By Visakh Prabhakar, Sam Worrapong Kit-Anan, Zachary Kleiman, and Youbean Oak, Ph.D.
With as many as 20 cell and gene therapies expected to begin hitting the market per year by 2025, there is a pressing need for stakeholders to find cost-effective ways to help more patients gain access to these life-changing innovations. These current and forthcoming therapies offer the curative potential to treat inherited or acquired diseases using genetic manipulation of patient cells or infusion or transplantation of whole cells to correct or treat symptoms of genetic disorders. Unfortunately, because of their limited durability data, one-time administration, and/or price ranges of hundreds of thousands to millions of dollars per patient, they struggle to fit into the traditional treatment and reimbursement paradigms designed for treating chronic diseases.
In an effort to share in their inherent risk, cell and gene manufacturers have collaborated with payers to develop multiple access pathways — including managed access agreements, early access programs, and innovative payment models — to help enable therapies to reach patients and be commercially attractive to warrant investment. Among those, manufacturers are increasingly turning to innovative payment models that address payer uncertainty across both financial (through discounts, price volume agreements, sales caps, annuities, etc.) and clinical outcomes (through outcomes-based agreements, coverage with evidence development, etc.). Many types of innovative agreements exist, and each presents pharmaceutical companies with opportunities and challenges to fulfill short- and long-term strategic access priorities and meet the needs and expectations of payers. To this end, manufacturers need to consider and address the following critical factors:
- Strategic fit with company vision and brand. The agreement should ultimately help the manufacturer meet unmet needs without taking on unnecessary financial or reputational risk, thus bolstering its perception and market position.
- Pricing and access implications. The agreement should help protect the value proposition of the therapy and enable broad access to the treatment in the shortest possible time. To do that, payer concerns with regard to budget, clinical uncertainty, and political/societal pressures to provide treatment also should be addressed, such as by providing flexibility to renegotiate or adjust the agreement within a reasonable timeframe.
- Feasibility of implementation. Both parties should be able to compliantly implement the terms of the agreement and monitor outcomes across markets in a timely manner with reasonable investment and effort.
So far, outcomes-based agreements (OBAs) in which manufacturers and payers agree to specific performance and outcome metrics are emerging as an attractive best practice option for both parties, and these offer a sufficiently flexible framework to meet the above critical factors. While individual arrangements are unique, each essentially creates a value proposition in which the cost of the therapy depends in part on its real-world effectiveness. The following section explores the clear access benefits OBAs offer and provides a behind-the-scenes perspective on the many design and implementation challenges manufacturers must overcome to initiate them effectively.
Why The Industry Is Turning To OBAs
Payers generally view new cell and gene therapies as a “high-cost, high-risk” proposition. Due to the rarity of the conditions they treat, most cell and gene therapies to date have been (and are set to be) launched with regulatory approval based on the results of limited clinical trials within limited patient populations and with the understanding that the manufacturer is committed to gathering additional data to further the therapy’s safety and efficacy evidence profile. It can take many years of data collection and analysis before a therapy’s long-term safety and efficacy are well understood and robustly proven across a variety of patient populations. Until this evidence exists, even if there is regulatory approval for a very broad indication, restrictions on reimbursement may be applied. For example, many markets and regions limit such treatments to patients with specific characteristics beyond regulatory label.
OBAs enable a customized approach to payer engagement whereby organizations can tailor the endpoints to be measured based on the level of risk tolerance for each payer and/or market and the level of data available to date in each patient segment. With an OBA, manufacturers and payers can negotiate a variety of levers to design a reimbursement structure with mutual benefit and shared risk. For example, differential outcome thresholds across patient segments may help mitigate concerns surrounding segments with immature clinical data.
By taking on part of the risk through an OBA, manufacturers help build confidence in their cell and gene therapies among payers and improve the opportunities for patients to gain access. In addition, manufacturers propel adoption and hasten their own ability to gather real-world data to bolster the safety and efficacy profile of their initial clinical trials and potentially expand the evidence and treatment guidelines for additional patient groups and subgroups.
