By Joanna Fernandes, Associate Consultant
Cell and gene therapies (CGTs) are considered one-time transformative treatments, positioned as having life-long benefits. These new therapies are challenging the traditional business model, with health technology assessment (HTA) and reimbursement processes having been established around chronic therapies. This has led to one of the biggest hurdles currently facing health authorities and industry; how to appropriately price and fund these innovative therapies.
A key concern for payers is the significant strain funding these often-high priced therapies can place on healthcare budgets. With the rise in CGTs expected in the coming years, paying high upfront prices for each of these one-time treatments will quickly become unsustainable. Adding to the challenge, is the uncertainty associated with the long-term efficacy and safety of CGTs, often driven by relatively short trial durations involving limited patient numbers.
Given these issues, payers are starting to adapt their funding frameworks to accommodate incoming CGTs. A recent example of this, is the payment at results (PaR) model announced by the Italian Medicines Agency (AIFA) in August 2019. This payment model will enable Novartis’ Kymriah in Italy to be reimbursed at a list price of €320,000.
Kymriah was approved by the European Medicines Agency (EMA) in August 2018. It is indicated for patients 25-years old or under with B-cell acute lymphoblastic leukaemia, who have relapsed or have failed to respond to previous treatment or stem cell transplant. As well as, treatment for diffuse large B-cell lymphoma in adults who have relapsed or are refractory despite two or more treatments. This new payment framework will be applied to both indications, affecting approximately 450 adults and 40 children in Italy.
Kymriah was awarded innovation status by AIFA, with a rating of important. This allows immediate uptake into regional formularies, exemption from compulsory discounts and funding via fondo speciale per I farmaci innovative oncologici (a special fund for innovative oncology drugs) which has an annual budget of €500 million. However, this status will be re-evaluated after 1 year with data from all patients included in a web-based patient registry.
The PaR model being introduced distributes the total cost of Kymriah over three separate instalments, with each payment linked to outcomes, as monitored by the mandatory patient registry:
- The first amount represents 20% of the total cost and is paid 45 days after infusion, assuming the patient remains alive
- The second instalment, at 40% of the total cost, occurs 6-months post-infusion if the patient remains alive and progression free
- The final payment, for the remaining 40%, is due 12-months post-infusion assuming no disease progression or death
If a patient declines at any point in these first 12 months, hospitals are under no obligation to pay any remaining instalments.
This new PaR model comes as an evolution of the payment by results (PrB) system that has been used in Italy for many years. There are however some key differences between the two models. Firstly, in the PbR model the manufacture is paid the total cost of the therapy upfront. Then if the patient dies or experiences disease progression, manufacturers must provide a partial or full rebate to the payer. This makes it very challenging for the manufacturer to recognise revenue for sales in the Italian market. It can also create an administrative burden for both the manufacturer and health authority when ensuring the full amount is being returned and to the appropriate region.
For PaR, there is no claw back mechanism in place. Once an instalment has been paid, the health authority cannot claim it back regardless of the patient’s future outcome. This provides manufacturers with a more reliable source of revenue and greater certainty for payers given they do not have to continue with the instalments if the patient declines. Furthermore, the impact on health budgets is reduced as the overall cost of the therapy is more affordable for health authorities. This is because payments are spread over a longer period of time and there is a possibility of a lower total amount being paid, depending on patient outcomes.
While there are clear advantages of PaR, whether or not the framework will be successful remains to be seen, with an 18-month contract being negotiated between Novartis and AIFA. Given that contracts with AIFA typically last for 2-years, this shorter agreement could indicate the health authority’s uncertainty around the new framework, the therapy, or both.
This is just one example of new payment models being explored in Europe, another is Bluebird Bio’s suggestion of a 5-year milestone payment method for its recently EMA approved Zynteglo for beta thalassaemia. With the anticipated increase in CGT approvals, payers will likely learn and continue to adapt with each therapy reviewed. They may become more flexible in the models they employ, and so prospective CGT manufacturers would be advised to track and analyse the opportunity this provides to their own assets.