Biotech company bluebird bio grabbed headlines this week at the J.P. Morgan Healthcare Conference in San Francisco when CEO Nick Leschly said the company would seek to ensure reimbursement for its gene therapy through an installment plan.
Leschly’s comments, to The Wall Street Journal, raise an important, but as yet unresolved question: As more gene cell and therapies hit the market with price tags in the six or even seven digits, how does the healthcare system pay for them? Multiple industry executives at JPM commented on stage and in interviews about the kinds of create payment structures that will be required, including pay-for-performance and payment-over-time models.
“We may have to work on different reimbursement models to support access, which may require as much innovation as the science,” said Autolus Therapeutics COO Christopher Vann, in a panel discussion Monday on cell and gene therapy at Biotech Showcase, which takes place alongside JPM.
Leschly said the plan would involve an upfront cost followed by five years of installments for the therapy, LentiGlobin, which is expected to receive European approval this year for transfusion-dependent beta-thalassemia, followed by US approval in 2020. It is also in Phase I/II development for sickle cell disease.
Novartis entered an outcomes-based pricing arrangement with the Centers for Medicare and Medicaid Services following the Food and Drug Administration approval of its CAR-T cell therapy, Kymriah (tisagenlecleucel), in pediatric acute lymphoblastic leukemia. However, CMS quietly pulled out of the deal last year. Kymriah is priced at $475,000 for ALL in children and young adults, while it and the other FDA-approved CAR-T therapy, Gilead Sciences’ Yescarta (axicabtagene ciloleucel), have a $373,000 list price for adult diffuse large B-cell lymphoma. The first approved gene therapy, Spark Therapeutics’ Luxturna (voretigene neparvovec-rzyl), for a rare genetic form of blindness, costs $425,000 per eye. Meanwhile, Novartis has proposed a $4-5 million list price for a gene therapy for spinal muscular atrophy.
But in a breakfast panel discussion Tuesday sponsored by the Boston Consulting Group, Gilead Sciences’ executive vice president for corporate development and strategy, Andrew Dickinson, conceded that the kinds of payment models being proposed for cell and gene therapies, including bluebird’s, are easier to implement in Europe than in the US. Gilead markets the other Food and Drug Administration-approved CAR-T therapy, Yescarta (axicabtagene ciloleucel).
That’s because of the centralization of European payer landscape there – universal healthcare systems, compared with the US hodgepodge of private and government payers. In an interview, Christian Homsy, CEO of Mont-Saint-Guibert, Belgium-based cell therapy maker Celyad, echoed Dickinson’s view. Initially, he said Celyad favored an outcomes-based approach similar to Novartis’s, but that appears better suited to European systems than the US healthcare system, even at the government level. “It looks like that’s too complicated for CMS,” he said.
But in addition to the problems posed by different healthcare system structures, differences between diseases treated are another issue. Under Novartis’s agreement with CMS, the agency would reimburse the cost of the therapy as long as children and young adults with ALL achieved a complete response within 30 days, or else the drugmaker would be on the hook. That made sense in part because Kymriah was able to achieve CR rates in the 80-90 percent range. But both Kymriah and Gilead produce much lower response rates in adults with diffuse large B-cell lymphoma. With about two-fifths of patients in complete remission at six months, a payment agreement like the one for Kymriah in ALL would mean the company would have to pay for the cost of manufacturing, and without any reimbursement from CMS, 60 percent of the time. “I’m not sure that’s an approach that’s really feasible,” Homsy said.
Another issue arising from the American healthcare system’s relative lack of centralization is that patients frequently change insurers. Implementing a model like bluebird’s means following patients over five years. “Very few people do that well, and certainly in the US the linkage between payer and provider gets tricky as patients move to different insurers,” said Bellicum Pharmaceuticals CEO Rick Fair in an interview at JPM. Indeed, the US healthcare system in particular is “poorly prepared” to deal with how to pay for cell and gene therapies, he said. In his own experience working in the pharmaceutical industry, healthcare industry decision makers did not want to discuss performance- or time-based payment models, but only wanted to lower the price.
Ultimately, even if 2019 does not turn out to be the year that cell and gene therapy manufacturers and payers overcome the payment model question, the types of models that have been proposed are likely to remain favored. “The concept of paying for performance and paying over time will probably stick because feels more palatable,” SQZ Biotech CEO Armon Sharei said in a JPM interview.
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