© 2019 Parexel International Corporation
How cell and gene therapies are redefining the traditional pharmaceutical P&R model
Alex Gee
Principal Consultant
© 2019 Parexel International Corporation 2
Easy first question…
How much is a human life worth?
What price tag would you put on this?
© 2019 Parexel International Corporation3
Agenda for today
Situation overview
Innovative P&R solutions
Local access challenges
© 2019 Parexel International Corporation4
We are upon an era of medicines with transformational benefits such as CAR-T…
CAR-T cell therapies
Genetically engineered
T cells
Express a synthetic receptor
designed for a specific target
Expand and persist in vivo with high potency
Indication: r/r B cell ALL
ELIANA (Phase 2 trial)
83% CR/CRi at 3 months
79% 12-month OS
E.g. KYMRIAH ®
© 2019 Parexel International Corporation5
…gene therapies also offer potential cures for treatments with high unmet need…
Gene therapies
Gene inserted into
a virus
Replace faulty or missing genes in
patients’ cells
Curative potential for genetic diseases and long-term cost savings
Indication: ADA-SCID
SoC: ERT ~$500,000/yr or HSCT
AD1115611 (Phase 1/2 trial, n=12)
100% survival (median f/u 7 yrs)
E.g. STRIMVELIS®
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…but these pose a myriad of challenges for reimbursement authorities…
Gene therapies
Transformative benefits
Expedited regulatory authorisation
Single treatment
Cost-effective at very high prices
Uncertainty in benefit magnitude and durability
Substantial upfront costs
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…with NVS announcing their SMA gene therapy could be cost-effective at $4-5 million / patient in November 2018…
Drug
A gene therapy
Phase 1: All 15 pts alive after 24 monthsand did not require permanent ventilation
������������� �� ���������� �����Rare progressive genetic disorder
Characterized by severe muscle weakness
Type 1 = most common and severe
68% affected newborns die before 2nd birthday
Clinical data for AVXS-101
Initial indication
Current Best SoC
only available disease-modifying treatment
Cost over 10 years: $4.1 million
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…which they launched in May 2019 at $2.125 million per patient for a one-time treatment…
$2.125m
10 yr cost of current SMA treatment10 yr treatment costs of genetic paediatric ultra-rare diseasesICER’s ultra-rare ICER threshold
Novartis’s price justification
50% less than established
benchmarks
Novartis’s price innovations
Working with payers to offer
5-yr pay over time options
5-yr outcomes-based agreements
© 2019 Parexel International Corporation9
… but some transformative healthcare innovations have been commercial failures
Case study: GLYBERA� – first EC-approved gene therapy
PricingLaunch price (in DE) €1.1 million per patient
No innovative reimbursement scheme
Commercial success
May 2016 – one commercial sale reported
Nov 2017 - UniQure did not renew their marketing authorisation
€1.1 millionEC approval 25/10/2012
For hereditary LPLD per patient
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…How do you appropriately price and reimburse gene and CAR-T cell therapies?
How can you appropriately price and reimburse gene & CAR-T therapies, that offer
No comparative data
No long term data
Single treatment
Durability of benefit?
Incremental benefits?
Substantial upfront investment
A
B
C
But, the evidence package supporting at launch may have
Potential long term, curative benefitsIn areas of severe unmet treatment needs
© 2019 Parexel International Corporation / CONFIDENTIAL11
Agenda for today
Situation overview
How payers may deal with potentially transformative/ curative therapies e.g. gene and CAR-T cell therapies
Innovative P&R solutions
Local access challenges
© 2019 Parexel International Corporation12
Question time…
What current or innovative solutions are there to mitigate the identified
risks?
No comparative data
No long term data
Single treatment
Durability of benefit?
Incremental benefits?
Substantial upfront investment
A
B
C
© 2019 Parexel International Corporation13
2 main subsections to this chapter
Innovative P&R solutions
Existing reimbursement schemes
Innovative proposals for P&R
© 2019 Parexel International Corporation14
There are several CAR-T cell and gene therapy products with EU +/or US regulatory approval
Drug Therapy Indication
STRIMVELIS Gene ADA-SCID 26 May 2016 Not approved
KYMRIAH CAR-T cellALL & DLBCL
23 Aug 201830 Aug 20171 May 2018
YESCARTA CAR-T cell DLBCL 23 Aug 2018 18 Oct 2017
LUXTURNA GeneType of retinal
dystrophy22 Nov 2018 19 Dec 2017
ZYNTEGLO Gene Beta-thalassemia CMAFiling expected by end
of 2019
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… In Europe, CAR-T cell therapies have had varied reimbursement outcomes to date...
Of note, Italy has also recently reimbursed Kymriah for both DLBCL and ALL.
