Durable therapies: Definition

The development of transformative cell- and gene-based therapies over the past decade has raised the possibility that patients with rare diseases could live without the need for ongoing treatments or the burden of daily disease management after a single course of treatment. These therapies represent a foreseeable reimbursement challenge to current healthcare systems: upfront cost is substantial and is incurred all-at-once, but patient, societal and economic benefits realized by society and healthcare systems are accrued over a longer period of time. Patient value may extend for years or even a lifetime with treatment durability as costs associated with years of chronic care management over a patient’s lifetime is reduced or eliminated. Additional complexity may arise when patients transfer to different payers and/or healthcare systems, or move to new countries, regions or provinces. The unique characteristics of durable/potentially curative therapies creates the need for new precision financing tools.

Expected availability to 2030

There are currently 11 (eleven) gene and cell therapy products available in the US approved for treatment of 14 (fourteen) indications.

NEWDIGS FoCUS has conducted a unique, detailed, indication-by-indication analysis to estimate the expected volume of durable cell and gene therapies likely to be available on the US market in the coming years. The model has been developed and refined over a period of several years, and continues to be updated on an ongoing basis. Updated results are published periodically.

At year-end 2020, there were 780+ active, durable, cell and gene therapies in development. Slightly over 300 of these are product trials in China by China-based developers. We have excluded these from the analysis because we do not think these products will become available in the US as many of these Chinese developers are hospitals, research institutes or companies with no exposure outside of China.

Figure 1: Pipeline of active programs in development for durable cell and gene therapies for the US market

NEWDIGS FoCUS developed detailed estimates of clinical trial progression rates, disease incidence and prevalence, and estimated patient uptake for each product indication. A synthesis of the approach used to develop these estimates may be found here.

Approximately 57% of product candidates in development are for oncology patients, 36% are for orphan, non-oncology indications and 7% are to treat larger therapeutic areas such as cardiovascular conditions. The current pipeline of US-targeted therapies is expected to result in 60+ product-indication approvals (estimated range 54-74) by 2030; the model’s projected rate of approvals estimates a market size of 35 product-indications within the next five years (2026), with an average of five new approvals annually.

Figure 2: Projection of product launches from pipeline analysis
Source: FoCUS Drug Development Pipeline Research Team, December 2020

While this estimate reflects the current pipeline, the pipeline will continue to be replenished and added to with new innovations.  Thus, towards the back end of this timeframe we may see additional products launch beyond those reflected here.

The key uncertainty within the FoCUS model lies in the market penetration and adoption rate  for these new-to-world therapies.  The model makes assumptions about two parameters for each disease incidence and prevalence:

• Peak market penetration: What percentage of the clinically-eligible population will be treated
• Time to peak/adoption rate: How long to achieve the peak (from 1 to 7 years)

Broadly, we have assumed that conditions with limited treatment alternative and more severe (fatal) consequences will see greater and faster adoption.  FoCUS will continue to explore the influence of disease severity as we have greater real-world data on patient and physician treatment choices.

While clinical trial outcomes and regulatory approvals are never guaranteed, by 2026 we expect the following types of products may be available to patients:

• Oncology
  Additional therapies for B-cell leukemia and lymphoma
• Rare Disease treatments
  Hematological conditions
  Hemophilia A & B
  Sickle Cell anemia
  β-thalassemia
• Additional treatments for ophthalmological conditions
• Neurological conditions
• Higher prevalence disease treatments
  Age related wet macular degeneration
  Diabetic peripheral neuropathy
  Osteoarthritis (Knee)

Therapy distinctiveness

Transformative cell and gene therapies differ from traditional pharmaceutical treatments in a single administration may bring significant improvements in serious conditions that will last many years but the payment for these therapies will be at the beginning of treatment. This payment-benefit alteration disrupts the normal payment paradigm for chronic treatments wherein reimbursement occurs in parallel with the recognition of benefits. In many ways it is a shift from a model of ‘renting’ treatments to one of ‘buying’ long-term health improvements as the following graphic illustrates.

