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Cell and Gene Therapy in Oncology, Part II

Summary

Tune into another episode of the Avalere Health Essential Voice podcast series focused on disease education. In this segment, the second in a series focused on cell and gene therapies, experts from our Policy and Market Access practices discuss value-based payment arrangements in cell and gene therapies, and the role they play in facilitating access to these therapies.
“Ultimately, whatever agreement is put in place, it can't be overly burdensome on patients and their caregivers simply in the name of generating evidence or paying for performance.” Jay Jackson

Panelists

Moderator
Michael Kearney , Consultant II, Commercialization & Regulatory Strategy

Michael provides strategic guidance and analytic support for providers across the continuum of care, from physician groups to hospitals and health systems and post-acute care organizations.

Speaker
Jay Jackson , Principal, Commercialization & Regulatory Strategy

Jay Jackson conducts evidence-based assessments of the regulatory and policy environments for approval of and market access for medical products.

Speaker
Megan Olsen , Principal, Policy

Megan Olsen supports clients in anticipating and navigating the evolving federal and state health policy environment.

If you would like to watch the video version, please visit our video page.

Transcription:

Michael: Hello and welcome to another episode of the Avalere Health Essential Voice Disease Education series in our second of several cell and gene therapy-focused podcasts. In this series, we will be covering topics on a wide range of therapeutic focus areas.

My name is Michael Kearney, and I’m a consultant in the Market Access practice here at Avalere Health. I’m joined by Jay Jackson, a Principal in our Market Access practice, and Megan Olsen, a Principal in our Policy practice.

In our last discussion, we explored challenges associated with cell and gene therapies related to coverage, reimbursement, and patient access. Today, we will explore value-based arrangements (VBAs) and the role that they play in facilitating access to these products.

Paying for value is certainly a theme throughout healthcare, and increasingly so in the context of high-cost drugs. Jay, let’s start with you. How would you characterize interest in or opportunity for value-based payment arrangements for cell and gene therapies? What’s driving it?

Jay: Thanks, Michael. I think it’s important to remember that while these products are generally targeted at a relatively small patient population for a rare disease, the pipeline for them is quite large, with 800 to 1,000 being studied right now.

Because they’re typically only administered once, that single administration has a high associated cost that’s not spread out over time. This leads to 2 primary approaches from payers like health plans and employers.

One is that they may seek to spread the financial impact out over time in a manner similar to traditional drugs. The other is that they may only want to pay so long as the product works. So, they want to track outcomes and either stop payments or receive a rebate if a product stops working relative to some baseline, as products come onto the market and generate additional evidence that they may not have had an opportunity to produce within a clinical trial if they came to market quickly and had accelerated approval.

Michael: Awesome. Thanks, Jay. Megan, I’d like to go to you now. What are we seeing in the market today in terms of uptake or adoption of these therapies? Where do we see it going in the future?

Megan: Yeah, good question. I would characterize where we are in the market today looking quite different from where we’ll be heading in the future. Jay spoke to the large pipeline. Today, there are a limited number of cell and gene therapy products on the market. They treat relatively small patient populations. The overall impact of them in combination is manageable for some payers, but we see that dynamic shifting as more products launch into the market. Some of these might treat larger patient populations and the cumulative impact of these, from a budget perspective, continues to rise.

We’re seeing this play out in our conversations with payers. As an evidence point to this, based on survey research that Avalere has conducted, we see that about 15% of payers report having innovative contracting arrangements in place for cell and gene therapies today. However, an additional 50% of payers express interest in adopting these types of innovative approaches for paying for cell and gene therapies in the future. So, I think that is an evidence point that speaks to how payers are viewing today differently from the future. There’s a lot to keep in mind here as stakeholders prepare for the future.

Michael: That’s great. Thanks, Megan. Switching back to Jay. Megan mentioned that about 15% of payers are utilizing VBAs. How are these currently being constructed? What do they look like? And can you talk about any potential challenges that stakeholders are facing as they’re thinking about launching these?

