As more and more cell and gene therapies come to the market, these high-cost drugs are set to have a major impact on cash-strapped Medicaid programs, according to a new analysis from Prime Therapeutics.
The Blues-backed pharmacy benefit manager noted that these treatments are typically intended to be curative, which is why the price tags are so high upfront. Cell therapies are generally priced around $500,000 per treatment, while prices often exceed $1 million for gene therapies.
Given the eye-popping prices, these therapies can significantly impact Medicaid budgets, the PBM said. As such, they're prime candidates for value-based pricing models that tie outcomes to reimbursement.
"They're very, very high cost agents, between a half a million and up to even $3 million, a dose or a cure," Meredith Delk, Ph.D., senior vice president and general manager for state government solutions at Prime, told Fierce Healthcare. "And they're coming to market at a very rapid pace. So this isn't sort of like a one and done. We're seeing a lot of these, we're seeing them at a rapid pace."
Prime Therapeutics' approach to assist Medicaid plans comes in the form of Value Plus, which assists states in negotiating value-based contracts with drug manufacturers. Under these arrangements, the drugmakers will refund a portion of the treatment's cost to the state should they fail to meet desired outcomes.
Delk said Medicaid leaders are committed to covering these drugs, especially given that they provide coverage to populations that face access challenges, but they need backup on negotiating.
"Ultimately, what Medicaid directors are saying to us is, 'We know we have to figure out a way to pay for these cell and gene therapies. We want to because we are committed to access for the people living in our state who are living in poverty and need these curative therapies,'" she said. "And we just need help, we need solutions."
Medicaid covers about 26% of people in the U.S., many of whom have significant health needs. The program, which does receive substantial federal funding, is also often one of the largest chunks of state budgets, making the addition of a sudden high cost a major concern.
Billy Thomas, senior vice president for PDL and rebate operations at Prime, told Fierce Healthcare that Medicaid plans, particularly fee-for-service programs, are under regulatory requirements to have open formularies and provide access to drugs that people want, even extremely high-cost ones.
But they're also setting budgets 12 months or 24 months in advance, so, if an enrollee needs coverage for a gene therapy that costs $2 million for the treatment, that can be a massive hit.
What Prime does through Value Plus is make it easier for the Medicaid organizations to evaluate the drugs for desired outcomes. The PBM also deploys its relationship with pharmaceutical companies to ensure the plans are getting the appropriate rebates if they do not meet outcomes benchmarks.
He added that value-based contracting is gaining momentum, and there are going to be other areas where it can deployed, particularly as more orphan drugs and pricey therapies make their way through the development pipeline.
"My opinion personally is that this is a model of the future by which all agents will be evaluated," Thomas said. "And it really is going to become the standard approach over time to create access to these types of agents, as well as any additional therapies that come to market in the future."