Barriers Slowing Adoption Of OBAs
Despite the numerous benefits for both payers and manufacturers, OBAs still are not as widely implemented as one might expect. Although approximately 79% of Organization for Economic Co-operation and Development (OECD) markets have implemented them in some capacity, the agreements largely cater to only a few drugs and indications. Several strategic and infrastructural challenges are hindering broader adoption of OBAs, including the following:
1. Missing infrastructure
OBAs by nature tend to be complex to implement, especially considering data privacy regulations and laws and the varying ability of IT infrastructures across geographies and organizations to confidentially measure, store, analyze, and transfer high-quality patient health information in a consistent manner over potentially long contract periods. In addition, cell and gene therapies to date have served niche, orphan patient populations, and some payers have required setting up national registries to follow patient outcomes over extended periods that typically involve significant long-term investment and commitment. Often, a large proportion of these costs fall on the manufacturer. Even when they do not, the cost and complexity of setting up and monitoring patient registries requires a major investment and dedication on the part of any involved stakeholder, be it the government, manufacturer, or another entity, and takes time to strategize, navigate, and implement.
However, there are indications that some of this burden will be mitigated in time. The proposed draft “European Health Data Space” regulation in the European Union – widely recognized as the global leader in driving strict data privacy and security regulations – signals it may soon become easier for companies to collect and use real-world data for scientific clinical purposes. Assuming it does, and other nations follow, it will likely become easier for manufacturers to access and share data across geographies.
2. Administrative burden
Most OBAs include requirements for following up on patients at predefined intervals, usually at least annually. For hospitals and treatment centers administering the cell and gene therapy, this can become very complicated and cumbersome. Patients may not adhere to follow-up criteria for a variety of reasons – personal choice, disease in remission, relocation, death, etc. Meanwhile, for clinicians and back-office staff already struggling with limited bandwidth, OBAs require more dedicated time for training, decision-making, as well as paperwork for tracking patients, invoicing, accounting, and other contractual obligations to ensure high-quality data is collected.
Measuring and documenting endpoints drives a significant portion of the administrative burden. To offset this, manufacturers and payers should do their best to base contracts only on clinically relevant endpoints and time stamps routinely used in clinics. Furthermore, with advancements in technology, future agreements could aspire to leverage more digital tools, including methods to track patient outcomes remotely, to help reduce the frequency with which patients visit healthcare providers. In addition, having a centralized, digitized method of measuring, storing, and analyzing endpoints would make information transfer more seamless and likely lead to improved learnings and outcomes.
3. Difficulties setting endpoints
While relatively straightforward, easy-to-define endpoints (e.g., survival) used to be commonplace in OBA negotiations, but payers now are increasingly requesting more complex, harder-to-measure endpoints (e.g., improvements versus baseline in patient functioning) for longer contract periods. However, because most cell and gene therapies launch with immature data, manufacturers may not have the necessary clinical trial data to estimate the potential risks for these types of endpoints. This dilemma may be mitigated through clearly setting endpoint expectations early in payer-manufacturer negotiations and by leveraging annuities, simple discounts, and other measures to better balance the risk between both parties.
Prepare For OBAs Sooner Rather Than Later
As technology advances and more cell and gene products enter the market, particularly in more prevalent diseases, innovative risk-sharing agreements like OBAs will increasingly become relied upon to help create sustainable access paths. While such agreements can solve many access challenges, they also create new challenges and complexities for the broader healthcare system and individual stakeholder groups that must be collaboratively addressed in order to lay the foundation for success, mitigate both parties’ concerns, and ultimately enable increased patient access. Those manufacturers that begin preparing early and putting plans in place to embrace OBAs and other innovative agreements will be best equipped to advance healthcare delivery, enhance patient lives, and sustain their own value propositions.
About The Authors:
Visakh Prabhakar, senior consultant in life science strategy at Guidehouse, supports clients with global market access strategy projects and specializes in designing and implementing outcome-based agreements for high-cost cell and gene therapies. He is an active member of Guidehouse’s Cell & Gene Therapy Expert Community.
Sam Worrapong Kit-Anan, senior consultant in life science strategy at Guidehouse, advises clients on global commercial and market access strategy, specializing in EU-5 and emerging markets. He has extensive experience in cell & gene therapies and is a member of Guidehouse’s Cell & Gene Therapy Expert Community.
Zachary Kleiman, managing consultant in life sciences strategy at Guidehouse, advises biotech and pharma clients on commercial and opportunity assessments, innovative market access strategies, and brand/function value stories. He plays leading roles in Guidehouse’s Cell and Gene Therapy and Oncology Expert Communities.
Youbean Oak, Ph.D., director in life sciences strategy, leads the Cell & Gene Therapy Expert Community at Guidehouse and specializes in early commercial and market access strategies for innovative cell- and gene-based therapies that have the potential to profoundly impact the existing treatment paradigm.