CORRESPONDENCE
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© 2014 Nature America, Inc. All rights reserved.
The business case for cell and gene therapies To the Editor: Cell and gene therapies for ailments ranging from inherited to infectious diseases have been developed over the past 20 years. In spite of drawbacks during their early development, they have recently been showing sustained clinical benefits. Two gene therapy products have reached the market1,2, and more are expected to be licensed in the near future. In light of this promising progress, there have been discussions about how such therapies will be reimbursed once they have become standard medical practice. The recent Commentary “The special case of gene therapy pricing” discussed reimbursement strategies for gene therapies, particularly those in vivo3. The assumption is that gene therapy applications that may be administered only one time may cost over $1 million. The authors suggest that a healthcare insurer pays a recurring yearly amount for the gene therapy as long as it continues to provide a clinical benefit. We find this to be an interesting strategy; however, asking for an installment payment with risk sharing may be difficult to implement in countries like the United States, where healthcare is covered by multiple private insurance companies and patients frequently change their health insurance affiliations. It is also feared that such excessively high prices will not be commercially feasible and that gene therapies, therefore, will not become an attractive treatment modality for payers. In addition, large payments, even administered in installments, may not be at all possible in developing countries, where the need for a one-time treatment with sustained clinical 1192
benefit may be desirable. Reimbursement with risk sharing has been implemented before4, but its feasibility has been questionable5. Many gene therapies have been developed to treat monogenic orphan diseases and have recently been successful in providing a sustained clinical benefit, such as in adenosine deaminase deficiency leading to severe combined immunodeficiency6. However, patient numbers in this disease category are too small to support gene therapy development in a commercial setting. If such a task were still to take place within industry, the final costs of the marketed product would need to be extremely high to cover incurred R&D and clinical development costs on top of product manufacturing and marketing costs. If the installment payment plan would be applied to such a model, payments would be needed for a long time. Moreover, when gene therapy is combined with cell therapy, such as autologous hematopoietic stem cell gene therapy, as was performed to treat patients with adenosine deaminase–deficient severe combined immunodeficiency6, a complex patient treatment procedure needs to be carried out. Good manufacturing practice (GMP) manufacturing and quality control of the autologous product will be complicated and lengthy, patients may need to be admitted to a hospital for the procedure as bone marrow ablation may be required and the genemodified stem cell product engraftment will need to be closely monitored. It is therefore unclear how such a procedure should be reimbursed. Will there be separate payments for the cell-based gene therapy product and
the patient procedure and follow-up or will the whole treatment, including the patient’s stay in the hospital, be reimbursed as one item? In such cases, reimbursement may involve multiple payment systems, and a market adoption process for this new product may be difficult to achieve. In addition to payment, developers will need to address the challenges associated with coding. So far, procurement codes for cell and gene therapies do not exist. This forces developers to circumvent the traditional coding system, leading to uncoordinated payment across insurers. These issues will definitely add even more obstacles to the reimbursement of cell and gene therapies. How are reimbursement strategies commonly handled? For small molecule drug manufacturing, R&D costs are factored in, followed by the product manufacturing cost, market size (the population to be treated) and profit margin to be gained. When a sufficient number of patients are in need of the drug, the price can then be lowered and the profit margin can still remain high. For pharmaceutical companies it is also attractive if a drug will be administered for an extended period of time because drug sales will be guaranteed. Most importantly, commercial payers are often critical of manufacturer-developed costing models7. Manufacturing costs will directly impact the pricing strategy for the product; therefore, payers depend on a sound model to calculate an accurate cost of goods. Our recent costing model of cell and gene therapy manufacturing8 suggests that these products are now achieving the level of economic maturity that is required for commercialization and gaining market access. For example, the cost of manufacturing a single GMP-grade genemodified hematopoietic stem cell product was $54,000. Even after adding the costs associated with bringing the product to market, it would still have an affordable and reasonable price. We believe that the suggested installment payment scheme based on risk sharing is not a universally applicable solution.