Jay: Yeah, absolutely. Earlier I mentioned paying over time and stop payments or rebates. Most of the contract structures that we’ve seen out there or that are being talked about include some variation of those components. But as you both noted, despite that high level of interest, there are not a lot of these contracts out in the market right now. There are a couple of reasons for this.

The first is that it’s hard to track patients as they go from one insurer to another. No one really does this. When a patient has been through several insurers, who gets the rebate? Who decides to stop payment if the outcome isn’t being met?

It can also be hard to track outcomes in some of these conditions that are being treated by gene therapies. Many of these conditions are slowly neurodegenerative, so it can be hard to detect clinical signals. This also involves more testing than a patient might otherwise undergo, especially if this is a disease that was previously an unmet need and there wasn’t a reason to do this testing.

The good news is that some products have very clear outcomes, things like complete remission of cancer and lack of bleeding events and hemophilia for some of the assets that we see in pipeline. But there’s definitely a mix there that needs to be addressed on a one-to-one basis for each product. Ultimately, whatever agreement is put in place, it can’t be overly burdensome on patients and their caregivers simply in the name of generating evidence or paying for performance.

Michael: Great insight, Jay. Megan, when we’re thinking about regulatory considerations, what are some of the things that stakeholders are thinking about or should be thinking about as they move into the space?

Megan: There are several. Jay spoke to the operational challenges that we see playing out, but it’s important to keep in mind some of the regulatory constraints that we see in the market that can inhibit adoption of these types of arrangements, potentially limit the scale of them in the market, or shape the design of how they’re playing out and the stakeholders who are involved.

Three primary barriers come to mind. There are several that must be considered as part of entering into any of these arrangements, but the three that I’ll talk about here are Medicaid best price, the anti-kickback statute, and then average sale price (ASP) and other price reporting metrics.

Best price can present an issue and inhibit providing a rebate or discount that is greater than the existing 23.1% rebate in the Medicaid program. That is because, if a rebate or discount is offered that is greater than that, it can trigger a new best price that has been applicable across all state Medicaid programs. So, there’s risk in putting more of the drug’s cost under these arrangements.

We have seen some interesting policy initiatives here to provide new optionality to get around or to mitigate the impact of these arrangements on best price. We saw the value-based purchasing rule finalized earlier this year. This rule sets out a new multiple best price option for manufacturers to pursue that allows best prices associated with value-based purchasing arrangements to not impact overall best price in the Medicaid program. The route for that is you establish multiple best prices for value-based purchasing arrangements.

There could be a proposed delay to the implementation of this value-based purchasing rule and associated flexibilities that we are monitoring closely. It’s looking like this will be moved to mid-2022, but it’s certainly an area that, given the importance of best price for innovative contracting arrangements, is one to keep a close eye on and to think through all of the options, whether it’s multiple best prices, bundled sale, or some of the other options within.

Another barrier that I mentioned is the anti-kickback statute that protects against incentivized utilization or spending in government programs. This is one that needs to be kept in mind across all contracting arrangements, but particularly in the context of innovative and value-based contracting arrangements as well. We have seen less policy activities specific to the anti-kickback statute, but there has been legislation and broader stakeholder conversations about this issue. So, it’s certainly one to watch out for.

Finally, there are a host of price reporting metrics that need to be kept in mind. One that rises to the top as we think about cell and gene therapies that tend to be physician administered is the impact on ASP. This is something that has not been contemplated in any policies that have been advanced to date, but in any innovative or value-based contract where a discount or rebate is being provided, you need to think about how that impacts ASP, and subsequently, how that impacts provider reimbursement downstream.

There is certainly a lot to think about in the context of these innovative arrangements for these high-cost, single administration cell and gene therapies. We need to keep an eye out for additional policy action, whether legislative or regulatory, under the new administration. This is a dynamic space with a lot of things emerging.

Michael: That’s great. Thank you, Megan. And thank you, Jay, very much. This is obviously a very interesting and timely discussion here on value-based arrangements. Next time, we’ll do a deep dive into approaches to patient support services in this space. Thank you all for tuning in to Avalere Health essential voice. Please stay tuned for more episodes in our disease education series. If you would like to learn more, please visit us at Avalere.com/podcasts. Thank you.

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