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  • RJW&partners
    • Mar 11
    • 13 min read

Can we afford future cell and gene therapies? Payer perspectives on sustainable reimbursement

Introduction

Imagine that you’re battling an illness for which, until now, a treatment has not been available. And this new medication could potentially offer you lifelong benefits from even a single dose. That’s the current offer of Cell and Gene Therapies (CGTs) for some rare disease patients. However, despite the potentially transformative nature of CGTs, reimbursement and clinical uptake has been slow, mainly due to high costs and uncertainty about their clinical benefit.


As an increasing number of Advanced Therapy Medicinal Products (ATMPs), including CGTs, are seeking market authorisation, the growing costs of these therapies need to be managed by payers to ensure long-term access for patients in need. Until now, sustainable reimbursement efforts for CGTs have varied by European market, with innovative contracting and risk-sharing agreements in the mix alongside more traditional pricing and reimbursement approaches.


Previous insights produced by RJW have described the use of risk-sharing agreements, including financial-based and performance-based models (link) and explored US payer approaches to managing the costs of CGTs (link). This article considers the current use of risk-sharing agreements for CGTs in Europe, how payers perceive these tools and asks: “what’s next?”. To support our secondary research into this question, we spoke with a (former) payer from each of EU4 + UK to probe their views on the affordability of CGTs. As CGTs necessitate high spending by healthcare providers and therefore face market access challenges, it is more important than ever that payers and manufacturers can find mutually beneficial, innovative, and sustainable reimbursement models for these therapies.


The Status Quo

As of January 2024, the European Medicines Agency (EMA) has approved 26 ATMPs, of which 21 are CGTs. However, a notable portion of these therapies (seven) have either been withdrawn from the market or have not pursued the renewal of their marketing authorisations (Figure 1).

Figure 1. Cell and gene therapies approved by EMA (2012–2023)[1, 2].
Figure adapted from EMA CAT quarterly highlights and approved ATMPs. CTMP: cell therapy medicinal product; GTMP: gene therapy medicinal product; MA: marketing authorisation; TEP: tissue engineered product.

With an incredibly high number of CGTs in clinical development, over the coming years, we’re going to see even more getting the green light in Europe. While the promise of these treatments is profound, their path to clinical adoption is full of challenges. These include limited long-term efficacy and safety data, lack of an appropriate comparator (from the payer perspective), difficulties in product upscaling and meeting regulatory quality standards [3].


A critical and often-discussed aspect of CGTs is their high upfront costs [3]. Of the CGTs described in Figure 1, five had a launch price of >€1 million. Feedback from our payers showed that the cost of CGTs at an individual level is high but that there were currently no concerns due to low patient numbers and [subsequently low] budget impact. When looking ahead at the number of CGTs in development however, all our payers raised concerns about the use of CGTs for indications with larger populations and described how manufacturer-set pricing needed to consider this. Reflecting on this, payers in Italy, France, Spain, and Germany expect the budget impact of CGTs to rise, with the German payer stating: “If they are coming at such high prices [as the existing CGTs], the budget impact will be significant”. In comparison, the UK payer described how the healthcare system was consistently under financial pressure but had always found a way to enable access to new, high-cost products.


Concerns around managing the high costs associated with CGTs has prompted a renewed interest in financial-and performance-based funding models that offer a more balanced risk distribution between payers and manufacturers (Figure 2).


Figure 2. Types of risk sharing agreements. Adapted from [3, 4].

Financial-based strategies

Financial mechanisms have long been a cornerstone in managing the growing cost of medicines, employing strategies such as price-volume agreements and discount schemes to mitigate the impact of new therapies on healthcare budgets [5]. These more traditional models remain relevant as a sustainable reimbursement strategy for CGTs, described as “automated and easy” in our discussions with payers. A recent example of access achieved through a simple discount, following an initially unsuccessful negotiation, is Libmeldy®. Orchard Therapeutics and the Beneluxa Initiative announced in January 2024 that Libmeldy® was available for the treatment of patients with metachromatic leukodystrophy in Belgium, Ireland, and the Netherlands, based on a confidential price discount [6].


In response to the unique financial challenges posed by CGTs, innovative payment models are emerging to enhance sustainability and management of budget impact for payers. One such approach is spread payments, which distribute the cost of CGTs over a defined period, easing the initial budgetary strain. The Association of the British Pharmaceutical Industry (APBI) in the UK recommends that high-cost ATMP payments could be spread over a maximum of seven years [7].


However, despite the promise of spread payments, a 2022 systematic scoping review highlights a sparse and varied understanding of their application and effectiveness for gene-replacement therapies [11]. This emphasises the need for continued dialogue and collaboration between payers and manufacturers to refine such financial strategies, ensuring that they can effectively address the challenges of funding CGTs.