VOLUME 32 NUMBER 12 DECEMBER 2014 NATURE BIOTECHNOLOGY
CORRESPONDENCE Table 1 Considerations to maximize reimbursement potential of cell and gene therapies. Consideration
Description
Sound clinical data and a well-established safety profile
Clinical study designs and patient sample sizes should be sufficient to enable meaningful conclusions regarding efficacy of cell and gene therapies. Reimbursement should be based on studies with clear life-changing endpoints such as mortality, morbidity and quality of life. Post-market registries may be beneficial to support reimbursement of cell and gene therapies because payers require long-term clinical data.
Analyzing cost and cost effectiveness
Developers should try to demonstrate reasonable cost effectiveness for their products at market launch because most gene therapies may require years to demonstrate their full effectiveness. Authorities should continue to design and collect proper economic evidence justifying the value of cell and gene therapies.
Reimbursement landscape assessment
Cell and gene therapy manufacturers should assess reimbursement-related issues in the early stages of product development. Authorities should adopt specific reimbursement procedures that would take into account the unique characteristics and delivery modes of cell and gene therapy products, particularly for orphan diseases.
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© 2014 Nature America, Inc. All rights reserved.
Cell and gene therapy product adoption process
Issues such as uncertainty of coverage should be addressed to motivate healthcare providers to consider new cell and gene therapies that could improve patient care. Early engagement of scientists, clinicians, patient advocates and key opinion leaders should be considered so that new therapies can have a chance for a possible market adoption process.
Rather, the overall costs for gene therapies need to be lowered and made affordable so insurers would be able to universally adopt payment strategies for such therapies. This ethical approach would dramatically expand access to these new therapies globally. One commonly overlooked factor is the original funding source. Gene therapies for orphan diseases are often developed by academic groups and funded by public money. Therefore, R&D costs are already paid for, and the public should benefit from this. If a commercial entity wants to take on the manufacturing and commercialization of a product, licensing fees should be
reasonable. New manufacturing methods for gene therapies based on automated, closed systems should be implemented that would be less labor intensive and would not depend on the use of highly expensive clean rooms. In addition, considerations should be given to provide sufficient training for physicians to be able to administer these treatments as standard-of-care therapies. Incentives are needed to develop such novel therapies, and their added value should be better communicated to patients and physicians. These proposed measures could improve the visibility of the products and make them available, for a reasonable price, to patients in developing nations facing life-threatening
NATURE BIOTECHNOLOGY VOLUME 32 NUMBER 12 DECEMBER 2014
diseases and epidemics9. Table 1 contains additional points to consider that could be applied to improve future reimbursement strategies. In summary, we believe that gene therapies should be made affordable, that development of gene therapy applications already funded by public funds should be licensed to manufacturers at a reasonable price and that less cost-intensive manufacturing technologies should be developed. Gene therapies should also be accessible to patients in developing nations. COMPETING FINANCIAL INTERESTS The authors declare no competing financial interests.
Mohamed Abou-El-Enein1,2, Gerhard Bauer3 & Petra Reinke1,2 1Berlin-Brandenburg Center for Regenerative
Therapies, Charité University Medicine, Campus Virchow, Berlin, Germany. 2Department of Nephrology and Internal Intensive Care, Charité University Medicine, Campus Virchow, Berlin, Germany. 3University of California, Davis, Institute For Regenerative Cures, Sacramento, California, USA. e-mail: [email protected] 1. Ylä-Herttuala, S. Mol. Ther. 20, 1831–1832 (2012). 2. Xin, H. Science 314, 1233 (2006). 3. Brennan, T.A. & Wilson, J.M. Nat. Biotechnol. 32, 874–876 (2014). 4. Cook, J.P., Vernon, J.A. & Manning, R. Pharmacoeconomics 26, 551–556 (2008). 5. Neumann, P.J., Chambers, J.D., Simon, F. & Meckley, L.M. Health Aff. (Millwood) 30, 2329–2337 (2011). 6. Candotti, F. et al. Blood 120, 3635–3646 (2012). 7. Faulkner, E. et al. Value Health 15, 1162–1171 (2012). 8. Abou-El-Enein, M. et al. Cytotherapy 15, 362–383 (2013). 9. Abou-El-Enein, M., Bauer, G., Reinke, P., Renner, M. & Schneider, C.K. Trends Mol. Med. 20, 632–642 (2014).
