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Gene Therapies Force Payment Innovation · 2019. 6. 17. · Managed Care & Specialty Pharmacy 2019 Annual Meeting. But as effective as the treatments may be, high setup costs, variable

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    Clinical (/Section/Clinical/500)

    MAY 17, 2019

    Gene Therapies Force Payment InnovationMilestone-based contracts, other strategies may avert losses on million-dollartreatments

    By Gina ShawSan Diego—Of the 48 gene therapies in phase 3 trials, several may hit the market this year or next,and some have the potential to transform care, according to experts presenting at AMCP’sManaged Care & Specialty Pharmacy 2019 Annual Meeting.

    But as effective as the treatments may be, high setup costs, variable clinical responses, and

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  • issues with reimbursement and coding have resulted in signiOcant losses for somemanufacturers and providers.

    “The one-time administration for these therapies introduces a mismatch with beneOts,” said JaneF. Barlow, MD, MPH, MBA, a senior advisor for the MIT Center for Biomedical Innovation, inScottsdale, Ariz. “The cost is front-loaded, but beneOts accrue over time, creating a challenge aspatients move in and out of plans. This is very different than what we see with chronicmedications.”

    ADVERTISEMENT

    Still, the effort to work out these Onancial kinks is well worth it, given the huge clinical upside ofgene therapy. In hemophilia, for example, gene therapy offers a possible “cure” for the disease,said Edmund Pezalla, MD, MPH, the CEO of Connecticut-based Enlightenment Bioconsult, addinga caveat: “Let’s keep that in quotes. Patients may still need factor replacement under certainconditions, but we may be able to move them from severe disease to moderate disease, or evenmild.”

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  • (/aimages/2019/spc0619_021c_45595_150.jpg)Susan Trieu, PharmD

    (/aimages/2019/spc0619_001a_45595_600.jpg)

    In the trial of BioMarin’s hemophilia A gene therapy (the farthest along in the pipeline of at leastsix gene therapies for hemophilia A in active clinical trials), the annual bleed rate among 15patients (all with severe disease) fell from 16.3 episodes to 0.5 per year, with the number offactor VIII infusions decreasing from 136.7 to 8.5 per year, according to data presented by thecompany at the International Society on Thrombosis and Haemostasis 2017 Congress.

    Gene therapy for hemophilia B is farther back in the pipeline but also is showing great promise. Inthe phase 1/2 proof-of-concept trial for uniQure’s hemophilia B gene therapy (N Engl J Med2014;371[21]:1994-2004), the 10 adult patients achieved an overall 84% reduction in spontaneousannual bleed rate, and eight of the 10 have discontinued prophylaxis, Dr. Pezalla noted.

    In phase 1 of the START trial of onasemnogene abeparvovec/AVXS-101(Zolgensma, Novartis), involving 15 children with the progressive, usually fatalneurodegenerative disease spinal muscular atrophy (SMA) type 1, 100% ofpatients were alive and free of mechanical ventilation at 20 months of age,compared with 8% of historical controls (N Engl J Med 2017;377[18]:1713-1722).

    “When they looked at motor end points, 75% of patients in the trial were ableto roll over and sit unassisted for 30 seconds, and about 13% of them werewalking,” said Susan Trieu, PharmD, the director of enterprise specialty clinicalsolutions at MedImpact Healthcare Systems, in Southlake, Texas. “None ofthe historical controls could achieve any of those motor end points. It’s awe-inspiring, but it willcome at a cost,” she noted. (For more coverage of SMA type 1, see article, page 6.)

