Can a Netflix Model Work for Gene Therapy?

One time-gene therapies are changing medicine, offering life-saving cures for deadly and debilitating diseases. This year alone, at least five new gene therapies could be approved. The IQVIA Institute for Human Data Science expects that 55 to 65 cell-, gene- and RNA-based therapies will launch globally by 2027, and U.S. spending on such therapies could rise to $12 billion by then.

Yutong Sun

“Gene therapies are the future of medicine,” Yutong Sun, co-founder and CEO of Quantile Health, said in an interview. “But the big question is, how do we afford them."

So far this year, the FDA has approved a second indication for Casgevy (exagamglogene autotemcel) to treat transfusion-dependent beta thalassemia, a blood disorder. Regulators are reviewing several other gene therapies including Kresladi (marnetegragene autotemcel) to treat the rare, autosomal recessive pediatric disease leukocyte adhesion deficiency. A decision is expected by June 30, 2024.

But these new therapies, come with a high cost. For example, Casgevy has a cost of $2.2 million. It was approved in December 2023 to sickle cell disease. Also approved in December for sickle cell was Lyfgenia (lovotibeglogene autotemcel), which has cost of $3.1 million.

Related: Questions Remain about CMS’s Plan for Gene Therapy Access in Medicaid

Several models have been suggested and implemented, including one offered by the Centers for Medicare and Medicaid Services to help state Medicaid programs’ with access to the sickle cell gene therapies. Magellan Rx Management’s program called MRx Value Plus, also provides state Medicaid fee-for-services programs a contracting option for gene therapies. And last year, a group of Blue Cross Blue Shield affiliated health plans formed a contracting company, Synergie Medication Collective, for gene therapies.

A model for self-insured plans

Now, a new solution is available to help small health plans and self-insured employers fund gene therapy access — with a subscription model. Quantile Health launched recently with $6 million in funding led by Munich Re Ventures with support from First Round Capital and Correlation Ventures.

“We think there is a clear financial engineering solution here — by partnering with manufacturing companies to offer these therapies through a model pioneered by streaming companies,” Sun said.

She said the subscription-based model allows self-insured employers and small plans to provide access to patients in a more affordable way by spreading the risk across a larger population and back onto the manufacturers. Companies and plans would pay a set per member per month fee.

Sun said Quantile Health acts similar to a trading desk, connecting payers with manufacturers. “A self-insured buyer can’t possibly afford gene therapy on its own by holding all the risk,” she said. “We’re creating something like a single payer system for gene therapy and shifting the risk, and we are removing the need for reinsurance and stop-loss.”

Reinsurance and stop loss can be expensive. In one recent study, researchers — led by Rena M. Conti, an economist and associate professor of Markets, Public Policy, and Law at Boston University Questrom School of Business — assessed payment options for gene therapies. In this analysis, one reinsurance program from Embarc Benefit Protection, a solution offered by Cigna Healthcare, that covered Zolgensma and Luxturna in 2020 cost about 99 cents per member per month. But researchers estimated a more appropriate cost would be 25 cents per member per month.

Zolgensma (onasemnogene abeparvovec) is a one-time gene therapy (with a cost of $1.2 million) that treats children with spinal muscular atrophy, a rare disease that causes muscle weakness. For full year 2023, Novartis reported net sales of Zolgensma of $1.2 billion, which is down 11% from 2022. Luxturna (voretigene neparvovec-rzyl) is a one-time gene therapy (with a cost of $850,000) used to treat patients with a rare inherited retinal disease that causes blindness.

Shifting risk

Quantile Health is not negotiating for reduced prices from drug manufacturers. Sun said, but creating partnerships with them and taking advantage of outcomes- and value-based programs that these companies offer for gene therapies, Sun said. This, she said, shifts the risk back to the manufacturers, which have different incentives from reinsurance companies.

Several manufacturers offer such programs. For example, BioMarin Pharmaceutical offers an outcomes-based warranty for its gene therapy for patients with severe hemophilia A. Roctavian (valoctocogene roxaparvovec-rvox) was approved by the FDA in June 2023. Biomarin has agreed to provide payers up to 100% back on the wholesale acquisition cost — which is $2.9 million for the one-time treatment — in the event that a person does not respond to Roctavian. If an individual treated with Roctavian loses response at any time in the first four years after dosing, BioMarin will reimburse payers on a prorated basis. In 2023, three patients were treated with Roctavian (two in Germany and one in the United States). For the full year 2023, Roctavian generated net revenue of $3.5 million.

To determine clients’ per member per month fee, Quantile Health will analyze employers’ plan and patient population demographics, as well as any stop loss programs. “We are essentially the underwriting engine, using a data science platform that takes that information to determine risk and a fair price for that patient population,” Sun said. “We think we provide the cheapest option here because employers won’t have to buy insurance anymore. We can provide access directly from drug manufacturers.”