Innovative Insurance to Improve US Patient Access to Cell and Gene Therapy

Abstract

Policy Points.

• Cell and gene therapies (CGTs) offer treatment for rare and oftentimes deadly disease, but their prices are high, and payers may seek to limit spending.

• Total annual costs of covering all existing and expected CGTs for the entire US population 2023–2035 to amount to less than $20 per person and concentrate in commercial and state Medicaid plans.

• Reinsurance fees add to expected costs.

• Policies that improve coverage and affordability are needed to assure patient access to CGTs.

Context

Cell and gene therapies (CGTs) offer treatment to rare and oftentimes deadly diseases. Because of their high price and uncertain clinical outcomes, US insurers commonly restrain patient access to CGTs, and these barriers may create or perpetuate existing disparities. A reconsideration of existing insurance policies to improve access and reduce disparities is currently underway. One method insurers use to support access and protect them from large, unexpected claims is the purchase of reinsurance. In exchange for an upfront per‐member‐per‐month (PMPM) premium, the reinsurer pays the claim and rebates the insurer at the end of the contract period if there are funds leftover. However, existing reinsurance plans may not cover CGTs or charge exorbitant fees for coverage.

Methods

We simulate the incremental annual per‐person reinsurer costs to cover CGTs existing or expected between 2023 and 2035 for the US population and by payer type based on previously published estimates of expected US spending on CGTs, assumed US population of 330 persons, and current CGT reinsurance fees. We illustrate our methods by estimating the incremental annual per‐person costs overall payers and to state Medicaid plans of sickle cell disease–targeted CGTs.

Findings

We estimate annual incremental spending on CGTs 2023–2035 to amount to $20.4 billion, or $15.69 per person. Total annual estimated spending is expected to concentrate among commercial plans. Sickle cell–targeted CGTs add a maximum of $0.78 PMPM in costs to all payers and will concentrate within state Medicaid programs. Reinsurance fees add to expected costs.

Conclusions

Annual per‐person costs to provide access to CGTs are expected to concentrate in commercial and state Medicaid plans. Policies that improve CGT coverage and affordability are needed.

Cell and gene therapies (cgts) are highly innovative medicines. There are over two dozen CGTs approved for sale globally, and over the last five years, many clinical trials have progressed toward later stages of development targeting an array of rare genetic disorders and cancers. ¹ , ²

CGTs come with a host of challenges for health care systems, of which perhaps the foremost is affordability. ³ , ⁴ , ⁵ CGTs are extremely expensive, ⁶ generally in the range of more than $300,000. The most expensive therapy on the US market in 2022 was a gene therapy for hemophilia B, Hemgenix, with a list price of $3.5 million per patient. ⁷ Casgevy and Lyfgenia, the two CGTs recently approved to treat sickle cell disease (SCD), a genetic blood disorder that affects approximately 100,000 Americans, cost $2.2 million and $3.1 million per patient, respectively. ⁸ High prices for CGTs are in part driven by their high incremental manufacturing costs. ⁹ While new, spending on all available CGTs may become significant, depending on their price and the number of patients treated. Two peer‐reviewed published studies have simulated patients in the United States (US) treated and associated spending on CGTs. Quinn and colleagues estimated that the number of expected US‐based patients treated with CGTs will amount to approximately 12,000 in 2020 and over 340,000 by 2030. ¹⁰ Wong and colleagues estimated annual US spending on CGTs will amount to $20.4 billion through 2030. ¹¹

Both estimates are likely inflated, even using conservative assumptions of treatment use. Indeed, available evidence suggests the uptake of CGTs in the United States, and so, patient access to them, has been less than expected. ¹² , ¹³ This may in part reflect patient reluctance to use these therapies because of their intensity and clinical concerns regarding fertility preservation and their long‐term durability and safety. ¹⁴ Limited adoption of CGTs also reflect insurers’ use of strategies to restrain patient access. ¹⁵ Patients and their physicians have reported encountering challenges when trying to acquire payer approvals for treatment of hematologic malignancies using CGTs. ¹⁶ , ¹⁷ , ¹⁸ Pediatric patients and their physicians have also reported significant barriers to accessing CGTs to treat leukemias, ¹⁹ which may lead to the therapeutic window closing. ²⁰

