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The Stacks – 3rd Quarter 2023 Newsletter

Gene and Cell Therapy: Where Compassion and Cost Collide
Jen McCormick, Esq.

As advancements in how individuals consume healthcare have drastically and rapidly improved (i.e., the prevalence of virtual patient care, online pharmacies where treatments can be received and delivered to the home, etc.) face-to-face communication between providers and patients has often been supplanted by virtual interactions that expedite processes. The result is faster and easier access to healthcare.

Improved access is certainly a step forward, but is it enough? For patients diagnosed with a rare or life-threatening condition where the only treatment is difficult to obtain, the answer is probably not. Availability is a challenge for patients seeking gene and cell therapy as treatment can cost millions to obtain. Cost is a factor and has the potential to impact the availability of treatment for patients.  Access and availability are not always in parity when it comes to patient care.

Research shows and common sense would suggest that providing healthcare services for patients to maintain or restore their physical, mental, or emotional well-being is best when the patient care is embedded with empathy and kindness; it greatly enhances the healing process. Compassion is important for healthcare providers, and for employers with self-funded healthcare benefit plans.

Gene and cell therapies are quickly evolving, and employers need to understand the potential impact. Employers face the tall order of exuding empathy while relating to employees contemplating the multi-million-dollar treatment that is gene and cell therapy. Even the most compassionate of such professionals find it difficult to strike the delicate balance of weighing costs to their respective plans with the natural inclination to provide coverage for potentially lifesaving or life-altering therapy.

Knowledge and a solid game plan for how to manage gene and cell therapy within their plan design, however, will allow employers to confidently focus their energy on the employee facing life-threatening circumstances instead of being blindsided by the economics of the situation. By understanding the nuances and limitations, plan sponsors should be well-positioned to employ a strategy that uniquely balances compassion and cost.

The following discussion highlights some of the plan administration and documentation considerations for employers navigating the evolving gene and cell therapy landscape.

Gene and Cell Therapy Background

According to the FDA, gene therapy is a method that modifies a person’s genes to treat or cure disease, while the American Society of Gene + Cell Therapy (ASGCT) defines cell therapy as the transfer of live cells into a patient to treat or cure a disease -- i.e., a blood or marrow transplant is a type of cellular therapy. 

Undoubtedly, accessibility and attainability are challenges for patients and plan sponsors as they learn more about cell and gene therapies, which has been a very hot topic in recent years. The response to these innovative treatments has been mixed: The medical community is advocating the new treatments for patients hoping to find a cure for their respective rare diseases while health plans remain concerned about potential costs.

In the past couple years, the pipeline of both pending and U.S. Food & Drug Administration (FDA) approved treatments has grown. In fact, in January 2019 FDA Commissioner Scott Gottlieb noted the surge in cell and gene therapy products entering early development and predicted that the FDA would be approving 10 to 20 cell and gene therapy products a year by 2025 based on the assessment of the current pipeline and clinical success rates. Flash forward to the present day and as of April 2023, the FDA has (according to approved over 25 cell and gene therapy products. Furthermore, according to the Alliance for Regenerative Medicine (ARM), there could be as many as 13 brand new cell or gene therapies approved in the United States, Europe, or both by the end of 2023, and there is a large queue of various clinical trials for gene and cell therapies listed on the website.

Why is there so much excitement over these developments? Gene and cell therapies potentially offer a new avenue for treatment in cases where there were otherwise limited options for such rare and life-jeopardizing diseases. Indeed, some of the FDA approved cell and gene therapy treatments on the market have yielded curative changes with a one-time treatment. Long term metrics and results are still being examined, but as the interest in and education about these types of treatments increases, employers who sponsor self-funded health plans should take the opportunity to decide how to address such coverage within their plan designs.

Plan Language Considerations

Many factors should be considered by employers as they navigate this new landscape. For example, if a treatment is approved for use in Europe, but not in the United States, would such benefit be eligible for coverage under the current plan design (if the individual travels to Europe) or is there an exclusion for foreign travel (i.e., benefits received outside the United States if travel is for the sole purpose of obtaining medical services)? Even if plans have the strictest language possible for international medical tourism, how does the plan currently address gene and cell therapy? Is there an exclusion? Is there a benefit? Are there limits? Is the plan silent?

This is an important conversation as cutting-edge science and technology continue driving forward the current state of medicine in the United States, and the queue for more FDA approved gene and cell therapies is rapidly growing. While it’s undeniable that these advancements in treatment options can come with an overwhelming price tag, the conversation becomes more nuanced when further questions are considered:  What if covering the one-time treatment could potentially cure the condition and offset the need for other expensive ongoing or life-long care? Further, if the plan did cover such benefits would they be reimbursable by the plan’s stop loss carrier?  Are there alternative payment options?

