By Pooja Rana, Senior Consultant, and Jen Klarer, Partner, Head of Cell and Gene Therapy
Cell and gene therapies (CGT) are revolutionary medical treatments that offer potential cures for previously untreatable diseases. However, the high cost and complex logistics associated with these therapies pose significant challenges for reimbursement, hindering patient access. To navigate these obstacles, manufacturers need to take strategic approaches involving various stakeholders in the healthcare ecosystem. Here are some of the biggest challenges to cell and gene therapy reimbursement, and how manufacturers can address them.
Financial Burden of Treatment Cost
One of the primary challenges in CGT coverage is the high one-time cost, which deviates from chronic treatments our healthcare system is used to. The price of these therapies often exceeds several hundred thousand dollars, placing a heavy burden on providers and payers. While these high one-time costs are unavoidable, providers and payers will benefit from better understanding how these treatments will fit into an overall new standard of care, treatment journey, and the scope of costs or reimbursable steps to facilitate budget planning. Manufacturers can support provider site economic sustainability by actively engaging with their prioritized sites with economic implications associated with use of these therapies. By sharing product-specific financial information, manufacturers can foster transparency and facilitate informed decision-making among providers and payers.
Payer-Provider Case Rate Negotiations
Reimbursement complexities vary across different payers. For commercial payers, providers can pursue single-case agreements, where they negotiate payment for the product and services on a per patient basis to cover costs of treatment. However, bundled case agreements with commercial payers, where a fixed payment is received regardless of the patient’s length of stay, present a more challenging scenario. Since the higher costs are often associated with extended hospital stays and services, manufacturers can continue to educate payers on the CGT patient journey and the need to reimburse ancillary services to alleviate these additional financial burdens.
For government reimbursement, particularly under Medicare and Medicaid, the situation is even more difficult. Inpatient reimbursement rates are typically low, so the cost of care can result in significant financial losses for providers treating Medicare/Medicaid patients. Manufacturers should engage in continuous dialogue with the Centers for Medicare & Medicaid Services (CMS) and state Medicaid programs to explore more favorable reimbursement models (e.g., increasing DRG weights, carving out product reimbursement from standard payment bundles, etc.) and ensure sustainable funding. Here’s how the CGT landscape has evolved, and implications to consider.
Provider Site Concerns with Cash Float, Delaying Care
The increasing cost and complexity of CGTs are leading to longer reimbursement timelines, which can strain the cash flow of provider sites. Delays in reimbursement can result in providers being hesitant to take on new patients, ultimately delaying treatment utilization and access across patient populations. Manufacturers should highlight these financial challenges to payers and advocate for faster, more reliable payment processes and timelines. Additionally, expanding product distribution network to include specialty pharmacies to limit provider site financial risk for product may also accommodate higher patient volumes across providers and limit cash float concerns.
Payer Reliance on Stop-Loss Carriers, Lacking Scalability
Stop-loss carriers provide insurance to payers and self-funded employer groups to protect them from catastrophic medical claims by reimbursing for claims beyond a certain threshold. As the number of CGTs on the market increase, traditional stop-loss policies may become unsustainable for payers and employer groups. High costs could lead to patients facing significant out-of-pocket expenses or lengthy appeals processes as stop-loss carriers begin to carve out cell and gene therapies from coverage.
Shift to Outpatient Drawing Investment, and Payer Attention to 340B
The shift towards outpatient administration of CGTs is projected to increase, which could benefit reimbursement sustainability and predictability for provider sites. Outpatient settings often allow sites to leverage their 340B status, resulting in significant discounts to centers that qualify. Under the 340B drug pricing program, outpatient-administered cell and gene therapies may be discounted 17.1% for pediatric indications or 23.1% for adult indications, making these therapies more affordable to sites treating underserved populations. However, payers have begun to challenge the ability of provider sites to retain this discount by reimbursing at acquisition cost. Manufacturers should continue to work with providers to provide guidance on outpatient administration and encourage provider site pushback against payer tactics to limit utilized of 340B program.
Ultimately, addressing these challenges requires a multifaceted approach involving proactive engagement with stakeholders, innovative payment models, and strategic adjustments to pricing strategies. By doing so, manufacturers can enhance patient access to life-saving cell and gene therapies, ensuring that these groundbreaking treatments reach those in need.
To learn how The Dedham Group can help you address reimbursement challenges, contact us.