Cellular and genetic therapies push into the commercial arena

Even as the science behind the new therapies is getting established, payers are preparing for their extraordinary cost

A wide variety of advanced medical research suddenly locked into place in August 2017 when the news of the FDA approval of Kymriah (tisagenlecleucel), for Novartis, was announced, followed quickly by a similar product Yescarta (axicabtagene ciloleucel), by Kite Pharma. Even before FDA approval of Kite’s product, Gilead Sciences acquired the company—for $11.9 billion, a hefty price for a one-product company whose market outlook was less than obvious.

Both Novartis and Gilead are banking on the excitement around a new type of therapy, CAR-T (chimeric antigen receptor – T cell), which has been under development for years, and which holds the promise of curing a relatively high proportion of patients suffering diseases. (Kymriah demonstrated around 80% of patients with B-cell acute lymphoblastic leukemia [ALL] were in remission a year after drug administration).

For a variety of reasons—including a sort of halo effect of CAR-T efficacy—many drugs and therapies have become united under the theme of “cellular and genetic therapies” (CGTs). CAR-T happens to be cellular, and genetic, technology, but “CGT” brings in the world of stem-cell research and development, which has been going strong since the mid-2000s. Stem cell development has been one of the mainstays of the Assn. of Regenerative Medicine (ARM, which had been involved in promoting the tissue engineering that goes into artificially generated organs)—so now tissue engineering is on the bandwagon as well. Various cell therapy, gene therapy and related professional or trade associations are themselves trying to encompass the CGT field as well.

FDA brought some order to this field when it set up the Regenerative Medicine Advanced Therapy program, following the dictates of the 21st Century Cures Act of 2016, which allows for accelerated review or approval of such therapies. (ARM has come up with its own acronym—regenerative medicine/advanced therapy, or RM/AT, for the field. In Europe, healthcare ministries have adopted the more generic term, ATMP, or “advanced therapy medical product,” which makes one wonder what the next small-molecule innovation could be considered, since by definition it is not “advanced.”)

Trying to corral the market impact of these various medicinal innovations is difficult, since they go in so many different directions, but let’s try: one market-research outfit, Grand View Research, happens to have generated forecasts for both cellular and also genetic therapies, at roughly the same time (2018), and presumably with more or less the same methodology. Its cellular therapy study, dominated by stem cell firms, finds a 2017 market worth $5.22 billion, and growing through 2025 at a compound rate of 5.34%. Its genetic therapy study finds a 2017 market of only $7.6 million—but one that will grow by 19.0% annually through 2026.

Mention of these market forecasts immediately raises the spectre of how these therapies will be reimbursed, for perhaps the most unifying theme of all of them is high cost—Kymriah came on the market with a list price of $475,000, which sounds ridiculous until one realizes that not only is it a life-saving treatment, but is one that can replace comparable costs for multiple years among patients suffering ALL. How the insurer community will grapple with this dilemma is still playing out.

CGT pipeline

Most new drugs, especially small-molecule ones, generally apply to diseases with thousands or even millions of sufferers. But another hallmark of CGTs is that they have been targeted for relatively uncommon diseases, many of which meet the criteria of FDA’s rare-disease and orphan-drug programs. (Kymriah, for example, was initially targeted only for children and young adults who failed first-line ALL therapy; in 2018, its indication was expanded to include adults with diffuse large B-cell lymphoma (DLBCL) or high grade B-cell lymphoma—a considerably wider patient base. DLBCL is also the target of Yescarta.) Rare-disease therapies have a more streamlined route to approval, and benefit from a variety of financial incentives.

The chance to develop a rare disease treatment via CGT has enabled a large number of researchers at medical centers to investigate therapies, in addition to startup biopharma companies. (One could also add in the wide variety of stem cell treatments—most of which are not being regulated by FDA, nor reimbursed by insurers, leading to something of a Wild West of stem cell businesses.) ARM, in a Q3 2018 industry status report, counts 892 companies worldwide, engaged in 1,0003 trials. There is a closer-than-typical linking between academic research centers and drug manufacturers (Kymriah represents a collaboration between Novartis and the Children’s Hospital of Pennsylvania, at the University of Pennsylvania, for example.) ARM also found that some $10 billion in private capital has been invested in the field.

