a hand trying to touch a DNA strand

By Jen Klarer, Partner, Head of Cell and Gene Therapy

At the 2023 Cell & Gene Meeting on the Mesa earlier this month, senior executives and top decision-makers discussed commercialization challenges facing the cell and gene therapy sector. This year’s conference called out some of the biggest issues that the industry is facing.

Leaders discussed challenges ranging from manufacturing scalability issues to gaps in Medicare and Medicaid reimbursement to funding difficulties for cell and gene therapies in the U.S. Here are three major challenges that were top of mind at the event, and my perspective on opportunities for the industry to address them.

  1. Manufacturing and supply chain issues. Manufacturing a cell or gene product is incredibly complex and expensive, with some cost of goods sold (COGS) totaling up to $450,000 per dose due to expensive materials, clean room space, and specialized scientists and engineers required to make and quality check products. The industry continues to wrestle with both manufacturing and supply chain issues due to limitations in technology, resources and experience, so scaling production is difficult. Raising awareness of cell and gene therapy manufacturing job opportunities in academic settings across levels of education may help recruit more talent to the field.
  2. Insufficient product reimbursement. Government patient reimbursement, particularly inpatient Medicare and Medicaid fee-for-service cases, continues to provide insufficient provider reimbursement for cell and gene products. This makes it more difficult for provider sites to offer products to eligible patients and scale those offerings. As outlined in my previous article, pharma companies can partially address these potential access inequities by educating provider sites on billing and coding best practices to support offering new products; however, continued commenting on draft CMS rules and in public forums to support changes in Medicare and Medicaid reimbursement structures is needed.
  3. Inadequate financing. Two separate issues related to cell and gene therapy (CGT) financing were raised: biotech financing of CGTs, and payer financing of CGTs.

As CGT companies’ marketed assets have struggled to reach forecasts, investors appear to be slowing infusion of additional capital. Limited investor visibility into historical drivers of forecast issues (e.g., commercial and market access challenges, complexities in FDA alignment), and lack of comparison to more relevant market dynamics for next generation CGTs (e.g., less referral barriers), reduces confidence in investment recovery. Biotech companies can address this by integrating realistic milestones with corresponding commercial readiness plans for timely launch and revenue realization into investor presentations.

Payers also expect affordability challenges as patients transition from chronic care management to one-time treatment. Payments for treatment, previously spread over years or decades, are now concentrated into one or a few instances of care with CGTs. This treatment journey misaligns with current annualized budget structures. As a result, pharma companies are developing novel benefit designs and payment model structures to make cell and gene therapy options more affordable to payers and potentially assist with managing “lightning strike” claims.

While these are pervasive issues, the industry is responding to these challenges with solutions like initiatives to recruit new talent (e.g., university sessions), commenting in public forums (e.g., CMS policy), and developing new affordability model structures. Pharmaceutical companies and biotechs can also address these challenges and improve access to cell and gene therapies long term with upfront commercial planning. We can work together to create a more sustainable environment for cell and gene products as we transition to more curative treatment options for debilitating conditions.

To learn more about The Dedham Group’s strategic consulting services for oncology and specialty therapeutics, and how we can help move your treatment from pipeline to patient, contact us.