Although payers have become somewhat accustomed to the high cost of specialty drugs, the price tags for gene therapies are causing “sticker shock.”
Specialty product innovation is increasingly viewed as a journey that begins during pre-commercialization and continues throughout the product life cycle. Pharmaceutical and biotechnology manufacturers now recognize the need to develop, implement and refine a process-driven strategy that is built upon solid structural dynamics and a proactive approach for every phase of commercialization, spanning ideation, clinical research and development (R&D), clinical trials, product launch, market access, distribution and beyond. This strategic foundation gives life sciences companies and their people a clear pathway and focus to ensure that tasks and projects are aligned across teams and departments.
With the development of a potential new specialty drug, cell or gene therapy (CGT) typically requiring a decade or longer,1 there are critical success factors along every iterative step of the product life cycle that all point toward the same goal: achieving market dominance and capturing substantial market share.
Establishing proof of concept and optimal brand positioning for CGTs may take even longer, given the complex requirements for developing genuinely new products that target an unmet need in the market or value chain. Although these novel and potentially lifesaving therapies for individuals with rare or orphan diseases bring the promise of personalized precision medicine to life, developers face challenges along several dimensions—manufacturing, regulation and reimbursement—to become broadly commercially viable.
These challenges do not appear to be holding back development, judging from the pipeline of products in phase 3 clinical trials and the sheer number of recent and anticipated approvals. In 2024 alone, up to 21 cell therapy launches and as many as 31 gene therapy launches—including more than 29 adeno-associated virus (AAV) therapies—are expected.2
Because there is little room for a slip-up in the market roll-out of a specialty therapy, there are a few key areas in which things must go smoothly right from the beginning to safeguard the successful launch and competitive performance of a product.
The countdown to a specialty product launch actually starts during pre-commercialization, beginning at the earliest stages of ideation while establishing proof of concept, conducting research and development even prior to clinical trials. This extended timeframe makes it critical to engage with an experienced group of professionals early on as the first step in strategic planning. A dedicated unit should understand the marked differences between introducing a specialty drug vs. a non-specialty drug and be prepared to embrace a patient-centric focus.
This may be a tall order for small to mid-size manufacturers for whom this expertise may not exist in-house. It is a factor that motivates many organizations to seek a specialty pharmacy solutions partner that can provide a single source of end-to-end solutions powered by the appropriate levels of expertise: deep bench experience with all phases of a product life cycle, from managing clinical trials, collecting and analyzing data, conducting payer negotiations and implementing go-to-market strategies for launch, market access, and distribution.
Ideally, the team should be flexible, have the ability to pivot as market conditions change and be able to deliver specialized expertise:
Projecting outcomes, also called events or endpoints, relies on collecting variables that are monitored during a clinical trial or study to document the impact that a given intervention or exposure has on the health of a given specialty population. When these data points are collected early during R&D, including product safety, efficacy epidemiology, and clinical results, they are key to informing later-stage decisions that affect pricing, health plan coverage and reimbursement, clinician prescribing, and other aspects of market access.
Here again, it’s never too early in the pre-commercialization phase to identify and measure a specialty product’s projected clinical outcomes as the pathway for meetingthe needs and expectations of payers and health care professionals. The accumulation of the right data, often from a single source to ensure consistency, is vital to negotiations with payers vs meeting the information requirements of regulators.
The importance of outcomes data is particularly relevant to value-based pharmaceutical contracts (VBPCs), performance-based reimbursement agreements between health care payers and pharmaceutical manufacturers in which the price, quantity, and nature of reimbursement are tied to clinical, intermediate, or economic endpoints.3
VBPCs may effectively improve the value metric of pharmaceuticals by reducing health expenditures, incentivizing favorable clinical long-term outcomes and improving access to drugs. In these arrangements, outcomes data are critical because VBPCs largely focus on medications that clearly offer clinically meaningful benefits to patients.
