Cell & Gene Therapy

Cell and gene therapies represent a paradigm shift in medicine: single treatments or short courses that can cure previously untreatable conditions. They also represent a paradigm shift in cost, with per-patient prices ranging from $373,000 for Luxturna (inherited retinal dystrophy) to over $3 million for Lenmeldy (metachromatic leukodystrophy). For employers, these therapies create novel financial risk that traditional pharmacy benefit structures were not designed to manage.

The Pipeline

Over 2,000 cell and gene therapy clinical trials are currently active, with dozens of products expected to reach market over the next decade. Current approved therapies target relatively rare conditions, limiting exposure for most employer plans. However, as the pipeline expands into more common conditions including heart failure, diabetes, and certain cancers, the probability of a plan member requiring one of these therapies increases substantially.

Financing Mechanisms

The challenge of paying for a one-time cure that costs $1-3 million per patient has generated several innovative financing approaches. Outcomes-based contracts tie payment to clinical results, with refunds if the therapy fails. Installment payments spread the cost over multiple years. Reinsurance products specifically designed for cell and gene therapy provide stop-loss protection for self-funded employers. Manufacturer copay assistance and patient support programs can offset a portion of the cost.

Employer Preparedness

Even if no plan member currently needs a cell or gene therapy, employers should evaluate their stop-loss coverage for adequacy against potential claims, understand their PBM's cell and gene therapy management programs, review their plan document language regarding coverage of gene therapies (which may fall under medical rather than pharmacy benefits), and consider dedicated reinsurance products for catastrophic pharmaceutical claims.