Nearly a Decade After CAR T, Medicare’s Cell and Gene Therapy Payment Gap Persists

Nearly 10 years after chimeric antigen receptor (CAR) T-cell therapies reached the market, Medicare still has no durable framework for paying for cell and gene therapies (CGTs), according to Dan Farmer, principal at BGR Group, and Remy Brim, PhD, head of the firm’s Health and Life Sciences Practice, speaking on a policy panel at inSPire2026, the National Association of Specialty Pharmacy’s newly rebranded annual meeting, in National Harbor, Maryland.

Both former congressional health staffers said federal payers have made only incremental fixes while the central question, how to sustainably pay for high-cost, potentially curative products, remains unresolved.

Medicare DRG Cell and Gene Therapy

Medicare pays hospitals for most CGTs through a single lump-sum diagnosis-related group (DRG) payment, the same mechanism used for any inpatient stay. New products can briefly qualify for an add-on payment covering 50% to 65% of costs, but it expires after a couple of years, leaving hospitals to absorb the cost inside a flat DRG rate. CMS created DRG 018 specifically for CAR T, and rather than adding new dedicated codes as more therapies win approval, it has weighed folding additional immunotherapies into that same DRG—a move the American Society of Gene & Cell Therapy has cautioned could dilute payment accuracy.¹

As Medicare pays the hospital rather than the manufacturer, Farmer said, “The hospital each time has to decide: are we willing to buy and sell gene therapy, provide it to the patient, and accept what Medicare provides us?” CMS has taken comments on expanding the DRG structure but has largely let the process play out.

Medicaid has moved further. Through the Cell and Gene Therapy Access Model, CMS negotiates pricing discounts and outcomes-based rebates directly with manufacturers, and participating states then decide whether to sign onto those model-negotiated terms rather than negotiating their own deals.² Most states opted in when the model covered sickle cell gene therapies, 33 states, DC, and Puerto Rico, covering roughly 84% of Medicaid enrollees, with manufacturers guaranteeing discounts and rebates if outcomes fall short.³ CMS says it is weighing whether to extend the approach to other therapies and even to Medicare, though no formal proposal has emerged.

Coverage Exclusions Fuel CGT Investment Risk

Brim said that ambiguity carries a cost beyond any single hospital's balance sheet, explaining that commercial insurers have begun quietly excluding specific disease indications from employer plans rather than covering gene therapies outright, and that pending drug-pricing policy adds to the uncertainty. Inflation Reduction Act price negotiation could eventually reach these products through Part B, but not before plan year 2028, once they clear an 11-year exclusivity window.⁴

Brim added that the administration's most-favored-nation deals, which peg US prices to a basket of other countries, carry little weight for therapies launched only domestically, since there's no foreign price to reference. Together, Brim argued, the unpredictability discourages investment, and he posed the question, “Why would you want to invest in this space to get your 10 to 20 adopted cell and gene therapies a year if you could invest in AI or a data center, where you have a more certain return?”

What’s Next: PDUFA VIII Reauthorization and the Patient Access Act

The panelists pointed to the pending Prescription Drug User Fee Act (PDUFA) VIII reauthorization—PDUFA VII expires September 30, 2027, and the FDA must submit its commitment letter to Congress by January 15, 2027⁵—as a legislative opening that could refine the Regenerative Medicine Advanced Therapy designation. The Patient Access Act, which would carve out anti-kickback rules so manufacturers can cover patients’ travel, lodging, and caregiver costs, was cited as a narrower, achievable fix.⁶

But neither panelist expects Congress to touch Medicare's core payment question. As Farmer put it, “The core question of, ‘Should Medicare just open the spigots and start paying for every cell and gene therapy at the asking price as it comes to market?’—you don't see as many people jumping in and asking for people to do that.”

A decade on, the panelists’ message was that federal payment policy is still being written one product and one workaround at a time.

References

1. American Society of Gene & Cell Therapy. Comments on FY 2026 IPPS proposed rule regarding MS-DRG 018. Published May 10, 2025. Accessed September 22, 2026. https://www.asgct.org/uploads/files/general/Policy%20Statements/PDFs/11-ASGCT-IPPS-FY26-Comments-ext.pdf.pdf
2. Centers for Medicare & Medicaid Services. Cell and Gene Therapy (CGT) Access Model. CMS.gov. Accessed September 22, 2026. https://www.cms.gov/priorities/innovation/innovation-models/cgt
3. McNulty R. CGT Access Model aims to expand access to sickle cell treatments. American Journal of Managed Care. July 18, 2025. Accessed September 22, 2026. https://www.ajmc.com/view/cgt-access-model-aims-to-expand-access-to-sickle-cell-treatments
4. Kaiser Family Foundation. Key facts about Medicare drug price negotiation. KFF.org. Accessed September 22, 2026. https://www.kff.org/medicare/key-facts-about-medicare-drug-price-negotiation/
5. Akin Gump Strauss Hauer & Feld LLP. PDUFA VIII pushes forward: proposed commitment letter outlines updates to drug review process. August 26, 2026. Accessed September 22, 2026. https://www.akingump.com/en/insights/alerts/pdufa-viii-pushes-forward-proposed-commitment-letter-outlines-updates-to-drug-review-process
6. Patient Access Act of 2024, HR 9184, 118th Cong (2024). GovInfo.gov. Accessed September 22, 2026. https://www.govinfo.gov/app/details/BILLS-118hr9184ih