Facing a tsunami of high-priced gene and cell therapies and ever-rising provider prices in 2020, employers, public and commercial payers, and American consumers will seek—and sometimes find—creative ways to finance care, spread risk and ensure that their money is paying for value.
Top of mind for payers and employers is the ballooning pipeline of emerging treatments, such as gene therapy, with million-dollar price tags and the potential to save or vastly improve lives. The impact of these therapies is not being felt acutely yet. As of September 2019, the FDA had approved just four gene therapies, with a total potential patient population of about 50,000 Americans per year, according to an analysis by HRI.
But by 2030, some experts estimate that 500,000 Americans will have been treated with gene and cell therapies. And the pipeline is robust: The FDA expects to receive 200 investigational new drug applications for gene and cell therapies in 2020, with 10 and 20 approvals per year by 2025. It’s no wonder that when the National Business Group on Health polled its members about their concerns, 60% cited the pipeline of million-dollar treatments.
Creating access and reimbursement models now, while the patient populations are small, will be critical to successfully scaling up these programs as more patients become eligible for expensive new treatments, industry executives told HRI. Providers, too, might need help financing gene therapy.
Providers are a critical part of the gene therapy supply chain, collecting the cells from patients, properly packing them to be shipped off-campus to a processing facility and then, once the cells return, reintroducing them into the patients. So far, the costs are high and reimbursement is uncertain. Under Medicare Part B, typically, providers purchase drugs and are reimbursed after the drugs have been administered, a process known as “buy and bill.”
Buying now and waiting to be paid back later, perhaps at a loss, is a different story when the treatment’s price tag is more than $1 million. Providers may seek assurance or financing help from pharmaceutical companies or payers to offset financial risks associated with being part of the supply chain. But these deals will have to be carefully constructed to avoid being viewed as kickbacks.
For citations, implications and insights, please read our full report, Top health industry issues of 2020: Will digital start to show an ROI?