    Of the four products most likely to hit the market soon (see box below), onasemnogeneabeparvovec has an expected FDA decision date of May 2019; the other three therapies (forhemophilia A, beta thalassemia and aromatic l-amino acid decarboxylase [AADC] deOciency) areexpected to Ole with the FDA by the end of this year. These products would join the three genetherapies on the market: 2 chimeric antigen receptor (CAR) therapies—tisagenlecleucel (Kymriah,Novartis), for relapsed/refractory B-cell precursor acute lymphocytic leukemia andrelapsed/refractory large B-cell lymphoma, and axicabtagene ciloleucel (Yescarta, Kite

    https://www.specialtypharmacycontinuum.com/aimages/2019/spc0619_021c_45595_150.jpghttps://www.specialtypharmacycontinuum.com/aimages/2019/spc0619_001a_45595_600.jpg

  • relapsed/refractory large B-cell lymphoma, and axicabtagene ciloleucel (Yescarta, KitePharma/Gilead), for relapsed/refractory large B-cell lymphoma—and voretigene neparvovec(Luxturna, Novartis), for biallelic RPE65 mutation–associated retinal dystrophy.

    High Cost of a Cure

    These previously approved gene therapies already are breaking price records, with costs rangingfrom $373,000 to $850,000 for a one-time dose.

    Although Novartis hasn’t set a price for onasemnogene abeparvovec, the company has arguedthat it would offer good clinical value at a price between $4 million and $5 million. (The Institutefor Clinical and Economic Review puts the cost-effectiveness threshold for the drug at $900,000).Analysts have projected that the hemophilia gene therapies could cost between $1.5 million and$2 million.

    (/aimages/2019/spc0619_021b_45595_600.jpg)

    The costs associated with gene therapies may prove challenging to sustain for manufacturersand providers alike.

    “We now have a full year’s worth of data on Kymriah and Yescarta from a sales perspective, andthey haven’t done as well as we thought they would do,” Dr. Trieu said. “For example, sales ofKymriah only reached $76 million at 90 authorized treatment centers in 2018, with Yescartareaching $263 million at 74 authorized centers. Several institutions may even be losing moneydoing these CAR-T gene therapies, because of inability to recoup their costs.”

    https://www.specialtypharmacycontinuum.com/aimages/2019/spc0619_021b_45595_600.jpg

  • doing these CAR-T gene therapies, because of inability to recoup their costs.”

    The Onancial loss is partly a function of becoming an authorized treatment center, which requiresan enormous investment in data management, staff training and patient education. At a panelheld during the 2019 National Comprehensive Cancer Network (NCCN) Annual Conference inMarch, cancer center oscials cited another problem: Medicare’s hospital billing codes, which arenot designed for the care involved in CAR-T therapy. Panelists at the NCCN meeting estimatedthat the real cost to an institution of providing one patient with CAR-T therapy is between$800,000 and $1 million. “The process of paying for it doesn’t allow Medicare to reimburseenough for hospitals to pay for the therapy,” said Frederick Locke, MD, the co-leader of theimmunology program at Mostt Cancer Center in Tampa, Fla. “How is that going to work? We canonly do this for so long where we’re not getting fully paid.”

    (/aimages/2019/spc0619_021a_45595_600.jpg)

    At the AMCP meeting, Dr. Trieu pointed to the cautionary tale of the world’s Orst gene therapy,alipogene tiparvovec (Glybera, uniQure). Approved in Europe in 2012, for the treatment ofhereditary lipoprotein lipase deOciency, it was withdrawn from the market in October 2017. Even

    https://www.specialtypharmacycontinuum.com/aimages/2019/spc0619_021a_45595_600.jpg

  • with a $1.2 million price tag, the cost of manufacturing each dose meant the company lostmoney on the drug. “Based on the combination of a lack of suscient market demand andrequirements for additional studies and surveillance of patients, uniQure deemed it too expensiveto continue,” she said.

    Playing With Risk

    The high price tags and front-loaded cost burden of these novel gene therapies are leadingpayors to experiment with innovative approaches to manage their Onancial risk, presenters at theAMCP session said.

    “Nothing has disrupted how we code and pay and reimburse as much as gene therapy has,” saidmoderator Clifford Goodman, PhD, the senior vice president and director of the Center forComparative Effectiveness Research at The Lewin Group. “Many groups are looking at newpayment models.”