The potential underuse of CGTs in the United States may be surprising to some. Insurance coverage after passage of the Affordable Care Act (ACA) in 2009 is guaranteed for patients with preexisting rare or serious disease and medicines by payers after approval by the US Food and Drug Administration (FDA), even among those with high prices. Many CGTs target cancer, for which payer coverage and patient access has been largely unchallenged despite concerns about high prices, and there are limited survival gains for many non‐CGT therapies. ²¹ , ²² , ²³ Approximately one‐third to one‐half of CGTs target children or adults who are eligible for public insurance, ¹¹ for which drug coverage after approval is assured by statute. Nevertheless, in the years following the approval of CGTs, inadequate reimbursement by the public payers, Medicaid and Medicare, appears to have resulted in threatened patient access. ¹³ , ²⁴

US payers have employed several strategies to manage the use of CGTs. ⁶ The most common method employed to manage CGT use by commercial (nongovernment) payers is stop loss or reinsurance. ²⁵ , ²⁶ , ²⁷ , ²⁸ , ²⁹ , ³⁰ Stop loss protects self‐insured plans administering full‐risk benefits against unexpected catastrophic health care costs. ³¹ Reinsurance functions similarly to stop loss but is offered to smaller payers who administer full‐risk benefit designs. ³² Although traditional fee‐for‐service (FFS) state Medicaid plans do not buy stop loss or reinsurance, their contracted managed care organizations (MCOs) typically do. Similarly, FFS Medicare does not purchase reinsurance, but supplemental plans and Medicare Advantage may. In exchange for a per‐member‐per‐month (PMPM) premium, the stop‐loss carrier or reinsurer pays the payer at the end of the contract period to cover losses incurred above a specified threshold. ³³ We employ the term “reinsurance” to refer to both because it more succinctly characterizes both plans providing a type of insurance provision to the populations covered. Typical reinsurance policies will cover medical expenses surpassing $250,000‐$500,000 per individual annually, a coverage range into which all currently approved CGTs would fall. Many reinsurers offer coverage below these amounts to payers.

Payers have also used alternative policies to manage CGT use. Although health plans cannot exclude preexisting illness from coverage under ACA rules, such exclusions are allowed for reinsurers. Consequently, reinsurers can and do restrict coverage of already diagnosed medical conditions and certain classes of treatments, including CGTs. ³⁰ These practices are sometimes termed “lasering out” in the insurance industry.

Alternatively, payers may acquire CGT‐specific reinsurance policies that provide beneficiaries with access to selected CGTs in exchange for supplemental PMPM fees. CGT‐specific reinsurance programs are offered by large payers with a vertically integrated pharmacy benefit manager, including Aetna/CVS (Gene Therapy Stop Loss), Cigna/Evernorth (Embarc Benefit Protection), and United Healthcare/Optum (Optum Gene Therapy Risk Protection). ³⁴ , ³⁵ , ³⁶ The Embarc program currently covers six CGTs at an extra cost of $1 PMPM. ³⁷ Take‐up of this coverage, which is voluntary, appears limited at this time.

