The wave of FDA-approved cell and gene therapies (CGT) is transforming treatment options for diseases that once had few solutions. As more CGTs move from clinical trial to commercial approval and availability, navigating the complexities of government pricing becomes a critical hurdle for emerging manufacturers.

Unique Challenges for Emerging Manufacturers

Emerging manufacturers encounter significant challenges when entering government programs for the first time, from navigating complex regulations coupled with making strategic and logistical decisions.

• Entering Medicaid Drug Rebate Program (MDRP): Enrolling in the MDRP is essential for ensuring that therapies are accessible to patients who rely on Medicaid. Manufacturers are required to “have at least one drug on the market and available for sale.” CGT manufacturers need to identify when their therapy will be “available for sale” which isn’t always straightforward since CGTs are not sold and dispensed like retail and specialty medicines.
• Values-Based Agreements (VBA): Many emerging manufacturers are exploring VBAs which link reimbursement to therapy outcomes, aligning incentives between manufacturers and payers. Manufacturers must decide between a multiple best-price and a bundled sales approach for best-price reporting. The multiple best price approach permits manufacturers to report multiple best prices tied to the commercial VBA if all states offer the same arrangement. Alternatively, a bundled arrangement allows a manufacturer to reallocate discounts associated with the VBA as a sale. Manufacturers need to evaluate which approach best suits their overall pricing strategy and specific circumstances. Typically, a multiple-best-price approach is more optimal for CGTs with small patient populations.
• Preparing for Government Audits and Compliance: Documentation is crucial for navigating government pricing programs. Emerging manufacturers need robust documentation to support their pricing strategies and treatment in the government pricing calculations. Documentation includes detailed policies, methodology, and assumptions for each government program. Proper documentation of assumptions, decisions, and methodologies is key for both internal compliance and external audits, helping mitigate the risk of penalties. Engaging experts to create tailored compliance solutions can further prepare manufacturers for market entry and effectively managing ongoing requirements.

Adapting to New Market Realities

The introduction of numerous new CGTs is significantly altering market dynamics, compelling manufacturers to re-evaluate their strategies to stay competitive.

Traditionally, regulatory systems like Medicaid struggle with the high costs of CGTs, creating financial and logistical challenges. This has spurred discussions on updating infrastructure and policies to address pricing, reimbursement, and distribution complexities.

So, what does this mean for manufacturers? More competition and new innovative approaches to distribution, contracting, and pricing.

Manufacturers are turning to specialty pharmacies in addition to specialty distributors to improve patient access and adherence. Specialty pharmacies are becoming more commonly used for handling these complex therapies and ensuring patient access and adherence.

Pricing Challenges & Government Budgeting

The high costs of CGTs challenge both government budgets and patient care planning. Traditional annual budgeting often falls short of managing the long-term expenses of these therapies. The impact of COVID-19, with many people moving from employer-based insurance to Medicaid, has further exposed the shortcomings of current budgeting systems in handling the lasting financial demands of cell and gene therapies and curative treatments.

Example: Hepatitis C medications, though highly effective, placed a heavy financial strain on government budgets due to their high costs, revealing the limitations of current budgeting systems in handling curative therapies. This issue is now emerging in the cell and gene therapy space, where the cost of treatments threatens financial stability. Planning for these expenditures can help ensure patients access life-saving treatments.

Final Thoughts

Navigating the complexities of government programs and distribution for cell and gene therapies is critical for emerging manufacturers. By proactively addressing regulatory challenges and leveraging innovative distribution models, manufacturers can ensure both market success and patient access to life-saving treatments. Riparian is committed to guiding manufacturers through these intricacies, providing expert support to optimize their strategies and maintain compliance.