Value-Based Pricing for Emerging Gene Therapies: The Economic Case for a Higher Cost-Effectiveness Threshold

Area of Science:

• Health economics
• Pharmacoeconomics
• Gene therapy value assessment

Background:

• One-time gene replacement therapies offer transformative potential for ultrarare, health-catastrophic diseases.
• Current U.S. healthcare systems face reimbursement challenges with single-administration gene therapies.
• There is no established consensus on valuing gene therapy innovation.

Purpose of the Study:

• To characterize challenges in traditional value assessment for one-time gene replacement therapies.
• To provide a health economic rationale for a higher value-based cost-effectiveness threshold (CET).
• To explore broader value concepts beyond quality-adjusted life-year (QALY) gains.

Main Methods:

• Review of existing cost-effectiveness threshold (CET) benchmarks.
• Discussion of health technology assessment (HTA) decision-making practices.
• Exploration of expanded value assessment frameworks, including insurance value, disease severity, real option value, value of hope, and equity.

Main Results:

• Ultrarare, health-catastrophic conditions warrant a higher CET, with benchmarks ranging up to $500K/QALY (US) and £300,000/QALY (UK).
• Broader value concepts beyond QALYs are crucial for accurately assessing gene therapy value.
• A higher CET is economically logical to support higher value-based pricing for gene therapies.

Conclusions:

• A higher, value-based CET is necessary to incentivize development and investment in gene therapies for rare diseases.
• Consensus on rewarding gene therapy value is imperative for diseases like spinal muscular atrophy (SMA).
• Failure to establish appropriate reward mechanisms will hinder future innovation in gene therapy.