Cell And Gene Therapies Test New Waters In Pricing And Reimbursement

With the first few cell and gene therapies launched in the US, the challenge of pricing and reimbursement – and the opportunity to set the standards in this area – was a repeated theme at the Alliance for Regenerative Medicine's Cell and Gene Meeting on the Mesa.

The regenerative medicine field finally has progressed to the commercialization stage, but the first cell and gene therapies are launching into markets that don't know how to pay for costly one-time treatments.

Companies with the first commercial products are testing new waters in pricing and reimbursement, negotiating novel agreements that ensure patients have access to treatment. Executives from companies with approved cell and gene therapies, and firms hoping to launch their own regenerative medicines soon, discussed the challenges and the potential to shape how these treatments are paid for during the annual Cell and Gene Meeting on the Mesa hosted by the Alliance for Regenerative Medicine (ARM) Oct. 3 and 4 in San Diego.

During a panel discussion about lessons learned by cell and gene therapy commercialization pioneers, Novartis Oncology Senior Vice President and Global Head-Cell and Gene Therapies Pascal Touchon described four lessons that Novartis AG has learned since the US launch of Kymriah (tisagenlecleucel) a year ago for relapsed or refractory acute lymphocytic leukemia (ALL) in children and young adults, and later for adults with relapsed or refractory large B-cell lymphoma.

Touchon said the first lesson is that it is possible to launch cell and gene therapies globally, but the second lesson is that it's "immensely challenging." The third lesson is that these medicines are transformative not just in terms of the treatment and survival of cancer patients, but for the stakeholders involved in access to chimeric antigen receptor T-cell (CAR-T) therapies, like Kymriah. And, for better or for worse, the fourth lesson is that this is just the beginning of figuring out how to pay for these products.

"We managed to work in a very collaborative way with payers – it's still going on now as we speak," Touchon said.

He noted that there already has been a lot of progress, though there still is a lot of progress to be made. But even in Europe, where single-payer government health care systems are particularly price-sensitive, agencies are seeing the value of CAR-T therapy for patients who've run out of options and may have an opportunity to significantly extend their lives beyond expected survival timelines.

Just a few days after European Medicines Agency (EMA) approval, Novartis reached an agreement with the National Health Service (NHS) in the UK under which the country's Cancer Drugs Fund will pay for Kymriah in its pediatric ALL indication, but not the adult lymphoma indication. (Also see "Kymriah: England Becomes First In Europe To Say Yes To CAR-T" - Pink Sheet, 5 Sep, 2018.)

"That shows how, if you engage early with payers, and you really educate them to show what is the value of these one-time, transformative therapies and you back that with strong cost-effectiveness data, that shows how effective are these therapies to also save cost in the system and create true cost effectiveness, then you can find ways," he added. (Also see "Gilead And Novartis Unveil EU Marketing Plans For CAR-T Therapies, But Hurdles Remain" - Scrip, 28 Aug, 2018.)

Pilar Pinilla-Dominguez, senior scientific advisor at the National Institute for Health Care Excellence (NICE), which makes recommendations on whether the UK should pay for new medicines, said during a separate panel on acceptance, uptake and affordability of cell and gene therapies that the country is unique in Europe in regard to providing access to CAR-T therapies.

In addition to Kymriah's pediatric ALL indication, both of the EMA-approved lymphoma indications for Gilead Sciences Inc.'s competing CAR-T therapy Yescarta (axicabtagene ciloleucel) recently won NHS backing. (Also see "Another CAR-T First: Yescarta Wins Lymphoma Funding In England" - Pink Sheet, 5 Oct, 2018.)

Pinilla-Dominguez noted that the UK wants to make such treatments available to patients, so it encourages biopharmaceutical companies to engage with NICE early to help it understand the value cell and gene therapy therapies may bring before they're approved in the EU.

Biggest Reimbursement Challenge: The Information Gap

The concern about cell and gene therapies isn't just about the price – though it's at the heart of the problem of paying for these treatments – it's also about realizing the value of these medicines over the long term. While they may look like cures at 30 days, three months or even a year after treatment in a clinical trial, will patients' responses be maintained for several years or will an additional treatment be necessary in the future? If treatment effects are durable, however, curative treatments could wipe out high, recurring annual costs for treating chronic conditions.

Collaboratively negotiating agreements that offset the risk that cell and gene therapy results won't work or won't be long-lasting has been attractive to all types of payers, from government agencies to commercial health plans.

In the US in particular, commercial payers are concerned about the high upfront cost of a one-time therapy, which could cost $1m or more, because most patients will switch insurers before the return on investment is realized, since insurance providers are selected annually.

"There's a large disconnect between what health authorities want and what payers are going to need to actually reimburse a product," David Lennon, president of the Novartis-acquired gene therapy developer AveXis Inc., said during the commercialization lessons-learned panel. "There's a lot of energy going into fast, rapid development, which leaves you with huge gaps when you go to have a conversation with payers about how to articulate the value of the medicine in their context."