Figure3: Therapy characteristics influencing precision financing needs

Paying for the full value of the treatment upfront creates a number of challenges, resulting from:

• Uncertainty about real world benefits (uncertainty about the benefits in a broader, real world population and the duration of those benefits given limited clinical trial data for this new area of science);
• Potential disconnects between who pays and who benefits (due to the potential for patients to change insurance plans over time after they have received treatment); and
• Difficulties in paying for the full value of the treatment upfront (particularly for smaller payers for whom patients may be infrequent and who may have a smaller population base over which to spread the higher upfront treatment costs).

While all therapies will have these challenges, individual products in the broad category of durable, transformative cell and gene therapies have different profiles and characteristics that affect the need for various precision financing solutions.

Figure 4: Therapy characteristics influencing precision financing needs

Size of target population

The incidence and prevalence of each therapy’s target population will vary and affect total treatment expenditures. Incidence reflects the number of new patients with a condition targeted by cell or gene therapy in a given year. Incidence may also be the yearly number of patients reaching the point of disease progression, or the disease tipping point, where the patient becomes treatment eligible for cell or gene therapy. For example, a patient with a cancer diagnosis refractory to other treatments would represent an instance of “tipping point” for a CAR-T therapy indication and would be included in the incidence rate for that cell therapy. Prevalence reflects the total population with a particular condition. Some conditions with high mortality rates only have an incident population. A large prevalent population could mean that a large number of patients are waiting for a transformative treatment. While we do not know what therapy uptake will be, a significant prevalent population could increase the annual total cost of treatment in the short-term until a condition again only has an annual incident population needing treatment.

Nature of clinical benefit

For the eligible population, durable (curative) therapies will vary in their clinical benefit relative to existing standards of care across multiple dimensions, including:

• The nature of their expected benefit: Expected benefit could range from a “cure” that eliminates all symptoms and modifies all condition processes, to modest reversal or slowdown of selected disease processes over a shorter period of time.
• The likelihood and severity of adverse events.
• Heterogeneity of patient response: Patients do not all respond to treatment the same way and to the same extent. There may be non-responders, partial responders, and complete responders and that mix may vary by therapy.
• The clinical benefit compared with alternative treatment options.

Offsetting and mismatched benefits

Durable therapies will vary in their net financial impact to the healthcare system, to society and to patients and their caregivers. Some therapies may reduce other healthcare treatment and service spending, while also generating higher patient benefit. Other therapies for conditions that generate relatively low costs due to rapid death or absence of treatments for chronic morbidity reduction may increase overall healthcare spending while generating patient benefits. Those benefits may reduce other social program costs and create additional economic benefits.

In addition, the timing of financial impact may vary; some treatments could result in immediate healthcare savings, while others could save money over time. For those therapies that save money over time there could be a mismatch between who pays for the therapy and who reaps the benefits of the patient having had that therapy, as patients may switch payers over time.

Durability of effect

Efficacy duration will vary among patients for a single therapy and across therapies in general. Some may experience a lifetime of benefit, but many patients may not. In addition, the full duration of effect for a particular treatment will not be known at the time of initial regulatory approval and launch, due to the urgent need in some cases of getting the treatment to the patients, and studies to determine duration of treatment efficacy are ongoing.

Therapeutic modality

Some cell and gene therapies employ viral vector delivery of genetic material in vivo while still others are similar to advanced transplantation with cellular harvest, ex vivo transfection and expansion, followed by cellular re-introduction. Therapeutic modality affects the location of treatment, payer benefit classification, provider reimbursement mechanisms, and patient financial participation, which in turn affects the financial challenges these therapies generate.

