.”

Although payers throughout the world are wrestling with how to pay for healthcare innovation, those in the United States are in different circumstance, he said. “In Europe and the rest of world, healthcare is a cost. If a disease is cured, taxpayer and the government gets money back. In the United States, healthcare is revenue. This is a model and infrastructure issue. It won’t be fixed overnight.”

One of the ways that payers in the United States and worldwide are addressing paying for gene therapies is through new ways of contracting that address the value, as determined by the payer, according to Ali. He highlighted a few of agreements in his presentation.

For example, Pfizer offers a program in the United States for Xalkori (crizotinib), which is approved to treat non-small cell lung cancer (NSCLC). It has a price of $20,000 for a 30 day supply. The Pledge Warranty Program provides for a rebate when a patient discontinues Xalkori before the fourth refill. It is available to both commercial insurers and Medicare Part D plans.

A unique aspect of this program is that patients can apply for a rebate for their out-of-pocket costs directly on the Pfizer portal.

Ali said the strategy used to address the Medicare best price requirement was to have a third party, in this case, AIG New Hampshire Insurance Company, manage the program. “This could not have been done without AIG, which provides distance from the manufacturer,” he said.

Another example of an innovative contract is BioMarin’s program for Roctavian in the United and Germany. The company is offering to enter into value-based agreements that will cover the companion diagnostic testing and pays refund based on the offset costs of avoiding Factor VIII costs.

A third example are Bluebird bio's outcome-based contracts for Lyfgenia with two U.S. payers. The agreements track treatment for three years and will offer rebates if patient is hospitalized with a vasoocclusive crisis, which occurs when sickled red blood cells block blood flow.

Ali said that the uncertainty about the long-term benefit of gene therapies could be what causes the bubble to burst. He noted that current data show that one-third of the children with spinal muscular atrophy who were treated with Zolgensma (onasemnogene abeparvovec) have been treated with other drugs to help control their disease.

“If some of the earlier gene therapies work for some time, and then after 18 months or two years, patients suddenly need to go back to the usual therapy, that’s a problem," said Ali. "Payers thought this was a cure. This is a big bubble burst. When payers see one or more gene therapies do this, they may start saying no."