Plans, however, are still permitted (and should) ensure benefits are covered subject to the appropriate medical management techniques. For example, plans should have a strong definition and policy for how medical necessity is determined. The plan should also review the definition of experimental and investigational to ensure the language is in line with its expectations. Other plan options may include pre-certification or prior authorization requirements on the benefits.

Compliance Considerations

A key question plans may be asking is what they are required to cover. The Affordable Care Act (ACA) prohibits plans from imposing dollar limitations on any of the 10 categories of essential health benefits (EHB). To the extent the plan covers an EHB, no dollar limitations may apply to that benefit. Self-funded plans should have identified a particular state benchmark to which they determine and classify EHBs under the plan design.  In 2022, HHS released the 2023 final payment rules which provide that for plan years beginning on or after January 1, 2023, an EHB plan design should be clinically based, among other factors. Further, in late 2022, HHS published a request for information (RFI) asking for public comment by January 31, 2023, regarding a variety of topics, but including the description of EHBs and questions involving the barriers to accessing services due to cost, coverage and whether EHBs needed to be updated to account for changes in medical evidence or scientific advancements.

The timing for plan design changes should be considered as well. Plan design modifications should comply with the ACA and ERISA timing requirements and may be best incorporated at plan renewal to mitigate discrimination concerns.

Consequently, coverage and access issues remain pressing issues.  Plans should be mindful when it comes to their decision-making surrounding how and whether to extend (or limit) coverage for gene and cell therapy. These are tough choices for employers and plan sponsors, and they need support as they weigh the various factors and considerations to make an educated decision.

Define a Strategy

As gene and cell therapies develop so too are the options for plan sponsors when it comes to potential payment methodologies. Traditional health plans were not structured to handle one-shot, high-cost treatments so alternative options are important to consider. For example, new reinsurance programs are emerging to offer options for plans hoping to cover gene and cell therapies. Each of these programs is unique and should be reviewed against the existing plan materials to ensure the program aligns with the intentions of the plan sponsor and the terms of the plan document/summary plan description.  Patient support programs where patients receive support for cell and gene therapy may also be available. Unlike traditional drug patient assistance programs, these programs may offer psychosocial, economic, and caregiver assistance to the patients and their families. The support programs may be individualized to address clinical issues and matters involving logistical and transportation related support, financial support, and nurse navigation support.  Other payment strategies could include multiple year payment plans, reimbursement based on meaningful outcomes or performance-based measures for the treatment, payment model where the price reflects the value, or a methodology that includes a warranty (where a refund may be issued if the treatment fails after a certain time).

In adopting a strategy for coverage (or exclusion, or limited coverage) of gene and cell therapies, plan sponsors should balance the various factors. While there may not be a perfect solution, plans need a strategy that is clearly consistent with plan materials so there is no confusion among plan participants (or between other contracts held by the plan sponsor). For example, in navigating this evolving area of benefits, plan sponsors should ensure the plan document/summary plan description aligns with their coverage decision; the stop loss policy provisions are free from conflict with the underlying plan materials; review any potential supplement programs that may assist in the coverage of these gene and cell therapy benefits; continually monitor the regulations as state and federal laws regarding price transparency and drug pricing pass to ensure ongoing compliance; and keep abreast of the pipeline of pending and newly approved FDA therapies.

New (and costly) gene and cell therapy treatments are on the horizon. As a result, it will be important for employers to have the appropriate balance between tight controls to ensure patients see the value and benefit of these high-cost treatments. Having a strategy that successfully connects employees and plan members with life-changing treatments and mitigates the financial impact, while demonstrating compassion, is critical.

Eli Lilly Caps Insulin Cost

By: David Ostrowsky

During his State of the Union speech last month, President Joe Biden called for the out-of-pocket cost for insulin to be capped at $35.

It turns out that at least one drugmaker was listening.

On March 1, Eli Lilly, a pharmaceutical company with vast global reach, announced that it was indeed capping the out-of-pocket cost of its insulin at $35 a month—in addition to slashing the price of its two highest-selling insulin products, Humalog and Humulin, by 70%—and thus falling in line with a provision in the recently passed Inflation Reduction Act, which ensured that seniors enrolled in Medicare pay no more than $35 per month for insulin. Eli Lilly’s announcement made for above the fold news because now some individuals with private insurance—and not just Medicare recipients—would reap the considerable benefits of a $35 cap. For those without insurance, they too can pay just $35 per month by downloading Eli Lilly’s Insulin Value Program savings card.

The costs of insulin, a lifesaving drug for millions of Americans (the American Diabetes Association estimates that 8.4 million Americans who are diabetic rely on insulin), remain exorbitantly high, at least compared to the medication’s price tag in other countries where their respective governments negotiate prices directly with drug manufacturers. Case in point: a 2020 Rand study revealed that the average price per vial of insulin in the US was over $98 in 2018; in Australia, Canada, and the UK, the prices for a vial of insulin were approximately $7, $12, and $8, respectively. Hopefully, Eli Lilly taking the initiative to help rectify this systemic problem will motivate America’s two other primary insulin manufacturers, Novo Nordisk and Sanofi, to follow a similar course of action.

