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Cell and Gene Therapy Pricing Model Remains Sticking Point Despite CMS Efforts to Defray Costs


This story was updated to clarify that Bluebird BIo withdrew Zynteglo, not Lyfgenia, from the EU market over pricing concerns.

BALTIMORE – The US Centers for Medicare and Medicaid Services (CMS) is exploring ways to streamline bureaucratic hurdles and help defray the cost to patients for cell and gene therapies (CGTs), but some stakeholders see these steps as inadequate to addressing core drug prices and the value-based models used to calculate them.

At a panel session on the role of government in ensuring equitable access to CGTs, held last week at the American Society of Gene and Cell Therapy's annual meeting, presenters highlighted some of the government initiatives being rolled out, largely by CMS, to lower the barriers to accessing CGTs.

These initiatives include simplified interstate physician credentialing to enable providers to bill Medicare and Medicaid for care given to out-of-state patients, exceptions to the federal Anti-Kickback Statute to allow companies to provide financial assistance to patients for travel and fertility preservation, and increased payments for CGTs through CMS's New Technology Add-on Payment program.

During the Q&A portion of the session, however, audience members repeatedly took the microphone to question why the community should focus on how to provide more money for patients to obtain CGTs rather than driving down the costs of CGTs in the first place.

"Why [do] we accept value-based pricing?" asked Rimas Orentas, scientific director and cofounder of Caring Cross, a nonprofit organization dedicated to providing equitable access to advanced medicines.

Value-based pricing is the idea that a drug's price scales with how much the patient believes it is worth, taking into account measures such as quality-adjusted life years (QALYs) and disability-adjusted life years (DALYs).

The inherent flexibility of this model allows for price fluctuations that scale with local economies, as shown in a recent study estimating the value-based cost of gene therapy for sickle cell disease that ranged from $3.6 million in the US to $700 in Uganda.

Some contend, however, that this methodology enables prices to remain artificially high by not accounting for falling costs elsewhere, such as in technology and manufacturing processes.

Orentas called it "a completely flawed philosophy" that has incentivized companies to exit markets where regulators and legislators can successfully push for lower prices.

Bluebird Bio, for instance, exited the European sickle cell gene therapy market in 2021, citing "challenges of achieving appropriate value recognition" for its beta thalassemia gene therapy Zynteglo (betibeglogene autotemcel). The therapy costs $2.8 million in the US.

Erin Estey Hertzog, one of the session panelists and co-chair of the healthcare department at law firm Foley Hoag, contended that a significant aspect in CGT pricing is the higher upfront cost of development, as these are often highly individualized therapies that don't scale like many other drugs.

"CMS now does have mechanisms to bring down costs," she said. "We're looking at the issues [involved in] how to viably commercialize these products, and just ratcheting down the price today may just tamp out the industry."

The way the US healthcare system is designed, she added, creates a web of complex dependencies that would have to be dealt with to realistically shift drug pricing models.

As an example, she referenced how Medicare payments can be tied to discharging patients from hospitals.

"Every time someone goes to a hospital and gets discharged, there's a payment for that," she said. "There isn't really a way in [this] system to take into account the value of someone not going to the hospital because [of] an ongoing therapy."

While the pricing battle is likely to be protracted, the US federal government is working to make CGTs obtainable by the people who need them.

One vehicle for this is the decades-old New Technology Add-on Payment, or NTAP. Although not designed with cell and gene therapies specifically in mind, this legislation provides extra payments to hospitals that are providing therapies that qualify as new technologies under the program.

Estey Hertzog pointed out that under NTAP, a technology is only considered new until claims data reflecting its use becomes available, which typically takes around two to three years. It also only covers roughly 65 percent of hospital costs related to that therapy.

However, she also noted that CMS has made "some promising NTAP-related proposals," such as potentially extending the newness period. The agency has also suggested increasing payments for sickle cell-related gene therapies, although Estey Hertzog said that some tough questions will have to be addressed in order to roll out that proposal.

"I'm not sure how they draw the line between sickle cell therapy and other cell and gene therapies in a non-arbitrary way," she said.

The Center for Medicare and Medicaid Innovation (CMMI), which is administered by CMS, has also recently announced certain policy changes aimed at improving access to CGTs for people covered by Medicare and Medicaid.

Drugmakers have been largely prohibited from paying patients' travel and lodging expenses and, critically, from paying for fertility preservation procedures. This is a major pain point for many men and women who might consider sickle cell gene therapy, in which an intensive conditioning process that includes chemotherapy can reduce both female and male fertility.

CMMI is currently testing an outcomes-based financing initiative called the Cell and Gene Therapy Access Model, which ties CGT prices to patient outcomes. Despite the model's broad name, it currently focuses only on sickle cell disease gene therapies.

Another suggestion for improving equitable access to CGTs raised during the session was establishing a streamlined credentialing process for physicians to be able to treat out-of-state patients, as many Medicare and Medicaid patients must cross state lines to access care.

At a smaller scale, some private institutions are making their own efforts to develop streamlined patient care systems to ease access to CGTs within their networks.

"I would say that our current patient care models are very archaic," said Navneet Majhail, deputy physician-in-chief of blood cancers at the Sarah Cannon Transplant and Cellular Therapy Network.

Sarah Cannon, Majhail explained, tries to make its services more accessible through a comprehensive program that includes a common quality plan with standardized operating procedures, and centralized data management and contracting, so that each hospital does not have to contract individually with payors.

Nonetheless, some conference attendees argued that unless the issue of drug pricing is addressed, the primary beneficiaries of these proposals are likely to be drugmakers and their investors.

"I think it's really important we distinguish between cost and price," said Patrick Harrison, faculty member of the pulmonary medicine division at Cincinnati Children's Hospital. "If we [find] ways to make vectors or CRISPRs cheaper, the cost [of making them] will come down. But if we use value-based models, it's just more profit for the people who make [them]."

Manar Zaghlula, policy and engagement manager for UC Berkeley's Innovative Genomics Institute, agreed, saying "I think we all came to this room because it was on equitable access, not on how to make sure that [investors] get the highest possible returns on their investments."