How to Navigate Cell and Gene Therapy Reimbursement: Part One

Q: What are some of the major challenges around reimbursement for cell and gene therapies?

Ana Stojanovska: Current payment mechanisms can be a challenge, given the unique characteristics of cell and gene therapies, and current legislation is potentially standing in the way of innovative payment arrangements. It takes time to evolve current thinking around reimbursement, and payers and government entities may not be ready to do this fast enough to accommodate timing as more of these therapies become commercially available. And, securing an accelerated development designation means there may be even less time for manufacturers to discuss, negotiate and coordinate payment for the treatment with providers and payers. 

One example lies within the established payment systems by Medicare in the inpatient setting, where many of these therapies may be provided. To qualify for new technology add-on payments (NTAPs) beyond the predetermined Medicare Severity Diagnosis Related Group (MS-DRG) payment rates, manufacturers must meet three criteria:

• The treatment must be considered new
• The treatment must have a high cost that exceeds the level of the MS-DRG payment amount
• The treatment must represent substantial clinical improvement in the diagnosis or treatment of Medicare patients

Based on how the payment system is currently structured, even if manufacturers are successful in showing the criteria have been met and obtain the NTAP designation (a resource intensive process in and of itself, relying heavily on data), the designation doesn’t allow providers and hospitals to recoup the full cost of the new products. The Centers for Medicare and Medicaid Services (CMS) appears to be recognizing some of the limitations of the current system and is open to comments, but it takes time to evolve the current reimbursement systems, leaving providers and hospitals exposed to possible financial losses. 

Coding can also be a big challenge. It’s typical for new specialty products to lack billing codes at launch, which threatens timely processing of claims. The lack of appropriate codes—and potential need for many newer types of codes given the complexity of cell and gene therapies and their cost—further magnifies the challenge for cell and gene innovators. 

While there have been strides made by CMS—YESCARTA and KYMRIAH got Q-codes relatively quickly post launch—challenges persist when it comes to what is included in the description of those codes. CMS has continued to bundle some of the steps needed to produce the patient-specific infusion for these new cell and gene therapies into the description of the product code itself. The fact that there is no separate code to account for cell processing by the manufacturer means that, consequently, there is no separate payment for that service. Therefore, reimbursement for the product is not granted until the product is administered to the patient. If the patient can’t receive the therapy for some reason, the cost of producing that specific dose cannot be recouped by the manufacturer, and a therapy owner may be required to absorb the cost of an entire treatment if therapy is discontinued.

Q: How are payers approaching new cell and gene therapies, and what will innovators need to do to educate them?

AS: Payers may not be very familiar with emerging types of therapies. Payers need early education not only on the clinical efficacy and safety data, but also the cost-effectiveness of the product, in order to provide appropriate coverage. Magnifying the need for education is the fact that many cell and gene therapies are developed for rare diseases, so payers also need disease state education.

In the case of Medicare, and depending on the therapy, existing coverage determinations may need to be addressed or updated. Because of the complexity, novel production and administration of these cell and gene therapies, the type of committee responsible for assessing these therapies may vary, necessitating education of pharmacy and therapeutics (P&T), medical policy and/or health technology assessment (HTA) stakeholders.

Additionally, the complexity of producing and administering a cell and gene therapy may involve multiple sites of care and multiple high-cost procedures. Such complexity may require split payments or new contracting agreements between entities, which dramatically increases the need for care coordination. This could also impact a payer’s decision for coverage, as they may choose to require administration by certain specialists/centers of excellence (COEs) before granting access.

In a recent development, CMS is undertaking a national level review for CAR-Ts. National coverage determinations (NCDs) for Medicare are typically not looked at very positively for traditional buy and bill drugs from a patient access perspective, because they can often introduce additional restrictions on coverage. However, in this case, due to the novel and individualistic nature of CAR-Ts, there are many questions surrounding how coverage should be determined. The large majority of initial comments submitted to CMS appear to be against having an NCD for CAR-Ts, with a number of commenters citing the early nature of these therapies, the potential for confusion among providers and patients, and the potential for inconsistencies in coverage with private payers in their remarks. As of the publication of this article, CMS is considering the comments and has scheduled a MedCAC meeting for August 22, 2018. Many fear that patient access to these innovative therapies could be jeopardized during the lengthy process that it takes CMS to analyze, understand, and address the comments and reach a decision.

In part two of this Q&A, Ms. Stojanovska discusses what is needed to overcome the challenges associated with cell and gene therapy reimbursement.