“While the current healthcare system provides access to insulin for most people with diabetes, it still does not provide affordable insulin for everyone and that needs to change,” remarked Eli Lilly’s Chair and CEO David A. Ricks in a company-issued press release. “The aggressive price cuts we're announcing today should make a real difference for Americans with diabetes. . . . For the past century, Lilly has focused on inventing new and improved insulins and other medicines that address the impact of diabetes and improve patient outcomes. Our work to discover new and better treatments is far from over. We won't stop until all people with diabetes are in control of their disease and can get the insulin they need.”

Tragically, for decades now, millions haven’t been able to get the requisite amounts of insulin they need because of the runaway prices charged for the medication that in its absence can lead to death or, at the very least, severe health consequences including kidney failure and amputation. In fact, for many Americans living with diabetes, the annual cost to obtain life-saving insulin can well exceed $1,000. As such, it comes as little surprise that, per a report released earlier this month by “PBS News Hour,” among the millions of diabetic Americans, approximately 1.3 million are either uninsured or have subpar insurance and are thus forced to ration their insulin in order to pay other bills … ultimately to jeopardize their ability to survive.

Undoubtedly, Eli Lilly has been a chief culprit behind such escalating prices, as evidenced by the fact that for the past nearly 30 years, the publicly traded company has increased the list price of its most popular insulin product, Humalog, by more than tenfold. And while the announcement that Eli Lilly will not only enact the $35 price cap but also plans to lower the list prices of Humalog and Humulin by 70 percent in the last quarter of 2023 and reduce its generic lispro’s list price from $126 to $25 per vial appears promising, diabetic Americans and lobbyists clamoring for price regulation still face significant headwinds in their campaign to reduce costs for an injection that millions take to stabilize their blood sugar levels.

For one, the reduced list prices, which will take effect over the course of 2023, are only applicable to Lilly’s older insulin products. (One of the company’s newer Humalog products, a prefilled insulin pen, will still cost $530 while its long-acting insulin product, Basaglar, first approved in 2015, will not become more affordable.) Meanwhile, Lilly’s new list price for a vial of Humalog ($66) still exceeds triple the amount which the company charged for the product when it was brought to market in 1996. And perhaps most significantly, Lilly’s list-price cuts won’t necessarily translate to all diabetic patients enjoying a corresponding reduction in their out-of-pocket costs for insulin as many insured people pay fixed monthly copays that will continue to be static.

As Elizabeth Pfiester, who has diabetes and is the executive director of T1International, a group that has been advocating for a federal ceiling on insulin list prices, told the New York Times, Lilly’s announcement “does not mean that the situation is fixed or everything is solved” while adding, “this is good news for some, but we need regulation to make sure that the companies can’t change their mind again and decide to raise the price.”

Indeed, the recent Eli Lilly development can’t be perceived as a panacea for all Americans who suffer from diabetes because there are still the two other drug manufacturing companies, Novo Nordisk and Sanofi, that have a significant foothold in the market. For patients whose health insurers are contracted with these two behemoth manufacturers, which in other words is approximately seven out of ten Americans, there may not be such relief at the pharmacy counter. This stands in stark contrast to the situation involving government-mandated insulin price caps: the firm $35 cap on insulin out-of-pocket costs for Medicare-eligible Americans, included in last year’s Congressional approved Inflation Reduction Act, is in effect irrespective of the company manufacturing the insulin.  

The bottom line is that for the majority of diabetic Americans, the prices of insulin will continue to present a significant financial burden—at least in the short term. Which means for self-insured employers, ones who traditionally contract with pharmacy benefit managers (PBMs) who design drug formularies and negotiate prices with drug manufacturers on their behalf, it becomes even more critical to seek out generic versions of a branded product as well as less costly alternatives. This is easier said than done. Unfortunately, the complex relationship that many self-funded employers have with PBMs often leaves many employers unaware that reclassifying certain drugs as generic (or branded) can drive up costs tremendously or that their employees have been directed to utilize pricey drugs when more reasonably priced generics are available. The end results are often the overutilization of overpriced drugs, higher patient cost sharing, and excessive employer spending on drugs. Although self-insured group health plans do not have full discretionary authority to include or exclude expensive prescription drugs, they do have some latitude to pursue prescription drugs that are more cost effective, a reality of which plan administrators should be very well aware.

From a broader perspective, diabetes, itself, remains a pressing concern among the American population. CNN recently reported that in the US alone, the number of adults with diabetes has doubled over the past two decades while the US Centers for Disease Control and Prevention estimate that over 37.3 million now have it. As if these numbers weren’t sobering enough, tens of millions of more Americans are prediabetic.

A measure to lower the cost of a live-saving product for the masses suffering from the malady? No wonder President Biden heralded the Lilly announcement as “a big deal.”