Journal Article

Confronting High Costs And Clinical Uncertainty: Innovative Payment Models For Gene Therapies

Horrow, Caroline, Kesselheim, Aaron S

2023

Overview

Gene therapies offer potentially life-changing benefits for patients, but their unprecedented high prices exacerbate challenges for reimbursement. Payers must confront high budgetary impacts, as a large up-front payment for each patient makes it difficult to predict and absorb costs. Payers also face considerable clinical uncertainty, as evidence for efficacy and durability is limited at approval. Alternative payment models may address these reimbursement problems and ensure equitable patient access. We developed a taxonomy of possible payment mechanisms for gene therapies, including installments, risk pools, reinsurance, pricevolume agreements, expenditure caps, subscriptions, outcomes-based payments and rebates, warranties, population outcomes-based agreements, and coverage with evidence development. We illustrate how these payment models take three main approaches: amortization, which mitigates initial budget impact by spreading payments over time; risk spreading, which makes budgets more predictable by pooling costs with other payers or capping costs based on expected volume; and performance-based payment, which addresses clinical uncertainty by tying prices to patient- or population-level outcomes. We discuss each payment model, its advantages and challenges, and considerations for US payers.

• Publisher: The People to People Health Foundation, Inc., Project HOPE
• Subject: Agreements / Amortization / Budgets / Classification / Cost control / Costs / Drug dosages / Efficacy / Expenditures / FDA approval / Gene therapy / Installment payments / Insurance coverage / Insurance policies / Manufacturers / Medicaid / Patients / Payments / Prescription drugs / Prices / Reimbursement / Reinsurance / Risk sharing / Subscriptions / Taxonomy / Therapy / Uncertainty / Warranty