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… NICE have utilized the CDF, but the SMC have struggled to approve CAR-Ts…
NICE SMC
DLBCL (CDF, 1st Feb 2019)
ALL (Accepted, 11th Jan 2019)
DLBCL Accepted after initial
rejection 9th September 2019)
DLBCL/PMBCL (CDF, 7th Dec 2018)
Accepted after initial rejection 7th October
ALL (CDF; 21st Dec 2018)
Inequities in access
SMC took substantially longer to recommend
KYMRIAH or YESCARTA in DLBCL patients
NICE recommended KYMRIAH and YESCARTA
through the newly reformed CDF
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…a time-limited resolution & performance-pricing was applied to KYMRIAH in DE…
KYMRIAH – 1st CAR-T assessed by G-BA (15 Mar 2019)
2 indications
Additional benefit
ALL (orphan) DLBCL (orphan)
Unquantifiable Unquantifiable
Benefit assessment only valid until 15 Mar 2020Data deemed “deficient” (due to short f/u)
Manufacturer must resubmit additional data
Time-limited assessment
Performance based pricing
• NVS will reimburse some of the costs if patient dies with a defined period after treatment
• Only until price negotiations completed
© 2019 Parexel International Corporation18
… and performance-based and indication specific pricing has been utilized in the US
Aug 2017: KYMRIAH launched in ALL with performance-based pricing
In ALL In DLBCL
May 2018: Kymriah launched in DLBCL where it is priced differently
$373,000$475,000
KYMRIAH: 1st FDA approved CAR-T (30/08/2017) in R/R BC-ALL
Payment only if patients respond in 1st monthInnovative P&R
announced at launch
CMS cancelled this planJul 2018
Feb 2019: CMS proposes Coverage with Evidence Development (CED)
Patient outcomes would be monitored for up to 2-years post treatmentEvidence would inform a future coverage decision by CMS
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Vision exam…
How much is 20/20 vision worth and avoiding sight
loss and eventual blindness?
What price tag would you put on this?
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Luxturna also leveraged a complex multi-part innovative pricing model
LUXTURNA – 1st FDA approved gene therapy
$850,000 FDA approval 19/12/2017In a rare inherited blindness
Innovative US pricing / contracting model
1
2
3
Outcomes-based rebate
Limit buy and bill risk
Payment in installations
Short term (30-90 days) and long-term (30 months) measurements. If efficacy not proven, rebate up to standard Medicaid rebate
IV medications are typically ‘buy and bill’ which can leave treatment centres with high financial exposure. Contract directly with speciality pharmacy providers
Proposal with CMS to spread payments over many years. Currently not feasible due to government reporting price requirements
per patient (both eyes)
4Cap patient OOP
costsTo address patient affordability issues, agreements to cap patient OOP costs have
been made with e.g. Express Scripts and other payers
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Leveraging RWE offers major opportunities for both types of Innovative PR but it can be challenging to use this for C>s…
Technology not
reimbursed
Payers want local RWE to
inform reimburse-
ment
Local RWE can only be generated
once product is on market
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EAPs can help leverage local RWE for P&R at launch, which has been done in the UK
ISPOR EU Nov 2018
However, there are some key challenges with using EAPS for evidence generation activities, such as
Data restrictions
Patient population
Time limits
NICE dupilumab (Aug 2018)
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2 main subsections to this chapter
Innovative P&R solutions
Existing reimbursement schemes
Innovative proposals for P&R
© 2019 Parexel International Corporation24
Gene therapy manufacturers proposing more innovative reimbursement agreements…
LentiGlobin (ZYNTEGLO) – a curative gene therapy
$1.8 millionEC-approval: 3 June 2019
For beta-thalassemia
Pricing plan: Performance-based reimbursement in instalments
20%
20%
20%
20%
20%
At treatment initiation
End of each year 1-4If efficacy maintained and blood transfusions are not needed
80% of the cost of treatment is potentially at risk
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… with similar innovations also being proposed by payers…
The Massachusetts Initiative
A group of insurers in Massachusetts exploring innovative reimbursement with companies with innovative compounds
Proposal: performance-linked instalment plan
First drug considered Zolgensma
Each plan negotiates over price
Payment structure
Performance structurestandardized
Implementation issues also discussed including patients switching plans and legislative issues (e.g. Medicaid best price)
12-24 pts per year
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…licensing delinks traditional volume and revenue models, with particular traction for antibiotics…
Jan ‘19: NICE, and NHS England have now announced a value-based license model for the
reimbursement of antibiotics to be implemented within 6 months
“Under such a model, the acute care institutions that are most likely to prescribe these medicines would
pay a fixed licensing fee for access to the drug, which would
offer them the right to use a certain number of annual doses”
USA UK
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… but in HCV, Louisiana are implementing a ‘subscription-based ‘Netflix-model’…
March 2019 - Louisiana – HCV drugs
Gilead was selected to partner with the state to pay a fixed annual cost for unrestricted access to a branded generic version of EPCLUSA to treat Medicaid recipients and prisoners
April 2019 - Washington announced that AbbVie had won a similar “winner takes all” 5-year deal for HCV therapies to take effect in July 2019*
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…with the UK NHS also proposing a licensing-based model for Vertex’s CF drugs
Vertex – Drugs by subscription?
