SummaryTune into another episode in the Avalere Health Essential Voice podcast series focused on disease education. In this segment, the first of several discussing cell and gene therapies, experts from our Policy and Market Access practices highlight many of the challenges surrounding these therapies from both the patient and payer perspective.
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Kolton: Hello, and welcome to another episode of the Avalere Health Essential Voice Disease Education series, and our first of several cell and gene therapy-focused podcasts. In this series, we’ll be covering several topics on a wide range of therapeutic focus areas.
My name is Kolton Gustafson, and I’m a Consultant in our Policy practice at Avalere Health. I’m joined today by Megan Olsen, a Principal in our Policy practice, and Jay Jackson, a Principal in our Market Access practice. Jay and Megan also co-lead Avalere’s work on cell and gene therapies, which is our topic of discussion today. We’ll explore the challenges associated with these products in the period leading up to and following launch. Let’s go ahead and jump in.
Jay, can you tell us what the market looks like right now, including the pipeline?
Jay: Sure, Kolton. There are only about 7 cell and gene therapies on the market right now. Five of those are cell therapies (CAR Ts), and 2 are gene therapies, but there are many more to come.
There are about 50 cell and gene therapies in the late stages of clinical development right now. Approximately a quarter of those are in the oncology space being led by those CAR Ts. Other significant therapeutic areas include hematology, metabolic disorders, and neurology. The therapies are unique in that many of them only require a single administration or very few administrations.
The sites of care will really be variable by product, medication, safety profile, and things of that nature. Nearly all of them will be physician administered, and whether that takes place in the hospital inpatient, hospital outpatient, or another setting will really be a function of individual product safety. Cell therapies such as CAR Ts are largely administered in the inpatient setting, though we do anticipate a future move toward the outpatient setting, especially for gene therapies and allogenic therapies that are currently in the pipeline.
Kolton: It’s a very dynamic space. Let’s jump into some of the challenges that are unique to cell and gene therapies that need to be considered before launch. One that I think is a hot topic and I’d like to explore is patient access. Megan, what are some key considerations to ensure that patients can receive cell or gene therapy treatments?
Megan: That’s a great question, Kolton. There are a lot of interesting patient access considerations that are unique to the cell and gene therapy space that must be thought through ahead of launch.
First, these therapies are typically treating a rare disease. It’s going to be a small patient population and will likely be administered in a narrow subset of treatment centers. There are also various out-of-pocket cost considerations from a patient perspective that differ relative to other current therapies.
Authorized treatment centers are a really important area to think about. Often, cell and gene therapies are only administered at a subset of specialized, trained, and certified treatment centers, like those that can adhere to risk-evaluation and mitigation strategy (REMS) regimens, for instance. That has considerations when thinking about how patients are going to access those treatment centers, as they may need to travel across states or regions. How much is it going to cost for the patient to travel across the country with a caregiver? Lodging and meals are also associated with that travel. Then, is that treatment center within the patient’s insurance network?
There are a lot of pieces of the patient journey that need to be considered that are different from the treatment journey for the standard of care today. We’ve seen some movement within the industry to address the logistical, travel, and out-of-pocket burdens associated with those treatment centers. For instance, the Office of Inspector General (OIG) has permitted manufacturer support associated with travel and lodging, so we’re likely to see more adjustments in the space as more treatments are launched that require patient travel.
Another important area is out-of-pocket costs for patients. We haven’t mentioned this yet, but typically, these therapies are very expensive. They cost $1 million or more in some instances, and as a result, patients could be exposed to different ranges of out-of-pocket costs. It’s a one-time cost given these are typically single-administration treatments.
It’s important to look at cost through the insurance market-specific lens. It will be different if you’re looking at a Medicaid patient population versus a Medicare population versus a commercial patient population with varying levels of out-of-pocket cost exposure, whether we’re talking about copayments or coinsurance. Importantly, the out-of-pocket max plays a big role here. For example, in the Medicaid market, patients are typically exposed to nominal out-of-pocket costs with a low cap on annual out-of-pocket spending. So, you’re less likely to have a patient affordability challenge in that market relative to the commercial market where you could see an out-of-pocket max upwards of $8,000.
