Paying for Gene Therapy: Payer Insights

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Publication Date:
May 2019
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Payers caution pharma to think hard about price if they want support for their gene therapies

The message from payers is stark: developers who present gene therapies with limited clinical data, eye wateringly high prices and insubstantial value propositions will not get a positive response. While payers want transformational and curative gene therapies, companies have to be realistic about what is affordable. Arguments about long-term cost savings may not resonate with payers working with time and cost limited budgets, so how–and what–can developers do to get payers on side?

In Paying for Gene Therapy: Payer Insights experienced payers from the US, Germany, France, UK and Spain speak out on current trends and future developments in gene therapy. Their insights provide practical and actionable knowledge for industry executives looking to ensure payer support and wide market access for their gene therapy products.;

Payers tackle key questions

  • What are the key factors that must be taken into consideration when assessing the cost benefit of a cell or gene therapy?
  • How does regulation and practice in leading markets vary and how does this influence payers' views?
  • Outcomes-based? Cost-based? Value-based? Is there a need for more innovative pricing and reimbursement contracts and what are the pros and cons?
  • What pricing strategy do payers consider most appropriate for the CAR-T cell therapies Kymriah (Novartis) and Yescarta (Gilead/Kite Pharma)?
  • Is there one or more sustainable pricing model that payers find acceptable?
  • How can pharma work with payers to ensure innovative gene therapies are made available to patients?

A case in point...Luxturna's $850,000 price tag

In November 2018, Novartis/Spark Therapeutics' transformative gene therapy Luxturna, for a rare form of blindness, was approved in the EU. With a list price of $850,000 or $425,000 per eye before discounts, this illustrates starkly the issue of how will payers cope with expensive, game-changing therapies in the future and why traditional models of pricing, contracting and reimbursement are not fit for purpose.

What our experts say…

"A few years ago one of the buzz words of the National Health Service was "pay by results" but we don't talk about this subject much anymore. Strimvelis was pay by result, but at the same time, the number was so high [cost of the drug] it became very difficult to justify coverage. Pay by result doesn't work because it's not really a number that you can go to, it's a concept proposed by the pharma company involved to justify costs. In NHS England if it was around £30,000 we would have covered it but the number was so high that we couldn't really justify it and the data was not so [strong] it made it very difficult to proceed. If we had one patient that pays £300,000, that's very difficult to justify but if we had 10 patients at £30,000, we could do this. If the pharma company said, well if we made X number, then the cost per unit would go down then, potentially, that would work going forward."
David Levy, UK Payer

"When we are thinking about budget impact, particularly early budget impact, we do not consider the savings we can make ten, twenty, thirty years later. We're really considering what we are paying at the present time. We've had some discussions on how to finance innovative medications, but we are not going to be able to rely on accurate models for long-term savings. We have to consider the yearly budget and affordability, because the amount of money we can spend every year gross is decided by law. We will still have to budget for the impact of these medicines."
Marc Bardou, French Payer

"I think everyone would welcome, including pharma and payers, a value-based pricing mechanism. It is likely that some gene therapies may be under-priced if you were to use the cost per QALY. In the UK, they have NICE and in the United States we have ICER. The UK has set the standard using NICE, and I think in the US, we simply need to have a value-pricing methodology that we could all agree to. In the UK, the price for the therapy is the dependent variable, while willingness to pay and clinical outcomes the independent variables. In the US, cost for therapy is an independent variable and "willingness" to pay the dependent one. Depending on clinical effectiveness and a willingness to pay $100,000 for a quality adjusted life year, some therapies may be worth more. Yet we just don't have a rational pricing mechanism that's based on anything other than what the manufacturer thinks they can justify publicly. We desperately need a methodology to help right size the cost of these therapies."
John Fox, US Payer

"I think it [Glybera's withdrawal] was the positioning in the market that wasn't appropriate. That high price tag and essentially the lack of a story, I think was the issue. Removing it from the market is a completely different story and might have been more political or PR focused than truly healthcare focused. If you have a million dollar price tag and then drop it to $300,000 it's going to raise more questions about why did you price it at a million in the first place? Those types of price drops and price increases have received immediate congressional attention. So, if you are on the market, you must carefully consider if your product placement is appropriate at the beginning. Glybera's a cautionary tale."
US Payer 2

What to expect

  • A detailed report revealing US and European payer attitudes to the emerging challenges of funding high-cost cell and gene therapies.
  • An examination of key issues that cell and gene therapy developers need to understand and respond to.
  • 20 targeted questions put to industry experts.
  • Their perceptive responses that provide 35 insights supported by 157 directly quoted comments.

