Consultant warns gene therapies, orphan drugs will drive drug spending; outlines value-based and legislative options
August 11, 2022 | San Francisco City, San Francisco County, California
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Omaz (Almaz) DeWitt, vice president of pharmacy services with Aon, gave a detailed briefing on genetic therapies and specialty drug market trends and described options for controlling escalating pharmacy costs.
DeWitt said FDA approvals in 2022 include many high-cost agents and that a meaningful share of the pipeline targets rare diseases and orphan indications. “There are of course new drugs that enter the market... 7 out of those 16 drugs are for rare diseases,” DeWitt said, noting that rare-disease drugs often cost at least $1,000 per month and can accumulate to more than $100,000 per member.
She described gene therapies as sometimes costed as one-time curative treatments and cited examples in the transcript with six-figure and seven-figure price tags. “We just got recent approvals for a couple of drugs... that is about 2,120,000.00 cost for a 1 time treatment,” DeWitt said, adding that other approvals have been priced in the high six figures.
DeWitt discussed mitigation strategies that payers and PBMs can consider: value-based contracting that ties payment to outcomes; carving orphan/high-cost drugs into specialized tiers; installment-payment arrangements for one-time therapies; and pooled per-member-per-month (PMPM) programs to share catastrophic risk across purchasers. She also highlighted biosimilars as a source of competition and potential relief for some biologic costs.
She summarized relevant federal activity including a recently passed Senate prescription-drug provision referenced in her slides and provisions in consolidated appropriations that would allow Medicare to begin selecting drugs for direct negotiation starting in 2026. DeWitt cautioned that many proposals remain under legal and actuarial review and may not immediately affect private payers.
During the Q&A, commissioners pressed on how to measure value (cost per life-year or quality-adjusted life-year), on the effect of advertising and manufacturer assistance programs, and on the timing of biosimilar entry; DeWitt said value-based contracting offers promise but U.S. regulatory and payment structures lag some international approaches.
Next steps: Board members requested updates as FDA approvals, biosimilar availability and federal negotiations evolve; staff and consultants will monitor legislative developments and potential contracting pilots.
DeWitt said FDA approvals in 2022 include many high-cost agents and that a meaningful share of the pipeline targets rare diseases and orphan indications. “There are of course new drugs that enter the market... 7 out of those 16 drugs are for rare diseases,” DeWitt said, noting that rare-disease drugs often cost at least $1,000 per month and can accumulate to more than $100,000 per member.
She described gene therapies as sometimes costed as one-time curative treatments and cited examples in the transcript with six-figure and seven-figure price tags. “We just got recent approvals for a couple of drugs... that is about 2,120,000.00 cost for a 1 time treatment,” DeWitt said, adding that other approvals have been priced in the high six figures.
DeWitt discussed mitigation strategies that payers and PBMs can consider: value-based contracting that ties payment to outcomes; carving orphan/high-cost drugs into specialized tiers; installment-payment arrangements for one-time therapies; and pooled per-member-per-month (PMPM) programs to share catastrophic risk across purchasers. She also highlighted biosimilars as a source of competition and potential relief for some biologic costs.
She summarized relevant federal activity including a recently passed Senate prescription-drug provision referenced in her slides and provisions in consolidated appropriations that would allow Medicare to begin selecting drugs for direct negotiation starting in 2026. DeWitt cautioned that many proposals remain under legal and actuarial review and may not immediately affect private payers.
During the Q&A, commissioners pressed on how to measure value (cost per life-year or quality-adjusted life-year), on the effect of advertising and manufacturer assistance programs, and on the timing of biosimilar entry; DeWitt said value-based contracting offers promise but U.S. regulatory and payment structures lag some international approaches.
Next steps: Board members requested updates as FDA approvals, biosimilar availability and federal negotiations evolve; staff and consultants will monitor legislative developments and potential contracting pilots.
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