Table 1. High -price CGTs which have received EU authorisation and use of innovative performance-based mechanisms across major European markets [5, 12-37]
Note: Despite EMA authorisation, no information regarding pricing models was identified for Alofisel®, Breyanzi®, Carvykti®, Casgevy®, Ebvallo®, Hemgenix®, Imlygic®, and Libmeldy®. Orange text indicates an Orphan indication. Abbreviations: r/r, relapsed/refractory.

Outcome-driven agreements: paying for performance

Payer apprehension regarding CGTs is not solely financial; it includes uncertainties tied to their long-term clinical outcomes [3]. This has led to an increased use of performance-based pricing mechanisms for CGTs over recent years as a tool for achieving sustainable reimbursement (Table 1).


Pay for performance mechanisms link product payment to an agreed outcome, which can include either an upfront discount or a back-end rebate if the intended outcome is not met. This can cover patient survival, disease progression, and the occurrence of adverse events. Luxturna®, Strimvelis®, and Kymriah® serve as real-world examples of these agreements in Italy and Spain [3, 5, 12].


A different way of implementing performance-based strategies is the concept of access with mandatory evidence development. Here, the reimbursement is provisional, pending the collection of additional real-world data over a set timeframe, after which the therapy will be re-assessed. This approach, emphasising ongoing evidence collection, has been pivotal in France and the UK, offering a path to manage uncertainty beyond launch. Yescarta®, Kymriah®, and Zolgensma® demonstrate the successful implementation of this model [5, 38].


The appeal of such innovative agreements lies in their potential to distribute the risks more evenly between manufacturers and payers, reduce financial pressures, and bridge data gaps through the collection of real-world evidence [39]. In France, the integration of performance-based agreements within the CEPS framework benefits from existing registries facilitating long-term data collection on safety and efficacy. Our French payer noted, “The registries and the specific follow-up make it easier for the manufacturer to get long-term data on safety and efficacy. It works quite well. We can design a specific agreement, defining a timeframe to get a specific outcome.” Meanwhile, in Italy, the application of these models is seen as essential for CGTs, especially given the uncertainties surrounding the longevity of CGT effects. Our Italian payer remarked, “With outcomes-based agreements, you can address uncertainties about durability of therapy.”


However, the complicated nature of these agreements prompts mixed feelings among payers (Table 2). Our Italian payer states, “Outcomes-based agreements are very complex…this is the reason we have fewer and fewer of such contracts overall,” highlighting that their implementation is being limited to high-cost, single-use therapies in small patient populations. Similarly, our French payer recognized their utility in niche markets, while the Spanish payer critiqued the use of performance-based agreements as more political than practical. Despite these different perspectives, the documented success of outcome-based approaches, particularly in small patient populations like those treated with CAR-T therapies, illustrates their potential [12].


Table 2. Payer views on key advantages and disadvantages of performance-based models when applied to CGTs
* German sick funds use routine billing information to collect data for these types of agreements.

Blending strategies –the hybrid approach

Some health technology assessment (HTA) and funding bodies are using hybrid models that leverage both financial and performance-based risk sharing elements to address the high cost and clinical uncertainty of CGTs. One example is the recommendation of Tecartus® by the National Institute of Healthcare and Excellence (NICE) in 2021 for the treatment of relapsed/refractory mantle cell lymphoma and acute lymphoblastic leukaemia. NICE’s approval was subject to the application of a simple discount scheme and a managed access agreement, which stipulated additional evidence generation efforts [31]. A hybrid approach was also implemented in Italy and Spain for Kymriah® and Yescarta®. In both countries, the cost of these therapies was spread across multiple instalments, with subsequent payments tied to patient outcomes. In Spain, Kymriah® payments are contingent on patients achieving a complete response at 18 months, while Yescarta® payments are linked to patient survival over the same time period [12].


We have also seen the application of hybrid mechanisms in Germany which incorporate both pay-for-performance elements and the requirement for additional evidence generation for therapies such as Kymriah®, Yescarta®, and Zolgensma® [5, 38].


Payer perspectives on current CGT reimbursement strategies

Payer perceptions of current pricing and reimbursement strategies for CGTs vary (Table 3). Those from Italy, Spain, and the UK expressed general satisfaction with the available approaches, viewing them as adequate for the current landscape. In contrast, opinions in France and Germany are mixed, reflecting the nuanced challenges inherent in CGT reimbursement. While financial-based models have received positive feedback from all but the Spanish payer we spoke to, performance-based mechanisms prompted a more divided response (Table 3). The implementation challenges of performance-based agreements – cited as being cumbersome, time-consuming, and fraught with financial unpredictability, administrative burden, and concerns over data quality – have led to mixed reactions (Table 2).