    The MIT Center’s Dr. Barlow said payors already are working on several solutions. For example, inMIT’s FoCUS (Financing and Reimbursement of Cures in the US) payor survey conducted in thefall of 2018 (unpublished), payors reported they plan to use multiple mechanisms to manage theOnancial risk and impact of these therapies:

    74% said they would restrict use to centers of excellence;

    50% said they would rely on short-term, milestone-based contracts;

    44% would use population risk pooling;

    36% would employ long-term, milestone-based contracts; and

    33% would spread payments over multiple years and tie each payment to achievement ofperformance measures.

    Dr. Barlow categorized these mechanisms into three primary “precision Onancial solutions”:

    Milestone-based contracts. These typically are less than two years in duration and involvespeciOed payment end points tied to early outcomes. “This doesn’t take away the high single-yearcost or the issues around timing, but it addresses performance risk,” Dr. Barlow said.

    Performance-based annuities. These are deOned as contracts longer than two years—most likelythree to Ove years—with payments spread out across a contract period and tied to performanceover time. “This type of contract may get at some of the actuarial risk because you’re spreadingout your payments, timing and performance risk,” she said. For example, payments for a high-value gene therapy, such as onasemnogene abeparvovec, might be made at 20% over four years:

  • 20% on therapy initiation and 20% each year after, assuming agreed-upon milestones are met.

    Risk pooling. This involves a carve-out of underwriting for novel breakthroughs. “That’s veryattractive to a lot of payors. Everyone wants to carve that out to the federal government, but itmay or may not be a viable solution in this case,” Dr. Barlow said.

    MIT’s FoCUS program is planning pilots of some of these models, including performance-basedannuities with commercial payors and milestone-based contracts with public payors, Dr. Barlowsaid. “The solutions you need to manage this new, disruptive therapy might differ by treatmentcharacteristics and the Onancial challenge the payors might experience,” she explained. “There’sno ‘one size Ots all.’”

    ‘A Paradigm Shift’

    “This is a paradigm shift,” agreed Sophie Schmitz, the managing partner at Partners4Access, aglobal consultancy specializing in access to orphan drugs, based in Amsterdam. “Gene therapydoes have the potential to revolutionize medicine, but if that is to be the case, then we need to bethinking in a revolutionary way about how we evaluate and pay for gene therapy.”

    Staged-payment contracts, not tied to milestones or performance, could soften the initial impactof new high-cost gene therapies on the health care budget. “In these arrangements, themanufacturer is almost acting as a bank,” Ms. Schmitz said. “But with so many gene therapiesbeing developed by small [biotech companies], it can be challenging for them to get suscientreturns on a short-term basis.” She noted that the initial payment must be suscient not only tocover the manufacturer’s costs but also the provider’s cost of delivering treatment.

    In addition, although payors can spread their cost over a certain amount of time, stagedpayments don’t necessarily address the uncertainty over long-term beneOts. “Just because you’repaying over four years doesn’t mean you get four years’ worth of beneOts,” Ms. Schmitz said.

    The type of Onancial solution deployed, she said, is likely to depend on the conditions that aparticular gene therapy will treat (see box on MIT’s Project Cure). Outcomes-based payments,whether short-term and milestone-based or longer-term and performance-based, solve thatproblem to the extent that they are conditioned on performance. “If the therapy is less effectivethan what was originally anticipated, then the next payments will not be made,” Ms. Schmitz said.

    “Of course, from a manufacturer or industry perspective, it’s a nerve-wracking system becauseyou need to have total conOdence that your therapy is going to do what you say it will do. Howcan you design a clinical trial that will give you that conOdence?” Furthermore, are the end pointsthat worked in a clinical trial feasible for widespread replication in outcomes-based contracts?

  • that worked in a clinical trial feasible for widespread replication in outcomes-based contracts?For example, the primary end point of the clinical trial that led to the approval of voretigeneneparvovec was patient performance on the multi-luminance mobility test, in which a patientnavigates a maze at varying light levels, stepping over and around obstacles to reach a door atthe end. “That’s discult to use in a larger outcomes-based payment system.”

