Evaluating alternative revolutionary reimbursement models to craft a sustainable business model for cell and gene therapies
Highlighting that we expect about 65 durable CGTs in the U.S. marketplace by 20301, he explained that beyond a one-time high cost, payers and therapy developers also face other financial challenges such as performance risks, referring to how effective and durable therapies will be, and actuarial risks, which relate to the likelihood of encountering patients willing to be treated with a specific treatment.
During the panel discussion that followed, Senior Vice President, Market Economics, David Senior, was joined by fellow industry experts, Heather McDonald, Vice President, Market Access for CGT + Digital at Bayer, Burcu Kazazoglu Taylor, Senior Director, Global Value and Access, at Novartis Gene Therapies, and Michael Sherman, Executive Vice President and Chief Medical Officer at Point 32, to discuss new innovative payment models to craft a sustainable business model.
Mark Trusheim: Before we dive into the what and the how of these new payment innovations, let’s start with why innovation pricing and contracting is important for your organization?
David Senior: Pharmaceutical distributors have played a key role helping therapy developers bring their products to market through various ways of innovation for decades. The right distribution partner is also a facilitator of the financing and data management that are critical in the early stage of product commercialization.
CGT isn’t the first market where financing challenges have gotten in the way of growth, but it is unique for many reasons.
As discussed with payers, providers, and biopharma manufacturers, building out models, payment timing, and performance risk are some of the things that stand out. The focus is really on outcomes-based agreements (OBAs) being the path forward.
“It is critical to have an efficient system in place for reimbursement, but there is the need to acknowledge the complexity of structuring these agreements.”
Each agreement is different, so it represents a lot of work, especially for a relatively small patient population, in a relatively small situation for a payer. There is a significant effort required to negotiate the agreement value structure and deal with the actuarial value associated with the agreement. But “the juice is definitely worth the squeeze” seeing that as the pipeline of CGTs continue to expand, there’s a pressing need to introduce solutions that help overtake the barriers affecting patient access.
Heather McDonald: As David mentions, there may be many different forms of innovative pricing and contracting. At Bayer we really see the transformative potential that these medicines can bring to patients. There’s a huge potential but in the access space, the frameworks that are typically used to assess value by payers don’t necessarily fit with the way CGTs are administered or the way they’re studied. And because of that fundamental mismatch, if we keep going down the road we used to be on in pharma, we won’t be able to reach agreements that consistently allow patients to access the medicines. We need to find a way to move forward and reach agreements that work.
I think what is really appealing about OBAs and why they have potential is because they allow stakeholders to negotiate on the things that are crucial for each party. The risks that the payers are bearing can be addressed in OBAs. The value of innovation that the manufacturers bring to market can also be recognized. It’s a framework that allows for discussion and an opportunity to address the actual risks and actual benefits and give a path forward.
Burcu Kazazoglu Taylor: We all recognize that new modalities challenge the current structure of healthcare systems. They are not really designed to manage therapies that provide long-term health benefit to patients with one-time administration. We need to consider the affordability and budget impact concerns that come with these therapies.
“Without innovative solutions, some of these therapies may not get reimbursed and may not reach patients that need them most.”
This patient impact is why these solutions are so important.
We’ve shown that we can successfully commercialize CGTs in today’s context and we have relied on innovative approaches to do that. But the work doesn’t end with having an agreement. It also requires we keep heavily investing in collecting and publishing real world data to continue address payer’s pain points. The future may present us with a new set of financing challenges to be able to do this at scale. There will be therapies for large patient populations with new modalities, and we do need to take a step further to plan for those.
Michael Sherman: Even though all of the noted challenges are relevant, as a payer, the most important issue for us is probably performance uncertainty. These therapies are generally coming to market under accelerated approval pathways with small populations and not always well controlled, randomized clinical trials. We understand that in many cases these therapies are for rare conditions, and there is the need to strike a balance between collecting solid data and getting a product to market when there is an unmet need. In that situation, when the data is less than robust or when there is a promise of a lifetime cure but not a lifetime’s worth of data, payers may push back on the price. We really need these kinds of agreements and collaborations to bridge the differences at least until a future date at which more comprehensive data reduces or eliminates that uncertainty.
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Mark Trusheim: What are the key features of the successful innovative pricing and reimbursement models?
Michael Sherman: We achieve the best results when we are sitting at the table with individuals whom we trust and when we believe that we are all trying to achieve the same objective, which is to provide access for therapies to those who need the most, in a way that fairly benefits all stakeholders.
From there, we can talk about 4 main features of value-based agreements:
- We need to start at a fair price and have an objective model for demonstrating that.
- The agreement should be tied to the right outcome measures, which should be objective, measurable, and matter to the patient, and ideally these should be the endpoints that were submitted to the FDA to gain approval.
- We need to agree on the population, which is generally but not always the population for which the data was collected. In some cases, FDA labels are broader than the population studied, and again that uncertainty may be addressed through Value-based agreements (VBAs).
- We need to get creative. We can’t be tied to simple models or what’s easy to implement but need to imagine what is possible.
Heather McDonald: I would also add the importance of the willingness for the parties to recognize the shared risk.
"It really needs to be a two-way or multi-way discussion where we are very honestly and openly recognizing that all parties are taking some risks when bringing these assets to patients."