Payers are also making the choice to impose restrictive policies to limit the number of patients who might be treated with CGTs. ³⁸ An estimated 27% of employers have introduced policy restrictions to limit access to expensive treatments, including CGTs such as Zolgensma. ³⁹ , ⁴⁰ , ⁴¹ Many of these plans are self‐insured, for which Employee Retirement Income Security Act (ERISA) rules that govern them provide more latitude over the coverage they provide to their beneficiaries. ⁴² Approximately 50%‐60% of all employed workers in the United States are covered by a self‐insured plan. ⁴³ Although previously self‐insurance was a practice typically used by selected large companies, increasingly geographical diverse medium and small employers are self‐insured. In addition, state Medicaid plans may choose to “carve out” coverage of CGTs from their MCO contracts and manage access to these therapies in the traditional FFS benefit. State Medicaid programs can use restrictive policies to manage CGTs and other expensive specialty drug use. ⁴⁴ , ⁴⁵

Finally, some payers have endeavored to restrain spending on CGTs by reducing expected prices per use. “Value‐based” payment arrangements with CGT innovators take numerous forms and are generally structured to allow for payment over time and rebates for the treatment meeting predefined clinical expectations. ⁴⁶ Although more commonly used by some commercial plans, some state Medicaid plans have also experimented with carving out coverage and entered into their own value‐based payments for selected CGTs.

Stakeholders have looked for alternative policies to support improved patient access and reduce disparities in access to CGTs. The focus on reducing disparities in access to CGTs is motivated by data suggesting the rare diseases targeted by CGTs affects vulnerable populations, including children and racial and ethnic minorities, ⁴⁷ who, in the United States, are more likely to be covered by commercial or state Medicaid plans. For example, more than 70% of patients with sickle cell disease (SCD) are covered by Medicaid. ⁴⁸ Several proposals and one pilot program to increase access to SCD‐targeted CGTs among state Medicaid plans have been initiated. ⁴⁹ , ⁵⁰ Additional reform would require state or federal congressional approval and appropriations. How much these reforms would cost is unknown at this time.

We estimate the costs of reinsuring the entire US population for CGTs expected to be available between 2023 and 2035. We also estimate expected costs to cover SCD‐targeted CGTs by payer. ⁵¹

Methods

Our estimates use the expected CGT spending model by Wong and colleagues. ¹¹ We use this method because it is the only CGT spending model in which the inputs and assumptions are peer reviewed and public, and the model was made available to us by permission of the authors to update. Because our model requires assumptions for which there is limited or no published data or industry reports to inform, our model also benefited from discussion with a number of industry practitioners to provide additional assurances of reasonability.

Our analysis entailed several steps. First, we used the model by Wong and colleagues of expected CGT spending overall and by patient age between 2023 and 2030 and extended this estimate to 2035 by adding newly approved and expected‐to‐be‐approved CGTs through 2027 and associated prices. ¹¹ We calculated and reported expected US annual spending on all CGTs available 2023–2035. We also converted estimated average annual spending on CGTs into spending by payer type on GCTs between 2023 and 2035 and in 2026, when Wong and colleagues expect maximum spending, based on the observed distribution of US insurance provision obtained from the 2021 America's Health Insurance Plans (AHIP) census data. ⁸ Methods for the spending extension through 2035 and the payer disaggregation are described in Appendices 1–6. We did not adjust spending estimates to reflect expected inflation, and consequently, all spending estimates are expressed in 2023 US dollars. We also only focused on CGT spending and did not estimate spending on complementary medical commonly associated with CGT‐based treatment. Similarly, we did not account for any potential medical care spending offsets associated with CGT use.

Second, we quantified the costs of reinsurance premiums PMPM that would accommodate all existing and expected CGT spending between 2023 and 2035. We reported PMPM premiums because this is typical in the insurance industry and it aids comparisons with other industry estimates.

To do so, we estimated the inferred profits plans make off existing CGT reinsurance fees, sometimes called “surcharges” in the insurance industry. The reinsurance surcharge is the additional cost for payers who purchase reinsurance compared with those who pay for CGTs via the traditional FFS model and represents the amount plans are willing to pay PMPM to avoid the risks and uncertainty of managing these costs on their own. Reinsurance fees relate to the gross premium insurers pay for risk protection. For example, if we assume a reinsurance surcharge of 100%, for every $1 of expected drug spending, the reinsurance surcharge is $1, and the total reinsurance premium will amount to $2. We reported estimated CGT reinsurance surcharge percentages and CGT reinsurance fees PMPM disaggregated by payer type.

