For decades, scientists around the world have dreamed of medical interventions to repair or replace defective genes in a targeted way. Today, that vision is becoming reality for an ever-growing number of debilitating and deadly diseases thanks to breakthroughs in gene therapy technology. But if millions of Americans are to benefit from these advances, our health care system needs to adapt.
Up to 4,000 diseases (including certain types of cancer, cystic fibrosis, and neurodegenerative diseases like Parkinson's and Alzheimer's) are rooted in genetic mutations that prevent cells from working properly. About 25-30 million Americans live with a rare medical condition, the majority of which are thought to be related to a genetic defect. By fixing the underlying causes of genetic disorders, gene therapies have the potential to deliver cures for these patients.
Progress has been swift. In 2017, the Food and Drug Administration (FDA) approved the first three gene therapies for use in the U.S., and dozens more are completing the review process. Last month, FDA Commissioner Dr. Scott Gottlieb predicted that by 2025, “the FDA will be approving 10 to 20 cell and gene therapy products a year based on an assessment of the current pipeline and the clinical success rates of these products.”
But this progress comes at a price. The costs of research and development are enormous, and many gene therapies are expected to be priced at more than $1 million per patient to provide an adequate return on investment.
However, policymakers and payers should look beyond the sticker-shock. Curing a disease, rather than treating it, can not only provide an immense improvement in longevity and quality of life, it can also save insurers and taxpayers money in the long-run.
In a new study from the American Consumer Institute, my coauthors and I compare the costs of conventional treatments for two serious genetic diseases — severe hemophilia and spinal muscular atrophy — with the cost of a one-time gene therapy cure. In both cases, the higher upfront cost of gene therapy is recouped within a decade by eliminating the ongoing expenses of conventional treatment. For example, the current annual cost to treat severe hemophilia is about $690,000, on average. By contrast, a gene therapy for hemophilia is estimated to cost approximately $1 million, meaning the gene therapy pays for itself in less than two years.
Despite the long-term benefits of gene therapy for both patients and payers, our current approach to financing health care makes it difficult for patients to access these cures. For example, insurers are often reluctant to cover the upfront costs for expensive therapies, fearing that patients will switch to another insurer after the treatment is done.
To overcome this problem, long-term financing of partial payments to drug companies has been proposed so that when a patient changes to a different insurance company, the new insurer bears some of the drug costs. Outcome-based payments, where payers are only financially responsible if a therapy produces the desired clinical outcome, are already used effectively by some European countries and Medicare for certain high-cost drugs and could be applied to gene therapies.
To further defray the cost, a universal fund based on a percentage of revenue from different insurers could be established. Reinsurance could also be used to shield insurers from large payouts. To help patients amortize their out-of-pocket costs, mortgage-like loans could help spread expenses over a series of smaller payments.
All of these possibilities merit careful scrutiny, and stakeholders should work together to develop new, value-based financing mechanisms that expand access to gene therapies and encourage continued research into lifesaving cures. Patients’ lives depend on it.