On top of that, simplicity. It is key because the administrative barriers will also be something that needs to be considered. Keep it simple. Keep it clear. Also, as Michael mentioned, make sure it’s tied to the right outcomes.
And finally, as we are still relatively new in the space, assess whether there is an opportunity to learn, revisit, take a look at what worked well and keep getting better at these.
Mark Trusheim: What are the key features of OBAs?
Burcu Kazazoglu Taylor: OBAs are also made to address payers’ pain points. What matters to one payer may not be a priority for another. The only way to come to that understanding is by ensuring early dialogue to really get a chance to build trust and to understand what each party is solving and design an agreement that reflect those priorities. Highly standardized approaches are great for reducing complexity, but they may not always be appropriate in every situation and there are cases that require custom agreements.
It is also critical to design agreements with implementation in mind. OBAs can easily get overcomplicated and impossible to execute in the real world. We need to have clear, measurable endpoints, and agree on how those will be validated so that everyone is comfortable with the outcomes.
They need to make sense in the context of the system, country or state dynamics, regulations, etc., which can have an impact on what can and cannot be done. The cost of OBAs too complex to execute is lost time, which means delayed access for patients, which is the very thing we are all working hard to avoid.
Lastly, OBAs have a shelf life. They are solving a risk, a pain point, and when the circumstances change, there may no longer be a risk to solve. The OBA may no longer be the most appropriate solution.
David Senior: Operationalizing OBAs requires addressing multiple paradoxes at the same time, such as keeping it simple, flexible and affordable yet customized for everyone and reliable in terms of data collection.
As we highlighted a few times during this discussion, OBAs aren’t applicable for all CGT products and this needs to be accepted from the start. For certain products, there will always be a lack of clarity in terms of measurable outcomes and the negotiation will go on forever.
A convener, the intermediary between payer, manufacturer and provider, should really focus on two things. First, data collection and second, how exactly will the financial flows work. Most OBAs are currently short-term agreements and data collection is slightly easier with those. But as you start talking about multi-year durable agreements, there’s a need to work out how to give everyone sustained access to the clinical data, what will be the responsibilities of the different parties once the agreement is set, and how to tackle the complexity ahead. Once clinicians give their consent to provide data, they should understand they will have to continue providing that data for the duration of the agreement as we need to be able to identify when the specified milestones are met.
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Innovative agreements: Exploring alternative payment models
Mark Trusheim: What is your advice to those looking at how to advance pricing and reimbursement options for CGTs?
Heather McDonald: How we show up across and around the table is really important and will be key as we continue to move forward. OBAs is one of the solutions for the way forward, but it’s one tool in the toolbox. We need to keep learning and growing. We need to share learnings across the ecosystem so that we can keep evolving, improving and doing better because ultimately this is about helping patients access transformative innovations.
David Senior: With so many products currently in the pipeline, the risk is that the technology moves faster than the reimbursement models. It is critical to get started early and not wait until the later stages of development. My advice would be: plan as early on the reimbursement side as on the clinical development side.
Burcu Kazazoglu Taylor: I agree on starting early, not just with discussions between manufacturers and payers, but also when thinking about contracts and outlining what an agreement might look like in the development cycle. We want to end up with the right end points and data metrics when launching.
Also, as Heather said, those options require a true cross-functional effort. Innovative approaches won’t be possible without the close partnership of medical, finance, legal and many other teams within the organization. Don’t underestimate the power and impact of investing in partnerships and bringing colleagues along the journey, educating them in why we’re trying to set up such solutions.
Michael Sherman: I would agree with being early. I am heartened by the number of early-stage companies that ask us for advice. It’s easier to craft mutually acceptable solutions early rather than downstream where one party may offer the other a “take or leave it” opportunity.
When approaching a payer, sell solutions and be creative; the ultimate goal is to offer a period of time during which patients will be receiving what has been promised, whether freedom from disease progression, functional improvement or avoidance of other medications. But also, be humble.
"We’ve gotten away from the playbook that states that if a drug is approved and it is the only game in town, payors will cover no matter how questionable the data and how high the price."
We have seen some recent examples that illustrate that when the data is unclear and when there are questions about the efficacy and value proposition of a therapy, payers are more willing to push back and say no. The less compelling the data used to gain approval, the more robust value-based agreements need be.
Although the current pricing and reimbursement models still strive to properly value cell and gene therapies, the capabilities of new and innovative approaches bring hope to entire ecosystem.
While they may not be appropriate in every situation, outcomes-based agreements (OBAs) may be the key to unlocking the market potential as long as therapy developers and payers ensure they maintain simplicity, flexibility, and multi-way conversations acknowledging the needs and expectations of all parties.
AmerisourceBergen sits in a unique position to operationalize and manage OBAs as well as the actuarial risk as we touch almost every segment of the ecosystem. We have visibility into different parts: on the therapy developer's side, we solve issues, while on the payer’s side, we offer turnkey solutions; being that end-to-end solution partner to ensure a seamless transition from bench to bedside.
Learn more about our new outcomes-based financial product designed to support the clinical use of CGT treatments here.
1. Source: Durable cell and gene therapy potential patient and financial impact: US projections of product approvals, patients treated, and product revenues. Drug Discovery Today, Colin M Young, Casey Quinn 1, Mark R Trusheim, https://pubmed.ncbi.nlm.nih.gov/34537333/