To estimate the expected CGT reinsurance surcharge, we calibrated the model using the sole reinsurance plan that covers GCTs and publicly reports their premiums. In 2023, Embarc covered six drugs for a flat $0.99 PMPM fee. ³⁹ As reported in their 2023 surcharge announcement, Embarc reported spending $0.10 PMPM on drug costs in the year and rebated $0.55 PMPM back to subscribed employers or plans. Therefore, the net cost of the reinsurance to subscribing employers or plans was $0.45 PMPM, and the profit for Embarc for offering these services was $0.34 PMPM. This is equivalent to a net reinsurance surcharge for CGTs of 340%, in which for every $1 in drug spending, Embarc collected $4.4 of premiums and made $3.4 in revenue. This is also consistent with Embarc's results in 2022, which reported $0.06 PMPM drug spendings and $0.34 PMPM retained earnings, suggesting that the pricing of these plans is structural and not the product of a single outlier year. ⁴⁹ Industry practitioners corroborated these estimates.

In estimating expected CGT reinsurance surcharges PMPM, we made some added assumptions. We assumed that half the commercial market, which includes ACA plans and ERISA self‐insured plans, will be able to purchase reinsurance at a lesser 100% surcharge because their risk pools are large, which reduces the pricing risk for the reinsurer and facilitates price discounts through negotiation. This assumption also applied to Medicare‐insured individuals with supplemental coverage. We assumed Medicaid MCOs face reduced reinsurance surcharges of 25%. We based this assumption on the observation that although state Medicaid programs do not buy reinsurance, their MCOs sometimes do. We assumed that Medicare does not buy reinsurance, but supplemental plans and Medicare Advantage plans do and that these plans are offered by commercial insurers. Industry practitioners corroborated these assumptions.

Third, we used our estimates to illustrate how disease‐specific CGTs might be challenging for payers to manage. We estimated SCD‐targeted CGT costs for all payers and by payer type. Then, we estimated expected PMPM costs for SCD‐targeted CGTs for state Medicaid programs. We reported estimated PMPM costs by state and by patient age.

We detailed our assumptions around SCD‐targeted CGT eligibility, adoption, and spending for patients in Appendices 1–6. We provided additional details on our models’ construction in Appendices 1–6.

The study was exempt from institutional review board review because it used deidentified aggregate data.

Findings

Expected Annual Spending on CGTs by Payer

We estimated annual maximum spending on CGTs to amount to $25.6 billion in 2026 and annual spending between 2023 and 2035 to amount to $20.4 billion (Table 1). Commercial plans were expected to be the single largest payer of CGTs, with the remainder split among the government payers, Medicare plans, and state Medicaid plans.

Table 1.

Expected Cell and Gene Therapy Spending Overall and by Payer 2023–2035

	2026 Maximum Spending, $bn	2023‐2035 Average Annual Spending, $bn
Medicare	8.10	6.40
State Medicaid plans	5.44	4.30
Commercial plans	12.20	9.60
Total	25.60	20.40

$bn, billions of US dollars.

Estimated Reinsurance Costs for CGTs PMPM

We estimated CGT‐targeted reinsurance annual premiums would total $62.74 billion at maximum gene therapy spending in 2026, representing $25.7 billion in drug spending and another $37.1 billion in reinsurance surcharges (Table 2). In 2026, the total PMPM reinsurance cost would be $15.69 PMPM. The average expected CGT spending is $31.2 billion per year with $20.4 billion in drug costs and $10.8 billion in reinsurance surcharges. The average total PMPM reinsurance cost would be $7.78 PMPM. Premiums are observed to be higher in Medicare supplemental and Advantage plans compared with commercial and Medicaid plans.

Table 2.