Expert payer contributors

This report harnesses the critical insights of experienced US and European payers. In some cases their identities have been kept anonymous to ensure free and frank expression of views.

  • David Levy is the Regional Medical Director for the Midlands and East Region. His previous roles include the Medical Director of United Lincolnshire Hospitals Trust, the President of the British Columbia Cancer Agency, and posts with the Department of Health, York and Humber SHA and Sheffield Teaching Hospitals, the latter as a consultant neuro-oncologist.
  • Dr John Fox is the associate Chief Medical Officer for Priority Health, a provider-sponsored health plan with 790,000 members headquartered in Grand Rapids, Michigan. Dr. Fox is responsible for technology assessment and medical policy development, and innovative programming. These include pay-for-value contracting, integrated specialty pharmacy management, behavioural health initiatives, surgical optimization initiatives, community-based palliative care, and oncology medical home programmes.
  • Marc Bardou, M.D. is a Gastroenterologist and Hepatologist by training. He is also a Professor of clinical Pharmacology. He did his medical school training and residency in Paris and is now practicing in Dijon's University Hospital. He holds several positions in regulatory bodies, such as the French Medicines Agency where he is leading the market approval committee of the French Public Health Agency where he has just been co-opted as a member of the expert group in charge of prevention and health promotion.
  • Oriol Solà-Morales, PhD, is the CEO and Director of the "Institut d'Investigació Sanitària Pere Virgili", Barcelona. He is a clinician specialised in Internal Medicine, with a Master of Science in Health Policy, Planning and Financing from the London School of Economics and Political Science. He has worked as Coordinator of the Health Policy Unit of the Agencia de Evaluación de Tecnología e Investigación Médicas (AATRM) and as Health Coordinator at La Orden Hospitalaria San Juan de Dios Aragón. After being Director of the AATRM, he has worked as the Medical and Market Access Director at Sabirmedical.
  • French Payer has performed leadership roles in a leading French Private Insurance Company. The payer has been involved with Corporate Legal Affairs, Corporate Secretary duties, Purchasing, and Partnerships. He has directed business strategy and serves as a Director and Board Member of several private insurers that provide advice for corporations as well as companies that offer health insurance and retirement planning services to individuals.
  • German Payer has over 30 years' experience in the German healthcare system. The payer is a member of the drug committee of the G-BA (Federal Joint Committee), the expert advisory committee on prescription-only products of the German Health Ministry, and the drug commission of the German Medical Association (AKDÄ). He also represents AKDÄ on the drug safety committee of the BfArM (Federal Institute for Drugs and Medical Devices).
  • US Payer 1, PharmD, is a Pharmacy Business Development Manager with a leading US Payer and has been working in the payer environment for more than 18 years. Payer 1 oversees pricing, actuarial analysis, informatics, client services, performance management, and trend management strategies and aims to improve operations to enable the payer to exceed performance metrics and develop new services and performance measures to move the business forward.
  • US Payer 2, PharmD, is a Pharmacy Business Development Manager with a leading US payer and has been working in the payer environment for more than 10 years. Payer 2 acts as a clinical consultant to managed care health plans. Payer 2 also provides clinical support of strategic business planning, contract negotiations, new product sales, clinical programmes and operations. Payer 2 has conducted drug utilisation reviews to ensure safe and effective medication therapy including cell and gene therapies.
  • US Payer 3, BSPh, is a Pharmacy Business Development Manager, with a leading US Payer and has been working in the payer environment for more than 15 years. Payer 3 manages health care plans, developing clinical strategies to effectively manage the pharmacy benefit and provides clinical support for strategic business planning and contract negotiations.

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