At this time, there are three CAR-T-based FDA-approved treatments: Kymriah and Yescarta, and an ocular treatment, Luxterna, by Spark Therapeutics, that was approved in late 2017. Between six and 12 additional approvals are expected by 2020. According to ARM, there are 93 cellular, genetic and tissue therapies in Phase III status currently—giving the impression that a tidal wave of therapies are about to cascade into the healthcare arena.

Rocky road

CAR-T therapies are truly new and revolutionary treatments, with the promise of curative effects, but the path to commercialization for CGTs has been anything but smooth. The pattern was set by an equally promising drug in the early 2010s: Provenge (sipuleucel-T), brought to the market by Dendreon in 2010 for a refractory type of prostate cancer. (Prostate cancer is one of the more common forms of cancer in men, although for many, treatment is unnecessary or unwarranted). Anticipation of Provenge’s approval was so intense in the late 2000s that there were street protests at FDA over delays in reviewing the drug. However, unanticipated problems in reimbursement, combined with the difficulty of setting up the autologous therapy process (where cells are harvested from a patient, manipulated at a central facility, then returned to the patient for infusion) torpedoed the company, which declared bankruptcy in 2014. (Having gone through three financial realignments since then, though, enables Dendreon to continue to offer its therapy.)

Similar experiences have been seen in Europe where other gene therapies have been approved. A company called Uniqure, with a gene therapy branded as Glybera, was approved in 2012 and offered for a price around $1 million for treating an “ultra rare” condition known as hereditary lipoprotein lipase deficiency (LPLD). In 2017, having treated one patient, the company withdrew the product from the market. GSK won approval of Strimvelis , for a rare condition that goes by the acronym ADA-SCID (an immunodeficiency) in 2016. According to press reports, only five patients had been treated until early 2018, when GSK sold the franchise (along with rights to several other gene therapies) to a small startup, Orchard Therapeutics, while retaining part ownership of the firm. “Our goal has been to identify the right owner who can build on what we’ve already achieved, and can advance these important medicines for patients, allowing GSK to focus on building its broader cell and gene therapy platform capabilities,” said John Lepore, SVP, R&D for GSK, at the time of the transaction.

In Strimvelis’ case, one complication of the therapy was that it could only be administered at a clinic in Italy (where the original research had been conducted, and where a manufacturing process had been worked out). Patients needed to travel to the site for treatment because the autologous cells could not be safely transported and retain efficacy. This, in turn, created a complication that patients from other countries in the EU would need to clear reimbursement with the health authority of their home country.

Orchard now has multiple applications for rare disease status with FDA, but only plans to apply for commercial approvals in 2020 and beyond. In December, it announced plans to build a manufacturing facility in Fremont, CA.

The somewhat disappointing experience of Provenge, Glybera and Strimvelis share a number of common obstacles to commercialization:

  • The difficulty of working out reimbursement mechanisms for therapies that can blow out the annual budgets of payers. This is paired with the reality that so far, CGTs have been developed easiest for rare or ultra-rare diseases, which in turn limits the scale of the potential market for them.
  • The logistics of siting patient, health center and manufacturer in proximity, to avoid distribution challenges.
  • The relative complexity of administering the treatment, usually requiring a hospital stay. (Both Kymriah and Yescarta were approved with an FDA-mandated Risk Evaluation and Mitigation Strategies, or REMS, requirement, which calls for extensive followup with patients.)