Estimated Total Annual Reinsurance Premiums for CGTs in 2026 and Average Annually 2023‐2035 by Payer

		Maximum Annual Spending in 2026				2023‐2035 Average Spending per Year
	Number of Lives, Thousands	CGT Spending, $bn	Reinsurance Surcharge, $bn	Total Reinsurance Premium, $bn	Reinsurance Premium PMPM, $	CGT Average Spending, $bn	Reinsurance Surcharge, $bn	Total Reinsurance Premium, $bn	Reinsurance Premium PMPM, $
Medicare supplemental and Medicare Advantage plans	60	8.10	4.86	12.96	17.93	6.42	2.70	9.12	12.61
State Medicaid plans	62	5.40	5.44	10.88	14.64	4.31	3.02	7.33	9.86
Commercial plans	212	12.20	26.84	39.04	15.36	9.67	5.08	14.75	5.80
Total	334	25.70	37.10	62.88	15.69	20.40	10.80	31.20	7.78

$bn, billions of US dollars; CGT, cell and gene therapy; PMPM, per member per month.

Expected Annual Spending Overall, by Payer and State Medicaid Plans SCD‐Targeted CGTs

Table 3 reports our estimated expected average costs of SCD‐targeted GCTs overall and by payer. We estimated $3.1 billion in SCD‐targeted GCT therapies per year, or about $0.78 PMPM. State Medicaid programs will face most of these expected costs; SCD‐targeted CGTs will add on average $2 billion or $2.79 PMPM annually to state budgets.

Table 3.

Estimated Average Annual Spending on SCD‐Targeted CGTs Overall and by Payer 2023‐2035

	Total Lives Insured	Total Average CGT Spending per Year, $	Average CGT Spending per Year PMPM, $
Medicare supplemental and Medicare Advantage plans	60,226	24,760,285	0.03
State Medicaid plans	61,940	2,074,736,687	2.79
Commercial plans	211,840	1,015,961,009	0.40
Total	334,006	3,115,457,982	0.78

CGT, cell and gene therapy; PMPM, per member per month; SCD, sickle cell disease.

Table 4 presents our average estimates of state Medicaid spending on SCD‐targeted CGTs PMPM broken out by state. The Southern states Mississippi, South Carolina, Georgia, Louisiana, and Alabama are projected to experience the largest impact on their Medicaid budgets from expected spending on SCD‐targeted CGTs. The expected average annual cost increase associated with SCD‐targeted CGTs will amount to over $6 PMPM in these states, more than double the expected average across state Medicaid plans. Other Northern and Midwestern states, including New Jersey, New York, Illinois, Missouri, and Michigan, are expected to incur higher than average reinsurance costs for SCD‐targeted CGTs.

Table 4.

Average Estimated State Medicaid SCD‐Targeted CGT Spending 2023‐2035 PMPM

State	Cost PMPM, $
Mississippi	7.90
South Carolina	6.50
Louisiana	6.20
Georgia	6.00
Alabama	6.00
Maryland	5.20
Florida	5.00
Virginia	4.70
North Carolina	4.40
District of Columbia	3.80
Arkansas	3.70
New Jersey	3.70
New York	3.50
Missouri	3.40
Illinois	3.40
Michigan	3.40
Tennessee	3.20
Connecticut	2.70
Ohio	2.50
Wisconsin	2.20
Delaware	2.20
Indiana	2.10
Texas	2.00
Massachusetts	1.90
Nevada	1.90
Rhode Island	1.80
Pennsylvania	1.80
Kansas	1.60
Oklahoma	1.40
Nebraska	1.40
Minnesota	1.40
Kentucky	1.20
Iowa	1.00
California	0.80
Arizona	0.70
Washington	0.60
Colorado	0.60
New Hampshire	0.30
Oregon	0.30
Utah	0.30
West Virginia	0.30
Alaska	0.20
New Mexico	0.20
Vermont	0.20
Maine	0.10
Hawaii	0.10
Wyoming	0.10
North Dakota	0.10
Montana	0.10
South Dakota	0.10
Idaho	0.10

CGT, cell and gene therapy; PMPM, per member per month; SCD, sickle cell disease.

