Introduction

The first one-time curative gene therapy Spark’s voretigene neparvovec (Luxturna) was approved in December 2017 for RPE65-mediated inherited retinal disease with a $850,000 list price.1 There is a historic increase in gene therapy clinical trials with 89 having reached phase III as of May 2018.2 In 2017 there were 285 gene therapy candidates in clinical development compared to 543 small molecules and 129 monoclonal antibodies.1 20% by number & 29% by market capitalization of precommercial public biotech companies in November 2017 were gene therapy focused.1

Gene therapies will challenge traditional reimbursement models which are suited for paying for treatments related to common, chronic conditions. As more gene therapies reach market the healthcare system will be pressured by the high upfront cost of treatments.3 Healthcare stakeholders including payers, providers, and pharmaceutical firms have begun experimenting with reimbursement models to address development costs as well as access, list price, and efficacy/safety concerns. These reimbursement models include outcomes based contracts, annuity payments, and upfront payments.4

These models are not mutually exclusive and can also be used in combination with other financial or insurance vehicles such as reinsurrance and carveouts.4

In January of 2018 Spark announced an outcomes based contracting model which shares risk with commercial payers and/or specialty pharmacies. This model leaves negotiation for payments to treatment centers up to commercial insurers. The model offers rebates to commercial insurers based on short term efficacy and long term durability. Spark is also currently working with the CMS on an installment payment program due to concerns with current government price-reporting requirements.5

The goal of this stakeholder assessment is to identify existing opinions and generate insights regarding gene therapies and their reimbursement models.

Methods

A twelve question survey was designed to collect demographic information and stakeholder feedback regarding gene therapies and reimbursement models. Key findings from the survey are intended to be directional and hypothesis-generating instead of statistically representative. Survey questions were designed to address findings raised from the results of a June 2018 HealthAffairs Blog survey of commercial payers.6

• Question 1 was a stakeholder group self-identification where participants were able to select more than one option. See figure one for list of stakeholder categories.

• Question 2, 3, and 4 used a likert scale 1-10 to ask about familiarity with gene therapies and efficacy and safety concerns

• Questions 5 and 6 used a likert scale to ascertain favorability of four reimbursement models (outcomes based contracts, annuity payments, upfront payments, and modified upfront payments). Question 5 specified the time frame as the next 5 years and question 6 specified the time frame as 15 years. These questions were designed to identify potential trends in model favorability over time.

• Question 7 presents an annuity model example and different payment duration options.

• Questions 8-12 were open free response questions designed to collect stakeholder insights regarding current list prices, patient access & affordability, and global barriers.

A list of 200 stakeholders was generated from authors contacts and via Phillybio, a healthcare industry networking organization. Care was taken to include representatives from each of the following stakeholder groups described in the introduction. 26 individuals completed the survey. Based upon self reported familiarity with gene therapy below 5, four individuals were removed from subgroup analysis. These removed individuals self identified as finance (n=1), provider and patient or patient/disease advocacy group (n=1), and two patient or patient/disease advocacy group (n=2). One provider was also removed due to familiarity indicated in free response answer.

Results

The self identification of the survey participants can be found in figure 2. Since question one allowed for self identification in multiple groups the 26 respondents represent 31 separate self identification groups. For later sub analysis, the stakeholder group utilized was taken as the respondents current role. Government stakeholders did respond to survey requests however as federal employees are unable to comment on reimbursement models.

Results Continued

Conclusion

Stakeholders surveyed responded with the highest favorability for outcomes based contracts and expressed general positive responses regarding efficacy/safety profiles. The main limitation for this survey is the sample size (n=21) and make up of respondents; therefore results are hypothesis generating and not statistically representative of stakeholder groups. Next steps include collecting more responses.

Gene therapy reimbursement models will face many difficulties as more candidates gain FDA approval. The US healthcare system will face challenges adapting payment and reimbursement models to reduce market barriers, address high R&D costs, and encourage patient access. Gene therapies represent just one pain point as the healthcare system shifts from reimbursing based on volume to reimbursing based on value and patient outcomes.

Gene Therapy Reimbursement Models – A Stakeholder AssessmentAaron Bholé1, Matthew Luminais2, MSc, BA Sillah2, MD, MBA1 Sidney Kimmel Medical College, Thomas Jefferson University 2 Militia Hill Ventures, Philadelphia PA

Acknowledgments & Disclosures

This project was supported by input and advice from the Militia Hill Ventures Managing

Partners Jane Hollingsworth, JD and Joan Lau, PhD, MBA. In addition the Thomas

Jefferson University Population Health Research faculty, specifically Geoffrey Mills,

MD, PhD provided valuable feedback.

Aaron Bholé discloses confidentiality agreements unrelated to this project with the

following organizations: Militia Hill Ventures, Synlogic Therapeutics, and Jefferson

Strategic Ventures.

Citations

1. Mehrota R, Sudarov A, Cinalli R. Gene Therapy - Near-Term Revolution or Continued Evolution?. MTS Health Partners. 2017.

2. Philippidis A. 25 up and coming gene therapies. GEN: Genetic Engineering & Biotechnology News. May 2018.

3. Gottlieb S, Carino T. Establishing new payment provisions for the high cost of curing disease. American Enterprise Institute. 2014.

4. Slocomb T, Werner M, Haack T, Valluri S, Rader B. New payment and financing models for curative regenerative medicines. In Vivo

Pharmaceutical Intelligence. 2017.

5. Stojanovska, A. How to Navigate Cell and Gene Therapy Reimbursement: Part Two. AmeriSource Bergin. Jun 2018.

6. Ciarametaro M, Long G, Johnson M, Kirson N, Dubois R. Are Payers Ready To Address The Financial Challenges Associated With Gene

Therapy? HealthAffairs Blog. Jun 2018.

