The New England Journal of Medicine just published a paper on gene therapy for hemophilia-B. The results look promising:
This was a safety trial and not a full phase 3 trial so there is still a long period between promising early results which these are and a treatment going on the market.
Hemophilia is an expensive disease. We’ve talked about it before. Maintenance medications can easily run six figures and a bad bleed can be a million dollar event without too much going wrong.
If the treatment eventually goes through FDA approval, it looks like it will be a game changer for individuals with at least some types of hemophilia. And that leads to the question of pricing. A cure should be worth more than the average year of treatment. The key questions is how much more? Is a cure worth 2 years of normal treatment? Is it worth 20 years of normal treatment costs?
Whatever number that the payers actually pay (let’s ignore list price as that is a fantasy only slightly richer than the letters section of Huster…), it is going to be a big number.
Insurers and other payers will need to figure out how to finance and pay for a really costly but socially cost efficient cure. It is a complex challenge as the current regime of paying for treatments creates two decision flows. The first is the simple one. If any individual is projected to cost the particular insurer more than the cost of the cure in a reasonably short time frame, paying for the cure is, to the payer, the easy thing to do. So people who are highly likely to not churn and who are highly likely to be a costly outlier will get approved.
People who are either likely to churn to another insurer or have low annual costs are far less likely to be readily approved on a pure cost effectiveness ground. Hurdles will be thrown up, pre-authorizations will be required and the pathway to approval will be a random and idiosyncratic obstacle course. Insurers will fear that if they pay for a cure then the patient gets all the benefit as soon as they change insurers. Insurers will also restrict their networks to avoid including the providers and hospitals where these types of treatments can be offered. It will be a race to the bottom to avoid a large expenditure that can not be recaptured by lower future claims.
Some very smart people at Duke-Margolis are thinking about this problem:
vA range of approaches has been proposed to alleviate the short-term budgetary pressures created by one-time payments for curative therapies, as noted by the ICER’s White Paper: Gene Therapy, Tapestry Network’s series of discussions with health care stakeholders, IMS Health’s White Paper on Cell and Gene Therapies and Alliance for Regenerative Medicine’s new payment and financing models for curative regenerative medicines. Models include new financing arrangements, such as providing a loan mechanism for certain payers (for example, states and smaller insurance companies) or providing a contractual annuitization mechanism to commit payers to make payments over time. These financing arrangements could be encouraged and augmented by government funding, such as government bonds or subsidies (for example, reinsurance), and publicly supported efforts to promote risk pooling across payers that face uncertainty from high costs of gene therapy treatments.
These financing arrangements are potentially helpful in addressing budgetary pressures.
I like the concept of residual bonds where future insurers pay an annual fee back to the insurer that paid for the cure. But this is a challenge. The science looks promising and now the delivery and financing system needs to be worked on.