Posted: 04 Oct. 2022 8 min. read

Multi-million-dollar therapies may alter payment models

By Mathias Cousin, managing director, and Richard Rahul Maria, senior manager, Deloitte Consulting LLP

It has been five years since the Food and Drug Administration (FDA) approved the first cell and gene therapy (CGT).1 While fewer than a dozen CGT products have been approved in the US since, many more are expected in the year and years ahead.

We launched Deloitte’s CGT-focused Value and Access Industry Group (VAIG) about a year ago. The goal of this group is to serve as an industry platform for CGT ecosystem players, identify common challenges, highlight critical focus areas, and collectively think through value and access issues. Early this summer, we moderated a forum to figure out how to define the value of CGTs, how to help ensure they are accessible to all patients, and how to use scalable financing models to pay for them. Along with its core biotech and pharmaceutical manufacturer members, VAIG also invited representatives from health plans, pharmacy benefit managers, and patient-community groups to offer their perspectives.

Outdated FFS model won’t work for CGTs

Nineteen gene therapies and 10 CAR-T treatments are expected to be approved in 2023, and a potential wave of new therapies is building on the horizon. The FDA has received more than 3,000 Investigational New Drug (IND) applications to investigate CGT in clinical trials.2 Determining how to pay for high-cost CGTs will likely be quite different than financing oncology drugs and other expensive therapies. Case in point: The FDA recently approved two therapies that are priced at $2.8 million and $3.0 million, respectively.3 Other similarly priced products are likely on the way.

But what happens to the payment model when dozens of CGTs are marketed? We expect to see increased use of value-based contracts, payments based on performance, risk-sharing arrangements, risk-pool protection, reinsurance, stop-loss programs, performance-based annuities, and patient-payment assistance programs. We also could see the creation of new portability rules that help ensure appropriate balancing of costs and revenues after switching coverage.

Stakeholders (e.g., payers, providers, employers, biopharmaceutical manufacturers, and regulators) will likely need to come together to identify strategies to finance CGTs. While these treatment modalities are still in their early days, CGTs hold tremendous promise in the treatment of certain diseases. However, financing is emerging as one of the most formidable challenges in ensuring the treatments are affordable and equitable. Price-tags for these therapies can make them inaccessible and cost prohibitive, particularly under the fee-for-service (FFS) payment model. Moreover, these treatments are unique to each patient, which means there is typically little economy of scale.

Consider this: A self-insured employer receives a $1.2 million claim for an employee’s gene therapy. We sometimes refer to this as a “lightning-strike claim” because it is exceptionally rare. There are a number of uncertainties employers and payers should consider when such claims occur. For example, real-world evidence with these therapies is limited, which makes it difficult to know exactly how effective they will be…and for how long. As more of these therapies are approved, health plans and self-insured employers should evaluate the size of their risk pool, determine their risk-pool fluidity (i.e., the number of people dropping in and pulling out of coverage), and identify strategies for keeping the cost of the therapies from negatively impacting coverage costs for all members.

As the risk pool gets deeper, some panelists who participated in our virtual forum suggested that costs for certain CGTs could decrease if competing therapies emerge. However, some small health plans could still face adverse selection challenges if they don’t have enough members to spread the costs.

Equity and accessibility

Our meeting also explored ways to ensure equitable access to CGTs. Many people who suffer from rare diseases already face significant barriers in accessing care due to factors beyond cost. Here are three components that could help ensure rare-disease patients benefit from effective and safe therapies, and better care:

  • Patients and patient-advocacy groups: Patient-advocacy groups, along with groups of patients who share the same disease, can play a major role in improving access to expensive therapies. However, patients who actually have the disease might be most effective at representing themselves. By working together, these groups could help address inequalities by promoting legislation and patient-support programs.
  • Clinical-trial diversity: All patients—regardless of background, race, ethnicity, or socioeconomic status—should have the opportunity to participate in clinical trials that are developing the latest breakthrough medicines. Regulators, pharmaceutical companies, patient-advocacy groups, and industry trade organizations have long recognized the importance of diversity in clinical trials (see our report, Enhancing clinical trial diversity). A patient’s race, ethnicity, age, and gender could all influence how well a drug performs. Data generated by clinical trials can increase the understanding of certain diseases, which can improve prevention and treatment for all populations, including racially and ethnically diverse communities.
  • Care coordination: Coordinated care can help break down access barriers. While some clinicians are uniquely positioned to provide comprehensive care coordination, they might lack resources, expertise, and information. Rare diseases present challenges across the treatment and patient journeys beginning with pre-diagnosis or misdiagnosis. These include transitions of care across multiple health care settings and specialists, obtaining access to the right specialists within all communities cutting across racial, ethnic and socio-economic dimensions, lower levels of understanding at a molecular and genetic disposition at an epidemiological level, lower levels of visibility into availability and access of genetic tests, specialized clinical services, patient support services including mobility, education and awareness to name a few. Clinicians should be trained to identify the unique presentation that might make it possible to detect diseases in the earliest stages. Artificial intelligence and machine learning could be used to sift through electronic health records to help clinicians make more informed decisions.

Takeaways from this session

Industry participants from this summer’s virtual forum offered excellent insight into financing challenges and potential solutions that should be considered as more CGTs become available. Overall, there was consensus that stakeholders should work together to iron out financing frictions for advanced therapies and ensure that they are accessible to everyone who needs them.

Biopharmaceutical companies and industry should work to integrate the voice of the patient, and truly engage directly with them. Solutions should be developed to help bring together diverse stakeholders—both old and new—to either expand current financing offerings or develop new models that are both equitable and sustainable. Such solutions need to consider the impact they will bring to both public and private payers while reducing and spreading risk across the system.

We are at the beginning of a very transformational era in personalized medicine, and the hope and promise of these innovations need sustainable and equitable financing solutions to realize the complete value they offer.


1 FDA approval brings first gene therapy to the United States, FDA press release, August 30, 2017 

2 Gene therapy pipeline 1Q2022-2Q 2025, CVS Health, February 2, 2022; Approved cellular and gene therapy products, FDA, September 19, 2022; The state of the industry, Alliance for Regenerative Medicine, January 26, 2021

3 A 3M gene therapy: Bluebird bio breaks its own pricing record, Fierce Pharma, September 19, 2022

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