Value-based care toolkits for cell and gene therapies

| min read

Cell and gene therapies (CGTs) offer tremendous promise to patients in indications with high unmet need. This includes multiple therapeutic areas such as oncology, rare diseases, and neurological disorders. But manufacturers face several challenges related to pricing and access of these products – here’s where a value-based care toolkit can help.

Of the more than 3,000 cell and gene therapies currently in the pipeline, about 25 products are in phase 3, and the highest number of potential developments are seen in oncology. Although many of these therapies have curative intent and target small patient populations, manufacturers face numerous challenges related to pricing and access of these products. Despite promising evidence of clinical benefit and innovation, payers and HTA bodies have many concerns about the efficacy and cost effectiveness of these treatments. This is due to a lack of long-term clinical data at launch, combined with high target prices commensurate with long-term effectiveness or cure.

Access barriers associated with cell and gene therapies vary by market primarily due to differences in reimbursement methodology and healthcare economics.

US: In the highly fragmented US market, the high price of CGTs gives rise to payer concerns about financial risks. The reasons are manifold:

  • Durability of response: Lack of real-world evidence/long-term clinical data creates uncertainty regarding the long-term efficacy and financial risk associated with payment of these therapies.
  • Additional treatments: Payers worry about cost effectiveness of CGTs when health care providers prescribe additional treatments to augment these one-time therapies.
  • Paying for patients that switch plans: Payers are concerned that long-term cost savings created by expensive CGTs will be realized by subsequent payers/commercial insurers when patients switch plans.

Europe: Increased budgetary pressure in the European market creates unique challenges for CGTs:

  • Budget impact: With the high cost of CGTs, payers are concerned that even a small number of target patients may disrupt their annual budgets. This might impact coverage of other chronic health conditions in patients.
  • Cost effectiveness: Lack of long-term efficacy data introduces uncertainties in economic modeling and causes concerns with cost effectiveness.

Therefore, manufacturers of CGTs are leveraging innovative contracting solutions to overcome payer concerns associated with durability of clinical efficacy, comparative effectiveness of treatments, and affordability.

Let’s see what role value-based agreements can play:

Value Based Agreements (VBAs)

Unlike traditional price-per-unit arrangements, value-based agreements are arrangements between payers and manufacturers that decouple treatment payment from treatment volume. Common types of VBAs include outcome-based agreements, finance-based agreements, and hybrid agreements involving some overlap between the two categories.


  1. Outcome-based agreements (OBAs):

Outcome- or performance-based agreements involve contracts in which payment terms are linked to the treatment performance as measured by predetermined patient health metrics or other real-world outcomes over a defined period. OBAs can differ with respect to how performance is defined (e.g. clinical, economic, humanistic, or competitive value), indicators used (efficacy, safety, adherence, quality of life, etc.), measurement of indicators (lab tests, clinical assessment protocols, quality-of-life surveys, etc.), and targets or predetermined goals (e.g., the manufacturer agrees to pay a rebate if lab tests indicate efficacy is below 70%).

Example: The VBA between multiple commercial health plans and Spark Therapeutics for LUXTURNA® (voretigene neparvovec-rzyl), a one-time gene therapy indicated for certain subtypes of retinal dystrophy. As part of the contract, baseline levels for patient outcomes are established and the manufacturer pays rebates to the payers if patients fail to meet a specified full-field light sensitivity threshold. Payments are linked to both short-term efficacy of 30–90 days and long-term treatment durability (e.g., 30 months)


  1. Finance-based agreements (FBA):

FBAs are aimed at cost containment and mitigation of financial risk associated with high-cost therapies, such as CGTs, and involve payment caps for a particular patient or patient population regardless of outcomes. Common types of FBAs include subscription models, which limit the cost of treating a patient or patient population to a negotiated total cost regardless of dosage or units of product, and annuity-based payments model, which spreads costs over multiple years regardless of outcomes.

Example: The annuity-based payment over time of Zolgensma (onasemnogene abeparvovec), a one-time treatment for children with spinal muscular atrophy. The manufacturer Avexis (a subsidiary of Novartis), in partnership with Accredo, proposed a VBA that would allow installment payments for up to five years. However, the agreement was never implemented due to lack of buy-in from payers.