Going forward under VBPCs—where manufacturers take on greater risk—these contract models function as one of the tools to align incentives and place greater focus on tangible benefits for patients. By demonstrating long-term outcomes and providing real-world evidence (RWE) that offers payers visibility into projected total health system costs related to a specific disease, manufacturers can improve their positioning for pricing and reimbursement.
Industry advisors at the MIT Center for Biomedical Innovation explain the main financial challenges that are associated with these innovative therapies:4
Given these issues, precision financial solutions are becoming a crucial component of market access strategies. One of the more attractive options that manufacturers offer payers is allowing the high one-time costs of gene therapies and other expensive specialty medication to be converted into small, predictable payments over time.
Although payers have become somewhat accustomed to the high cost of specialty drugs, the price tags for gene therapies are causing “sticker shock.” Most recently, a new hemophilia gene therapy etranacogene dezaparvovec (Hemgenix) debuted at $3.5 million for just a one-time dose administration, making it the most expensive therapy to date.
Data showed, however, that it cut the number of bleeding events expected over the course of a year by 54%. It also freed 94% of patients from time-consuming and costly infusions of Factor IX, which is currently used to control the potentially deadly condition.5 Another recent example is betibeglogene autotemcel(Zynteglo), which represents a potential cure for a rare blood disorder at a price of $2.8 million per patient, making it one of the nation’s most expensive drugs.6
Manufacturers are also addressing the financial barriers of patient access by introducing innovative co-pay solutions that support existing co-pay card programs. These programs are designed to ensure full transparency of transactions, with built-in capabilities that guard against fraud, provide far-reaching oversight of co-pay fund usage and pledge that funds are safe and secure.
In many instances, blockchain technology is utilized to provide data security and tools that avoid “accumulators,” a term that describes the coverage of 2 prices–the deductible and the maximum amount patients must pay out-of-pocket in order to minimize risk and ensure that patients receive the full benefits of co-pay funds.
Without the benefit of a crystal ball, it is often difficult to accurately predict the manufacturing capacity that will be needed when a product is finally launched. This is particularly true for CGTs where demand forecasting is encumbered by the uncertainties of the CGT supply chain and lacks the benefit of long-term historical data.
Despite these circumstances, manufacturing capacity should be matched carefully with demand so that patient-specific doses are delivered just in time to sites of care.7 To accomplish this, dynamic demand forecasting should begin as early as 3 years before the actual launch.8
Furthermore, with potentially complicated payment structures as described, custom production means forecasters need more sophisticated data analysis tools and strategies to deliver accurate revenue and profit projections. Accurate forecasting requires specific data on the size of the eligible patient population size, benchmarked prices to establish realistic projections of the product’s durable pipeline success, number of patient lives that are affected as well as the direct financial impact on the payers as they calculate the total cost of care.
This is precisely where a single outsourced vendor with robust experience in rare disease therapies and access to sophisticated data analytics can be invaluable. When actionable, real-time clean data emanates from one source, manufacturers get integrated support that reflects combined data inputs from epidemiology analysis and across market access activities. This includes establishing a digital supply chain thread that includes track-and trace data on critical information, such as the location and quality of cells extracted from patients for autologous cell therapies, reports that follow the patient journey, and market intelligence that captures payer reimbursement levels.
Manufacturers also contract for exclusive drug distribution services, choosing a vendor that specializes in rare disease and recognizes that novel therapies often require special handling, such as refrigeration, overnight delivery, and shipment tracking. An experienced distributor that focuses on this market sector has the know-how to coordinate third party logistics (3PL) for warehousing or shipping, providing patients uninterrupted therapy and access to medications they need when they need them.
An exclusive distribution model also represents significant cost savings for the manufacturer, with the added reassurance that the drug itself is available and has not encountered delays along the supply chain.
Manufacturers face numerous market challenges in preparing potential prescribers for the introduction of a new specialty drug or CGT. Typical HCP practices may see few specialty patients and even fewer rare disease patients; specific education, training and experience are often required to diagnose and/or treat orphan diseases.
