September 9, 2019 Read Advisory Board's take: Why we may be seeing a fundamental shift in gene therapy coverage

Major insurers are eyeing and developing new strategies to help employers cover the cost of gene therapies priced at millions of dollars per treatment.

Gene therapies manipulate a patient's genes at the cellular level to treat inherited diseases. But the therapies are among the costliest treatments in the world. For example, the list price of Novartis' Zolgensma—a gene therapy approved by FDA in May to treat a rare type of muscular atrophy in infants—is $2.125 million and the list price of Spark Therapeutics' Luxturna—a gene therapy approved by FDA in January 2018 to treat an inherited disorder that causes blindness—is $850,000. The high costs have presented a financial challenge for employers and insurers.

Steve Miller, Cigna's chief clinical officer, said, "You have all these new products coming to the market at these very high prices. Clearly this is a pain point in health care that needs to be solved."

Troy Brennan, CVS Health CMO, said, "Employers are saying, 'I just can't afford it.'"

Insurers respond to the high cost of gene therapies

But insurers are taking steps to blunt the impact of high-cost gene therapies.

For example, insurers in Massachusetts are developing a pilot program to create installment payment plans for gene therapies and other costly one-time treatments. Under the program, insurers would agree to continue paying for the treatment even after a patient has switched to another insurer. However, Mark Trusheim—strategic director of the New Drug Development Paradigms, a think tank run out of the Massachusetts Institute of Technology—said movement on the pilot program has stalled due to drugmakers' concerns about Medicaid's best-price rules, which require Medicaid to receive the lowest price for a treatment of any payer.

Meanwhile, Cigna on Thursday announced a new program, called Embarc Benefit Protection, that allows health coverage providers to pay a monthly fee for a service that will manage the use of gene therapies and cover their full cost.

As part of the program, health plans, employers, and unions can pay a per-member, monthly fee to access Embarc's gene therapy network. Physicians will be required to submit a prior authorization for a gene therapy and Embarc will determine whether a patient is eligible for the treatments. If they are eligible, Cigna's specialty pharmacy will dispense the drugs to patients who will pay no out-of-pocket costs for gene therapies.

Miller said the program will begin with Zolgensma and Luxturna in 2020, but Cigna plans to add more drugs to the program in the future. Cigna has not established the monthly fee for the service, but Miller said the insurer hopes to set the rate at less than $1 per month. Cigna said it hopes enough clients will sign up for the new program to allow the insurer to gain more leverage in negotiations with drugmakers and strike better deals for gene therapies. Miller said, "We're looking for money-back guarantees."

Meanwhile, CVS Health in 2020 plans to provide employers with a new layer of coverage designed specifically for gene therapies that would cover employers' costs above a particular threshold. Brennan said the coverage option, which is referred to as a stop-loss program, will be available to self-insured employers with the company's Aetna health plans and cover Zolgensma, Luxturna, and potentially other therapies. Brennan added that CVS Health is also developing a broader reinsurance program for high-cost treatments.

Anthem also is exploring special insurance setups, including reinsurance or stop-loss options, to provide employers with protection against the negative financial effects of costly gene therapies.

In addition, insurers have said they are seeking to reach agreements with drugmakers to tie gene therapy payments to the treatment's results in patients. Drugmakers have expressed their willingness to work with insurers to create new payment agreements that will help more patients access their treatments.

Insurers have also set conditions to limit who is eligible to receive gene therapies to strike a balance between providing patients with access to gene therapies and managing their costs.


But even though insurers are developing more options to cover gene therapies for employers, the number of protection plans available to employers remains limited and it is unclear whether new approaches will allow insurers to lower the costs of gene therapies or simply spread out their costs.

Still, Nadina Rosier, who is head of the pharmacy practice at advisory firm Willis Towers Watson, said new options insurers are providing employers might be attractive to companies that are not large enough to shoulder the costs of gene therapies and do not have stop-loss insurance to cover them. But Rosier said companies with stop-loss policies will have to "ask [themselves], 'Why am I double paying?'"

A spokesperson for AveXis, the Novartis subsidiary that developed Zolgensma, said the drugmaker has not been briefed on the new payment plans for gene therapies but acknowledged that "innovative therapies like Zolgensma require innovative solutions for access." The spokesperson said the company currently offers insurers a payment option that allows them to receive a rebate if Zolgensma does not meet predetermined clinical outcomes for a patient.  The spokesperson noted the rebate cannot exceed the 17.1% statutory rebate drugmakers pay Medicaid for pediatric drugs.