    Dr. Trieu reported that her spouse is employed by AstraZeneca. Dr. Barlow reported Gnancial relationships with Pictet, RealEndpoints and Therapeutics MD. Dr. Pezalla reported a Gnancial relationship with BioMarin. Drs. Goodman and Schmitz reported norelevant Gnancial relationships.

    MIT’s FoCUS Project Cure Archetypes

    (/aimages/2019/spc0619_021d_45595_600.jpg)

    The type of financial solution deployed for gene therapy in real-world outcomes-based paymentsystems is likely to depend on the conditions that a particular therapy will treat, suggested SophieSchmitz, managing partner with Partners4Access. She agreed that the four “archetypes” described byMIT’s FoCUS project offer a good framework for projecting financial impact:

    Novel breakthroughs: treatments for ultra-orphan diseases with a high unmet need and noalternative therapies. “While the price for these therapies would be very high, the budgetimpact could be manageable, because you haven’t got that many patients,” Ms. Schmitz said.“But if there is uncertainty about the long-term effects—perhaps you only have three years’worth of data—outcomes-based staged payments would work quite nicely.”

    Orphan disruptors: new treatments for orphan diseases with a preexisting, establishedclinical pathway, such as spinal muscular atrophy type 1. “The budget impact here could bemanageable if you think about using those therapies in only newly diagnosed patients,” shesaid. “But if you use it in the treated population, the short-term, one-off high budget impact islikely to require staged payments. The complication here is all around current standard ofcare and what’s going to happen to it.”

    Oncology products: treatments such as CAR-T therapies for oncology indications with highincidence and low prevalence, where the durability of the novel treatment is defined by arange of about 12 to 18 months. “Therapies like CAR-T have a smaller period of benefit and

    https://www.specialtypharmacycontinuum.com/aimages/2019/spc0619_021d_45595_600.jpg

  • range of about 12 to 18 months. “Therapies like CAR-T have a smaller period of benefit andtheir durability is not as great as some of these other gene therapies,” Ms. Schmitz said. “Theway outcomes-based staged payment would work here is if a treatment’s efficacy is reallyuncertain, but over a much smaller time period, not year by year.”

    Quantum leap: treatments with large incident and prevalent populations representing asignificant burden—areas such as cardiology, metabolic disorders, neurology andrheumatology. “That’s where the budget impact would be enormously high and a major issue,but we are not likely to see those very soon.”

    —G.S.

    Gene Therapies Nearing FDA Approval

    (/aimages/2019/spc0619_020a_46085_600.jpg)

    The following gene therapies (or gene-modified cell therapies) are among the candidates for approvalwithin the next 24 months:

    Onasemnogene abeparvovec/AVXS-101 (Zolgensma, Novartis), a treatment for theprogressive, usually fatal neurodegenerative disease spinal muscular atrophy (SMA) type 1.SMA is believed to affect as many as 10,000 to 25,000 children and adults in the UnitedStates, making it one of the most common rare diseases.

    Valoctocogene roxaparvovec/BMN-270 (BioMarin), for the treatment of hemophilia A.According to the National Hemophilia Foundation, about 16,000 people are living withhemophilia A in the United States.

    Lentiglobin (bluebird bio), for the treatment of beta thalassemia. An inherited blood disordercharacterized by reduced levels of functional hemoglobin, beta thalassemia is relativelyuncommon in the United States but is one of the most common autosomal recessivedisorders worldwide. More than 60,000 infants are born with the disease every year.

    GT-AADC (PTC Therapeutics), for the treatment of AADC deficiency. There are no approvedtreatments for this rare inherited disorder, which usually appears in the first year of life andinvolves impaired production of an enzyme responsible for synthesis of the neurotransmittersdopamine and serotonin. Patients with severe forms of the disorder usually die before 7 yearsof age.

    —G.S.

    https://www.specialtypharmacycontinuum.com/aimages/2019/spc0619_020a_46085_600.jpg

  • —G.S.

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