  1. Hybrid models:

These include VBAs which allow risk-sharing between payers and manufacturers by linking FBAs to some form of patient outcomes, such as number of days of hospitalization, improvements in quality of life, etc.

Example: An annuity-based contract with outcomes as a payment model in Europe was arranged by GSK for Strimvelis, an autologous CD34+, indicated for severe combined immunodeficiency due to adenosine deaminase deficiency. According to the terms of this contract, payments are made over time for the one-time therapy, with reduced payment if pre-determined outcome measures are not met.

Challenges arise in implementation of value-based contracting due to several logistical and strategic barriers as outlined by stakeholders. Payers and manufacturers need to align on outcome measures that demonstrate treatment efficacy, and reliable yet feasible ways to measure them. Logistical hurdles such as data privacy and lack of adequate infrastructure for data-sharing can be difficult to overcome.

Given the high upfront cost of CGTs, it is important to identify a realistic timeframe within which the outcomes can be monitored and linked to payments. The cost and complexity of monitoring performance of CGTs over an extended period, while overcoming regulatory barriers around patient privacy, and strategic hurdles such as plan switching can be daunting to most stakeholders. 


Introducing a VBA toolkit:

Facing these challenges, a value-based contracting toolkit can help manufacturers mitigate access barriers associated with CGTs. By providing a roadmap for the development and successful implementation of a VBA, the toolkit supports manufacturers to assess the merits of potential contract offerings while avoiding pitfalls by incorporating all the key elements of a VBA.

Let’s take a look at what’s required:

  • Performance metrics: Clinical outcomes such as efficacy, safety, adherence, and health economic outcomes such as number of hospitalization days, QALY (Quality adjusted life years), etc. need to be identified based on clinical data for a given treatment. Transparency is key: Both payers and manufacturers must be able to reasonably estimate the likelihood of the given product performing on the target metric in order to have a successful VBA. Practical and cost-effective ways to monitor clinical or financial outcomes, such as lab results or claims data, must be easily accessible to all stakeholders involved. Another important factor: Cost and responsibility of monitoring such data must be incorporated into the terms of the contract.
  • Timeframe: It is critical to establish a realistic timeframe to monitor the performance of CGTs given the high upfront cost and curative nature of some of these treatments. This could vary by factors such as treatment type (one-time or multi-dose), disease stage at identification, subpopulation, market, etc. An effective timeframe should be long enough to ensure the efficacy of the treatment while catering to payers’ more short-term budgetary needs.
  • Payment models: Multiple payment models such as direct discounts, rebates, patient-based caps/subscription, annuity payments, etc. are available to manufacturers, each coming up with unique challenges and benefits. For example, annuity payments are a type of loan with interest associated, resulting in payers paying less upfront but more over time. Manufacturers must therefore carefully assess each individual option before choosing one that best aligns with their business needs.
  • Arbitration mechanisms: Given the magnitude of financial risk involved in CGTs, the long-term nature of contracts, and the multiple administrative challenges in implementation, stakeholders must be prepared to handle disagreements. A streamlined procedure to address arbitration in case of disagreements or disputes between relevant stakeholders, such as payers and manufacturers, should be put in place to offset any future issues. This works best with a predetermined independent third party handling the process to ensure objectivity.
  • Internal touchpoints and team: Value-based contracts are a team effort that requires internal alignment between various stakeholders across the organization, including legal, regulatory, financial, marketing, market access etc. for successful implementation. Manufacturers must be open to delegate responsibilities to relevant internal entities and establish key touchpoints for seamless execution of value-based contracting.

Taking this into account, VBAs can be a highly effective tool to address access challenges associated with CGTs. However, given their complexity, manufacturers should be careful when designing and implementing them to ensure optimal success.

To avoid pitfalls and make sure VBAs are implemented in a way that contributes to your growth plans, reach out to our author and discuss your situation.

Further insights: 

Cell & Gene Therapy: Curing the "Incurable"

Launch planning for cell & gene therapies

CGTs in China

International Price Referencing in CGT 

How Pharma can Overcome Barriers to CGT Diagnostic Testing 



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