The CGT Ecosystem Explained, Part 3

Why CGTs Present Market Challenges and Innovation Risk for Manufacturers

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 Manufacturers

Cell and gene therapies (CGTs) are remarkable medical breakthroughs that open new markets for drug manufacturers in treating patients with conditions once considered incurable. But the financial and clinical risks associated with these therapies create formidable barriers to coverage, access, and, ultimately, a thriving marketplace. 

Aradigm was launched to help stakeholders overcome those barriers. As a public benefit corporation, we designed a market-based solution to ensure that patients who will benefit the most can receive these breakthrough treatments. Our approach aligns the incentives of all stakeholders across the drug development and delivery ecosystem to achieve their shared and specific goals. 

Every stakeholder needs to do business a little differently to make that work. For manufacturers, this means adopting a new playbook for achieving clinical and financial success. 

Structural Barriers to Market Success

While CGTs can be extraordinary in their clinical efficacy, their price points — typically up to $4 million per dose — threaten the financial capacity of purchasers and providers to absorb the risks of coverage and payment, respectively. 

In addition, the diseases and conditions CGTs treat are often so rare that clinical trials are limited in scope and scale compared to traditional therapies.  The trials even use clinical surrogates rather than clinical outcomes to assess efficacy. This makes it difficult to predict their impact and durability. 

Despite limited data and the unique circumstances required to manufacture CGTs, the FDA is easing regulatory requirements to make it easier to bring therapies to market because of their life-changing potential. But that only makes it even more important to closely manage and monitor which patients receive these therapies, how they are delivered, and the long-term sustainability of outcomes. 

For manufacturers, this makes business as usual untenable. From their perspective, a successful drug is one that gets FDA approval, achieves desired health outcomes more effectively than alternatives, and sells sufficient units in the addressable market to reach profitability goals. 

With CGTs, however, hazards abound. Development costs are high, and approval is still harder to predict than in more commonly tested modalities. Purchasers may decide not to cover therapies because of their clinical risk and cost. Providers may not be able to afford the upfront payments or the investment in clinical infrastructure necessary to deliver them to an uncertain number of patients. And patients may be wary of new therapies that alter their genetic material. 

This can create a doom loop for drug development. Despite significant potential clinical impact, the economics of CGTs make it difficult for manufacturers to develop a viable market. 

If we want to continue to encourage development, this predicament must not be a roadblock but a forcing function for innovation.

A New Way of Thinking about Market Access

At Aradigm, we’re working to solve this problem for all stakeholders at once. We’ve chosen a limited number of therapies to support, but we will expand that list in the years to come. We pool risk across multiple payers (including health plans and self-insured employers) to make these treatments financially sustainable. We provide expert clinical evaluation so coverage decisions are based on evidence, not guesswork. And we connect the patients who will benefit most with providers who have the infrastructure and expertise to deliver these complex therapies safely and appropriately. 

For manufacturers, we develop outcomes-based contracts that tie payment to clinical performance of the therapies. Though such agreements are becoming more common for high-cost therapies, they are still a new way of thinking and doing business. Manufacturers are used to relying on rebates, preferences, and relationships with pharmacy benefit managers (PBMs) to facilitate market access. But those are blunt instruments and rigid arrangements that aren’t sustainable with CGTs.

Aradigm is not a PBM that sets prices or enables access unilaterally. Nor are we a vendor working to maximize a therapy’s sale volume without regard to impact. Our goal is to help the right patients receive the right therapies through an economic model that doesn’t break the system, but instead allows the market to flourish and the health benefits to be fully realized. We sit in the middle of the highly fragmented and sometimes adversarial healthcare system as a facilitator of innovation, access, and affordability. 

Win-Win Contracts that Focus on Value

To that end, the contracts we develop with manufacturers require clinically nuanced discussions that are always tied to value creation. 

The point of these negotiations is to increase clinical efficacy, access, and affordability. For example, in some cases, to reduce the risk of CGTs for purchasers at a price that manufacturers can support, we need the ability to “claw back” those costs from manufacturers if health outcomes are not achieved. That way, purchasers can be more confident that their members or employees will receive the benefits that are being covered. 

For some conditions, outcomes are very easy to assess and measure. For other conditions, like cancer, it may not be possible to ascribe outcomes to a specific CAR T therapy, so we align with efforts to expand supply in community settings to support more convenient and patient-centered access.

We follow patients throughout the outcome window of the contract, often up to five years, and track outcomes longitudinally even if patients change employers or insurers. Doing so allows us to optimize the fidelity of these contracts and create greater value for the purchaser.

This approach also creates value for the manufacturer by capturing an integrated dataset with longitudinal clinical and utilization data. This data source can be used to better understand real-world effectiveness, explore sub-groups more or less likely to experience clinical benefit, and more rigorously assess safety and real-world effectiveness.

We’re agnostic about the specific financial arrangement we come to with manufacturers. The point is to make it workable for all stakeholders. The guiding principle must be customization — a bespoke approach to creating the greatest overall value in every category. It’s true that traditional contracts are easier to work with, plan for, and execute. But they will not work in the new world of CGTs. 

Facilitating and Sustaining a New Era of Drug Innovation

The excitement surrounding CGT development is undeniable, and manufacturers deserve tremendous credit for making these breakthroughs possible. But CGTs can be a fragile and complex market. The front-end costs are extraordinary, and the lack of clinical certainty makes that financial risk even more difficult for purchasers and providers to absorb. The patients who need these therapies will not be able to access them if we don’t do things differently.  

These barriers cannot be solved by regulation or through traditional market mechanisms. They require a new kind of market-based solution that enhances collaboration and aligns financial interests. 

For their therapies to succeed and for investment in new therapies to continue, manufacturers will need to expand their capacity for innovation to encompass new market access strategies and business models.

Let’s talk about how to make that happen together.