In the first of this series, we discussed how innovators can be more strategic and effective about reimbursement and address coverage barriers earlier from a better understanding of the US insurance marketplace. Particularly, this gave a clinical and financial perspective on the implications that impact the use of novel therapies like cell and gene therapies.
However, when and what manufacturers determine through post-approval research or Risk Evaluation and Mitigation Strategies (REMS) requirements with FDA, marketing, and access strategies, and why it matters for commercial insurance is the focus of this column.
Clinical and financial tactics utilised by manufacturers today can create unintentional barriers or slow access down – the opposite of the intended strategy. An alternative integrated strategy to include novel holistic models could better serve manufacturers. This stands in stark contrast to the current marketplace of solutions that are used, even when inappropriate for these high cost, low volume therapies for rare diseases.
Thinking earlier in development about reimbursement
Before the pandemic, the US market was changing in its thinking regarding value-based contracts, care management, total versus unit cost of care, risk management, and risk mitigation. For employer-based commercial insurance products there has been a faster evolution in thinking while the care administration and provider systems are still catching up post-pandemic. The result has been little change in 2023 from the manufacturers’ perspective, but operational change is underway because of the emerging shift in employer client coverage strategies.
Off-cycle to the manufacturers’ calendar, the insurance coverage calendar runs 12-36 months long depending on the employer or insurer contract. When considering product development or launch strategy timing, manufacturers involved with rare disease therapies have increasingly faced surprises or no-coverage challenges within a year of launch.
Given commercial insurance and plan administration changes in response to an increasing number of rare disease therapies and consumerism, it is not surprising that no coverage, exceptions, or exclusion clauses have increased substantially. Existing alternative financial coverage strategies have not delivered on their promise. The financial implications of unknown or little-understood clinical therapies by employer plan administrators have been driving the no-to-limited coverage trend seen in the marketplace.
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Role of insurance, reimbursements and reinsurance
Higher prices for orphan drugs have not been associated with more significant barriers to insurance coverage (medical benefits). That is because insurers recognised that even very high prices, when multiplied by small patient numbers, would have a limited impact on budgets and insurance premiums. That is now changing as numbers and financial risk rise.
There is a strong “rule of rescue” to prioritise treatment for severe conditions, inherited, and disproportionately affecting the very young. Currently, orphan drugs are not a small minority of drug approvals. Just as manufacturers plan far in advance (5-10 years for R&D), larger plans and employers are now in the earliest stages of strategic plan coverage development (i.e., initial dialogue with providers and facilities). Complex and rate-limiting issues continue around the use of prior authorisation requirements that are tied to FDA labeling. Surprisingly, relatively few employer plans utilise preventative management efforts such as requirements for genetic/diagnostic testing or clinical improvement monitoring. This trend limits alternative risk contracting solutions too. Also, it is an important area for plan operations improvement, which is beneficial to all stakeholders.
Finally, most commercial plans or payers reported that they are yet to determine the methods for assessing the financial impacts of orphan drugs thereby limiting the opportunity to achieve or report value to purchasers of care. This can be an easy area of opportunity but requires real-world multi-stakeholder insight and knowledge.
The individuality of cell or gene therapies works against traditional population-based insurance risk mitigation models. While over half of the US market is represented by employer purchasers, those covered by US government insurance are also seeking new models that address clinical and financial barriers. While less limited to change than the government, the goal for employers in healthcare coverage is optimising clinical and financial outcomes.
Disproportionately higher costs for rare diseases have significant implications for employers. Solutions for rare disease coverage must consider those five areas and provide reportable results for employers and plans to adopt beneficial coverage.
Path forward for cell and gene therapies
The future view on new gene and cell-based therapies is largely positive when their value is verified as durable and offering life-saving solutions for previously untreatable medical conditions. Mitigating that positive is the absence of a patient-centric holistic solution offering the resources required for a small volume of patients that need a complex diagnostic process and immediate care. That care includes access to clinically appropriate and available gene or cell therapies that can be financed and delivered to the patient with measured and enhanced outcomes.
If the current ecosystem must be compensated for a leveraged trend to be profitable, coverage inequality will continue. Entrenched behaviours consolidated with participants that spend excessive monies to disengaged third parties managing utilisation that destroys quality may be further enhanced by conservative, actuarial analysis mostly from retrospective models. Current development pipelines and regulatory approval speeds outstrip the actuarial process for risk coverage adaptation.
How innovators can be more strategic and effective in thinking about reimbursement sooner rather than later offers a unique opportunity for market alignment. Discussed but never fully realised, is an integrated approach that can help shape actuarial and coverage or contract models leading to the development of innovative market-ready solutions. Such solutions can include maximising market access, product acceptance, and creating a “win-win” beneficial for all stakeholders. That is a stated goal for life science firms but requires an effective convener to achieve an alignment around holistic solutions that can deliver benefits coverage desired by all concerned.
F. Randy Vogenberg is a principal at the Institute for Integrated Healthcare (IIH) where he focuses on collaboration across the U.S. health ecosystem. His projects encompass commercial employee benefits, insurance innovation, strategic applied outcomes research, and address high-cost medical benefits care – including for cell and gene therapies.
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