Similar to what I mentioned about how the industry is addressing costs associated with travel to treatment centers, we’ve also seen some movement in manufacturers supporting patients in out-of-pocket costs. Certainly, there are constraints per market that need to be considered there as well, but it’s definitely an area of focus.
Jay: That’s a great point, Megan. Within that, also ensuring that the patient journey is understood by the product sponsors as well as providers. Understanding where patients get their care, what the potential network of centers of excellence or their equivalent might be for these cell or gene therapies. Understanding what the referral and diagnostic pathway looks like to get access to these therapies, noting that it’s going to be different from a more traditional type of pharmaceutical product. Making sure the providers know that this is an option and that they’re educated in these therapeutic areas that these cell and gene therapy products are going to be entering.
These considerations are not necessarily unique to cell and gene therapies, and I think that’s true for a lot of these aspects. There’s an outsize challenge and issues are exacerbated in this space. I think one example of that is the single administration profile that we see for a lot of these products with that durability of effect. Physicians or other stakeholders are going to need to find ways to track patients and their outcomes over time without the benefit of those touchpoints of repeat administration. So, that’s an example of another type of issue as well.
Kolton: Thanks, Jay and Megan. It’s helpful to think about the impact on patients, one of the key stakeholders here. But let’s turn to another one of our stakeholders: payers. Can you tell us about some of the challenges that payers are facing with cell and gene therapies?
Jay: Absolutely. I think this is an interesting area. One thing we have to consider is that a lot of these products are filling an unmet need, so they’re getting fast-tracked through the FDA. Often the patient population is small, so they’re getting through the regulatory agency with trial sizes in the dozens as opposed to the hundreds.
One challenge is that payers may be hesitant to cover these products based on that relatively limited evidence. If they do cover, they may cover it in a more restricted way than the label may cover its clinical trial data, which may be, again, rather small or limited. These dynamics are also going to vary payer by payer. We’ll see Medicare potentially cover more products and commercial payers may cover fewer. Medicaid payers may have budget issues that may lead them to cover fewer products or be more restricted, things of that nature.
On the payment side of things, we should note that reimbursement methodologies vary by site of care. Inpatient versus outpatient versus physician office are all paid differently by payer. This is coming into play with the CAR T products that are reimbursed on a bundled basis using Medicare Severity Diagnosis-Related Groups (MS-DRGs), where we might not see that in the outpatient setting. We tend to see more sufficient reimbursement with commercial payers than we do see in Medicaid and Medicare. However, that’s not always true and varies by setting.
Megan: And because of some of these challenges that Jay flagged, we’re seeing aligned interest in new ways to pay for and finance these types of therapies. Jay mentioned having more limited data available upon launch. We know these products seek to promise a durable benefit over a number of years. We’re seeing interest among payers and manufacturers in setting up payment arrangements that can ensure that patients are getting the value from these therapies that they’re intended to deliver.
Outcomes-based arrangements come to mind, where a rebate can be provided if the patient doesn’t meet certain clinical outcomes over time. There is also interest in various “pay over time” or milestone-based payment arrangements where instead of financing a $1 million therapy upfront in year one, it can be financed over a 5-year period, paying 20% each year, potentially also tied to those patient outcomes.
So, I would say the market uptake of these arrangements is limited today, and that’s a function of several things. Most notably, there are only a few products on the market today, and they’re treating relatively small patient populations. In addition, the regulatory constraints, including Medicaid best price and the anti-kickback statute, can create some barriers to uptake or limit the scale of those arrangements. As the pipeline moves further into market and more products are launched, as the cumulative patient population and budget impact is felt by payers to a greater extent, and likely in combination with some new regulatory flexibilities around best price, I think we could see potentially broader and wider adoption of these arrangements. So, it’s definitely an exciting area to focus on in the near term.
Kolton: Yes, lots to look out for there. Thank you, Megan and Jay, for sharing your insights. We discussed a lot of challenges in this space today. In our next installment, we will dive into some of the solutions as well. I want to thank you all for tuning in to Avalere Health Essential Voice. Please stay tuned for more episodes in our Disease Education series. If you’d like to learn more, please visit us at Avalere.com/podcasts. Thank you.
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