A relatively favourable position towards performance-based models has been seen in France, whereas in Germany, Italy, and Spain, opinions have been mixed. The UK's position is notably distinct, with a preference for confidential payments and targeted evidence development. Our UK payer captured this sentiment, stating, “The default will be confidential payments, and evidence development when needed."


Table 3. Payer perceptions on the current approaches to pricing and reimbursement for CGTs

So, what do payers think will happen next?

Although innovative risk-sharing tools are available, our secondary research and discussions with payers demonstrate their strengths and weaknesses, as outlined in Table 2 (and here). Despite this, every one of our payers emphasised that there will be a continued need for innovative pricing models to support future CGT affordability. That said, it is important to highlight that use of innovative mechanisms does not guarantee market access success. The case of Zynteglo® in Germany highlighted this; despite proposing spread payments over five years tied to patient benefits, the negotiations faltered on pricing issues, ultimately leading to its market withdrawal [40].


Payer expectations on price trajectories

All payers expect a downward pricing trend for CGTs but note that this will be dependent on various factors including disease indication, patient population size, and existing unmet medical needs. Key drivers for this anticipated cost reduction include decreasing research & development production costs, increased market competition and the application of CGTs to broader indications. Notably, the French payer stated, "a renewal means a price reduction," indicating that price reductions over time are as relevant for CGTs as for other therapies. One comment from the Italian payer, that “companies cannot expect the same prices as now and need to make them [CGTs] more accessible," reflects the collective payer sentiment that future CGTs will not have the same high-level price tags as current ones.


Beyond performance-based reimbursement models: providing better financial certainty

Given the difference in healthcare systems, there is no “one size fits all” when it comes to sustainable financing of CGTs in Europe. This poses an opportunity for payers to make use of financial-and performance-based hybrid models, particularly those which can be tailored to the needs of a particular market. The UK payer’s mention of subscription-based models as a prospective approach for CGTs, where a fixed annual fee is set based on estimated patient numbers, reflects this adaptive strategy. So far, there is limited evidence of subscription models being used in Europe, although an example has been seen in the US.


Most of the payers we interviewed acknowledge the relative simplicity and reduced administrative burden of financial models over performance-based agreements. Yet, our Italian payer cautions that while financial models might mitigate immediate impacts, the aggregate financial burden of CGTs would persist. This suggests that a blend of both financial-and performance-based models should remain an option for high-cost products.


Do policy changes support sustainable reimbursement of CGTs?

Several countries, including France, Italy, Spain, and the UK, have been revising policies to facilitate innovative contracting. Spain’s implementation of VALTERMED, a tool for enhancing real-world data collection, exemplifies this type of initiative and has been employed for therapies like Kymriah® and Yescarta® since 2019 [12, 13]. France’s 2023 Social Security Finance Bill proposed measures aimed at promoting access to ATMPs through negotiation and risk-sharing agreements based on staggered payments and real-world outcomes [13].


The availability of silo funds ensures there is national funding for certain products such as ATMPs or high-cost oncology drugs [3]. Examples of such funding avenues include the Cancer Drugs Fund (CDF) and the Innovative Medicines Fund (IMF) in the UK, and Fondo per i farmaci innovativi in Italy [41-43]. Use of these funding avenues has enabled the reimbursement of Tecartus® in both the UK and Italy [20, 41]. Where they exist, silo funds provide another tool or route to reimbursement, subject to the product meeting a specific eligibility criterium.


When asked, our payers generally did not anticipate major policy shifts specifically aimed at accommodating CGTs. They cited different reasons for this, such as the political astuteness of UK healthcare organisations and the inherently “slow, reactive nature of systems” as in Germany. Based on this, it seems that healthcare systems will likely not bend to accommodate novel high-cost products, and manufacturers of CGTs will need to find a way to work within the current systems.


Are we in the eye of the storm?

Our research indicates that payers currently have few concerns about the affordability of CGTs, since the target populations for such therapies are small, and given that they anticipate both a price decline for CGTs in the future and the availability of innovative pricing models. However, looking ahead, payers expressed concerns about affordability if CGT technologies expand to use within larger patient populations. Our research suggests that there is no universal model for Europe that ensures sustainable reimbursement of CGTs. Manufacturers should remain open-minded to different agreement types and explore how they can be combined. Tailoring approaches to individual markets and gaining an understanding of payer perspectives and policy evolution, will ultimately help to secure timely access to these transformative therapies for patients.


Further reading, supporting articles by RJW&partners:

  1. Risk-Sharing Agreements: a fancy way to discount? (link)

  2. Will US payers cope with the influx of high-cost cell and gene therapies over the coming years? (link)


References:

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  2. Agency., E.M. First gene editing therapy to treat beta thalassemia and severe sickle cell disease. 2023 [cited 2024 16/02]; https://www.ema.europa.eu/en/news/first-gene-editing-therapy-treat-beta-thalassemia-and-severe-sickle-cell-disease.

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