Conference Presentation, Panel
Paying for Cures
Milken InstituteColleen Rye, Christiana Bardon, Louis DeGennaro, Joe La Barge, Mark Trusheim, Cynthia Verst, Cindy Virst, Mark Trusseimer, Chris Barden, Joe Medina, Eric Schmidt, Lou, Louis Kombolaini, John McWhorter, Tanisha Carino, Martha Minowski
- The number of FDA-approved curative therapies is projected to rise significantly beyond the three existing in 2017, with global and European markets expected to see "many more" approvals.
- With over 500 gene therapies currently in development and approximately 20 in Phase 3, historical success rates predict 12 to 14 additional curative, durable therapies reaching the US market within two to three years.
- MIT statistical modeling forecasts approximately 40 durable cures by 2022, noting that roughly half of the pipeline consists of oncology-related therapies.
- Future market entry of 14 more curative therapies priced near $1 million each poses significant financial strain on healthcare systems without the implementation of innovative financing strategies.
- Regulatory mandates require long-term post-marketing evaluations for gene and cell therapies, with follow-up periods extending up to 15 years for cohorts of 1,000 to 1,500 patients.
- Manufacturing costs for some current cell therapies may exceed revenue per patient, though the development of allogeneic "off-the-shelf" options could reduce single therapy costs from $400,000 to $40,000.
- Industry players face structural barriers including Medicaid best price rules designed for chronic quarterly purchasing, FASB rules causing income statement volatility for multi-year contracts, and data sharing challenges arising from patient mobility during long-term follow-ups.
- Innovative contracting models are being explored to manage risk and access, including installment payments tied to non-performance, discounts for efficacy failures within 30 to 36-month windows, and direct-to-payer sales to remove balance sheet risk from hospitals.
- Historical precedents in the Hepatitis C market suggest that competition and shortened treatment durations (e.g., from 12 to 8 weeks) can drive prices down, while precision medicine approaches in trials have demonstrated 25 to 30% cost reductions.
- Patient populations for inherited retinal diseases are small, estimated at 1,000 to 2,000 patients in the US with only 10 to 20 new cases annually, necessitating specific incentive models to encourage development in very small markets like those with 50 patients.
- Pricing pressures are expected to intensify as the introduction of three or four alternatives for cell therapies is projected to make prices significantly lower, mirroring price drops seen in other therapeutic areas following market entry.
- Payers are considering removing patient deductibles and co-pays for curative therapies, citing that appropriateness is determined through strict vetting rather than point-of-sale choice, while rejecting consumer loan models as socially inequitable.
- European payers may resist investing in population-level health improvements, with some characterizing orphan drugs as unethical, and global markets may rely heavily on ex-US pricing due to insufficient patient volume in the US alone to support development costs.
- Development economics must account for the high failure rate of drugs, where the cost of one success may involve the failure of approximately 32 other candidates plus commercialization expenses.
- Uncertainty remains regarding how Health Technology Assessments will manage gene therapies and whether health authorities in Europe will adhere to HTA recommendations.
- Optimism exists that the FDA will support innovative clinical designs and real-world evidence for long-term follow-up, though the transition from classic to curative therapies could stall without changes to government policies.