Delivery setting

Durable (curative) treatments vary in where the therapy is administered. Products may be administered within the inpatient or outpatient setting and at a limited number of centers of excellence or a broader set of facilities. Some therapies may require extended hospitalization stays or intensive follow-up, while others may warrant only periodic clinic follow-up.

These characteristics not only affect the stakeholders requiring financial solutions but also impact ecosystem-related operational enablers such as appropriate provider networks, certifications, care coordination, product distribution and data monitoring processes to ensure patients have access or financial solutions can be administered or both.

Critical precision financing dimensions

Durable, potentially curative therapies create three financial challenges:

1. Payment timing: Therapies can involve substantial upfront payment for multiple years of therapeutic benefit.
   Detail

   For a single payer, this can mean a mismatch between costs and expected benefits. Also, the payer will have concentrated costs in the first year of a patient’s treatment. Moreover, as patients may switch payers over time, the first payer may incur the costs and future payers may benefit from reduced longer-term costs.

2. Therapeutic performance risk: Real world efficacy and durability are uncertain at the time of initial regulatory approval and market launch.
   Detail

   Payers may need to address two types of uncertainty as they evaluate whether to cover and how to reimburse durable, transformative gene and cell therapies: 1.  Uncertainty as to the expected benefits of treatments in a broader, real world population, given that regulatory approval will be based on limited clinical trial data and real word results are sometimes different from clinical trial results; and 2.  Uncertainty as to the duration of those benefits (how long the benefits will last), given this is a new, innovative area of science.

3. Actuarial risk: The number of eligible patients in a payer’s population may be uncertain and could vary significantly from period to period.
   Detail

   Health plans with relatively few covered lives are unlikely to have patients needing a particular rare product in a given year, but a single case could have large cost consequences if the risk is not managed

   The table below shows the likelihood of a health plan of different sizes having a patient in a given year who could benefit from a new treatment for a very rare condition.

   Hypothetical Example: Product with US incidence of ~1,600 patients—Number of Patients Per Year by Health Plan Size

   

   The above analysis focuses on a single new treatment considered in isolation. In a portfolio of products, uncertainty will be dampened because it is unlikely that all products will have similarly high utilization levels in the same year. The figure below shows the simulated results of portfolios with different numbers of uncorrelated new products. As you can see, when there is only one product (purple curve), the curve of actual to expected patients is relatively flat and spread out around 1. It is hard to be actuarially certain that the estimated number of products will be correct in actual practice. When there are more products in the portfolio, say 100 products as the yellow curve shows, the ability to predict accurately increases and the band is very tight around 1. Therefore, as the number of products increases, uncertainty and average portfolio risk decline.

   Illustrative—Distribution of Actual Patients vs. Expected Patients

   

Payers will not all be equally affected by these therapies and risks. US payers differ in terms of number of covered lives (size), types of lives covered (children, elderly, mixed), funding sources (self-funded, premiums, taxes), and the coverage and reimbursement rules that they must follow. For example, Medicare and larger commercial insurers face less actuarial risk than self-insured employers, regional commercial plans, and some state Medicaid plans due to the significantly larger number of lives they cover. Financial solutions addressing actuarial risk may therefore be needed and appropriate for only smaller payers. Similarly, some payers may cover clusters of patients with certain genetically-driven conditions that occur in families and therefore have a larger number of members who might benefit from a particular therapy than other payers.

Self-assessment of financing needs

As precision financing needs will differ by product and payer characteristics, the FoCUS team has developed a simple Solutions Prioritization Tool, found in the Individual Indication Worksheet, for those who wish to understand what solutions FoCUS stakeholders have prioritized for particular product and payer types and risks. Further drill down into each solution is possible, once identified.

In addition, for those considering how to address the overall pipeline of cell and gene therapies or an individual therapy, Payers’ Guided Assessment Tools for Individual Indications and the Pipeline are available.

An overview of all precision financing solutions fleshed out by FoCUS can be found here and an overview of other solution design considerations may be found here.