Following stalled pricing negotiations over access to Vertex’s cystic
fibrosis drug Orkambi, NHS England proposed an unpreceded pricing
arrangement…
NHS England offered Vertex £500 million over 5 years, and £1 Billion over
10 years for unlimited access to all of Vertex’s CF drugs (including
Orkambi, Symkevi, and Kalydeco)
However, this arrangement was rejected by Vertex for “failing to adequately
reflect the value of our current and future medicines and the number of
patients that will be treated with these medicines“
Despite the lack of agreement, this highlights that payers are willing to consider, and even propose, innovative pricing arrangements
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In summary, a range of innovative reimbursement schemes are being explored across markets…
Financial risk sharing Dynamic pricing
Performance-based
Leasing
Financial risk management tools include free stock, fixed per patient pricing, price-
volume agreements, budget caps, and dose caps
Reimbursing a medicinal product at a temporary price that can change upon
the generation and appraisal of subsequent data
Tying reimbursement to how well the drug works in real-life clinical practice in terms
of individual patient outcomes
Replacing up-front payment for medicines with a stream of staggered payments
linked to performance
Indication-specific
Enabling differential pricing per vial/packdepending on which specific indication it
is intended to be used in
Licensing
Drug developers would be paid based on how valuable the medicines are, not the
quantity of drugs sold
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… but each has a distinct range of benefits and drawbacks reflecting their complexity
Financial risk sharing
Dynamic pricing
Performance-based
Leasing
More complex schemes may be potentially fairer in managing
risk/payment
but this may be outweighed by their associated complexities
and costs
Notable failures:UK MS Risk Sharing Scheme
2002
Indication specific
© 2019 Parexel International Corporation31
Agenda for today
Situation overview
How payers may deal with potentially transformative/ curative therapies e.g. gene and CAR-T cell therapies
Innovative P&R solutions
Local access challenges
© 2019 Parexel International Corporation32
What else matters…?
Besides financial risk, what other risks to commercial success are involved
with cell and gene therapy?
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Cell and gene therapies may be associated with other specific access issues
Manufacturing Speed and distribution
Personalized nature Staffing and expertise
Provider-burden Upscaling
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It takes 17 days to manufacture a CAR-T cell, during which patients can deteriorate…
If a patient has deteriorated during these 17 days to a point which they can no
longer be treated…
Who pays?
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…post-treatment, patients are hospitalized for up to 14 days – but coding may be insufficient…
14 days
This ancillary treatment could increase the overall cost of care to as much as
$1 millionPayment codes do not address how this care will
be covered and by whom
Patients receiving CAR T-cell therapy use multiple care providers and sites of care
In the US, current coding inappropriately bundles the manufacturing process with provider-side care
© 2019 Parexel International Corporation36
… and these types of therapies may require a large financial outlay by providers…
Buy
Bill
&IV-administered therapies under
the medical benefit are administered / reimbursed under
buy and bill
The high costs associated with CAR-Ts mean that high upfront financial burdens must be incurred by providers and reimbursement sought later, with inherent risks
© 2019 Parexel International Corporation / CONFIDENTIAL37
… under this model, patient cost sharing may be prohibitive to access
Under such circumstances, a family whose child is treated with Novartis’s Zolgensma
($2m) could be required to pay:
$520,000
How much of the cost of care will be borne by patients?
However, 19% of commercial plans have no limits on cost-sharing, requiring patients to
pay an average of 26% of their drugs cost…
Such a cost burden would be unattainable and crippling for many families
In the US, most health-insurance plans have upper ceilings on co-insurance or co-
payment costs paid by patients, which limit patient liability for therapies
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Centralization of CAR-T manufacturing and distribution internationally poses challenges…
Donor screeningTraceabilityLabelling
ConfidentialityApheresis requirements
Manufacturing T-cells in one country and then distributing them worldwide
is challenging, as regulations vary between countries in terms of
© 2019 Parexel International Corporation39
Recent news – the market is waking up to how commercialization is key to a gene therapy’s success
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Initial and recent cell and gene therapies are taking initial steps to identify and address the issues
STRIMVELIS� – second EC-approved gene therapy
Regulatory approval
EC-approved in May 2016 (GSK)
For ADA-SCID (incidence ~15 per year in EU)
SoC: ERT ~$500,000/yr or HSCT
Innovative P&R
Commercial success?
July 2017 – two commercial sales reported1
April 2018 – GSK transfers rare disease gene therapy portfolio to
Orchard therapeutics2
Launch price (in Italy)
€594,000 per patient
Staggered payments via
annual installments
Patient & carer costs
travel/accommodation
Full ‘money back guarantee’
© 2019 Parexel International Corporation41
Summary and conclusions
Risk
management
Identifyand
define
Highly effective therapies
Limited data, short duration
One single treatment
Manage and
innovate
Conditional, outcomes based
Instalment to spread budget impact
Payer and provider willingness to
innovate
Beyond financial
risk
Regulatory, Price, Logistics?
Increase in C&G therapies impact
more widely?
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