New Medicare, Manufacturer Coverage Are Among Solutions for Cell and Gene Therapies

Among the issues facing health care payers, paying for multimillion-dollar cell and gene therapies (CGTs) is one of the most pressing, as evidenced during AHIP’s 2024 Medicare, Medicaid, Duals & Commercial Markets Forum, held March 12 through 14 in Baltimore. While they were mentioned by multiple speakers throughout the three-day conference, speakers at one session focused on the topic said that while approaches such as short-term milestone-based contracts and risk pools are being used, no perfect solution has emerged yet.

Many CGTs are in the pipeline, impacting potentially millions of patients and prompting many questions around affordability and accessibility, stated Sean Dickson, senior vice president of pharmaceutical policy at AHIP, during the March 12 session, titled “Cell and Gene Therapies: Regulatory Updates and Coverage Policies.” “Oncology is where it will get really interesting,” and these agents will have the greatest impact on Medicare payers.

But Medicaid stands to be impacted as well by certain agents, among them two for sickle cell disease approved Dec. 8: bluebird bio, Inc.’s Lyfgenia (lovotibeglogene autotemcel) and Vertex Pharmaceuticals Inc. and CRISPR Therapeutics’ Casgevy (exagamglogene autotemcel). Medicaid covers half of the U.S. population with sickle cell disease, and these agents — one-time treatments with costs of $3.1 million and $2.2 million, respectively, as well as additional treatment costs — are already posing coverage challenges.

CMS’s Cell and Gene Therapy Access Model’s first focus will be on therapies for sickle cell disease, and the agency has moved up the launch of the model from 2026 to 2025. States will be able to submit letters of intent by April indicating their plans to participate, and CMS will be simultaneously working with manufacturers, Dickson explained. The agency will then take the pooled interest from states to determine how many lives will be in the program.

Mark Trusheim, strategic director of NEWDIGS at the Center for Biomedical System Design at Tufts Medical Center, where he also co-leads the Financing and reimbursement of Cures in the US (FoCUS) Project, acknowledged that CGTs are going to be expensive, and that there are three key factors around them:

(1) The “cost shock” of the up-front payment.

(2) “Do they work?” What is their performance risk? Their durability risk?

(3) The actuarial risk. How many people are impacted?

He explained that five precision financing solutions have been designed for CGTs:

(1) Short-term milestone-based contracts,

(2) Multiyear performance-based annuities,

(3) Warranty model,

(4) Orphan Reinsurer and Benefit Managers (ORBMs) and risk pools, and

(5) Subscription/Netflix model.

Still, maintained Trusheim, “there are no perfect precision financing designs yet created.…These are complex products requiring sophisticated solutions.…A best of breed hasn’t emerged.” He said he expects the next two to three years will be “an active [period] of experimentation to see what works.”

Should Manufacturers Take on Risk?

The recently launched Quantile Health is focused on increasing patient access to CGTs, explained Yutong Sun, co-founder and CEO. As almost one-third of self-insured plans have dropped their coverage of gene therapies, the company is focused on this sector of the health care marketplace, which faces “quite different challenges” than other entities, she said. While CGTs may be “a drop in the bucket” for major national plans with annual budgets of a few billion dollars, one CGT could represent half of the annual budget for a self-insured plan with 100 to 500 employees.

“No good solution to manage costs” of CGTs exists, Sun contended. “We think there is a better way to think about risk.…Why not shift it to manufacturers” of the agents? Payers can directly enter value-based agreements with manufacturers, which could absorb the risks around efficacy and budgeting, she explained. “In a way, we’re creating a single payer system.”

And while employers often express concerns about paying for treatments for employees who may change jobs, “if you’re a manufacturer, you couldn’t care less where a patient works.”

For Medicaid managed care organizations, the costs for CGTs can be “especially hard to predict,” said Jack Rollins, director of federal policy at the National Association of Medicaid Directors (NAMD). “It creates a sensitive budgeting environment,” as “Medicaid spending impacts other programs.”

Also complicating the situation are “long inpatient hospital needs” for patients receiving these agents, as well as the Medicaid Drug Rebate Program, by which, in exchange for mandatory coverage and mandatory rebates off list price, states get a guarantee of best price. That program “has worked really well, but where it’s encountering friction is with” CGTs, asserted Rollins. While some changes have been made to the program, challenges still exist.

“Managed care is the predominant model in Medicaid,” he said, “so plans are a major player in solving” the issue.

Among the strategies Rollins is seeing are states “expect[ing] plans to take on that risk,” others “carving out the pharmacy benefit in whole or in part” and some “using reinsurance pools and risk corridors.” However, so far there has been “no coalescing around” one particular strategy. “This will be a year of learning,” he contended. Of CMS’s CGT Access Model, “the devil is in the details.…If it doesn’t align with operations, it’s not going to work.”

Is Medicare Part E Needed for These Agents?

As far as future models, asked Trusheim, “do we carve out cell and gene therapies into a Medicare specially funded pool” — a Medicare Part E “or a Part G for ‘gene’?” There has been “a lot of noise in the last six months” around possible solutions.

Noting that CGTs have “unique differences” and “analytical requirements,” Rollins questioned whether states have the “administrative capacity to manage” these aspects. “It’s not sustainable.”

Trusheim agreed, noting that Massachusetts’ Medicaid program, MassHealth, “has been a bit of a leader” in managing CGTs, but it received a grant from CMS that it used to hire people such as data-tracking analysts. Without this kind of support, plans will struggle, he said.

According to Trusheim, a number of self-insured employer plans are “discussing excluding cell and gene therapies from coverage.” In response, “some states are thinking about requiring them to cover” the agents. “If that happens, we’ll hear a lot more noise about changing ERISA [the Employee Retirement Income Security Act of 1974] rules,” he said. “This [companies denying coverage] will be a lightning rod if it’s widespread.”