Skip to main content Skip to footer

August 4, 2022

Finding the fix for cell and gene therapies’ pricing problems

Value-based contracts could point the way forward for untangling pricing models for these new therapies.

Cell and gene therapies “are changing the treatment landscape for various cancers and rare diseases,” as Fierce Pharma writes—but not without challenges and controversy.

(A quick primer courtesy of the American Society of Gene and Cell Therapy: “Gene therapy involves the transfer of genetic material … and the uptake of the gene into the appropriate cells of the body. Cell therapy involves the transfer of cells with the relevant function into the patient. Some protocols utilize both.”)

While the industry has seen many successes after decades of development, including some truly inspiring ones, it also faces major hurdles in the areas of quality and standardization, scale and regulations.

And then there’s the cost considerations.

The Cognizant take

“In the standard health economic model, any therapy that displaces existing therapies gets to claim the cost of the replaced, existing standard of care as part of the overall economic benefit,” explains Avi Kulkarni, Senior Vice President in Cognizant’s Life Sciences practice. This leads to challenges in the case of durable, curative therapies:

  • In calculating benefits, how does one include a lifetime of avoided costs if the injection today cures the patient of the need for future, not fully predictable, interventions?

  • If the numbers add up to disproportionately large sums, is it OK to have a high price today to account for the annuity benefit tomorrow?

  • And what to make of the uncertainty about long-term durability?

To avoid sticker shock, many cell and gene therapies are now priced at a fraction of their calculated benefit.

“In addition to pricing that passes the shock test (i.e., less than the value provided), payers and pharma companies have been working on contracting mechanisms where payers continue to pay the pharma companies for each future period of medical benefit gained,” Kulkarni says.

This model for value-based contracts, as they’re called, is an emerging area, he adds—it requires the establishment of registries, outcome codification, and finding honest data brokers that can be trusted to report outcomes when significant public and private financials are at stake.

It's complicated to design amid all this uncertainty, Kulkarni adds, and value-based contracts could prove difficult to enforce in non-single-payer systems. While pharma companies and payers have accepted the broad outlines of what needs to be done to make value-based contracts happen, detailed, enforceable constructs are not yet in place.

Kulkarni will help lead an on-demand webinar in which experts will offer a deeper understanding of how the discovery and delivery of cell and gene therapies requires a transformation of the typical product lifecycle.

Tech to Watch Blog
Cognizant’s weekly blog
Headshot of Digitally Cognizant author Tech to Watch

Understand the transformative impact of emerging technologies on the world around us as they address our most significant global challenges.

Latest posts

Related posts

Subscribe for more and stay relevant

The Modern Business newsletter delivers monthly insights to help your business adapt, evolve, and respond—as if on intuition