International Reference Pricing for Cell and Gene Therapies

In recent years, the US government has had a number of proposals which aim to lower drug prices by linking US drug prices to the prices in other developed countries. This process is known as international reference pricing (IRP). A paper by Sullivan et al. (2022) explains:

Federal legislative proposals to address global pricing differences and affordability, including US Senate Bill S.25432; US House of Representatives Bill HR 33; and, more recently, the Prescription Drug Price Relief Act of 2021,4 have advanced some form of international reference pricing (IRP) to reduce drug prices. IRP seeks to benchmark US drug prices to the prices of comparable drugs in other counties. Some proposals would have the US federal government develop a reference price index based on prices paid by a select group of high-income countries and then restrict prices by negotiating to a narrow range of the index

One key question is how would international reference pricing impact cell and gene therapies (CGT), such as CAR T therapies.

Beyond price, these treatments have certain characteristics in common that generate unique challenges for market and patient access. These challenges include single-arm or “basket” trials with small patient samples, short follow-up duration, uncertainty regarding durability of benefit, and little information on clinical risks. Despite these challenges, widespread market access for these therapies exists in the United States, and the nonprofit Institute for Clinical and Economic Review has delivered favorable assessments for a number of these treatments

Even if IRP was implemented however, IRP programs differ across a number dimensions including:

Number/type of countries referenced Method of calculating prices (eg, minimum, median, mean, or a weighted index of referenced countries); How the prices are obtained (eg, from pharmaceutical manufacturer or external sources); Type of price used (e.g., factory, wholesale, or retail) with or without rebatesProcedures used when prices are unavailable for some referenced countries; Types of products to which IRP is applied (eg, on-patent, reimbursed, or all products); Frequency of price revisions

One well-known challenge is that reference pricing can lead pharmaceutical manufacturers to delay launching their products in lower-price, but highly referenced countries.

For example, companies may control the launch sequence of pharmaceuticals, entering first into higher-priced markets, which serve as the first-reference comparators for other countries. However, this may lead to significant launch delays, impeding patient access in lower-income countries. Companies may choose to delay or not launch new medicines in certain heavily referenced, lower-priced markets

Although many cell and gene therapies are cost-effective, they do pose challenges to both public and private payers around the world.

In the fragmented US health care system, in which patients will likely change insurers (private and/or public) several times over their lifetimes, greater upfront expenses for a curative treatment will not be fully covered by subsequent insurers who benefit from the innovation and avoid further costs while the patient is in their plan. Even in countries with single-payer systems, which also typically operate on an annual budget cycle, there may be reluctance to provide coverage for newer, expensive treatments that have not been accounted for in their annual budgeting efforts.

The Sullivan et al. (2022) provides a nice overview of the potential IRP legislation, practical challenges and implications for cell and gene therapies.