This response introduces the article, “Using Real-World Data to Inform Value-Based Contracts for Cell and Gene Therapies in Medicaid,” by Antal Zemplenyi, Jim Leonard, Michael J. DiStefano, Kelly E. Anderson, Garth C. Wright, Nicholas D. Mendola, Kavita Nair, and R. Brett McQueen, published in PharmacoEconomics in 2024.
The article addresses the significant financial challenges faced by state Medicaid programs due to the high upfront costs and long-term benefit uncertainties of cell and gene therapies (CGTs). These therapies often require a single, large payment, posing a substantial burden on Medicaid’s budget, especially since Medicaid covers a significant portion (28%) of the US population, many of whom rely on it for access to such treatments for rare genetic disorders. The uncertainty surrounding the durability of CGTs’ benefits and the variability in standard-of-care costs further complicate financial planning for payers.
The primary aim of the study was to utilize real-world data (RWD) to estimate the actual cost-offsets for two specific CGTs for hemophilia: valoctocogene roxaparvovec (for hemophilia A) and etranacogene dezaparvovec (for hemophilia B). The authors sought to define the payback periods and their uncertainty from the perspective of Colorado Medicaid, thereby informing the design of value-based contracts (VBCs). VBCs are innovative payment models designed to link reimbursement to a treatment’s real-world performance, allowing costs to be spread over time and financial risk to be shared between Medicaid and manufacturers.
To achieve their objective, the researchers conducted a cost analysis using 2018–2022 data from the Colorado Department of Health Care Policy & Financing. They compared the real-world costs of standard-of-care treatments for hemophilia A and B with simulated gene therapy costs. The study specifically identified patient cohorts aged 18 and older with ICD-10-CM codes D66 (hemophilia A) and D67 (hemophilia B), using claims data to define severity criteria (e.g., ≥6 claims per year for severe hemophilia A and ≥4 claims per year for moderate/severe hemophilia B prophylaxis).
Key findings from the study include:
- Significant Differences in Breakeven Times: The study found that using real-world data generated “markedly different break-even time estimates” compared to those derived from published literature based on clinical trials and cost-effectiveness analyses.
- Colorado Medicaid’s annual standard-of-care costs were $426,000 for hemophilia A and $546,000 for hemophilia B. In contrast, literature-based estimates for hemophilia A were around $633,000 and for hemophilia B were around $689,000.
- Substituting standard-of-care with gene therapy for eligible patients resulted in average breakeven times of 8 years for hemophilia A and 6 years for hemophilia B when using real-world costs. This is longer than the 5-year breakeven time suggested by published economic evaluation costs.
- Impact of Cost Variability and Eligibility Criteria:
- There was “substantial variability” in real-world standard-of-care costs, leading to a 48% probability of breakeven within 10 years for hemophilia A and 59% for hemophilia B. This uncertainty is a crucial factor that economic evaluations often fail to adequately capture.
- Altering eligibility criteria (e.g., based on the number of factor claims per year) significantly influenced the proportion of eligible patients, cost offsets, and breakeven times. For instance, for hemophilia A, increasing the claims per year from ≥4 to ≥20 dramatically reduced the breakeven time from 10 years to 4 years and increased the probability of breakeven within 5 years from 18% to 81%. Similar trends were observed for hemophilia B.
- The study highlights that literature-based cost inputs are often higher and representative of only a small percentage of patients with the highest costs (e.g., top 5% for hemophilia A, top 13% for hemophilia B), leading to an “overly optimistic expectation regarding breakeven time”.
In conclusion, the article emphasizes that incorporating real-world data into the design of VBCs is essential for Medicaid agencies to gain a more accurate understanding of the true costs and cost offsets associated with these innovative therapies. By leveraging RWD, Medicaid can negotiate VBCs that effectively manage budget fluctuations, share financial risk with manufacturers, and ultimately enhance patient access to CGTs. The findings provide critical insights for states to better structure VBCs by considering cost variations and eligibility criteria, addressing the unique financial challenges posed by CGTs.
Reference: Zemplenyi, A., Leonard, J., DiStefano, M. J., Anderson, K. E., Wright, G. C., Mendola, N. D., Nair, K., & McQueen, R. B. (2024). Using Real-World Data to Inform Value-Based Contracts for Cell and Gene Therapies in Medicaid. PharmacoEconomics, 42(3), 319–328. https://doi.org/10.1007/s40273-023-01335-x