Allogeneics offer a straighter pathway

All of the aforementioned therapies (including Provenge, which is not a genetic therapy) depend on autologous cells, derived from the patients themselves, and reinfused in them. While autologous therapies inherently avoid graft-versus-host compatibility issues, they require a precise (and fast) extraction and return of the altered cells to the patient. It is possible to store some of the patients’ cells (such as for a repeat dosage), but the manufacturing steps are one-and-done for each patient; there’s no going back short of starting the process over if the cellular modification fails. The alternative to autologous therapy is allogeneic—using cells that have been processed to remove “foreignness” as well as to provide the needed therapy.

Allogeneic therapies have been under development in parallel with autologous ones. After Kite Pharma was acquired by Gilead, its founders (no longer with the company) took command of the newly formed Allogene Therapeutics; in less than a year the company has gone public, and has both pre-clinical and Phase I studies going on (boosted by partnership with another biopharma company, Servier). It has also formed a partnership with Pfizer, picking up rights to some of that company’s CAR-T technology.

“While there is important work underway across the industry for next-generation autologous cell therapy, Allogene hopes to bring about the next revolution in the field with the successful development of allogeneic cell therapy and the potential for greater and faster patient access,” said Arie Belldegrun, Allogene chairman, at the time of the Pfizer announcement.

Another allogeneic CAR-T developer, Atara Biotherapeutics, has multiple Phase III trials for Tab-Cel (tabelecleucel), a treatment for a condition related to Epstein-Barr virus cancers. Derrell Porter, global commercial head, notes that the advantages of allogeneic therapies like Atara’s are that the cells can be available in days (versus a couple weeks for autologous); that there is little or no patient pretreatment necessary; and that patients need to be monitored only for a couple hours after infusion. Autologous therapies (at least the ones approved so far) have a significant risk of a condition called cytokine release syndrome, (CRS), which has been characterized as a “hyperactive immune response” that can cause fevers, heartbeat irregularities and other effects—and can be fatal. Clinics that infuse autologous CAR-T therapies are required to have another drug, Actemra (tocilizumab), on hand to counter CRS if it appears. (Actemra was approved for this indication simultaneously with the approval of Kymriah.)

“Autologous therapies can require hospitalization when administered; our allogeneic therapy can be administered on an outpatient basis,” says Porter. Even so, for Atara’s technology, there is a need to match the patient with one of a variety of “cell lines” of the allogeneic cells, based on the type of human leukocyte antigen (HLA) present in the patient.

Societal cost

Gilead, Allogene, Atara and the others are just a few of the hundreds of companies pursuing CGTs, as noted in the Assn. of Regenerative Medicine report. The payer and provider network is scrambling to prepare for this new generation of medical care.

ARM, in conjunction with the market research firm IQVIA, sponsored a study earlier this year, the Economic Impact Landscape Analysis of Regenerative Medicine Advanced Therapy, to get a handle on the approaches that could be taken in delivering care to patients. ARM, through its research foundation, has organized a working group to carry this process forward. The initial report identified a dozen factors that will help assess the impact on payers:

1. Population size

2. Lifetime horizon

3. Patient indirect costs

4. Patient non-medical costs

5. Caregiver indirect costs

6. Caregiver non-medical costs

7. Age of onset

8. Additional value for curative nature

9. Real world evidence

10. Innovative payment models/contracting

11. Societal economic impact

12. Patient-centered endpoints.

Woven into this framework is the status of “QALYS”—the quality-adjusted life year. QALYS provides a benchmark for putting a price (or cost) on the value of a healthy, disease-free patient, over a period of years or a lifetime. This, in turn, enables at least an approach to some of the innovative payment models that are being proposed for the very expensive CAR-T therapies available today: in essence, how much is a cure worth, depending on the disease state?

With some payers, Novartis has already agreed that there will be no payment for the therapy if a complete response is not experienced by the patient within 30 days. At Atara, Porter says that “the pre- and post-administration costs of Tab-Cel are minimal compared to autologous therapies,” but can’t yet put a dollar figure on what the therapy will be priced at when commercialized.

