CMS Announces Grants of Nearly $10 million to State Medicaid Programs for Gene Therapy Funding Model

Acknowledging the enormous complexity of not just developing and administering gene therapy treatments but also financing them, CMS is offering states up to $9.55 million to states that participate in an outcomes-based funding model.

Under the Cell and Gene Therapy (CGT) Access Model, the federal government will negotiate outcomes-based agreements with gene therapy manufacturers to provide states with additional Medicaid rebates if the cell or gene therapies do not perform as expected. The approach will initially target sickle cell disease.

CMS posted the Notice of Funding Opportunity on Aug. 15.

The model will test “whether a CMS-led approach to developing and administering outcomes-based agreements (OBAs) for cell and gene therapies (CGTs) improves Medicaid beneficiary access to innovative treatment, improves health outcomes for Medicaid beneficiaries, and reduces health care expenditures,” according to the executive summary of the model.

Under the plan, CMS will negotiate standard key terms of an OBA directly with manufacturers of FDA-approved gene therapies. The agreements may include outcomes-based rebates, volume-based rebates, and guaranteed rebate components. Participating states will adopt those terms through a supplemental rebate agreement with the manufacturer.

CMS’s Innovation Center will provide support through tasks such as implementing, monitoring, reconciling, and evaluating the financial and clinical outcomes specified in the key terms. Two types of funding will be available. The total pot of money is $95.5 million. The program will run through 2035.

Gene therapies have the potential to correct with a single treatment the underlying causes of genetic diseases, restore functionality or halt the progression of devastating illnesses like sickle cell. But their relative novelty, the rare indications on which they focus, and limited use and outcomes data available so far mean that their long-term ability to cure disease is uncertain.

The costs also are astronomical. CMS said that some payers, including some Medicaid agencies, are using cost containment and other permitted measures that effectively limit access to the therapies. Some state Medicaid programs have said that their ability to pursue their own outcomes-based agreements were hindered by a lack of leverage and the complexity of negotiating endpoints and thresholds with gene therapy manufacturers, as well as the difficulty of data collection, the agency said.

The new model will first focus on therapies for sickle cell disease. CMS said it could be expanded to include gene therapy treatments for other genetic disorders.

Sickle cell, an inherited and sometimes excruciatingly painful blood disorder, affects more than 100,000 people in the United States, most of whom are Black individuals. The total cost to the health care system alone is estimated at $2.98 billion annually, according to CMS, and 50% to 60% of people with sickle cell disease are enrolled in Medicaid.

The FDA approved two gene therapy treatments for sickle cell disease in December 2023. Casgevy (exagamglogene autotemcel), from Vertex Pharmaceuticals, has a wholesale acquisition cost (WAC) price of $2.2 million. Bluebird bio’s Lyfgenia (lovotibeglogene autotemcel or lovo-cel) has a WAC price of $3.1 million.