For those of you that missed ISCT’s recent webinar on manufacturing, needle-to-needle logistics and reimbursement, below is a brief re-cap of the key points on the reimbursement section that I provided. The presentation, including audio, should be available free on the ISCT website shortly. Thanks again to ISCT for hosting and Invetech, a member of CCRM’s Industry Consortium, for sponsoring.
As we all know, regulatory approval does not translate to dollars for a company, nor does it lead to patients being treated. Without reimbursement, all of the efforts of translation and development are lost. So, developers need to be pro-active and complete clinical development and manufacturing with the needs of the payer in mind. The data requirements for reimbursement are more stringent than those required for regulatory approval. In order to minimize the gap between approval and reimbursement, it is essential to begin generating these two data sets, in parallel, from an early-stage (Phase 2).
The global pipeline of advanced medicinal products is looking more robust than ever, and continues to be fuelled by major scientific advances that seem to happen every month. Cell-based immunotherapies have exploded, while gene therapy enjoys a second wind. Venture capitalists are pouring money into the biotechnology sector as valuations reach unprecedented heights.
The elephant in the room, though, is the question as to who will pay for these technologies, as health-care budgets around the world remain severely constrained. The grand challenge in health care over the next decade will be how we meet payers’ needs for risk mitigation, while ensuring manufacturers of cell and gene therapy (CGT) technologies are able to generate revenue. If we fail to do this, many promising new medicines may never reach the patient’s bedside, and we run the risk of stifling innovation in the biotechnology sector.
The CGT industry must focus on reduction in cost-of-goods, scale-up/scale-out, automation, and bioprocess optimization, to ensure products are produced as cheaply as possible. In tandem, CGT developers and payers need to foster discussion on the methodology that will be used to price CGT technologies.
Payers that have historically implemented cost-effectiveness models and threshold willingness-to-pay values per quality-adjusted life-year (QALY), like those in the UK, may not find these instruments suitable for evaluating CGT technologies, as affordability to the system comes into question (cost-effectiveness does not necessarily mean affordable).
Based on a recent survey of 29 payers in the U.S. and EU (published in Nature Biotechnology), it seems the consensus is that value-based pricing will be the preferred mode by which CGTs are priced; not multiples of the cost of chronic treatment, or some value ascribed that was calculated based on the cost of bringing a therapy to market.
As the face of health care changes, new models of payment may need to be brainstormed to allow for the uptake of CGTs. One such model is an annuity-driven system, where the manufacturer receives a series of future payments from the payer as long as a therapy provides some threshold health benefit to the patient.
The Nature Biotechnology survey indicates that payers, generally speaking, would prefer this approach – for obvious reasons. However, in the confines of today’s health systems, particularly in the U.S. where an annuity would be exceedingly hard to implement, payers say they will accept upfront payments for CGT products, so long as developers used value-based pricing methodologies when negotiating what an upfront will be.
It’s a very exciting time in the CGT industry, but we need to be thinking about the end game – treating patients and getting paid for it. In summary: 1) understand the differences in data requirements for approval and reimbursement, 2) engage payers early and collect regulatory and reimbursement data in parallel, 3) focus on finding proxies to demonstrate the value of a product to payers, and 4) be open to the possibility of new modes of payment that may be necessitated by the paradigm shift we are witnessing in therapeutics.