Medicaid Faces Costly Frontier With Sickle Cell Gene Therapies

Multimillion-dollar gene therapies promising treatment for sickle cell disease have hit the market, leaving state Medicaid programs confronting how to foot the bill for these breakthrough drugs.

Vertex Pharmaceuticals’ Casgevy and Bluebird Bio‘s Lyfgenia in December 2023 became the first gene therapies to receive FDA approval for the treatment of sickle cell disease. These treatments target the genetic defect causing sickle cell disease, where abnormal hemoglobin causes red blood cells to become crescent-shaped and block blood flow.

Sickle cell disease affects approximately 100,000 Americans, with African Americans making up over 90% of those cases.

Clinical trials have shown these therapies to be highly effective, with about 90% of patients on both treatments experiencing long-term relief from severe and potentially life-threatening blockages.

However, with the wholesale acquisition costs of both treatments exceeding $2 million per unit, Medicaid authorities say the recent approval of these therapies presents a tremendous challenge to cash-strapped states looking to ensure patients get access to these life-saving treatments.

“The disease burden of sickle cell among Medicaid covered populations is higher compared to other payers, which does suggest that there could be a potential universe of many folks that would be eligible for these therapies,” said Jack Rollins, director of federal policy at the National Association of Medicaid Directors.

Current estimates peg the number of Medicaid beneficiaries eligible for sickle cell gene therapies at about 7,300. However, health-care actuaries project far fewer patients will actually get their hands on the treatments due to limitations associated with the high price tag of these next-generation therapies.

To address these challenges, the Centers for Medicare & Medicaid Services in January introduced its Cell and Gene Therapy Access Model, which aims to provide financial support and logistical assistance to states and manufacturers willing to test ways to pay for the drugs.

The voluntary program spearheads new outcomes-based contractual agreements with manufacturers that pay out based on whether clinical thresholds are reached, leaving states off the hook for high costs if a treatment doesn’t work as intended.

The CMS told Bloomberg Law the agency is betting the new contract structure will not only ensure more patients have access to the therapies but will also save states money in the long term by addressing the underlying causes of disease and reducing health-care costs over the lifetime of a patient.

Research published in the journal PharmacoEconomics found patients treated with lovo-cel (marketed as Lyfgenia) were predicted to live an average of 24 years longer than those receiving standard care, with about $1.3 million in direct health costs avoided per patient over their lifetime.

How It Will Work

Even with the potential for long-term savings, many states until now have been hesitant to adopt outcomes-based contracts. Complexities in negotiating clinical endpoints, limited leverage due to lack of alternative treatments, and insufficient administrative resources for ongoing data collection have been cited as barriers, according to the CMS.

Bluebird Bio, the creator of Lyfgenia, told Bloomberg Law that as of September more than half of sickle cell patients insured by Medicaid live in a state that has affirmed coverage of Lyfgenia. Massachusetts and Michigan have finalized outcome-based agreements with the company.

To boost participation in outcome-based contracts, the CMS says it will negotiate directly with manufacturers on behalf of state Medicaid programs to handle much of the logistical heavy lifting such as establishing financial and clinical outcome measures, reconciling data, and evaluating results.

“The power of our collective can give us the ability to guarantee manufacturers real return on their therapy,” HHS Secretary Xavier Becerra said this week at the department’s inaugural sickle cell disease summit.

The program will begin in January 2025 and is set to run for 11 years. The agency plans to allocate over $95 million to facilitate participation and could expand the program to cover more drugs as more gene therapies receive FDA approval.

To qualify for participation in the program, manufacturers will have to agree on a set of key clinical benchmarks that will be used to define their outcome-based rebates with the Medicaid program. The access model will also require manufacturers to provide volume-based rebates and guaranteed rebates to states regardless of how well or badly the treatment performs.

The CMS will also require manufacturers who agree to join the access model to cover fertility preservation services at no cost to the beneficiary. Patients undergoing these gene therapies typically lose their fertility due to complications from the chemotherapy used in conjunction with the treatment.

The agency said this will allow states to test whether manufacturer-led payments for fertility treatments will lead to better long-term health outcomes and greater savings for state Medicaid programs, which have in the past cited the high long-term costs associated with the service as a barrier to adoption.

Navigating Challenges

Despite the promise of the CMS model, significant hurdles persist in making these groundbreaking treatments widely accessible to Medicaid beneficiaries with sickle cell disease.

Cost remains one of them. That’s because drug companies will seek to recoup the billions of dollars spent on development of cell and gene therapies.

“The research and development costs that were invested in the development of these drugs are certainly substantial. They’ve taken decades to bring to fruition, and the work of a lot of researchers and a lot of effort into that,” said David Barrett, CEO of the American Society of Gene and Cell Therapy.

Adding to these challenges, a 2023 analysis by the society revealed significant inconsistencies in Medicaid coverage practices for gene and cell therapies. Despite federal laws mandating coverage of FDA-approved drugs for their indicated uses, the study found state Medicaid programs and their managed care organizations often applied more restrictive patient coverage criteria than statutorily required.

Doctors on the front lines say the jury is still out on whether the access model and the potential for long-term savings will dramatically shift how states will set coverage criteria.

“Historically, for other therapies, we did have to jump through hoops to justify the need for a new FDA-approved drug,” Andrew Campbell, director of the Comprehensive Sickle Cell Disease Program at Children’s National Hospital in Washington, said in an interview.

“What we found out was in the first few months, it was OK, but when you get beyond six months or a year, we started to see struggles in terms of not only states but also private insurance, increasing the prior authorization process once a treatment has been established,” Campbell said.

Geographical limitations could also pose a significant barrier to access because many patients live in states lacking facilities or physicians with the expertise to administer these specialized treatments, Rollins said.

That said, Rollins pointed out that avenues exist to mitigate this issue. “It’s not unusual for states to have to send people out of state for more specialized care” he said. In such cases, states without access to these facilities have options, including negotiating small case agreements for specific individuals or enrolling out-of-state Medicaid providers, he said.

“Those are solvable problems.”