A Spark spokesperson said the pharmaceutical company continues to assess "ways to enhance patient access" to Luxturna with several stakeholders (Walker/Wilde Mathews, Wall Street Journal, 9/5; Owens, "Vitals," Axios, 9/6; Maddipatla, Reuters, 9/5; Cigna release, 9/5; Express Scrips release, 9/4).

Advisory Board's take

Brandi Greenberg, Managing Director, Life Sciences and Natalie Trebes, Senior Consultant, Health Plan Advisory Council

Hardly a week goes by without one of our members—across payers, providers, and life sciences—mentioning the daunting challenge of how to ensure affordable patient access to these potentially curative, but very high-cost gene therapies. That's why Cigna's newly-announced Embarc Benefit ProtectionSM program certainly piqued our interest.

While we still have a lot of questions about the specifics of Cigna's program—and the competitor responses and potential cross-industry ripple effects it will cause—we applaud Cigna for trying something creative and different. Unquestionably, this new class of gene therapies (as well as other rare disease specialty drugs) demand a different approach. As with all truly disruptive clinical innovations, they will challenge conventional approaches to value assessment; formulary design; price and rebate negotiation; and utilization management—demanding new financial and care management innovations in response.

In reviewing the basics of Cigna's program, two things stood out to us:

  1. Its multi-stakeholder approach: In addition to smoothing costs for employers and other payers, the program incorporates the needs of patients, providers, and biopharmaceutical manufacturers. Patients will have no copayments or coinsurance. Providers get assurances that their patients can access potentially life-changing therapies—coupled with care management support to ensure high-quality outcomes. And manufacturers have a path to greater coverage (and therefore payment) for their clinical and technological innovations.
  2. Its use of Cigna's expanded scale and scope: This new approach clearly benefits from Cigna's scale as a health plan combined with a PBM after their recent merger with ExpressScripts. But it's about more than that. Cigna's official press release describes Embarc as a "new offering that brings together the health services, medical management, and specialty pharmacy expertise of Express Scripts, eviCore, Accredo, and CuraScript SD"—clearly tapping into Cigna's extensive portfolio. Aetna and CVS, as well as United and Optum* have similarly broad portfolios, should they choose to offer something similar to Embarc. The details of the offering strongly suggest that Cigna leaders see a winning gene therapy coverage strategy by leveraging both massive scale and the synergistic combination of their financial, utilization, and care management solutions—also suggesting that most employers' traditional reinsurance alone won't cut it.

Where do we go from here?

Cigna's solution, coupled with proposed stop-loss insurance products and alternative payment models from CVS and Anthem, may signal the beginning of a fundamental shift in how payers and employers approach ultra-high-cost (and potentially curative) treatments for rare genetic diseases. They're looking for ways to spread out and manage their financial risk—risk that's hard to predict and affects a small number of people, but can wreak financial havoc on families or self-insured employers. It's not at all surprising that Cigna is initially targeting self-insured employers and unions, as even the large ones can't absorb this risk on their own and are seeking greater predictability.

What happens next is anyone's guess, but here are a few questions that remain for us:

  • Are we headed down a path of unbundling or carving out even more insurance products on an opt-in or opt-out basis? Just as we can now purchase supplemental vision, dental, or long-term care insurance, could it become standard for employers or individuals to select gene therapy insurance, rare disease insurance, etc.?
  • Might gene therapies create opportunities for public/private partnerships in an effort to ensure affordable, appropriate access? Cigna's Dr. Miller noted that the company was in early conversations with government payers (despite the likely hurdles to collaboration that exist). Perhaps state governments or HHS could pilot ways to work with commercial payers to ensure sufficiently large risk pools that can absorb the costs for a defined set of ultra-rare, unpredictable diseases for which curative therapies now (or may soon) exist.
  • How might commercial payers couple these new supplemental or reinsurance programs with outcomes-based contracts that ensure they're only paying for treatments that work?

While there are many unknowns, we do know that more clinical and financial innovations are on the horizon. We are excited to see what happens next.

What other questions or predictions do you have? We’d love to hear from you. Please email us at and

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