Value-based payment and financing for cell and gene therapies: challenges and potential solutions

Figures & data

Table 1. Similarities and differences in the challenges and solutions for financing cell and gene therapies among US and European healthcare systems.

	US healthcare system	European healthcare systems
Common challenges	(a) high cost for a single therapy; (b) high upfront costs; (c) uncertainty about long-term benefits.
Differences in challenges	Fragmentation of insurance policies, heterogeneous population, difficulty in recouping the benefits of treatments by payers	Smaller patient population size, difficulty in diversifying risks
Advantages	Larger patient population size, better opportunities to pool risks	Universal coverage with a single payer to provide and recoup the benefits
Common themes of solutions	Value-based contracting (OBC) with an emphasis on outcomes
Different themes in solutions	Early models mostly developed by private manufactures to increase coverage and access. CGTs have also been a part of pharmaceutical company portfolios to position themselves at the forefront of industry advancements for market dominance and monopoly profits.^1	National focus by Italy, Spain, UK, and France, activities at the sickness fund level in Germany^2
Newer solution proposed by the US federal government	Cell and Gene Therapy Access Model by the CMS, a voluntary model that will engage state Medicaid programs and manufacturers to help make selected therapies more accessible to eligible Medicaid enrollees. CMS and pharmaceutical manufacturers negotiate a set of key terms, and state Medicaid agencies decide whether to sign the negotiated contract.^3	N/A
Specific solutions by Horrow & Kesselheim	(a) risk spreading, (b) capping costs based on expected volume, and (c) performance-based models.^4 Subject to the size of risk pools and the limitation in real-world evidence.	Can be adopted across healthcare systems.
Recommended publicly funded special plan	This special plan will pool funds from public sources, with a matching scheme between the federal and state governments, to support the payment for these therapies. A private insurance company that agrees to “buy in” to the treatment and pay a certain fee upfront would need to pay amortized benefits per annum (e.g. expected cost savings due to treatments) should its enrollee receive such a treatment. The federal government and pharmaceutical manufacturers negotiate a set of key terms. Can maximize the risk pool and take advantage of population-based estimates of health benefits.	Can be expanded by including NGOs, philanthropic institutions, and big companies who self-insure for US taxpayers around the globe. Such collaboration can begin with the discovery phase of the treatment to risk-pool the failure of drug trials, hence lower the R&D costs the manufacturer must recoup.
Considerations of insurance company’s financial liabilities and premium in the publicly funded special plan	Using a pay-as-you-go system, the financial liabilities borne by the insurance company are limited to the government-determined stream of amortized benefits of the treatment minus a regulatorily-set percentage. Premium will be a regulatorily-set percentage of the government-determined stream of amortized benefits of the treatment.	N/A

Legend: ¹Pharmaceutical-Technology.com. Cell & gene therapy in the pharmaceutical industry: analyzing innovation, investment and hiring trends. Available https://www.pharmaceutical-technology.com/data-insights/cell-gene-therapy-in-pharma/?cf-view. ²Nazareth T, Ko JJ, Sasane R, Frois C, Carpenter S, Demean S, Vegesna A, Wu E, Navarro RP. Outcomes-based contracting experience: research findings from U.S. and European stakeholders. J Manag Care Spec Pharm. 2017 Oct;23(10):1018-1026. ³Centers for Medicare & Medicaid Services. Cell and gene therapy (CGT) access model. (https://www.cms.gov/priorities/innovation/innovation-models/cgt) ⁴Horrow C, Kesselheim AS. Confronting high costs and clinical uncertainty: innovative payment models for gene therapies. Health Aff (Millwood). 2023 Nov;42(11):1532-1540.