Conclusions

We estimate annual incremental spending on CGTs between 2023 and 2035 to amount to $20.4 billion, or $15.69 per person. Annual estimated spending on CGTs varies by payer and is expected to concentrate among state Medicaid plans and commercial plans. Annual spending estimates are consistent with expected CGT spending between 2023 and 2030 reported by Wong and colleagues. ¹¹ This is not surprising given our estimates’ reliance on this model. SCD‐targeted CGTs will add a maximum of $0.78 PMPM in reinsurance costs to the US health care system and those costs will largely concentrate within state Medicaid plans.

Much of our estimated CGT expenses result from surcharges reinsurers charge on top of the expected costs of CGTs. This estimate is the added cost for all payers to reduce risk and uncertainty for themselves. That insurers may face risks and uncertainty managing expected CGT costs, which they may wish to pay to avoid, should not surprise readers. Payers typically run on an annualized budget, collecting premiums based on expected costs and paying for costs as they are incurred. It may be challenging for plan actuaries to assess the budgetary impact of CGTs because of the limited historical data available to predict future costs and the uncertainty of disease incidence and prevalence of the typical diseases targeted by CGTs. There are no national or international registries of rare or genetic‐based disease to base incidence or treated prevalence estimates on, and the clinical trials used to register the product with the US FDA may be small and contain many exclusions resulting in the trials not reflecting the typical prevalent case. This would cause difficulty in modeling expected spending using claims data, especially among small insured patient populations.

What may be surprising to readers is the expected profit margin off the sale of CGT‐targeted reinsurance. Industry reports suggest the reinsurance market is profitable. Between 2022 and 2024, reinsurance premiums of overall medical care have increased 10% annually. ⁵⁰ Unlike ACA plan and Medicare Part D insurance premiums, reinsurers do not face medical loss ratio requirements, which would cap them. In addition, the expense of current CGT reinsurance policies reflects their corporation's market power to price more than the policies’ value and their nature as voluntary purchases by plans. It is likely that CGT reinsurance surcharges on plans currently available are high because this is a nascent market with little competition. Adverse selection may also contribute to high premiums, as the employers or plans wishing to purchase this protection reveal themselves to be both knowledgeable about the risk and less able to expect or handle it on their own. However, caution should be exercised in interpreting our reinsurance premium estimates, as they are only calibrated off the offerings of one plan (Embarc), the fees of which are public, over two years. We did check the soundness of these estimates with industry experts who found them to be reasonable.

We also found that Medicaid plans with the highest expected annual spending to cover SCD‐targeted CGTs are concentrated in several states, largely in the South, North, and Midwest. Some of the states with the most expected SCD‐targeted CGT burden have not expanded Medicaid coverage under the ACA and therefore are not eligible for enhanced federal subsidies. This suggests the additional costs of covering SCD‐targeted CGTs will fall disproportionately on state budgets requiring legislative appropriations. ⁵¹ , ⁵² Consequently, reforms to ensure access to CGTs are likely to be most salient to these state plans and their beneficiaries.

Our results have limitations not yet discussed. Our model estimates are based on Wong and colleagues, and consequently, model limitations are shared between our estimates and theirs. ¹¹ The expected market penetration of GGTs, and consequently, spending estimates may be overly optimistic and would lead to overestimated expected annual spending per person on CGTs and therefore higher differences between estimated annual premiums and observed CGT reinsurance premiums. We endeavored to be conservative in market penetration and adoption assumptions based on a review of the published academic literature and industry grey reports. In addition, the prices of expected CGTs launched between 2023 and 2027 are based on observed CGT list prices, matched to targeted diseases, and therefore may also be overestimates of net reimbursements, leading to overestimated expected annual spending per person on CGTs. Conversely, our spending estimates did not account for ancillary medical spending associated with CGT treatment, leading our spending estimates to be underestimates. As explained in Appendices 1–6, and like Wong and colleagues, we assessed result sensitivity to model assumptions and found they are robust to reasonable variation in market penetration and adoption assumptions. ¹¹ Given the paucity of public data on these variables, the variation was supplied to us through discussions with industry practitioners. These sources of information may be subject to their own biases.

