How To Pay For CAR-T? Reimbursement Insights For Cell & Gene Therapy Developers

Kuo Tong, Sneha Peck, Rinki Kapoor, and Angelo Encarnacion, Cell & Gene

While recent scientific breakthroughs for regenerative cell therapies are bringing great hope to patients and providers in desperate need of treatments and cures, they have created a major question mark for the healthcare system at large. How do you determine payment for something of enormously high value that has literally never existed before? 

In 2017, the Food and Drug Administration approved the first of its kind — CAR-T regenerative cell therapy, in which a cancer patient’s own immune cells are taken and altered in the laboratory to bind with and kill the patient’s own cancerous cells — and payers are in the unenviable position of having to play catch-up. With a long list of long-awaited regenerative cell therapies in the final stages to be submitted for approval, many in the industry were looking for the introduction of CAR-T to get the systemwide reimbursement strategy and plan situated. Unfortunately, the largest payer in the United States, the Centers for Medicare and Medicaid Services (CMS), has yet to determine a holistic reimbursement approach. For other payers in the United States, it’s been hit or miss as well.

In other words, currently no comprehensive reimbursement model adequately pays for CAR-T therapies across all payers and settings of care. As a result, issues with reimbursement remain one of the major barriers to CAR-T adoption by healthcare providers, and this could likely pose a similar threat to other novel, regenerative cell therapies soon to be launched.

Regenerative Cell Therapies Create Unparalleled Category

Currently available CAR-T therapies, such as Yescarta and Kymriah, received breakthrough designation and accelerated approval on Phase 2 pivotal trials, which meant clinical development and regulatory approval outpaced optimal market access conditions. (Note: Future CAR-T therapies might not be able to go through this accelerated path.) However, in any case, the market was at least in part unprepared for this unparalleled treatment category, because the makers of CAR-T and other regenerative cell therapies did not proactively consider or work with payers on reimbursement strategies during early development stages.

For background to help illustrate the quandary, CAR-T treatment can be delivered in an outpatient setting, such as an infusion center. Traditionally, outpatient drugs and biologicals receive new codes and fee schedule amounts fairly quickly, with few administrative hassles. Payments are typically slightly higher than average selling prices (ASPs), which allows hospitals to budget, plan, and bill accordingly.

Due to the potential for adverse events associated with CAR-T, however, patients may experience major toxicities or require ICU admission up to 50% of the time. On average, patients spend 14 days in the hospital post-infusion. Based on the current reimbursement model, this outpatient care, coupled with hospitalization within 72 hours, becomes a bundled payment for inpatient reimbursement that is paid under a Medicare Severity Diagnosis Related Group (MS-DRG). However, payments bundled under existing MS-DRGs are insufficient to cover the average cost per patient on CAR-T, since the therapy and associated costs have never been experienced to date.

CMS officials, medical specialty societies, and hospital providers and administrators alike recognize that current MS-DRG rates are grossly inadequate and do not account for the costs of delivering such high-value, breakthrough therapies, leading to a detrimental effect on patient access.

To be fair, CMS has considered several potential solutions for improving the reimbursement environment for high-value regenerative medicines. And professional societies, such as the American Society for Blood and Marrow Transplantation (ASBMT), have offered innovative ideas to CMS, urging the agency to consider the unique nature of this new class of therapies and the negative financial impact that hospitals are likely to face within the current inpatient payment system.

These recommendations included implementing an immediate form of financial relief to hospitals by establishing separate payment for CAR-T products, similar to Transitional Pass-Through (TPT) payments, employed by CMS for products used in an outpatient setting. Here, eligible drugs and biologicals would receive separate application service provider (ASP)-based payment for CAR-T products, in addition to the usual inpatient hospital service payment for treatment.

In addition, the society requested that CMS create a new MS-DRG for CAR-T therapies, so the reimbursement rates for providing these services will adequately cover provider and facility costs.

Read How to Pay for CAR-T?

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