Paying for Cell and Gene Therapies Enabled by Medicaid Best Price Reforms

Study on Medicare Best Price and Payment Reform

Authors

Quinn C, Ciarametaro M, Sils B, Phares S, Trusheim M. 

Publication

Expert Review of Pharmacoeconomics & Outcomes Research. Published online ahead of print December 29, 2022.

Background

Cell and gene therapies can offer the promise of durable benefits, but for payers, the uncertainty in their performance make covering these treatments financially challenging.  Value-based purchasing arrangements (VBPAs) between manufacturers and payers can address uncertainty but have been inhibited in the US by the Medicaid Drug Rebate Program (MDRP) approach to determining Medicaid Best Price (MBP) rebates. The likely effectiveness of MDRP reform proposals enabling VBPAs is examined in this study for durable cell and gene therapies.

Methodology

Monte Carlo simulations examined three potential reforms (Multiple Best Prices, Bundled Sales, and National Pooling) to determine the impact on payment misalignment, the required payer size to participate, and the percentage of total lives covered by a VBPA.

Results

Simulation results suggest that 11% to 54% of commercial US lives would be feasibly covered by a VBPA, depending on reform type and condition size. MPB reform achieved the highest commercial contracted percentage and lowest misalignment for commercial payers, compared to National Pooling and Bundled Sales. State Medicaid plan results suggest lower extreme misalignment across all successfully contracted instances than commercial payers. 


Proposed reforms would increase the ability of payers to cover durable cell and gene therapies through VBPAs, which would ultimately increase patient access to treatments. The impact of reforms would be greatest among larger payers and for treatments related to conditions with larger patient populations.  Further reforms may be needed to extend VBPAs to ultra-orphan conditions.

This article is the latest NPC research highlighting regulatory barriers and challenges to innovative payment models.

Key Takeaways

  • Innovative Value-Based Purchasing Arrangements (VBPAs) can address payer uncertainty and risk associated with covering durable and potentially curative cell and gene therapies. 
  • Pre-June 2022 Medicaid Best Price rules have inhibited the adoption of VBPAs. For instance, a single high rebate for a single commercially covered patient would set the best price for all patients in Medicaid, making it unviable from a business perspective. CMS reforms which went into effect in 2022, along with others that have been proposed may help remedy this issue.
  • Among reforms, the Multiple Best Prices (MBP) methodology is most likely to enable VBPAs for many durable cell and gene therapies and large payers, and ultimately increase access for patients who may benefit from these therapies.
  • MBP does not work under small populations such as small State Medicaid plans, smaller commercial plans, and and for conditions with 10,000 or fewer drug-treated conditions per year.
  • Further CMS reforms may be needed to extend VBPAs to ultra-orphan conditions.