Our results have important implications for stakeholders interested in advancing equitable patient access to CGTs. First, plans’ use of reinsurance to manage patient access to CGTs raises concerns regarding the transparency of coverage policies. Unlike primary plans, reinsurers are not generally required to make available their policies in advance of beneficiary subscription. ERISA plans are also not subject to ACA guaranteed coverage policies and transparency requirements. Given the large proportion of commercially insured individuals and families insured by these plans, and the reports of patient access challenges, we agree with recommendations of a recent Institute for Clinical and Economic Review report suggesting more transparency regarding insurance plan offerings for rare and specialty diseases targeted by CGTs appears warranted. ³¹ This would require both state and federal policy encouragement and potentially reform, as ACA‐compliant plans and state Medicaid plan transparency are governed by both. ⁴⁴ ERISA plan transparency is governed by federal Internal Revenue Service (IRS) rules.

Second, potential variation in access to CGTs among state Medicaid plans within a state suggests the current laws requiring drug coverage on FDA approval are not adequate to ensure equitable access to treatment for patients. Variation in coverage policies between commercial and state Medicaid plans operating within a state also suggests adverse selection may occur, concentrating exposure to CGT spending into specific plans. These behaviors may be particularly relevant for state Medicaid plan coverage policies and budgeting. State policies encouraging or requiring uniform coverage policies in all state Medicaid plans, such as the use of a unified preferred drug list, may better support access. ⁴⁴ To impose additional uniformity in benefit design, states may consider CGT coverage mandates for all ACA‐compliant commercial and Medicaid plans. These policies would require state legislative action and potentially appropriation and would amount to $62.9 billion per year. If the policy only targeted state Medicaid–insured beneficiaries, our estimates suggest expected costs could be much more modest. Without administrative expenses or profit margins, a lower bound estimate of a Medicaid beneficiary–targeted program would cost $5.4 billion per year, whereas an upper bound with reinsurance surcharges included would amount to $10.8 billion per year. Lastly, a “skinny” federal program focused exclusively on SCD‐targeted CGTs (we called it ‘Part S’) would add $2 billion per year to the federal budget with reinsurance surcharges from private plans included.

The main advantages of such a program would be more uniform access and reductions in inefficiencies caused by adverse selection. There are additional advantages to these proposed policies because the risk would be diversified across a larger member pool, reducing the reinsurer's capital expenses and so producing more affordable priced policies. A federal government–supported program covering all FDA approved CGTs modeled on Part D, called by ‘Part G’ by Katchar and Cohen, ³⁷ would also likely pull more plans to provide coverage, and consequently, competition might create opportunities for additional savings and quality of care.

However, implementing any of these proposed federal programs presents significant challenges, as already discussed by Katchmar and Cohen. ³⁷ Any federal program offering CGT coverage across multiple diseases would increase the complexity of administration and oversight. Government‐guaranteed coverage might also induce higher launch prices for CGTs.

An alternative approach would be for the federal government to support state Medicaid programs in their pursuit of greater beneficiary access to CGTs. This approach may be found in the federal government's recently announced new pilot program, which promises to support state Medicaid plans in their pursuit of value‐based payments for SCD‐targeted CGTs. ⁴⁹ , ⁵³ A related approach would be for the federal government to expand support for state Medicaid plans to provide CGT treatment access through expanded direct federal subsidies.

