bluebird's five-year pricing model for LentiGlobin could resonate with payers

A potential outcomes-based pricing scheme from bluebird bio Inc. (NASDAQ:BLUE) for its gene therapy could resonate with payers and proffer tentative solutions for navigating challenges around outcome tracking, patient portability and the Medicaid best price rule.

Under the model, presented Tuesday at the J.P. Morgan Healthcare Conference, payers would make up to five equal payments for LentiGlobin BB305 across five years, with 80% of the one-time gene therapy's cost depending on treatment success. LentiGlobin BB305 is under EMA review to treat transfusion-dependent β-thalassemia; bluebird expects U.S. regulatory submissions this year.

"We are willing to put a majority of the price of our therapies at risk," bluebird spokesperson Stephanie Fagan told BioCentury. "If the treatments do not perform over the long term, we will forgo payment."

While bluebird has not yet disclosed what it will charge for LentiGlobin, the company said the price will neither exceed the therapy's intrinsic value of $2.1 million nor increase above the consumer price index (CPI). bluebird calculated the intrinsic value based on patient quality of life and survival.

Harvard Pilgrim Health Care Inc. SVP and CMO Michael Sherman told BioCentury the payer has discussed the model with bluebird and completely supports what the company is trying to do. Sherman said the multiyear framework would resolve two issues with gene therapies: upfront budget impact and lack of long-term data, particularly true for indications with small patient populations. It further reduces worry on the payer's part about paying for a treatment that's not working, he added.

On the payer side, Sherman said payers would need to see a fair starting price for a therapy under approaches such as bluebird's, and would need to be able to reach agreement on metrics for defining treatment success. He named CAR T as another modality that could benefit from a similar approach.

Blue Cross Blue Shield Association, Anthem Inc. (NYSE:ANTM) and Cigna Corp. (NYSE:CI) did not respond to inquiries.

Obstacles do exist for implementing novel payment models. The current system isn't set up for one-time, potentially curative treatments, bluebird CEO Nick Leschly said in Tuesday's presentation, and LentiGlobin constitutes one of several one-time therapies based on new modalities poised to hit the market in the next few years (see "A Pathway to Biopharma 3.0" ; "Pricing Gene Therapies").

"There are significant systemic and logistical barriers to work out, including portability, but we are confident that we can co-create solutions," said Fagan.

bluebird suggested payers could use claims or registry data to track outcomes. It plans to use binary endpoints for its outcomes-based model, such as blood transfusions, which are easy to measure, report and capture in claims data, Fagan said.

Contract negotiations or a mutual recognition strategy could address patient portability issues, or scenarios where a patient switched insurers before the final payment.

bluebird listed innovative federal or state pilot programs or waivers as potential solutions for dealing with the Medicaid best price rule. Sherman believes clarification from CMS on how installment payment plans might not trigger Medicaid best pricing could come before LentiGlobin reaches the U.S. market. There have been signs from CMS that the rule may be due for a change to pave the way for new payment policies for gene therapies and other novel, expensive medicines (see "CMS's Verma Outlines New Drug Payment Options").

Under traditional pricing strategies, patients pay $1.5-$3 million over five years for treatments, bluebird said. It based those estimates on 2018 U.S. list prices for seven undisclosed chronic rare disease therapies; Fagan told BioCentury the analysis did not include gene therapies.

LentiGlobin comprises autologous CD34+ stem cells transduced ex vivo with a lentiviral vector delivering the human β globin gene.

Harvard Pilgrim and bluebird have separately participated in the Financing and Reimbursement of Cures in the U.S. (FocUS) consortium, which was launched by the Massachusetts Institute of Technology’s NEW Drug Development ParadIGmS (NEWDIGS) and is focused on developing and piloting new payment methods (see "Breaking Ground").

bluebird was up $0.03 to $113.67 on Tuesday.