The high cost of gene therapies pose challenges for drug makers and insurers.

With one gene therapy and two CAR-T cell therapies approved in the U.S., the challenges posed by the very high prices of these novel treatments are starting to attract notice. Hundreds more are in the clinical pipeline, with several nearing the approval stage.

So far, the issues around pricing for advanced cell and gene therapies haven’t impacted the overall industry because there are so few approved and the patient populations are small, though that will change when additional products reach the market.

This topic was tackled at the annual meeting of the American Society of Gene & Cell Therapy, with pharma companies and insurers weighing in.

The one marketed gene therapy – Luxturna – costs $425,000 per eye. Novartis, meanwhile, has indicated that Zolgensma, its gene therapy for the treatment of a severe form of spinal muscular atrophy, would be cost-effective if priced at $4 million. Those figures are concerning for insurance companies because the existing system was not designed to manage very high, one-time payments.

Installment payments would be one way to overcome the problem. Some gene therapy companies have said they would consider spreading the high upfront costs of gene therapies over time, such as in the form of installment payments, but regulatory restrictions would make doing so difficult. According to the Medicaid Best Price law, drug manufacturers have to offer the government health program a minimum 23% discount or the lowest price negotiated with other private or public payers.

If a gene therapy proved to be ineffective and an insurance company stopped making installment payments, the government would view the amount actually paid as a discount – which could reset the price for everyone receiving that treatment – a risk drug makers don’t want to take.

In the case of Luxturna, maker Spark Therapeutics has implemented a results-based rebate program with insurers Harvard Pilgrim and Cigna's Express Scripts. They receive rebates up to 20% of Luxturna’s cost if efficacy goals are not achieved between 30 and 90 days and again between 30 and 33 months following treatment. The 20% level was established to avoid the consequences of existing federal regulations.

Spark has proposed an alternative in which 50% of the drug’s price would be tied to performance measures over three to five years, and payers could elect to pay when the measures are met or receive rebates. The company is waiting to hear back from the Centers for Medicare and Medicaid Services on the proposal.

Other areas that were discussed at the meeting included establishing acceptable and practical measures for determining the efficacy of gene therapy treatments, and the possibility of drug companies (with other treatment options) including them at no additional cost if a gene therapy doesn’t achieve the desired outcome.