Are Gene Therapies Financially Sustainable?

Article by: Isobel Firth and Grace Hampson

Gene therapies directly address the underlying cause of disease, and many of them offer short-term treatment regimens. As a result, they could bring transformative benefits to patients by halting disease progression and – in some circumstances – offer the prospect of a cure.

Despite the transformative value offered, questions are being raised around whether adopting these technologies into routine clinical care threatens the financial sustainability of health systems in the long term.

In a recently published report, we explore the financial sustainability of gene therapies, and highlight the factors that are likely to influence the financial sustainability of this important medical technology.

What do gene therapies offer patients and health systems?

For patients, there is hope that gene therapies will change the treatment paradigm for chronic conditions. For health systems, the picture is more complex. Gene therapies generate different kinds of value for the health system, depending on the disease they target and existing treatments available. 

Gene therapies differ in the value they offer, depending on whether they generate health gain predominantly through an increase in the length of life or the quality of life. Therapies that increase the quality of life of the patient when compared to existing therapies have the potential to generate cost savings (or cost-offsets) for the health system or for wider society.

In the report, we outline three indicative categories of gene therapies to illustrate this further.

Are gene therapies financially sustainable?

There are three key factors that will influence whether the adoption of gene therapies is sustainable in the long term:

1. The R&D pipeline for gene therapies: The speed and number of products gaining marketing approval and the size of the eligible patient populations will influence the total spend on gene therapies. As different gene therapies generate different kinds of value for the health system, financial sustainability will depend on the value profile of all gene therapies coming to market.

2. The price of gene therapies: Value-based pricing promotes efficiency in the long term by incentivising the development of high-value medicines. A particular concern to payers regarding the concept of value-based pricing is whether or not cost offsets to the health system are taken into account in the price. Pragmatic steps should be taken to share the cost offsets between the manufacturer and the payer.

3. Competition for gene therapies: Gene therapies are short-term treatments. Their one-off nature means the prevalent population declines following the entry of the originator. They have high development and manufacturing costs, and many gene therapies target rare diseases. All of these factors may serve as barriers to competition.

What can be done to harness the potential of gene therapies whilst managing the challenges?

Policymakers can work with manufacturers to adopt Managed Entry Agreements (MEAs), transforming the risk profile of the adoption of gene therapies and managing short-term budget impact. Simultaneously, manufacturers can work with payers and HTA bodies to deliver responsible pricing strategies which allow the health system to share the economic value. In the long term, the extent of on-patent and off-patent competition will impact financial sustainability. Policymakers could work with patients and physicians to encourage the uptake of generic entrants where available, and there may be a role for policy in reducing the barriers to competition. More research is needed to explore how policymakers can apply these ideas in practice.

Access the full report here.

This report was commissioned by Novartis Gene Therapies. The programme of research also included a debate on some of the issues discussed in this blog. Access the interactive report of the debate (containing clips, quotes and analysis) here

Related Research

Hampson, G., Towse, A., Pearson, S., Dreitlein, W., Henshall, C., 2018. Gene Therapy: Evidence, Value and Affordability in the US Health Care System. J Comp Eff Res, 7(1), pp.15-28. DOI: https://doi.org/10.2217/cer-2017-0068.

Jonsson, B., Hampson, G., Michaels, J., Towse, A., Graf von der Schulenburg, J.M. and Wong, O. 2018. Advanced Therapy Medicinal Products and Health Technology Assessment Principles and Practices for Value-based and Sustainable Healthcare, The European Journal of Health Economics, DOI: https://doi.org/10.1007/s10198-018-1007-x

Hampson G, Mott D, Shah K, Devlin N., 2018. Public Preferences for Health Gains and Cures: A Discrete Choice Experiment. OHE Consulting Report, London: Office of Health Economics.

 

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