By Greg Reh, vice chairman, US and Global Life Sciences leader, Deloitte LLP

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This week’s blog, by Greg Reh from the US firm, first appeared on the US Center for Health Solutions blog site. The blog features Greg’s commentary on the panel discussion from the Financial Times US Pharma and Biotech Summit about the changes needed to face coming innovations in manufacturing, pricing, and reimbursement of personalized therapies. These innovations include direct-to-payer models, mass customization, and valuation of gene therapies and one-time treatments, all of which present unique challenges to pharma companies’ current technology systems.

Delivering on the potential of personalized medicine

After years of research, the field of advanced cell and gene therapies is at a tipping point. While still early days for commercialization, the reality of curative therapies is here. The next few years promise to bring even more dramatic results, and hope may be realized for many more patients and caregivers dealing with rare and genetic diseases.

The US FDA is seeing a surge in Investigational New Drug (IND) applications. By 2020, the agency expects 200 INDs per year for cell and gene therapies. An additional 50 clinical reviewers are being hired to handle the more than 800 applications already on file. By 2022, we could see 40+ new approvals added to the list of approved cell and gene therapies.

While science is advancing exponentially, questions remain whether our health care systems, manufacturing capacities, and policy and reimbursement models can keep up. Recently, a group of industry leaders joined me at the Financial Times US Pharma and Biotech Summit to discuss how they are carving a new path to commercialization for cell and gene therapies:

  • Joseph La Barge, Chief Legal Officer, Spark Therapeutics – first to receive FDA approval of a gene therapy for Luxturna, one-time therapy for patients with Inherited Retinal Disease (IRD)
  • David Lennon, President,  AveXis, a Novartis company – recent FDA approval for Zolgensma, lifesaving treatment for infants with spinal muscular atrophy (SMA)
  • Samarth Kulkarni, CEO, CRISPR Therapeutics – translating CRISPR/Cas9 gene-editing technology into transformative therapies
  • Alberto Santagostino, Senior Vice President-Head of Cell and Gene Technology, Lonza – CDMO industrializing cell and gene technologies
  • Rama Kondru, Chief Information Officer, Medidata,and Chief Technology Officer, Acorn AI, a Medidata company – data platform accelerating decision-making and clinical trials

Predictions for the future of cell and gene therapies

Over the next ten years, more than one-third of therapies will be cell and gene-based, according to CRISPR Therapeutics’ CEO, Samarth Kulkarni. “We are in a transformative time in the development of personalized therapies, and new modalities, in general,” he says, “The pharma model of developing a drug and sitting on a patent for 20 years is now gone. Like the technology industry, new generations of products will be coming out every two or three years, and continuous innovation will separate the winners from the losers.”

Manufacturing challenges for cell and gene therapies

“While the pharma industry is at a transformative turning point, it is not equipped for the coming innovation,” according to Alberto Santagostino from Lonza. As companies transition from clinical to commercial, product manufacturing is a crucial issue. Santagostino says companies are having a difficult time forecasting supply and demand. But the biggest challenge in manufacturing cell and gene therapies is industrialization coupled with mass customization. Manufacturing for autologous therapies is especially riddled with complexity and very short timelines, and quality cannot be compromised.

At CRISPR, Kulkarni believes the answer lies in coming up with allogeneic solutions, and as development partners, Contract Development and Manufacturing Organizations will have a huge part in the ecosystem. AveXis President David Lennon predicts that many companies will fail on the path to commercialization, and the winners will invest in infrastructure and be highly connected to those doing technological advances. He says, “It is going to be an ecosystem of advances, no one is going to be able to do it on their own.”

Small patient populations require new pricing and reimbursement models

Joseph La Barge believes some of the work Spark Therapeutics has done with Luxturna will provide a roadmap for future gene therapies, including its innovative direct-to-payer model. Instead of the traditional model of selling the drug to a hospital system, which may buy at a discount and then mark up to the payer, Spark sells the product directly to payers, and drop ships to the treatment center. Patients benefit with quick access. La Barge highly recommends engaging with payers early in the process, now allowed by the 21st Century Cures Act.

Current regulations are not designed for variable payments more suitable for small populations of orphan drugs. In the US, approximately 80 percent of rare diseases are of genetic origin with a quarter of orphan drug approvals targeting populations smaller than 5,000 patients.

“If we’re really going to enable the business model for one-time therapies to prosper, we have to change the regulatory environment to really enable the value of a therapies to be tied to their price. Being able to bill or be paid over time, only if those drugs continue to work, is critically important for the success of these therapies.” – Joseph La Barge, Spark Therapeutics

Luxturna has a short-term durability measure, within 30 to 90 days of administration of the drug, and a longer-term outcomes-based measurement at three years to demonstrate continued efficacy. According to La Barge, “If either of those don’t work, Spark would rebate back 20 percent of the cost of the drug, which is under the limit of Medicaid ‘best price’ rules.” According to research by MIT, payers, manufacturers and patients would benefit from updates to the Medicaid Drug Rebate calculation that would enable the use of Value-Based Payment (VBP) agreements.

A cure is better than chronic care

Zolgensma recently received FDA approval and is now the second biotech with a marketed gene therapy in the United States. Priced at $2.1 million dollars, it is not surprising that its cost is attracting a lot of attention, even though its cost rivals the existing treatment over a five-year period. This life-changing, one-time treatment tackles the most common genetic cause of death in infancy, SMA. With the most severe form of SMA, patients may not live past their second birthday.

According to Lennon, patients start to have a full life with Zolgensma, and its first cohort is starting kindergarten in the fall. He says, “When you look at one-time therapies and the potential for a lifetime of benefit, you really start to generate opportunities for value creation.” With existing treatments, those that survive need ongoing care from medical specialists and their families. The cost to society is not factored in, considering a family member needs to stay home and care for a child that may be fully disabled.

AveXis engaged in a dialogue with patient advocates and payers early and decided they didn’t need to go to the highest thresholds. The high-end rare disease threshold put the value of Zolgensma between $5 to $7 million. ICER’s final assessment to reach a threshold of $100,000 to $150,000 per life year gained, gave Zolgensma a value-based benchmark between $1.2 million to $2.1 million. “Our belief is you shouldn’t try to extract every piece of value out of the system,” says Lennon.

Data is essential for determining value

Medidata’s Rama Kondru asked the audience if their company’s technology systems were ready for personalized medicine. No one could affirm. While a lot of time is spent on manufacturing, biology, and chemistry, Kondru believes that not enough time is spent on the connective fabric of data and technology. He says we have to spend more time on it – for the patient at the end.

There are many benefits to society from a cure as opposed to continuous care, and many challenges for new therapies, including data limitations for long-term efficacy. But patients want cures, and there’s no going back. Everyone agrees, the science will continue to advance, and technologies and production processes will be adapted to many more therapeutic areas in the future.

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Greg Reh, Principal and Life Sciences Sector Leader, Deloitte Consulting LLP

Greg leads the DTTL Global and US Life Sciences practices for Deloitte. In his role with Deloitte’s US member firm, he leads the life sciences sector practices for consulting, audit, tax, and financial advisory services. Greg has more than 25 years of experience helping clients in the life sciences, process manufacturing, consumer, and government sectors. In his role consulting to clients, his career has spanned such topics as technology strategy, integration solution development, and implementation of emerging and disruptive technology. Prior to his consulting career Greg held positions at a government research lab, where he led teams in the design and development of life support devices; and was a lecturer at the University of Pennsylvania. 

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