That information gap is the biggest challenge in commercializing and winning reimbursement for cell and gene therapies, Lennon said. The potential 2019 approval for AveXis' lead product candidate AVXS-101 for spinal muscular atrophy (SMA) type 1, which will be submitted to the US FDA this year, will be based on a single-arm Phase I trial in which the comparator was a historical control.

"The reality is, a single center Phase I trial in one market – the US – is really a challenging dataset to take to a European or German payer, who really wants a much more robust package," Lennon said. Novartis plans to submit AVXS-101 to the EMA in the first half of 2019.

Pamela Keith, director of oncology reimbursement, access and value marketing at Celgene Corp.-acquired CAR-T therapy developer Juno Therapeutics Inc., said during the panel on acceptance, uptake and affordability of cell and gene therapies that the information gap is why Juno has committed to publishing updates on its programs as the data matures, to show both physicians and payers how high response rates translate into improved outcomes. (Also see "Celgene Seeks CAR-T Leadership, Hematology Diversification With Juno Buy" - Scrip, 22 Jan, 2018.)

Like Touchon and Pinilla-Dominguez, Keith also noted that it is important to talk to payers early and often. While reimbursement discussions for oncology medicines typically start about 12 months before a drug's launch, she said Juno is initiating those talks 24-36 months before the launch of its CAR-T products via the ongoing sharing of clinical trial data.

Negotiating Flexible, Outcomes-Based Deals

Lennon credited Spark Therapeutics Inc. for its efforts in resetting how payers think about the value these new medicines provide. Spark has been able to get payers to think about the cost of chronic therapy that's essentially eliminated by a curative gene therapy over five, 10 or even 20 years, which are long-term time horizons that payers typically do not consider in the evaluation of traditional pharmaceutical products.

Spark came in under the expected $1m price tag for its gene therapy Luxturna (voretigene neparvovec-rzyl) for patients with biallelic RPE65 mutation-associated retinal dystrophy, a rare inherited form of blindness with a few thousand patients in the US. Luxturna's list price is $850,000 for the treatment of both eyes, but Spark's reimbursement strategy includes discounts tied to patient outcomes at 30-90 days and 30 months post-treatment. (Also see "Spark's Luxturna Approval Ushers In A New Gene Therapy Era" - Scrip, 19 Dec, 2017.)

"We were fortunate in having Luxturna with an extremely strong regulatory package and the data that allowed us to do things that were a little different, at least in the United States," Spark Senior Vice President and Global Commercial Head Ron Philip said during the panel discussion about commercial cell and gene therapy pioneers.

As a result of Spark's flexible outcomes-based contracting arrangements, Philip said about 80% of commercial plans in the US have agreed to cover the cost of Luxturna. The one thing he said he would change, however, is to talk to the Centers for Medicare and Medicare Services (CMS) earlier about setting up a demonstration project rather than beginning that conversation around the time Luxturna launched, since government payers need more time to examine the potential benefits of gene therapy.

Without long-term data for cell and gene therapies to show that the high upfront costs are justified by long-term value for patients and payers, outcomes-based contracting appears to be the way forward, but each agreement with each payer will have different terms and varying definitions of value.

Novartis also has been negotiating outcomes-based and indication-based agreements with payers for Kymriah, which launched at $475,000 for the one-time treatment of pediatric and young adult ALL patients. (Also see "Novartis Beats CAR-T Competitors To The Pricing Punch With Kymriah Approval" - Scrip, 31 Aug, 2017.)

The company initially discussed such arrangements with CMS, but while CMS has expressed interest in these types of contracts and other arrangements, such as bundled payments to hospitals for administering CAR-T therapies and associated care, the payer's agreement with Novartis for outcomes-based Kymriah reimbursement has since been cancelled. (Also see "CMS' Verma Touts Value-Based Payments After Cancellation Of Pilot For Novartis' Kymriah " - Pink Sheet, 12 Jul, 2018.)

Spreading Out Costs Over More Years, Multiple Payers

Other ideas for covering the cost of cell and gene therapies include amortized payments, where a payer may pay for the one-time treatment over a couple of years. High-risk pools also may be established in which multiple health plans and pharmacy benefit managers (PBMs) pay into a dedicated fund that covers the cost of high-priced therapies, spreading the risk across all of the participating payers so that one entity does not take a big hit when a $1m treatment doesn't work.

A high-risk pool is "one viable solution," Richard Powell, chief medical officer at Medpoint Management, said during the panel on acceptance, uptake and affordability. Medpoint provides managed care management services for independent health care providers.

Pools may be especially attractive to US commercial payers to deal with the problem of patient "portability" among health plans, Powell said. In California, he noted, patients stay with a health plan for less than a year, on average, so amortizing the price of a cell or gene therapy over three or five years means that payers would continue to reimburse the cost of a one-time treatment long after the patient has moved on to another health insurer.

Editor's Note: This article was updated on Oct. 9 to clarify that only pediatric ALL is a funded indication for Kymriah in the UK, whereas both of Yescarta's lymphoma indications are covered by the NHS.