The CGT Ecosystem Explained, Part 1
Why CGTs are the Next Big Coverage Challenge for Self-Insured Employers
New cell and gene therapies (CGTs) can change lives. But their astronomical costs make access a massive challenge in our fragmented healthcare system. Our three-part series on the CGT Ecosystem explains how Aradigm is working with stakeholders to overcome the barriers impeding access to these astounding breakthrough treatments.
The CGT Landscape for Employers
Many employers choose self-funded health plans to control costs, optimize cash flow, and offer their employees customized benefits that best meet their needs. But those advantages are increasingly uncertain as rising premiums test the administrative and financial expertise of even the largest organizations.
Over the past few years, comprehensive coverage has become even more difficult with the rapid emergence of breakthrough cell and gene therapies. Employers are accustomed to a small percentage of employees accounting for disproportionate claims, but CGTs bring that risk to an entirely new level.
CGTs represent truly astounding medical breakthroughs. Advances in biomedical technology have made it possible to cure an ever-growing number of diseases considered untreatable only a few years ago. On a human level, the potential relief from suffering, fear, and diminished quality and length of life is a wonder to be celebrated. Yet the exceptionally high costs of these treatments can threaten the capacity of any business to cover employees and remain financially solvent.
We’ve launched Aradigm to solve that intractable problem. We enable employers to sustainably manage their claims risk for CGTs so they can offer employees access to life-changing therapies with the highest-quality care that lead to the best possible outcomes.
The Financial Perils of Life-Changing Therapies
To date, the Food and Drug Administration (FDA) has approved more than 40 cell and gene therapies for various cancers and life-threatening or life-altering diseases like sickle cell disease, hemophilia, inherited retinal disease, and spinal muscular atrophy, a once-fatal childhood disease. There are more than 4,000 other CGT products in development pipelines, including treatments for type 1 diabetes, Parkinson’s disease, and multiple sclerosis.
In some cases, a single dose may be sufficient to cure these rare conditions but treatment costs can range from $1 to $4 million per patient. Employers with even one affected employee can face drastic and potentially overwhelming increases in their total healthcare spend.
High-cost claims already threaten the financial stability of employer-sponsored healthcare. Between 2019 and 2022, almost 90 percent of employers faced a stop-loss claim due to unanticipated surges in treatment costs. On average, only 1.2 percent of employees account for a third of all healthcare spending. The emergence of even higher-cost CGTs makes that volatility an existential threat.
With the rapid development of these new therapies, employers may not know which or how many of their employees might benefit from treatment. Those treatments are not only extraordinarily expensive but also “front-loaded,” meaning employers bear the financial hit immediately rather than spreading care costs over years of employment. In addition, the long-term reductions in care costs that result may not even accrue to the employer if the employee moves to another organization.
Since CGTs are clinically novel therapies, there is also uncertainty about therapeutic efficacy and outcomes. Employers may agree to cover the cost of treatments without truly knowing whether those therapies will work or which providers are qualified to deliver them.
In other words, few companies have the clinical or financial expertise and the complex mitigation strategies needed to manage the coverage risk for a very small number of employees. This forces those organizations to make potentially terrible choices between financial solvency and life-saving care.
That’s why we’ve stepped in.
The Aradigm Answer
Recognizing those challenges, we saw the urgent need for a private sector solution to create a robust and sustainable CGT market. So we decided to build that solution ourselves.
We started by assembling a group of national employers and insurers. Together, we rolled up our sleeves and spent six months analyzing the problem before designing and developing a solution. Then, we turned to manufacturers and providers to learn about their specific challenges and priorities. This enabled us to create a comprehensive solution that brings all stakeholders together and gets to the heart of the problem — which lies with the disconnect and financial misalignment inherent in our highly fragmented healthcare system.
For our employer partners, the Aradigm solution looks like this:
Identify exposure
We assess your employee health claims data to underwrite your risk with a premium that’s adjusted to your specific exposure.
Pool and cap risk — and pass back savings
We pool premiums across employers, insurers, and other risk-bearing entities to stabilize that risk. We take full responsibility for paying for cell and gene therapies and the associated medical care to deliver and monitor those therapies. Aradigm has arrangements with a syndicate of reinsurers to pay for any claims that exceed the amount in the pool, effectively capping each employer’s risk at the premium paid. At the end of the year, any dollars that remain unused in the pool are returned, in their entirety, as a dividend to participating employers. Aradigm is fully transparent about all spend in this cost-plus, pass-through model.
Set performance agreements
We work directly with manufacturers to ensure reliable access and establish health outcomes that must be achieved—or we claw back costs to reimburse our risk-pool partners.
Establish centers of excellence
We partner with providers who can deliver on the promise of those therapies. By covering their upfront treatment costs and ensuring predictable patient volume, we enable them to invest in the right delivery infrastructure and set high standards for quality and experience. Doing so drives care to the highest quality and highest value providers — improving the value proposition for employers.
Ensure quality outcomes
We help patients navigate their benefits, coordinate patient care, and track long-term outcomes to ensure effectiveness. This also helps advance clinical understanding of novel therapies, which are often approved urgently with limited clinical trials.
Our goal is to make these therapies accessible to those who would benefit most. We’ve brought a world-class clinical team together to establish evidence-based clinical coverage policies and continually surveil newly published evidence to refine and optimize policies.
Today, our formulary includes therapies for sickle cell disease, hemophilia, Duchenne muscular dystrophy, spinal muscular atrophy, and blood cancers treatable by CAR-T therapies. We’ll expand to new therapies as they are approved and we can accurately assess the underlying risks and set expectations for outcomes.
A New Era of Transformative Care
In a healthcare system that is already too costly and complex, few employers have the capacity, resources, or expertise to manage the financial risk and administrative burden of covering new cell and gene therapies on their own.
The employers we work with genuinely want to offer life-saving therapies to their employees and their families, but even a small number of cases can overwhelm healthcare budgets. Our employer partners want to plan, not react, but they can’t predict the need, costs, or outcomes involved with CGTs. This is a challenge that even the largest companies cannot solve on their own. Through collective action and shared risk comes predictability, stability, and sustainability — a rising tide that lifts all ships.
Aradigm provides the strategy, platform, expertise, and network to smooth out and cap risk, ensure resources are invested efficiently, and enable access to life-changing therapies to those who would benefit the most.
We call on you to join us in this effort and hope to work with you to make these remarkable clinical advances a reality for those that need it most.