Gene Therapy Reimbursement

Model Stakeholders

Healthcare Providers

Scientific Researchers

Biotech & Pharmaceutical

Industry

Healthcare Finance

(e.g. Venture Capital, Private

Equity, Investment Banking, etc.)

Healthcare Consultancies

Think Tank/Academia (e.g. Healthcare Economics and

Policy)

Patients or Patient/Disease

Advocacy Groups

Government (e.g. CMS, FDA, elected

officials)

Payers/Insurers

The averages including all 26 respondents for gene therapy familiarity, efficacy concern, and safety concern are 6.3, 6, and 5.5 respectively. Once respondents unfamiliar with gene therapies were removed (n=21) the gene therapy familiarity, efficacy concern, and safety concern are 7, 6.3, and 5.6 respectively. Stakeholders surveyed on average believe that gene therapy efficacy benefits outweigh safety concerns. Note that a high efficacy score is unconcerned with long term efficacy and a low safety score indicated concern for long term safety.

Five Year Favorability Fifteen Year Favorability

Number of

Respondents Familiarity Efficacy Safety

Outcomes

Based

Payments

Annuity

Payments

Upfront

Payments

Modified

Upfront

Payments

Outcomes

Based

Payments

Annuity

Payments

Upfront

Payments

Modified

Upfront

Payments

Provider 5 6.4 7.4 5.8 6.6 4.0 5.6 6.4 7.4 4.2 5.6 5.2

Biotech/Pharm 4 8.8 7.3 4.8 7.3 7.0 4.8 5.5 7.5 6.8 4.3 4.8

Consulting 3 8.3 5.3 4.0 8.3 4.7 2.0 3.7 9.0 4.3 1.7 3.3

Finance 3 7.0 5.7 5.7 7.0 5.7 5.3 5.0 5.7 6.0 3.7 7.0

Payer/Insurer 2 6.5 5.5 7.5 7.5 6.0 3.5 7.0 8.0 5.5 4.0 7.5Scientific

Researcher 2 5.5 5.5 5.0 7.0 6.0 4.5 5.5 8.5 7.0 4.5 6.0Think Tank

Academia 2 5.5 7.0 7.5 8.5 6.5 6.0 6.5 9.5 6.5 6.0 6.5

Average 7.0 6.4 5.6 7.3 5.5 4.6 5.6 7.8 5.6 4.3 5.5

The average favorability of gene therapy model adoption in the next 5 years excluding low familiarity responders (n=21) is as follows: outcomes based payments (7.33), annuity payments (5.52), upfront payments (4.62), modified upfront payments (5.61).

The average favorability of gene therapy model adoption in the next 15 years excluding low familiarity responders (n=21) is as follows: outcomes based payments (7.76), annuity payments (5.57), upfront payments (4.29), modified upfront payments (5.52).

Outcomes based payments (OBP) are the favored reimbursement model in both the immediate and long term periods. Moving from 5 years to 10 years sees OBP increase in average favorability by 0.43 while upfront payments decreases by 0.33.

Please rate from 1-10 how favorably you view gene therapy reimbursement model adoption in the next five years (1 = unfavorable; 10 = favorable)

Outcomes Based Payments Annuity PaymentsNum

ber

of re

spondents

Num

ber

of re

spondents

Modified Upfront

Payments*Upfront Payments

0

2

4

6

8

Figure for adoption in the next 15 years not featured

* Note modified upfront payment modified by risk adjustment or carevout

The 21 responders analyzed for response based upon subgroup. Note again that results are not statistically representative but rather hypothesis generating.

Selected quotes from free response questions

Regarding current list prices:

“List prices are very high currently; although this appears justified given the significant level of investment, developmental risk and limited patient pool. However, I expect that over time prices will be driven down by technology advancement, regulatory adjustments and increased competition in this space.” – Biotech/pharma

“Putting a price on the improvement of quality-adjusted life years for "radically" curative treatments is both a blessing (it's good problem to have as a technologically advancing society) and a curse (due to difficulty of their integration into viable economic and socially acceptable schemes). Compared to the social and economic cost of treatments for chronic diseases, I do not find the price of these new drugs to be as out of line as portrayed by the media.” – Scientist

“The list prices are currently high, but understandably from the developer perspective aim to recoup the R&D, implementation, and follow up costs associated with these novel programs. With such small niche patient pools, the prices indeed are high, but I expect as time goes on and further development and opportunities arise the prices will come down.” - Provider

Regarding patient access & affordability:

“Centers of excellence where rare disease patients can be identified and directed” – Biotech/pharma

“Coverage of genetic testing” – Finance │ “Better interaction between governments and pricing negotiations to support value-based therapies.” - Biotech/pharma

“Safe harbors that allow stakeholders to work together without regulatory interference to develop outcomes based contracts” – Think Tank

Regarding international barriers:

“The reluctance of governments with single-payer health plans to pay for costly new therapies, and to develop innovative ways to pay for them; conversely, the reluctance of governments that regulate a robust private insurance market to upset the status quo in order to do the same” – Finance

“High costs, especially high prevalence diseases (e.g., hep c). Access controls put in place by payers due to high cost and high prevalence.” -Consultant

Regarding “patient portability”:

“Developing a graded model of fee reductions related to the period of time the patient is on the plan. Or enter into an agreement with the patient that they must stay on plan for a specific duration if accepting the payment for the intervention. Ensuring the patient's have invested in their own care is also legitimate in the form of co-pays however the access question vs. risk for the insurer is a tough balance.” - Provider

The most favored duration for an annuity payment was 10 years (42.3%) which may reflect beliefs about ability of payers to bear costs of treatments. It also may reflect beliefs in gene therapy durability of response.

Figure 1

Figure 2

Figure 3