Expert Discusses Payment Models for Cell and Gene Therapies


Joe DePinto discusses innovative payment models like value-based agreements and warranties for cell and gene therapies

Joe DePinto, head of Cell, Gene, and Advanced Therapies at McKesson, covered several topics related to cell and gene therapies. He discussed the unique challenges in delivering these therapies at scale and expanding sites of care beyond academic medical centers. Payment models being utilized included value-based agreements, outcomes-based agreements, annuities, and warranties.

Human cell or Embryonic stem cell microscope background | Image Credit: Anusorn -

Image Credit: Anusorn -

Q: As the market expands to more cell and gene therapies, what can we expect from these drugs in the coming years?

So cell and gene therapy is unlike any products that have been on the market previously. The value chain is different, the way it gets to the market is different, and each of the products are a little different. Whether you're dealing with a cell therapy, you can be dealing with autologous or allogeneic. If you're dealing with gene products, it could be a different market access strategy as well.

Q: What are some of the biggest challenges for the uptake of CGT?

So I think when you think about what we can expect some of the challenges to be is how do we standardize or industrialize the delivery of these products and how those products will get to patients, and also the site of care. Site of care continues to expand from smaller populations being treated in academic medical centers to larger populations being treated, even in community medical centers.

Q: What are some ways that the payers, health care providers, and pharmacists can address financial challenges for patients to make these options more accessible?
At this conference, I was fortunate enough to moderate a panel on innovative payment models, and what we've seen is at each of the launches of the cell and gene products, there's usually an announcement that the product has been approved by the regulatory authorities, and the companies are really excited about that. They usually reference some kind of innovative payment model. These payment models vary everything from value-based agreements to outcomes-based agreements. There's also some annuity-based agreements, subscription-based agreements. But at this conference, we did a deep dive into warranties, and how warranties can be used to really address some of the value-based concerns in the marketplace. So I think you're going to see a continued effort in that area by biopharma to make sure that the right patient gets the right drug at the right value.

Q: How can the addition of CGTs impact Medicaid and private payers?
I think cell and gene therapy with the therapeutic areas they're going into will have a an interesting payer mix. Each will be different., for perhaps like sickle cell that recently were approved 2 products. I will have to imagine they'd be a more of a Medicaid population because of the population they're treating, and then some will be more private pay, but it'll be really important for the biopharmaceutical companies, as well as the providers that are giving these products to understand the payer mix, and how to navigate that payer mix, and whether the product is given inpatient, or outpatient is also component. Regardless, there's going to be an impact to all the payers of these products because they're going to see a larger volume. You're getting 10 to 20 approvals a year. So these payers are learning as this area expands how to deal with it.

Q: The session mentions annuity payment structures, warranties, and subscriptions. Can you elaborate on each of these?
So when you think about the different innovative payment models, let's take them in groupings. You have value-based agreements and outcomes-based agreements. They're typically set up in a way where you get an outcome and there's renumeration if you don't hit that outcome, right? The subscriptions and annuities are really set up to deal with the cost density issue of cell and gene therapies. Cost density is defined as a large outlay in year one with a value over a period of time, what you're really doing is solving for durability of response for these patients. So a subscription or an annuity payment is sort of a pay as you go rather than paying all upfront versus the value-based, as well as the outcomes-based being more of an end point hit, end point not hit. The beauty of warranties that was discussed in the meeting yesterday is that there's some benefits that came out of some of the regulations from CMS 2020 around best price, as well as looking at how you can use a well known vehicle in other markets to address the medical market, especially in cell and gene therapy. It's similar, you set up a criteria, and then you look at what the risk of hitting that clinical criteria is, and then insure for that in the warranty. So it's a mix of the both.

Q: How could these models help to improve access to much needed medication for patients?
Cell and gene therapy patients navigate a really fragmented health care system, and for the cell and gene patient to really optimize their treatment, they really have to navigate that system with a guide. At times, there's many steps along the way they have to go, but the first step is payment and benefit verification and benefit approval that you want to make sure that the product the providers are using are gonna get paid for. Those agreements, those value-based opportunities financially will help that patient navigate the system because it starts there. At the end, you get paid at the end right when the delivery care, but it really starts at the beginning because of the benefit verification and the benefit approval of the payer saying 'yes, move forward.'

Q: Is there anything you would like to add?
What we're really excited about here at McKesson is the fact that we're well positioned as a company to really satisfy the needs of multiple stakeholders, the biopharma companies, the providers who treat these patients, as well as the payers who ultimately will reimburse for the drug. So we're excited about our distribution assets and logistics, assets, patient assets, as well as provider enablement, commercial and clinical enablement tools that are available for our clients. So it's an exciting space. It's still nascent, but we're really excited to help these patients navigate the value chain and allow for more access to these groundbreaking therapeutics.

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