Gene therapy, a revolutionary approach to treating disease by modifying a person's genes, is one of the most transformative developments in
Though the number of people in the U.S. who have received gene therapy is still relatively small,
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What is gene therapy?
Gene therapy aims to treat genetic disorders and diseases by fixing or replacing faulty genes. Patients typically need a one-time dose of a carrier (such as a viral vector, stem cells or liposomes) with the healthy gene to treat or cure the illness. Gene therapy can prevent a condition from worsening and is often lifesaving for patients faced with severe disability or early death.
Gene therapy has been shown to effectively treat conditions like hemophilia, spinal muscular atrophy, certain types of cancer and certain types of blindness and deafness, among others. It is often performed to prevent the development of future health problems or as a last resort when other treatments have failed.
In 2023, the U.S. market for gene therapy was valued at about $3 billion and is expected to grow to an estimated $18.5 billion by 2034 as new therapies are introduced and approved. As of March 2024, there were
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Covering gene therapy
A novel frontline treatment, gene therapy is extremely expensive, with wholesale prices of millions of dollars per dose. But as a curative treatment, it can often eliminate the long-term costs associated with ongoing care, not to mention radically improve the patient's quality of life. Because gene therapy is typically recommended for rare medical conditions, costs are not spread evenly across the member population. Therefore, plan sponsors should determine now how to best handle future high-cost claims.
As many new therapies are likely to be approved in the future, plans should have processes in place for determining how and whether to cover them. Plans may also be able to add caps for certain treatments.
However health plan sponsors may choose to cover gene therapy, the health plan should be amended with specific language (e.g. only FDA-approved therapies) to avoid any ambiguity about coverage. Health plans should include explicit language about how and under what specific circumstances gene therapy is covered to help avoid misunderstandings associated with these treatments.
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Cost containment options
Since gene therapy is a relatively new treatment, cost containment opportunities are few. However, there are effective options for health plans to minimize the financial risks associated with covering such treatments.
In case of catastrophic claims, stop loss insurance provides reimbursement for claims that exceed a certain amount. Two types of stop-loss coverage offer protection against high-dollar claims: specific and aggregate. Specific stop-loss (or individual stop-loss) protects against a high-dollar claim for any one individual, rather than against an abnormal frequency of claims in general. Aggregate stop-loss provides a ceiling on the total amount that a plan sponsor could pay for eligible claims during a contract period. The insurance carrier reimburses the plan sponsor after the end of the contract period for aggregate claims that exceed a certain amount.
Case management can support direction of care and ensure that members access quality, outcomes-based providers. In addition, case managers might only approve gene therapy if it's covered by the health plan, meets standard of care and is lifesaving.
Next steps
Considering the potential benefits of gene therapy for members, along with the treatment's significant costs, plan sponsors should have a proactive plan in place. Health plans can get started by reviewing and possibly amending their current plan language and developing custom strategies that utilize case management and stop-loss coverage to manage costs without sacrificing quality of care.
