The market for cell and gene therapies (CGTs) is rapidly transitioning from ultra-niche science to approved therapies. By 2021, 89 CGTs had achieved approval globally, only four years after the first CGT was approved by the U.S. Food and Drug Administration. In fact, 2021 was a banner year for CGT financing, closing with more than $23.1 billion raised. The main driver of this funding was venture capital, which rose to $10 billion. Overall, CGT financing increased 16 percent and venture capital funding increased 73% compared to 2020.

The years 2021 and 2022 were also marked by CGTs therapeutic successes and innovation. A February 2022 study published in Nature found that CAR-T cells remained detectable more than 10 years after infusion, and treated patients remained in remission, suggesting that the treatment was curative.1 Preliminary results from a 2021 landmark CRISPR trial suggested that gene-editing therapy could act successfully within the body, when its demonstrated utility had previously been limited to gene editing extracted cells.2 Driven by impressive clinical progress, increased investment and new regulatory guidance, officials anticipate a wave of new cell therapies to reach the market by 2024.

Despite the growing investment, getting products clinically adopted and paid for is perhaps the primary roadblock to CGT market development. Among the 15 novel CGTs approved in Europe in 2020, four were withdrawn from the market, at least in part due to challenges associated with reimbursement.3 Many payers are hesitant or unable to take on the high sticker prices and large upfront payments of CGTs, especially because the therapies remain experimental and their long-term benefit is yet to be proven through long term data.

Gathering cost-benefit data will help facilitate acceptance of CGTs by payers and policymakers by defining the long-term offsets available to health systems from CGTs. This data should be compared to the existing standard of care, and include incremental trial costs and implications for study duration. In the long term, huge offsets may be available to health systems from CGTs, such as upfront expenditure on a lifetime hemophilia therapy versus the cost of lifelong Factor VIII replacement.

Even if payers are convinced that a treatment offers long-term savings, the administration of a single, curative CGT treatment or short-course of therapy may be prohibitively expensive using the traditional payment model, which requires a full-price payment upfront. Current payer systems and their budgets are not designed for huge one-off reimbursements, and are instead used to patients requiring the same treatment over a long period of time to manage symptoms or cure a disease. However, research suggests that payers are open to innovative CGT financing models that improve financial predictability and reward clinical performance.4

Alternative, more innovative, funding models that help to spread or defer the upfront cost of therapies may be key to mitigating the uncertainty of CGTs value. Specifically, annuity-type payment mechanisms and outcome-based payment mechanisms are emerging as possible alternatives to traditional payment methods.

In annuity payments, the treatment has a fixed price, but is paid in installments over the course of months or years. For outcome-based payments, the cost of the therapy depends on its efficacy and is paid for in installments linked to preset efficacy thresholds. These two models are often combined, so that a single treatment is paid for over time, and the total reimbursement depends on the patient’s outcome. For example, the first gene therapy in the US – a $850,000 treatment for a rare genetic retinal disease – secured reimbursement through an outcomes- and annuity-based funding model where after an initial up-front payment, further payments are triggered if the treatment is effective after 30 days, 90 days and 30 months.5 Novartis’s leukemia treatment, Kymriah, which is priced at $475,000, uses a model where Novartis agrees to repay the reimbursement if the patient dies within a specified period.6

Even alternative payment models may encounter difficulties, especially in particular regions, such as the US, where a patient's insurer may change over time. In the US, patients frequently switch health insurance plans, and new insurers are unlikely to want to assume costly or long-running commitments made by their predecessors. Proposed solutions to this problem involve alternative models for financing – or who pays for a therapy. For example, in risk-pooling strategies, a dedicated fund for high-value medicines could be financed by multiple insurers through a percentage of member premiums. Such a model prevents a single payer from being severely impacted by a cluster of patients in a plan requiring a high-cost therapy.7 

As investment in CGT research and development accelerates, drug developers need to position themselves to scale-up for eventual commercialisation, early. Earlier engagement with key stakeholders that will influence successful commercialisation, such as Regulatory Authorities, Health Technology Assessors and Payors, will help smooth the way. CGT developers will have to convince health-care professionals, governments and budget holders to invest in a radical new approach to therapeutic intervention. To do so will require a substantial upfront cost-benefit analysis, market research, and a departure from traditional models of payment and financing.

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  1. Melenhorst JJ, Chen GM, Wang M, et al. Decade-long leukaemia remissions with persistence of CD4+ CAR T cells. Nature. 2022;602(7897):503-509. doi:10.1038/s41586-021-04390-6
  2. Gillmore JD, Gane E, Taubel J, et al. CRISPR-Cas9 In Vivo Gene Editing for Transthyretin Amyloidosis. N Engl J Med. 2021;385(6):493-502. doi:10.1056/NEJMoa2107454
  3. Cynober T. Why Are There Only 11 Cell and Gene Therapies in Europe? Published September 21, 2020. Accessed June 28, 2022.
  4. Barlow JF, Yang M, Teagarden JR. Are Payers Ready, Willing, and Able to Provide Access to New Durable Gene Therapies? Value Health. 2019;22(6):642-647. doi:10.1016/j.jval.2018.12.004
  5. Tirrell M. A US drugmaker offers to cure rare blindness for $850,000. CNBC. Published January 3, 2018. Accessed June 28, 2022.
  6. Opportunities and challenges for Cell Gene Therapies in Pharmaceuticals and Medical Products in Europe | McKinsey. Accessed June 28, 2022.
  7. New Payment And Financing Models For Curative Regenerative Medicines. In Vivo. Published July 24, 2017. Accessed June 28, 2022.