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MIT Group Brings Together Stakeholders to Brainstorm How to Pay for Curative Therapies Over Time

Mary Caffrey
More and more, stakeholders across the healthcare system— providers, commercial payers, pharmaceutical companies, large employers, state Medicaid officials, and even state budget officers—are grappling with the fact that the old pay-as-you-go way of covering medicines, even cancer drugs, was not built for these revolutionary therapies. A group at MIT is developing new models, which use reinsurance and payments over time to fund these durable treatments. 
Medicaid Best Price (MBP). The white paper and FoCUS members said the most pressing barrier to its financing ideas, especially the 5-year annuity, is the need to reform MBP rules. Created to ensure that Medicaid always received the lowest price for a medicine, the rules now create chaos when applied against value-based agreements that call for refunding payment if a therapy doesn’t work. It’s quite possible that a gene therapy for a rare condition could result in such a rebate—and then also set the pricing floor for all patients covered by Medicaid for whom the therapy would work perfectly. Fortunately, the MIT FoCUS members who spoke with EBO say members of Congress are keenly focused on this point, and Trusheim said bipartisan legislation to fix the problem is possible. 

Patient Mobility. Payers, employers, risk managers, and the government have all historically budgeted around 1-year time frames, so figuring out how to break out of that mindset will be one of the biggest challenges of the new financing models that the MIT FoCUS leaders envision. Solving the puzzle of what happens when a patient is treated with an expensive therapy and then changes health plans won’t be easy, but it must be addressed. Glasspool sees it this way: Say the former insurer entered into a 5-year annuity on behalf of a beneficiary. If the person’s employer switches insurers, and the former insurer has made 3 payments, the new insurer must make the last 2 payments. 

Just as the new insurer must take on the pre-existing medical condition, he said, “That new company is taking on the preexisting financial commitment.” As these kinds of agreements become common, insurers will take on and offload each other’s multiyear agreements, and things will even out. 

Clarity on Payer Communication. Most payers take 3 to 6 months after a therapy is approved to evaluate treatments before making final coverage decisions, Barlow said; in the interim, most have a process for a “medical necessity review” for individual cases. Recently, the FDA has allowed conversations prior to approval between payers and drug makers about which populations will be affected by a new therapy, but there’s still a need for more clarity on what is allowed and what is not. “Each company is trying to interpret that on their own,” Barlow said. “The problem is, you don’t know you’re stepping over the line with your interpretation until you are.” 

Greater clarity from the FDA, more robust data sharing, and a better understanding by providers of what information they must have to gain coverage would all help, Barlow said. 

Size of the Pipeline 

Trusheim notes that data published by NEWDIGS show that the number of durable therapies expected before 2030 is not so large that the health system cannot absorb them. A separate paper just released in Value in Health projects that 350,000 patients would be treated by 30 to 60 products by 2030.15 

Trusheim said that this translates into a $40 billion market. “So, that’s real money, but compared to a $3 trillion total healthcare spend, it’s not catastrophic to the whole system,” he said. “But the sticker shock on any individual product is still certainly high.” 

From the perspective of a nonprofit payer or a self-insured employer, a therapy for 1 or 2 rare diseases in a single quarter could be difficult to manage but is unlikely a threat to their reserves, Trusheim said. 

Coming up with solutions to smooth out payments, to avoid shocks to these smaller entities, gives these entities the tools to manage their way into the future. “I’m hopeful in all this,” he said. 

  1. Caffrey M. NCCN panel digs into the reality of CAR T-cell reimbursement. The American Journal of Managed Care® website. Published March 21, 2019. Accessed June 4, 2019. 
  2. Dr Brian Koffman highlights the benefits and risks of CAR T therapy. The American Journal of Managed Care® website. Published November 16, 2018. Accessed June 4, 2019. 
  3. Kaiser Family Foundation. Public opinion on prescription drugs and their prices. Kaiser Family Foundation website. Published March 1, 2019. Accessed June 4, 2019. 
  4. Spark Therapeutics announces first of their kind programs to improve patient access to LUXTURNA (voretigene-neparvovec-rzyl), a one-time gene therapy treatment [press release]. Philadelphia, PA: GlobeNewswire; January 3, 2018. Spark-Therapeutics-Announces-First-ofw-their-kind-Programs-to-Improve- Patient-Access-to-LUXTURNA-voretigene-neparvovec-rzyl-a-One-time- Gene-Therapy-Treatment.html. Accessed June 4, 2019.
  5. AveXis announces innovative Zolgensma gene therapy access programs for US payers and families [press release]. Basel, Switzerland: Novartis; May 24, 2019. Accessed June 4, 2019.  
  6. MIT NEWDIGS. New Drug Development ParadIGmS program. NEWDIGS website. Accessed June 4, 2019. 
  7. MIT NEWDIGS. Precision financing solutions for durable/potentially curative therapies. NEWDIGS website. uploads/2019/02/MIT-FoCUS-Precision-Financing-2019F201v023.pdf. Published January 24, 2019. Accessed June 4, 2019. 
  8. Kleinke JD, McGee N. Breaking the bank: three financing models for addressing the drug innovation cost crisis. Am Health Drug Benefits. 2015;8(3):118-126. 
  9. Jorgensen J, Kefalas P. Annuity payments can increase patient access to innovative cell and gene therapies under England’s net budget impact test. J Mark Access Health Policy. 2017;5(1):1355203. doi: 10.1080/20016689.2017.1355203 
  10. Carr DR, Bradshaw SE. Gene therapies: the challenge of super-high-cost treatments and how to pay for them. Reg Med. 2016;11(4):381-393. doi: 10.2217/rme-2016-0010. 
  11. Neville S, Atkins R. Novartis weighs reinsurance tie-up to fund ultra-expensive drugs. The Financial Times. December 16, 2018. d9685d58-f6db-11e8-8b7c-6fa24bd5409c. Published December 16, 2018. Accessed June 4, 2019. 
  12. CMS proposes coverage with evidence development for chimeric antigen receptor (CAR) T-cell therapy [press release]. Baltimore, MD: CMS; February 15, 2019. Accessed June 4, 2019. 
  13. Caffrey M. Providers, industry raise concerns about CMS plan for CAR T-cell reimbursement, reporting on PROS. The American Journal of Managed Care® website. providers-industry-raise-concerns-about-cms-plan-for-car-tcell-reimbursement-reporting-on-pros. Published April 15, 2019. Accessed June 4, 2019. 
  14. CMS statement: delay in final chimeric antigen receptor (CAR) T-cell therapy national coverage determination [press release]. Baltimore, MD: CMS website; May 17, 2019. Accessed June 4, 2019. 
  15. MIT NEWDIGS. Projections from the existing pipeline of cell and gene therapies: launches and patient numbers. NEWDIGS website. edu/sites/default/files/FoCUS%20Research%20Brief%202018F210v027.pdf. Published October 28, 2018. Accessed June 4, 2019.
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