Introduction

One of the therapeutic areas in development that represents the greatest scientific promise is gene therapy. Gene therapy’s potential is particularly exciting in the possibilities it holds for transforming and curing debilitating diseases that, in some cases, can lead to premature death.

While the terms gene therapy and cell therapy are often confused, the Food and Drug Administration’s Center for Biologics Evaluation and Research (FDA’s CBER), which regulates cellular therapy products, human gene therapy products and certain devices related to cell and gene therapy, distinguishes them through the following definitions.

Cellular therapy products include cellular immunotherapies, cancer vaccines, and other types of both autologous and allogeneic cells for certain therapeutic indications, including hematopoietic stem cells and adult and embryonic stem cells. Human gene therapy is the administration of genetic material to modify or manipulate the expression of a gene product or to alter the biological properties of living cells for therapeutic use. CBER has approved both cellular and gene therapy products. A list of approved products may be found here.1

The number of cellular and gene therapies under development in the U.S. continues to grow. According to the Journal of Gene Medicine, as of 2017, there were 2,597 clinical trials being run related to gene therapy. Close to 1,700 (65%) are focused on oncology, 287 (11.1%) in the monogenetic field, 182 (7%) in infectious diseases and 180 (6.9%) in the cardiovascular category. While oncology is attracting much of the trial work, monogenetics is the low-hanging fruit for gene therapy technologies.

Pricing Challenges

Gene therapies face the challenge of pricing to value, with the need to balance their transformative or even curative potential with their high cost. Few of the diseases for which gene therapies are used are curable, many are life limiting—and all are expensive to treat. Comparing a high-cost curative therapy with a lower-cost ameliorative therapy starts to raise some interesting financial questions—and to shape the conversation around reimbursement.

Adding to the complexity is the proliferation of governmental and nongovernmental value- assessment organizations—some of which have very short timelines relative to return on investment and many of which impose budget constraints. We weren’t certain how value-assessment organizations would view very expensive but curative therapies until now.

Two Recent Case Studies

1.         Novartis Pharmaceuticals Kymriah™ (tisagenlecleucel)

On August 30, 2017, Novartis received FDA approval for Kymriah, the first chimeric antigen receptor T-cell (CAR-T) therapy, for the treatment of patients up to 25 years of age with B-cell precursor acute lymphoblastic leukemia (ALL) that is refractory or in second or later relapse. Kymriah is a one-time treatment that uses a patient’s own T cells to fight cancer.2 The cost of Kymriah is $475,000.

On the day of FDA approval, Novartis went public with a press release announcing an outcomes-based payment arrangement with the Centers for Medicare & Medicaid Services (CMS), indicating that CMS will only pay Novartis when patients respond to treatment within one month. The CMS press release was much more general, reiterating its commitment to using its authority through the CMS Center for Medicare & Medicaid Innovation (CMMI) to alleviate regulatory barriers in Medicare and Medicaid to testing payment and delivery models involving value-based arrangements. State Medicaid agencies remain interested in pursuing these types of arrangements, and CMS has pledged to work with stakeholders to develop an outcomes-based payment template.

The details of the contractual arrangement between CMS and Novartis have not been revealed. In September 2017, several members of congress called for additional information.3

2.         Spark Therapeutics LuxturnaTM (voretigene neparvovec-rzyl)

On December 19, 2017, the FDA approved Spark Therapeutics’ Luxturna, a one-time gene therapy product indicated for the treatment of patients with confirmed biallelic RPE65 mutation-associated retinal dystrophy. This is the first virus vector gene therapy approved in the U.S.4

Luxturna works by delivering a normal copy of RPE65 to the retinal cells, allowing them to produce the protein needed to restore the patient’s vision. The cost for Luxturna has been listed at $850,000.

Institute for Clinical and Economic Review

The Institute for Clinical and Economic Review (ICER) is an independent nonprofit research institute that produces reports analyzing the evidence on the effectiveness and value of drugs and other medical services. ICER’s mission is to help provide an independent source of analysis of evidence on effectiveness and value to improve the quality of care that patients receive while supporting a broader dialogue on value in which all stakeholders can participate fully.

According to ICER, its evaluation reports include evidence-based calculations of prices for new drugs that accurately reflect the degree of improvement expected in long-term patient outcomes, while also highlighting price levels that might contribute to unaffordable short-term cost growth for the overall healthcare system. ICER has struggled with evaluating treatments for rare diseases and in fact is revising its evaluation framework for orphan diseases.

ICER undertook an evaluation of Luxturna, with the Evidence Report assessing the comparative clinical effectiveness and value of Luxturna released on January 12, 2018, and findings scheduled to be discussed in a public meeting on January 25, 2018.5 The evidence report found that:

“Evidence on voretigene neparvovec provides high certainty of at least a small net health benefit for patients with biallelic RPE65-mediated retinal disease; however, significant uncertainty remains about the long-term effects and durability of the responses to treatment.

“Assuming a 10–20-year benefit of treatment for 15-year-olds—the average age of patients in the clinical trials—economic analyses found that, at the current price of $850,000, use of the treatment would exceed common cost-effectiveness thresholds…

“Separate analyses suggest that voretigene neparvovec meets standard cost-effectiveness thresholds when treating only three-year-old patients and accounting for both direct medical costs and broader societal benefits…”

ICER also published a draft evidence report in December on CAR-T cell therapies, including a review of Novartis’s Kymriah. The findings of ICER’s analysis suggest that the CAR-T therapies of focus for the review provide gains in quality-adjusted and overall survival over alternative chemotherapies. With the evidence available at the time of the report, “these therapies seem to be priced in alignment with clinical benefits over a lifetime time horizon. However, the findings are sensitive to the time horizon and long-term benefit forecasting of the therapies.”

Potential Solution

In light of numerous treatments on the horizon, Manatt is developing a proposal to create and explore options for creating an entity that would allow private and public payers to share in the cost of certain high-cost therapies across payers and over time. The facility would spread the cost of the therapy over all participating payers throughout the years of benefit.