Sep 6, 2019

Insurers want a new model to pay for expensive drugs

Illustration of hundred dollar bills being shredded through a prescription bottle

Illustration: Sarah Grillo/Axios

Insurers are trying to figure out ways to help employers afford to cover gene therapies, which can carry price tags in the millions, WSJ reports.

Driving the news: Cigna announced yesterday that it's starting a new program in which employers and insurers will pay monthly for a service that covers gene therapies and review who can get the drugs, which can be dispensed through Cigna's specialty pharmacy.

And CVS, which owns Aetna, said it's going to offer new coverage specifically for gene therapies. Anthem said it's also looking at ways to help employers protect themselves from the cost.

Why it matters: The gene therapy pipeline is robust, and sales are expected to skyrocket in the next few years.

  • Some experts say gene therapies are already too expensive. Insurers want to tie their payments to outcomes, and Cigna hopes to enroll enough patients in the new program to secure better deals.

What they're saying: "Hard to know if the thesis of getting more lives will turn into getting bigger discounts where there is no competition. It clearly has not borne out for those other expensive specialty drugs that lack competition," Memorial Sloan-Kettering Cancer Center's Peter Bach told me.

Yes, but: Many companies already have stop-loss insurance, meaning these additional services could come across as redundant.

  • The 3 insurers included in the Journal's report also operate their own pharmacy benefit managers and specialty pharmacies.
  • Specialty pharmacies owned by the same companies that manage drug benefits have a financial incentive to handle expensive drugs — at a cost to everyone else.

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