Schaeffer white paper outlines stepwise approach for improving uptake of the advanced, high-cost treatments
New cell and gene therapies (CGTs) offer hope to patients with life-threatening and debilitating diseases once thought untreatable, including certain cancers and rare diseases. But despite their promise, most patients who may benefit from these treatments lack timely access.
The U.S. healthcare system is structured to manage chronic conditions over a lifetime, rather than to deliver one-time or short-term, potentially curative therapies with long-lasting benefits. This mismatch creates economic and structural barriers across the system that existing efforts to expand access are unable to overcome:
- Insurers are reluctant to cover treatments that often carry million-dollar price tags and have limited long-term evidence.
- Providers must invest in specialized infrastructure to deliver the treatments and may be reimbursed below costs.
- Manufacturers need a sustained CGT market to continue investing in research and development.
A new white paper from the USC Schaeffer Center for Health Policy & Economics proposes a stepwise approach to expanding CGT access. The authors first outline a new private-sector financing model aimed at realigning incentives and spreading risk across key stakeholders. Should that approach fail, the authors suggest policymakers consider progressively stronger government interventions.
“Cell and gene therapies can transform the lives of patients with devastating diseases, but their extremely high costs and uncertainty about long-term outcomes pose unique challenges,” said author and Schaeffer Scholar Alison Sexton Ward. “We need new and innovative solutions to achieve broad access.”
A market-based approach
The treatments are “perfectly engineered” to exploit cracks in how the U.S. pays for drugs, the authors write. Because patients frequently switch insurance coverage (an issue known as “churn”), health plans that pay for treatment today may not capture savings from long-term health improvements. At the same time, provider reimbursement often fails to account for the initial investments needed to deliver CGTs, and some providers may be reimbursed at rates below the cost of these therapies.
Most private-sector efforts to improve CGT access have focused on isolated issues, rather than broader systemic challenges. For instance, while value-based agreements that pay for treatment performance or drug mortgages can help manage costs, neither addresses the major hurdle of insufficient provider reimbursement or other issues like patient churn.
The white paper proposes an integrated model managed by a third-party financial mediator—either a for-profit company or an insurer-funded cooperative—that would:
- Negotiate manufacturer reimbursements, including upfront payments and bonuses or rebates over time tied to how well the treatment works
- Structure performance-based payment with insurers
- Ensure sufficient provider reimbursement and help providers secure capital for upfront infrastructure investments. This may include facilitating manufacturer support in compliance with anti-kickback rules.
There is emerging precedent for this approach. Some companies already provide certain services to insurers, such as designing value-based contracts and tracking treatment outcomes.
A stepwise path forward
A private-market model would likely be the easiest to implement. However, policymakers may consider two government-led approaches if the mediator model fails.
Public-private financing: The first option would be subsidizing private insurance coverage for CGTs, modeled on Medicare Part D. This would require creation of an accurate, predictable and objective health technology assessment process (HTA) to set value-based prices, along with reforms ensuring sufficient provider reimbursement.
Direct coverage: A more intensive approach would be universal direct public coverage of the treatments. In addition to a new HTA process and provider reimbursement reform, it would require the U.S. government to determine prices and eligibility—a role that is largely unprecedented for new drugs.
The paper examines the anticipated advantages and challenges of each approach. In all cases, CGT outcomes should be consistently tracked over time through privacy-protected registries to understand how the treatments are working, help align prices with value and inform coverage decisions.
“Realizing the full potential of cell and gene therapies will require bold, sustainable approaches that expand access and support innovation,” said co-author Darius Lakdawalla, Schaeffer’s chief scientific officer and the Quintiles Chair in Pharmaceutical Development and Regulatory Innovation at the USC Mann School. “We must be willing to try new solutions, closely monitor performance and build on what works.”
About this Study
Other authors are Elizabeth Fowler and Jeremy Shane. This white paper was supported by the Schaeffer Center. A complete list of supporters of the Schaeffer Center can be found in our annual report.
