How to cover Novartis’ $475K CAR-T drug Kymriah? A ‘new payment model’ is the only way, Express Scripts says

Novartis' $475,000 price tag on its CAR-T treatment isn't nearly as high as some predicted, but PBM Express Scripts is raising alarm bells.

Steve Miller, the chief medical officer of Express Scripts, is one of the loudest voices in the ongoing debate over high drug prices, so it was only a matter of time before he weighed in on Kymriah, Novartis’ $475,000 CAR-T treatment for some patients with leukemia. That time came yesterday, and Miller didn’t mince words in his assessment of the new product’s price.

While Kymriah’s price is “lower than the $600,000 to $750,000 that some analysts expected,” Miller wrote in a blog post, it is “still dramatically higher than other specialty drugs.” What’s more, the product is the first of what is predicted to be thousands of gene therapies—treatments that are personalized and given to patients as one-time cures—and that could be a problem for pharmacy benefits managers (PBMs) and other payers, Miller wrote.

“The healthcare system isn’t set up for this type of economic model,” Miller said.

A spokeswoman for Novartis said in an email that health plans "will evaluate Kymriah on its clinical and economic benefits and make an independent decision for coverage. Patients’ out of pocket cost will vary by patient depending on their health plan. While payers are developing their coverage policies for Kymriah, we will offer an access program in the U.S. for eligible uninsured or underinsured patients."

Furthermore, she said, the company has already established an outcomes-based approach to reimbursement for Kymriah with the Centers for Medicare and Medicaid Services (CMS) that "allows for full payment only when these patients respond to Kymriah by the end of the first month after treatment. We are working through the specific details with CMS and other stakeholders to put this new pricing model in place as soon as possible. There are many hurdles, and Novartis is committed to making this happen."

Kymriah is made by extracting immune-boosting T cells from individual patients and engineering them to seek out and destroy their leukemia cells. No one disputes Novartis’ assessment that this gene therapy makes for a complicated and expensive process, and it is true that the final price tag was lower than virtually everyone predicted it would be. But Kymriah is hitting the market at a time when concerns about drug pricing continue to dominate the national conversation, so it’s unlikely to be an issue that Novartis will be able to avoid.

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According to Miller, Express Scripts is working with the pharma industry and policymakers to explore alternative payment models for gene therapies. “Ideas on the table include paying for a treatment over time, establishing insurer risk pools and financing one-time payments,” he wrote in the blog post. “A successful model must address patients who change insurers or employers, and tracking their health outcomes over time to ensure payments aren’t being made if the treatment stops being effective.”

Novartis, for one, is probably open to having those discussions, considering its history of experimenting with alternative payment models—and not just with CMS. Last year, for example, it offered rebates to Cigna and Aetna on its heart failure drug Entresto. The rebates fluctuate based on the drug’s ability to reduce hospitalizations and other consequences of heart disease.

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Still, as Miller points out, gene therapy introduces a whole new set of challenges. Treatments like Kymriah are designed to be administered once, giving pharma companies “a single opportunity per patient to get paid,” he wrote. And they may target small patient groups—Kymriah is initially approved to treat the 3,100 people under age 20 who are diagnosed each year with acute lymphoblastic leukemia (ALL). That limits the potential market.

Miller singles out two approved gene therapies in Europe that he believes offer a warning of what can go wrong with high-priced gene therapies. One is UniQure’s Glybera to treat the metabolic disorder lipoprotein lipase deficiency, which was priced at $1.4 million and ultimately pulled from the market because of lack of demand. The other is GlaxoSmithKline’s Strimvelis, priced at $665,000 to treat the immune disorder ADA-SCID. That drug is so far failing to live up to sales expectations.

Whether those products make for a fair analogy is open to question, however. Glybera faced questions about efficacy and Strimvelis is being marketed to an exceptionally small patient population—an estimated 15 children are diagnosed in Europe with ADA-SCID per year. In clinical trials, Kymriah produced remissions in 83% of patients, all of whom had failed to respond to traditional leukemia treatments.

RELATED: At $475,000, is Novartis' Kymriah a bargain—or another example of skyrocketing prices?

And the market for CAR-T therapies will only grow over time. Novartis, for one, intends to seek approval for Kymriah in diffuse large B-cell lymphoma later this year. Kite Pharma, which is being acquired by Gilead, is close behind with its CAR-T treatment for non-Hodgkin lymphoma.

Express Scripts’ Miller is both excited and concerned about the potential for gene therapy, he said in his blog post. He counts 600 such therapies for cancer in pharma pipelines, as well as another 500 in development for rare diseases. But he stops short of guaranteeing that Express Scripts will pay for them all if they carry Kymriah-like prices. “As these life-saving and revolutionary treatments continue to be developed, it is up to payers, pharma companies and policymakers to unite and ensure they reach patients,” he wrote.