Who will pay for CRISPR?

The ruckus over the CRISPR gene-editing system hides a dark reality: its high cost may make it unaffordable and questions remain whether most insurance companies will pay for it.

As CRISPR begins to move forward in clinical trials, there are some signals about how it may — or may not — be received commercially. Other types of gene therapies carry a price tag that is likely to induce sticker shock. If adopted, these therapies will add striking new cost burdens to our health care system.

“The cost isn’t coming down,” said Mark Trusheim, director of the Massachusetts Institute of Technology’s NEW Drug Development Paradigms, a think tank working on the problem of how we will pay for expensive new drugs. “Companies will say, ‘We are developing these medicines, just pay us’; insurers will say, ‘We can’t afford it.'”

A few years ago, Dutch drug company uniQure set up a plant in Lexington, Mass., to make a gene therapy called Glybera, at the time the most expensive drug in the world. It used viruses to slip copies of a gene into human cells to restore an enzyme needed to break down fats. The cost? $1.4 million per patient. The company eventually abandoned its bid to bring Glybera to the U.S. and, after having sold it just once in Germany, recently withdrew it from European markets, rendering it a commercial failure.

Spark Therapeutics of Philadelphia is vying to bring the first gene therapy to market in the U.S. to treat a rare genetic eye disease called Leber congenital amaurosis 2. Analysts said it could cost a half-million dollars per eye. Like Glybera, Spark’s treatment is a form of traditional gene therapy, which makes use of viruses to get bits of restorative code into our cells.

CRISPR will allow us to alter our existing genes. But it often relies on using viruses to shuttle the molecular gene-editing systems into our cells, and can be as expensive as other gene therapies.

Editas Medicine plans to use CRISPR-Cas9 to treat various diseases, including Leber congenital amaurosis. “Enthusiasm is great for interventions in the eye,” New York University bioethicist Arthur Caplan told me. “They permit trying one eye at a time and it is easy to tell if anything positive happens. Safety is much easier to ensure.” But in its annual report, Editas noted “significant uncertainty” on whether payers would cover the treatment. In fact, a handful of insurance companies (VantageBlue from Blue Cross Blue Shield of Rhode Island, Select Health, and VIVA Health) have issued policy documents that exclude gene therapy from coverage, a move that experts say establishes policy against paying for CRISPR-based therapeutics.

The Institute for Clinical and Economic Review released a report in March stating there are 12 to 14 gene therapy candidates that are expected to be among the first for commercial approval. “With payer budgets already stretched, and reining in the costs high on the agenda, both public and private payers will likely balk at the cost of some of these gene-based treatments,” the American Journal of Managed Care wrote in a reflection on the report. “Europe has the lead in approved gene therapies, and the first such drug to be approved had a launch price of $1.4 million. Can the US health care system absorb the cumulative impact of such prices, considering that 10 percent of the population has a rare condition linked to a genetic defect?”

Five major gene therapy companies went public last year, suggesting that investors are ready to bet on the commercial prospects. Editas signed a deal with Juno Therapeutics that could be worth up to $737 million. The companies would combine CRISPR with other tactics to trick the immune system’s T cells to fight cancer. Those tactics could include disabling genes in T cells that prevent cancer cells from shutting down a T cell response, and adding bits of genetic code to engineer new receptors into T cells to let them attach to abnormal proteins in cancer cells called neoantigens.

Gene and cell therapies that run into the six figures and beyond are poised to heighten the cost of cancer treatments, which not everyone may be able to afford. In fact, oncologist Dr. Siddhartha Mukherjee, author of the bestselling “Emperor of All Maladies,” gave a speech this month at the annual American Society of Clinical Oncology meeting that warned about dividing the world “into the rich who can afford personalized cancer treatment and the poor who cannot.”

Tania Bubela, a law and policy expert, and Chris McCabe, a health economist, both at the University of Alberta, will be holding a workshop in late June in Banff, Canada, to explore how to enable access to high-priced technologies. According to Bubela, gene-editing systems such as CRISPR-Cas9 promise to heighten the tension around health care policy. One idea for easing the tension is for regulators to permit drug makers to get reimbursed from insurers before their gene therapy gets FDA approval, while requiring drug makers to collect more data before charging full price — a kind of price control.

