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Gene Therapy Costs Skyrocket: Payers Turn to Value-Based Contracting

Authored by: Ian Wayton

Once the stuff of sci-fi movies, gene therapy is becoming a profound reality. And for payers, the need to manage the costs of these treatments has never been greater. The price tag can reach the millions — cumulatively, the cost is estimated to hit $25 billion annually by 2034 

 

Just last year, the FDA approved Hemgenix, the most expensive treatment to date. It treats hemophilia B and has a record-breaking price tag of $3.5 million. And in the future, treatments like these are likely to become even more common as more than 500 gene therapies are currently in clinical trials and an estimated one million Americans are forecasted to be treated by gene therapies by 2034.

   

So it’s no surprise that payers are eyeing the costs — and strategies for managing them. Many different solutions exist, but one of the more promising is value-based contracts.  

Negotiating risks  

Value-based contracts for gene therapies involve negotiating deals between payers and pharmaceutical companies to outline expected patient outcomes, with payments tied to meeting those outcomes. Payers carefully track data to determine whether performance was as expected, and if not, they might get back some — or even all — of what they paid out.  

The agreement structures and details vary, but here are a couple of examples:  

  • Spinal muscular atrophy treatment. The FDA approved in 2019 Novartis’ Zolgensma — a treatment for spinal muscular atrophy, which is a hereditary disease that can damage nerve cells in the spinal cord and brain. Although the cost isn’t recording-breaking like the hemophilia treatment, the price tag is still $2.1 million. The pharmaceutical company struck a deal with payers that provides an option to pay over five years and allows for an outcome-based contract.  
  • Beta thalassemia treatment. The FDA also recently approved Bluebird bio’s Zynteglo, a treatment designed to help patients with beta thalassemia, a rare blood disorder that lowers hemoglobin production. The cost is $2.8 million. The pharmaceutical company offers an outcome-based contract that provides payers with a guarantee to reimburse 80% of the therapy cost if the patient fails to achieve and maintain the agreed outcomes.  
With these examples, or any value-based contract, the need to meticulously track data over a period of time is the lynchpin to managing high costs. And it’s why implementing a solid system for value-based data tracking is critical.  
Harnessing the power of your data  

 

With the rise in value-based contracting, many payers are still determining the best way to track data. And, of course, for value-based contracts to be successful, you need the right tools to gather, interpret and display data to keep close tabs on your contracts.  

 

Working with a solid technology partner can help you solve the “data and tracking” piece of the value-based contracting puzzle. They can help you determine where you’re at right now and what tools are required to get you where you want to go — to prepare for a future full of more high-priced treatments.  

As more gene therapies hit the market, the need to efficiently track and monitor data will only become more critical. And as during any disruption, the best path forward can initially seem uncertain.

That’s why mastering and systemizing how you track data is a good starting point to pave the way for more of these contracts — and to give your members access to life-changing treatments.  

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