Finally, whichever paths policymakers pursue, we encourage them to consider the quality of CGT care provided. One design concern that all policy prescriptions must address is the considerable uncertainty about the long‐term effectiveness of CGTs. Although value‐based payment for these therapies is the commonly proffered answer to this concern, and a practice is already in use by several innovators and payers and that was recently endorsed by the Centers for Medicare and Medicaid Services, there are significant diseconomies of scale associated with this approach, which in turn diminishes their uptake. Many states and plans simply lack the expertise for the complex negotiation process required to set up such agreements and face significant costs associated with the data required to benefit from such arrangements.

A simpler approach would be for practitioners and policymakers to identify, standardized, and validate quality metrics regarding the use and outcomes associated with CGTs and incorporate these into the accessibility policy approaches reviewed above. We are unaware of validated quality metric creation that scales across CGTs currently, but this is an important direction for future work.

The importance of understanding risk, monitoring quality outcomes and sharing best practices does suggest an important role for an entity that could act as a neutral broker among plans, providers, and innovators. One approach that has yet to be fully tried in the US market but appears promising is for a standalone entity that could screen patients eligible for treatment, guide patients to providers that realize the best outcomes for their disease and other characteristics,  and measure and report outcomes at scale. A CGT reinsurance plan could function in this role. Under such a model, employers, plans, or taxpayers would make direct monthly premium payments. The intermediary would price the premium according to each employer's or plan's or state's risk pool and take on other delivery and auxiliary functions, such as ensuring patients found requiring care receive the treatment and monitoring treatment outcomes. The plan could be paid to manage patient treatment outcomes and hold down costs through outcome‐based ratings and risk‐sharing corridors like Part D plans.

The presence of an intermediary has several key advantages over the current status quo. First, it solves the structural problem of a given company with CGT product negotiating access with each employer and plan, an enormously complex and cost challenge. The innovator company would come to an agreement with the intermediary about the terms of access, and the intermediary would offer a standardized plan product to all beneficiaries. The intermediary could supply CGT “one‐stop shopping” for plans to all therapeutic programs offered by contracted innovators. Second, the intermediary would help agreements between plans and contracted innovators on topics in which these parties often have different incentives and opinions, such as prior authorization requirements and outcome adjudication for patients. It also could serve as an information clearinghouse, allowing each participating provider employers, plans, or states to learn from the real‐world practices of using CGTs for patients. The latter would be a significant improvement over the status quo. An added advantage the intermediary could play is scaling across CGTs as their availability increases over time. For example, the intermediary could inform decision making about the best CGT products to supply patient access, based on the strength of the clinical evidence, and match patients to treatment centers to obtain the best patient outcomes across diverse medical providers.

From an economic perspective, this model may have two additional benefits if it is structured as a “subscription model.” Subscription models shift the risk of having to pay for CGTs from the employer, plan, or state to the lowest cost provider of reinsurance, the innovator companies themselves. The innovators drop their price in exchange for gaining access to more patients with certainty. Second, the plan could face incentives to find and treat eligible patients because the incremental cost of treatment to them is zero. This is a well‐known property of subscription payment models found across industries, and it contrasts sharply with the traditional reinsurance model in which reinsurance companies may require patients in need to exhaust all existing treatment options before allowing them access to more expensive treatments. It also contrasts sharply with risk pools, which must guard closely against depleted funds. A subscription model reduces this frustrating dynamic and, in many cases, cuts it.

In summary, CGTs promise life‐changing possibilities for patients and families and significant spending challenges for health care systems. Payers currently pay for the high cost of these medicines and may buy excessively priced reinsurance to protect themselves from budgeting risk. Policies that encourage the private market to innovate their reinsurance offerings would be welcome and could be complementary to state or federal policies aimed at providing more equitable access to CGTs. To support high‐quality care with CGTs, quality metrics need to be identified, validated, and deployed across CGT clinical applications. A subscription model CGT reinsurance plan is an innovative approach, which may offer advantages over the status quo and could improve patient access to these innovative treatments without inflating employer and government budgets.

Conflict of Interest Disclosures

No disclosures were reported.

Supporting information

Appendix 1

Appendix 2

Appendix 3

Appendix 4

Appendix 5

Appendix 6