“Companies will charge whatever the market will bear,” Bubela told me. “I’m not even sure that many of these gene therapies will work, and not all medicine is worth the price.” But if these technologies become broadly used, especially in altering T cells for cancer, payers won’t meet the demands of steep prices, and Bubela predicts that “the system implodes under its own weight.”

I believe that part of the problem lies in financial dealings. The Broad Institute, for instance, holds patents to gene editing tools such as CRISPR-Cas9 and CRISPR-Cpf1 and has issued exclusive licenses to Editas to use these tools for medical purposes. It could issue more-affordable CRISPR licenses one gene at a time, say directly to Juno Therapeutics, which now accesses them through its multimillion dollar deals with Editas. But that would cut Editas investors out of the loop. Such deals tend to inflate drug prices, since venture and public investors in Editas demand a cut on each CRISPR application. As investors engage in layers of transactional deals along the top of the food chain, the costs of gene therapies go up while the financiers may shift blame for a lack of patient coverage to insurance companies.

Dr. Stuart Orkin, a pediatric oncologist at Boston Children’s Center, and Dr. Philip Reilly, a partner at Third Rock Ventures, an Editas funder, coauthored a paper in Science magazine saying that sticker shock shouldn’t halt commercialization. It can cost $300,000 a year to treat a single hemophilia patient with existing standard treatments and $25,000 to treat a single sickle-cell patient. Given costs like those, one-time gene therapy treatments running into the six figures may be comparatively affordable if an insurer makes payments to a drug-maker over a decade that are tied to the drug’s continued performance. In fact, the idea of spreading payments over years as annuities originated with corporate-friendly FDA commissioner Scott Gottlieb in a 2014 paper he co-authored for the American Enterprise Institute.

Other performance-based models are being tested. GlaxoSmithKline, for example, is trying to bring a $665,000 gene therapy to the U.S. to treat an immune system disorder. The company said it will tie the cost of the drug to its performance in patients — with a money-back guarantee. “The reality is it’s very tough, and it doesn’t come easy,” said Jonathan Appleby, a chief scientific officer for the company’s rare disease unit.

Orkin and Reilly also like the idea of using U.S. government funds from the Orphan Drug Act, established in 1983, to pay gene therapy companies for their commercial products. Another idea for keeping gene therapy, including CRISPR-based therapies, affordable is that investors could ask insurance companies to buy in bulk. MIT’s Ernst Berndt, inspired in part by volume purchases of vaccines in Africa, has proposed “advanced market commitments” through which insurance groups commit to buying a bunch of expensive drugs. That model that could be applied to gene therapies, but the insurers may not go for it without a bit more give.

In 2009, the Biologics Price Competition and Innovation Act created a pathway for approving generic biologics, also known as biosimilars. It may apply to CRISPR-based biosimilars, but generic gene-editing — and thus competition to drive down prices — is unlikely to appear for decades. Cathryn Donaldson, a spokesperson for American’s Health Insurance Plans, noted that a lack of generic forms of CRISPR means “drug makers may charge whatever they want for their branded medication. “

In 1968, Garrett Hardin argued in his now-classic essay, “The Tragedy of the Commons,” that a shared-resource system will tend to be depleted by self-interested individuals. He also argued against exponential growth — to which we could add today the growth of biotech valuation.

Health care is a limited shared resource, and expensive new technologies could add pressures resulting in unequal access, especially to cancer therapies. Given the aggressive drive for money, and without new approaches in thinking, we are headed for disaster. One of two things will happen: either we will embrace a national health care system with broad access but that severely limits expensive new drugs, gene therapies, and CRISPR-based biologics; or these treatments will be available to only the wealthiest among us who can pay for them, a dystopian vision which is perverse but perhaps more realistic considering the pressures for a return on investment.

Writer Jim Kozubek is the author of “Modern Prometheus: Editing the Human Genome with Crispr-Cas9,” published by the Cambridge University Press.