Even when clinicians want to help these patients, some find it difficult to refer them to a clinical trial or specialized facility. The scarcity of dedicated resources is frustrating for physicians, patients, and families.
But manufacturers can address these issues by providing full support for the therapy itself and offering evidence-based information to HCPs. They also need to anticipate requirements and potential barriers for HCPs to communicate in a timely manner with health plans, case managers, and specialty pharmacies.
By working with a specialty pharmacy solutions partner that makes it a priority to ensure streamlined communications between the HCP, patient, and pharmacy, manufacturers enhance patient compliance with treatment. Consider how critically important it is for HCPs to be notified if a patient is non-compliant with taking medication on schedule or as prescribed.
Manufacturers must also recognize the role of prescribers in the prior authorization process and provide them with tools and assistance to ensure that a particular drug qualifies for coverage under the terms of the patient’s pharmacy benefit plan. Any interruption in these communications weakens patient access to treatment.
The importance of maintaining a patient-centric focus throughout the product life cycle cannot be overstated. Manufacturers should “walk in the shoes of the patient,” try to anticipate the barriers they face in accessing treatment, and address these challenges at every touchpoint in the product life cycle.
About the Author
For nearly a decade, Dea Belazi has led the development and management of AscellaHealth, a global Healthcare & Specialty Pharmacy solutions organization, serving patients, life sciences manufacturers, payers and providers, offers a comprehensive portfolio of uniquely tailored, tech-enabled services supporting complex, chronic conditions or rare diseases that require specialty medications and/or cell and gene therapies. A recipient of numerous industry awards for innovation, and a NASP Strategic Channel Partner of the Year award winner, AscellaHealth’s best-in-class, patient-centric approach is built upon proprietary technology processes for novel programs and services to support the launch of specialty medications and proactively address multiple challenges, optimize clinical health outcomes, and improve quality of life for this patient population. AscellaHealth brings a rare and special perspective to all stakeholders. Visit www.AscellaHealth.com.
1. Carroll, J.P. “How Long Does it Take to Get a Drug approved?” Biotechnology Innovation Organization, February 16, 2021. https://www.bio.org/blogs/how-long-does-it-take-get-drug-approved
2. McKinsey & Company. September 2022.https://www.mckinsey.com/industries/life-sciences/our-insights/eight-imperatives-for-launching-cell-and-gene-therapies
3. J. Carlson, S.D. Sullivan, L.P. Garrison, P.J. Neumann, D.L. Veenstra.Value-Based Pharmaceutical Contracts: Value for Whom?; Value in Health, Volume 23, Issue 2; Pages 139-276; February 2020.https://www.sciencedirect.com/journal/value-in-health/vol/23/issue/2
4. Jeremias, Skylar; Emerging Solutions to Address Financial, Reimbursement Challenges Associated With Gene and Cell Therapies,Conference/The Academy of Managed Care Pharmacy Nexus, Oct 19, 2021. https://www.ajmc.com/view/emerging-solutions-that-can-address-financial-and-reimbursement-challenges-associated-with-gene-and-cell-therapies
5. Cortez, Michelle. Bloomberg World News, November 2022.https://www.ndtv.com/world-news/at-3-5-million-a-dose-worlds-most-expensive-drug-to-treat-haemophilia-3547401
6. Walker, Joseph. Wall Street Journal, August 2022.https://www.wsj.com/articles/fda-approves-bluebirds-2-8-million-gene-therapy-for-rare-blood-disease-11660759942
7. McKinsey & Company, March 2022. https://www.mckinsey.com/industries/life-sciences/our-insights/viral-vector-therapies-at-scale-todays-challenges-and-future-opportunities
8. McKinsey and Company. September 2022.https://www.mckinsey.com/industries/life-sciences/our-insights/eight-imperatives-for-launching-cell-and-gene-therapies