Nermina Ferizovic | Health Economics Expert

For the next blog post in the series where I review papers published as part of the “Economics of Gene and Cell Therapies” in PharmacoEconomics, I will review: Innovative Contracting for Gene Therapies: Current Landscape and Perspectives on the Future of Gene Therapy Financing in the USA. The paper can be found at the following link: https://link.springer.com/article/10.1007/s40273-025-01563-3. 

The authors aimed to assess the landscape of innovative contracts (ICs) between payers and manufacturers for gene therapies and identify barriers and opportunities for future contract development and implementation in the United States. The authors used a mixed-methods approach to understand how innovative contracts – defined by the authors as “those that use real-world outcomes to determine the total price paid for gene therapies” – are designed and used as well as their advantages and drawbacks. Their evolution over time and best practises of ICs were also explored. The study employed a literature review followed by interviews with stakeholders (payers, manufacturers, insurance companies, providers, academics, contracting specialist and pharmacists). 

Based on literature review, the majority of gene therapies were found to be subject to ICs; 50% of these were upfront payments associated with milestone-based rebates, 12.5% were performance-based instalments, and 6.25% was an upfront payment with a rebate over a 5-year period. No detail was provided on the remaining 31.25%. The authors note that there is no consistent definition for these three types of ICs and refer to a previously published white paper which provides definitions for these three ICs. 

The authors discussed these ICs with the stakeholders with these interviews highlighting the drawbacks of these three approaches as given in the below table. 

Innovative Contracting Method	Drawbacks
Upfront payment with milestone-based rebates: payer pays upfront and receives rebates if milestones are met	Different definitions of gene therapy failure among stakeholders Model incentivises failure (i.e., poor patient outcomes) Data collection is burdensome Payers prefer lower prices rather than this type of IC
Upfront payment with warranties: payer pays upfront and receives compensation or an alternative treatment at no cost	Warranties add security and allow for standardised contracts Payers may interpret this contracting method as a manufacturer’s lack of confidence in their treatment
Performance-based instalment payments: instalment-based payment model where instalments are only paid if performance milestones are met	Complex data collection Incompatibility with some insurance models

Subsequently, the paper discusses two additional ICs which were not identified in the literature: the holdback approach and service-based agreements. The former involves paying only when the outcomes are confirmed; the latter involves agreeing a service delivery model with a rebate paid by the manufacturer in exchange for the healthcare system offering a complementary service (e.g., testing for relevant mutations). Overall, the study notes that payers prefer ICs which align with their own accounting and billing practises with a preference for real-world data to supplement trial data. The study further identifies that around 27% of payers have worked with a third party to plan and administer ICs and prefer to do so. However, providers do not like to be involved in ICs. 

The authors describe key barriers to ICs such as the complexity associated with these agreements such as data collection needs and aligning on most appropriate outcomes, lack of incentives for stakeholders to participate in ICs and the impact of patients changing health plans. However, ICs may be employed to improve equity of healthcare. Finally, the authors touch upon the possible evolution of ICs. Based on discussions with stakeholders, they postulate that flexible and risk pooling methods may be needed given the expected increase in gene therapies over the coming years. 

Overall, I found this paper very informative and a good contribution to the literature on ICs and despite the study being focussed on the United States, the findings are transferable to other countries. Key findings which could assist other jurisdictions to develop and evolve their ICs include:

• The use of third-party providers to support the design, implementation and assessment of ICs. A key finding of the study is that stakeholders consider ICs to be resource intensive and burdensome to implement. The use of an objective third-party to agree on outcomes to use to assess the real-world effectiveness of treatments may reduce length of time required to agree ICs. The third-party could also play a pivotal role in data collection and analysis, as exemplified in the study, which could reduce the burden of ICs on the key stakeholders. However, it is unclear who this third-party should be and what their remit should be. What is clear from this study is that it is unlikely to be healthcare providers due to the added strain ICs place on them.
• There may be misalignment on outcomes to use to assess treatment effectiveness between regulatory bodies and payers which is a barrier to payer use of ICs as the outcome measures used by regulatory bodies may not be reflective of real-world effectiveness. A possible solution to this would be the evolution of ICs to focus primarily on the assessment of real-world value and the pricing implications of this or the inclusion of multiple outcomes in ICs; the latter is likely to increase the burden of ICs meaning that the former option is more feasible.     
• ICs can play a role in ensuring health equity through inclusion of access agreements which would support patient access to treatments. This would also have the knock-on effect of providing additional data on effectiveness in populations that may have been excluded from trials due to logistic challenges.

Based on this study and its findings, there are a few key areas for further research. Firstly, there is a lack of guidance as to which type of IC should be implemented in a specific setting and situation. Industry-wide guidance could prove helpful for stakeholders and support development of best practise. This includes ICs which may be targeted towards conditions with limited patient numbers. However, a consistent industry-wide definition for different types of ICs should be agreed first; this paper provides a good starting point for this. Although, there may be jurisdictional differences in terms of feasible ICs with some only applicable to publicly funded healthcare systems.  

Secondly, the involvement of patients in the development and implementation of ICs may lead to patient-relevant outcomes being included within ICs and thereby enabling the collection of data which can capture the patient experience in a real-world setting. Patient group involvement in ICs should be explored further but it is important that ICs remain objective otherwise they may veer off course. An identified challenge of ICs is the misalignment between stakeholders including manufacturers and payers; the involvement of patient groups may reinforce the ultimate purpose of ICs: patient access to innovative medicines. 

In summary, this paper provides good insights into different types of ICs which are transferable to other jurisdictions. The identified key areas for development will support the evolution and expansion of ICs.