A shared opportunity: The future of cell and gene therapy
The commercialization of cell and gene therapies raises several complex conversations and questions for employers and payers.
Despite the many challenges of the last two years, the global cell and gene therapy (CGT) market continues to rapidly expand. The investment landscape for regenerative medicine has grown 16% in 3 years, hitting an all-time high in 2021 of $23.1 billion raised. With more funding pouring in each year and over 2,261 ongoing global clinical trials in regenerative medicine, the market is expected to reach $34.31 billion in 2030. With this immense growth potential, the industry is reaching a tipping point heading towards commercialization. Cell and gene therapies provide hope for many patients suffering from rare diseases, creating great urgency to bring these treatments to market.
The commercialization of CGTs forces several complex economical conversations and questions, some concerns include manufacturing, labor challenges, payer coverage, adequate reimbursement, and cost-effectiveness. To find adequate solutions, we must first have a deep understanding of the process and factors driving the high-ticket price of these life-saving therapies.
The road to manufacturing & commercialization of CGTs
Cell and gene therapy manufacturing is experiencing rapid growth and these complex, life-saving therapies take a significant amount of time and money to bring from bench to bedside. With any innovative technology, there are bound to be growing pains as the industry evolves and optimizes to find best practices in manufacturing, capacity, and efficiency.
Industry capacity limitations
Advanced therapies are produced in small batches and are currently manufactured through manual processes, which severely limits production capacity for these products. At present, manufacturing infrastructure can’t support the industry’s capacity needs. CGT developers are currently forced to outsource early-stage manufacturing due to the complexity of processes, time and expenses required to build internal capabilities. Manufacturers are now facing long lead times with their outsourcing partners (CDMOs), and with the equipment and critical raw materials.
The need for flexible manufacturing, talent and efficiencies
Due to the small patient population these therapies serve, CGTs are not mass-produced like traditional biologics. Therefore, traditional manufacturing facility infrastructure will be insufficient. Combined with the fact this is a rapidly evolving sector, the industry must heavily rely on flexible facilities that can be modified as new technologies emerge. Companies must have the ability to pivot and transform their facilities as new products come to market and best practices are established.
With the industry growing at such a rapid rate, many organizations are seeking skilled staff, but there is not enough talent to go around. The processes currently rely heavily on manual technicians, and even automation will not fully alleviate this strain. Trained operators will still be required to run automated equipment and conduct quality checks.
There is an ongoing industry-wide effort to make the road to commercialization more efficient and ultimately decrease the cost of bringing cell and gene therapies to life. There is a heavy focus on identifying and implementing more automated processes and eliminating the manual nature of development. Automation will allow better control over the manufacturing process, leading to fewer quality control issues and overall faster and safer deployment to market. To combat talent shortages the industry is making great strides to partner with organizations at the university level to create and support STEM programs in cell and gene sectors.
The cost of cell and gene therapies
Developing a gene therapy can cost up to $5 billion, more than five times the average cost of developing traditional drugs. This price, driven by costly manufacturing and regulatory considerations, is further compounded by the small patient populations the therapies serve.
However, upon a review of Institute for Clinical and Economic Review (ICER) survey of a portfolio of expensive cell and gene therapy products, reviewers concluded that more than half of them were considered cost-effective. The reviewers assessed not only the amount of time a patient gains, but also the quality of life gained in cost per quality-adjusted life-year framework. If a cell and gene therapy is deemed more cost-effective than the standard of care, that is great news for the health care ecosystem as a whole. But as more cell and gene therapies move through the regulatory pipeline and approach commercialization, capacity will dwindle, and questions related to overall health system affordability will continue to rise.
Estimates show that as of this year 75,000 patients will be eligible for some type of cell and gene therapy, with an expected cost of over $15 billion. With that number rising to 100,000 patients at $25 billion in the next three years. Without proper solutions and partnerships, employers and health insurers will be held responsible for extreme medical costs.
Complications in cell and gene therapies
Cell and gene therapies have changed the way insurers think about coverage, as the treatment turns the traditional model on its head. Cell and gene therapies are typically administered once or twice over a lifetime of an individual at a substantial price. In the traditional model, a drug is administered and paid for overtime as the prescription is filled, and health benefits accrue incrementally in alignment with the payments. With cell and gene therapies, the payment happens up front, and the benefits accrue over time creating a misalignment between the payment and the benefit. This poses a complication for payers, as individuals typically stay with a plan for 2-3 years, meaning a plan may cover the entire cost of a therapy upfront and not receive the benefit over the lifetime of the patient.
Other potential complications with implementing one blanket solution for cell and gene therapies include the fact that cell and gene therapies cannot simply be lumped together. In terms or pricing, there can be huge variations across treatments, and we are now seeing that while some gene therapies are administered once, others can now be administered several times over a patient’s life.
Finding solutions and mitigating risks
Despite their life-saving potential, cell and gene therapies are getting resistance from payers and employers across the board, but there are ways to mitigate risks and reduce the burden.
Several health plans have already identified and implemented programs that mitigate upfront costs. Cigna’s plan allows an employer or insurer to contribute less than $1 per member per month, and in the event a cell or gene therapy is needed the patient would pay nothing out of pocket for the treatment. CVS Health offers two financial protection solutions to payers including a stop-loss that offers eligible clients financial protection against unexpected, high-cost gene therapy claims, and installment payment plans that allow clients to pay for gene therapies over several years.
Partnerships between payer and manufacturer
Payers and manufacturers have been working together on a number of solutions to address further misalignments.
The two major mechanisms are value-based contracts and risk carve-outs. Risk carve-outs cleave patients or treatments from the plan, the plan then pays a set fee for these individuals to be managed, thereby shifting the risk. However, payers usually have to pay a premium for shifting the risk and may ultimately end up paying more over time.
Value-based contracts create scenarios where manufacturers and payers share risk by binding payment to indicators of value, such as product performance and patient outcomes. Despite many potential challenges with this model, it will help ensure the therapies that bring value and overall cost savings are rewarded. Although cell and gene therapies may come with a high price tag, they have the potential to cure chronic conditions that can otherwise cost millions over a patient’s lifetime. The value cell and gene therapies bring by significantly reducing many of these associated costs, and massively improving a patient’s quality of life, cannot be understated.
The cell and gene therapy industry shows immense potential for improving patient outcomes. As the industry quickly moves towards commercialization, employers, insurers, and other stakeholders must start planning now to put the right solutions in place. It is the collective’s responsibility to solve for the barriers that may limit patient access, it is also a collective opportunity to improve the lives of many patients that desperately need these treatments.