In a November 2018 article in the J. of Clinical Oncology, [1] researchers at Stanford calculated that the $475,000 cost of Kymriah was economically sound provided that there was an assumption of a 40% relapse-free survival rate at five years; the underlying QALYS is $100,000 per year, and Kymriah at the assumed survival rate came well under that. “The long-term effectiveness of tisagenlecleucel is a critical but uncertain determinant of its cost effectiveness,” said the authors. “At its current price, tisagenlecleucel represents reasonable value if it can keep a substantial fraction of patients in remission.”

This points to an uncertain risk that patients, providers and manufacturers are taking—no one knows, at this point, what the long-term benefit of the therapy will be. J. of Clinical Oncology editors, in an accompanying editorial, stressed this uncertainty, adding that the “The money-back guarantee has set a performance threshold so low that it will do little to enhance value for those who actually pay for the product.” (In this context, “low” means only 30 days rather than many years.) But this is a harsh perspective when the chance of a patient’s years of disease-free life is recognized. A similar debate followed the introduction of Gilead’s Sovaldi (sofosbuvir) in 2015; what followed were competing therapies, lowered drug prices, and a maintenance (so far) of high cure rates.

Speaking generally of CGTs, Porter says that the various alternative reimbursement mechanisms will take hold in the industry. “I do expect these to be a standard approach in coming years, We’re tryng to be responsive to current challenges in ensuring patients can get treatment.” For Atara specifically, he says that “one of the things we’ve discussed is cell line switching,” i.e., using a different pairing of HLA cell line with patient, if the first cell line chosen delivers a sub-optimal result. “That’s one possibility of an outcomes-like approach that we are evaluating.”

Money-back guarantees or cell line switching are novelties that generally don’t fit with conventional Medicare or Medicaid reimbursement practices; in light of this, CMS recently moved CAR-T therapies into a renamed “Medicare Severity–Diagnosis Related Groups (MS-DRG) 016 – Autologous Bone Marrow Transplant with CC/MCC or T-cell Immunotherapy,” and upped the reimbursement rate it allows.

The logistics challenge

Even if CAR-T therapies like Kymriah or Yescarta continue to demonstrate high levels of efficacy, these companies and all that are following the CGT pathway have to contend with a radially different way of commercializing their products. CGTs are not an example of obtaining chemicals or biomolecules and then transforming them into therapies, but are almost akin to a medical procedure. Logistics was one of the hurdles Provenge had to overcome early in its introduction; the company developed its own software system, called Intellivenge, to track the cells going from the patient, to its regional processing centers, and then back. Logistics also hampered UniQure and GSK with their early innovations.

For this reason, the drug companies have set up networks of providers (i.e., oncology centers); Gilead has nearly 70 locations in its network in the US. FDA is watching this aspect of the commercialization closely: both Kymriah and Yescarta were approved with REMS (Risk Evaluation and Mitigation Strategies) requirements, which compel the manufacturers to track results from the commercial operations and report them back to FDA.

Two IT companies, TrakCel and Vineti, have risen up in the past several years to provide an “orchestration” program to manage the data and physical operations of CGT commercialization. (The programs are also used in pre-commercial clinical trials.) The programs are designed not only to track the physical movement of the cellular materials, but even the in-plant processing, and beyond that, the clinical results that can be reported to payers. “The companies developing CGTs don’t have time to also develop these supply-chain-management IT systems,” comments Amy DuRoss, Vineti CEO, while noting that existing software solutions “lack patient-specific traceability.” Besides working with a number of CGT developers, the company is also involved in the Catapult project, a comprehensive program sponsored by the UK government to enhance the country’s advanced-therapy initiatives.


1. Cost Effectiveness of Chimeric Antigen Receptor T-Cell Therapy in Relapsed or Refractory Pediatric B-Cell Acute Lymphoblastic Leukemia, accessed at: DOI: 10.1200/JCO.2018.79.0642 Journal of Clinical Oncology 36, no. 32 (November 2018) 3192-3202.