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© 2014 Nature America, Inc. All rights reserved.
The business case for cell and gene therapies To the Editor: Cell and gene therapies for ailments ranging from inherited to infectious diseases have been developed over the past 20 years. In spite of drawbacks during their early development, they have recently been showing sustained clinical benefits. Two gene therapy products have reached the market1,2, and more are expected to be licensed in the near future. In light of this promising progress, there have been discussions about how such therapies will be reimbursed once they have become standard medical practice. The recent Commentary “The special case of gene therapy pricing” discussed reimbursement strategies for gene therapies, particularly those in vivo3. The assumption is that gene therapy applications that may be administered only one time may cost over $1 million. The authors suggest that a healthcare insurer pays a recurring yearly amount for the gene therapy as long as it continues to provide a clinical benefit. We find this to be an interesting strategy; however, asking for an installment payment with risk sharing may be difficult to implement in countries like the United States, where healthcare is covered by multiple private insurance companies and patients frequently change their health insurance affiliations. It is also feared that such excessively high prices will not be commercially feasible and that gene therapies, therefore, will not become an attractive treatment modality for payers. In addition, large payments, even administered in installments, may not be at all possible in developing countries, where the need for a one-time treatment with sustained clinical 1192
benefit may be desirable. Reimbursement with risk sharing has been implemented before4, but its feasibility has been questionable5. Many gene therapies have been developed to treat monogenic orphan diseases and have recently been successful in providing a sustained clinical benefit, such as in adenosine deaminase deficiency leading to severe combined immunodeficiency6. However, patient numbers in this disease category are too small to support gene therapy development in a commercial setting. If such a task were still to take place within industry, the final costs of the marketed product would need to be extremely high to cover incurred R&D and clinical development costs on top of product manufacturing and marketing costs. If the installment payment plan would be applied to such a model, payments would be needed for a long time. Moreover, when gene therapy is combined with cell therapy, such as autologous hematopoietic stem cell gene therapy, as was performed to treat patients with adenosine deaminase–deficient severe combined immunodeficiency6, a complex patient treatment procedure needs to be carried out. Good manufacturing practice (GMP) manufacturing and quality control of the autologous product will be complicated and lengthy, patients may need to be admitted to a hospital for the procedure as bone marrow ablation may be required and the genemodified stem cell product engraftment will need to be closely monitored. It is therefore unclear how such a procedure should be reimbursed. Will there be separate payments for the cell-based gene therapy product and
the patient procedure and follow-up or will the whole treatment, including the patient’s stay in the hospital, be reimbursed as one item? In such cases, reimbursement may involve multiple payment systems, and a market adoption process for this new product may be difficult to achieve. In addition to payment, developers will need to address the challenges associated with coding. So far, procurement codes for cell and gene therapies do not exist. This forces developers to circumvent the traditional coding system, leading to uncoordinated payment across insurers. These issues will definitely add even more obstacles to the reimbursement of cell and gene therapies. How are reimbursement strategies commonly handled? For small molecule drug manufacturing, R&D costs are factored in, followed by the product manufacturing cost, market size (the population to be treated) and profit margin to be gained. When a sufficient number of patients are in need of the drug, the price can then be lowered and the profit margin can still remain high. For pharmaceutical companies it is also attractive if a drug will be administered for an extended period of time because drug sales will be guaranteed. Most importantly, commercial payers are often critical of manufacturer-developed costing models7. Manufacturing costs will directly impact the pricing strategy for the product; therefore, payers depend on a sound model to calculate an accurate cost of goods. Our recent costing model of cell and gene therapy manufacturing8 suggests that these products are now achieving the level of economic maturity that is required for commercialization and gaining market access. For example, the cost of manufacturing a single GMP-grade genemodified hematopoietic stem cell product was $54,000. Even after adding the costs associated with bringing the product to market, it would still have an affordable and reasonable price. We believe that the suggested installment payment scheme based on risk sharing is not a universally applicable solution.
VOLUME 32 NUMBER 12 DECEMBER 2014 NATURE BIOTECHNOLOGY
CORRESPONDENCE Table 1 Considerations to maximize reimbursement potential of cell and gene therapies. Consideration
Description
Sound clinical data and a well-established safety profile
Clinical study designs and patient sample sizes should be sufficient to enable meaningful conclusions regarding efficacy of cell and gene therapies. Reimbursement should be based on studies with clear life-changing endpoints such as mortality, morbidity and quality of life. Post-market registries may be beneficial to support reimbursement of cell and gene therapies because payers require long-term clinical data.
Analyzing cost and cost effectiveness
Developers should try to demonstrate reasonable cost effectiveness for their products at market launch because most gene therapies may require years to demonstrate their full effectiveness. Authorities should continue to design and collect proper economic evidence justifying the value of cell and gene therapies.
Reimbursement landscape assessment
Cell and gene therapy manufacturers should assess reimbursement-related issues in the early stages of product development. Authorities should adopt specific reimbursement procedures that would take into account the unique characteristics and delivery modes of cell and gene therapy products, particularly for orphan diseases.
npg
© 2014 Nature America, Inc. All rights reserved.
Cell and gene therapy product adoption process
Issues such as uncertainty of coverage should be addressed to motivate healthcare providers to consider new cell and gene therapies that could improve patient care. Early engagement of scientists, clinicians, patient advocates and key opinion leaders should be considered so that new therapies can have a chance for a possible market adoption process.
Rather, the overall costs for gene therapies need to be lowered and made affordable so insurers would be able to universally adopt payment strategies for such therapies. This ethical approach would dramatically expand access to these new therapies globally. One commonly overlooked factor is the original funding source. Gene therapies for orphan diseases are often developed by academic groups and funded by public money. Therefore, R&D costs are already paid for, and the public should benefit from this. If a commercial entity wants to take on the manufacturing and commercialization of a product, licensing fees should be
reasonable. New manufacturing methods for gene therapies based on automated, closed systems should be implemented that would be less labor intensive and would not depend on the use of highly expensive clean rooms. In addition, considerations should be given to provide sufficient training for physicians to be able to administer these treatments as standard-of-care therapies. Incentives are needed to develop such novel therapies, and their added value should be better communicated to patients and physicians. These proposed measures could improve the visibility of the products and make them available, for a reasonable price, to patients in developing nations facing life-threatening
NATURE BIOTECHNOLOGY VOLUME 32 NUMBER 12 DECEMBER 2014
diseases and epidemics9. Table 1 contains additional points to consider that could be applied to improve future reimbursement strategies. In summary, we believe that gene therapies should be made affordable, that development of gene therapy applications already funded by public funds should be licensed to manufacturers at a reasonable price and that less cost-intensive manufacturing technologies should be developed. Gene therapies should also be accessible to patients in developing nations. COMPETING FINANCIAL INTERESTS The authors declare no competing financial interests.
Mohamed Abou-El-Enein1,2, Gerhard Bauer3 & Petra Reinke1,2 1Berlin-Brandenburg Center for Regenerative
Therapies, Charité University Medicine, Campus Virchow, Berlin, Germany. 2Department of Nephrology and Internal Intensive Care, Charité University Medicine, Campus Virchow, Berlin, Germany. 3University of California, Davis, Institute For Regenerative Cures, Sacramento, California, USA. e-mail: [email protected] 1. Ylä-Herttuala, S. Mol. Ther. 20, 1831–1832 (2012). 2. Xin, H. Science 314, 1233 (2006). 3. Brennan, T.A. & Wilson, J.M. Nat. Biotechnol. 32, 874–876 (2014). 4. Cook, J.P., Vernon, J.A. & Manning, R. Pharmacoeconomics 26, 551–556 (2008). 5. Neumann, P.J., Chambers, J.D., Simon, F. & Meckley, L.M. Health Aff. (Millwood) 30, 2329–2337 (2011). 6. Candotti, F. et al. Blood 120, 3635–3646 (2012). 7. Faulkner, E. et al. Value Health 15, 1162–1171 (2012). 8. Abou-El-Enein, M. et al. Cytotherapy 15, 362–383 (2013). 9. Abou-El-Enein, M., Bauer, G., Reinke, P., Renner, M. & Schneider, C.K. Trends Mol. Med. 20, 632–642 (2014).
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