Balancing Efficacy and Value for Cell and Gene Therapy Through Value-Based Pricing

The economics of novel cell and gene therapies present a growing challenge as these groundbreaking treatments gain traction in the health care landscape, explained Corey Cutler, MD, MPH, president of the American Society for Transplantation and Cellular Therapy (ASTCT), during a plenary session at the 2025 ASTCT and Center for International Blood and Marrow Transplant Research (CIBMTR) Tandem Meeting in Honolulu, Hawaii. The chimeric antigen receptor (CAR) T-cell therapy market is projected to reach $108 billion globally by 2033, with the US accounting for a substantial portion of this growth.

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“We all know that the global CAR T market is growing exponentially,” Cutler said during the ASTCT and CIBMTR Tandem Meeting. “Some estimates claim that the total value of the market will be as high as $108 billion globally by 2033, with an overall compound annual growth rate of approximately 25%. The US CAR T market will account for about $25 billion, or about a quarter of the globe’s consumption of CAR T therapeutics.”

These therapies not only come with exceptionally high development and manufacturing costs but are also often used to treat a small number of patients, Cutler explained. Yet funding these treatments remains critical, particularly for conditions such as sickle cell disease.

“The 2 gene therapies that are approved in the hematology space have acquisition costs in the $2 million to $3 million range, and nearly two-thirds of the 100,000 or so US [patients with] sickle cell…are relying on Medicaid at this time for payment, placing a significant challenge on both the states and the federal government,” Cutler said. “Without real long-term outcome data, today’s payers are being asked to pay today for the value that novel cell and gene therapy products hope to deliver in the future.”

The lack of long-term outcome data complicates payment models further, prompting discussions around innovative financing solutions, such as outcome-based rebates and installment payments. However, policy shifts—such as the recent rescission of the Center for Medicare and Medicaid Innovation’s (CMMI) Cell and Gene Therapy Access Model—have hindered progress toward sustainable solutions.

“CMMI developed a program of outcome-based payments negotiated directly with pharmaceutical companies on behalf of state agencies. This CMMI program was unfortunately recently rescinded by executive order,” Cutler said. “It’s therefore clear that our field will need to find new strategies to allow these innovative therapies to get to those [who] need them most.”

The Role of Cost-Effectiveness in Drug Pricing

In traditional markets, consumers weigh cost and value before purchasing a product, explained David Rind, MD, MSc, chief medical officer for the Institute for Clinical and Economic Review (ICER), during the plenary session at the 2025 ASTCT and CIBMTR Tandem Meeting. However, in health care, the person receiving the drug is often not the one paying for it. This disconnect raises challenges in determining fair pricing.

According to Rind, a common assumption would be that the development cost would play a significant role in determining pricing. “What determines the price of a car? A Honda Odyssey minivan is about $42,000, and a Toyota Prius is about $30,000. The Odyssey is built like a standard car on a standard car frame; the Prius was the first hybrid electric car developed in the world and changed the world’s use of hybrid car technology,” Rind said. “Which of these do you think required a greater cost of development?”

According to Rind, the complexities of determining pricing must reach beyond the cost of development. “No buyer cares what it cost Toyota to develop the Prius. Imagine going in to your local Toyota salesman and having them say, ‘Well, this was a really expensive development project. The Prius cost $100,000 [to develop], so that’s what you should pay for it,’” Rind said.

If the cost of manufacturing is too high, this is not a directly translatable metric for pricing. However, with insurance, the payer and the buyer become different players than in traditional markets, according to Rind.

“The person who is buying the product isn’t paying for it and isn’t really experiencing the cost,” Rind said. “If an insurer could negotiate—and they can some of the time and can’t other times—what should they pay for a drug? Well, if they pay based on the cost of development, they’ll pay more for mediocre drugs than for great drugs, and that will encourage inefficiency in developing drugs. Manufacturers can certainly be inefficient and cause costs to rise, and thus charge more, but also, it will cause dollars to go to not-very-good drugs. If instead you do value-based pricing, you would be paying based on the average value.”

With value-based pricing, the better the drug, the higher the price, Rind explained. Rind’s company, ICER, an independent, nonpartisan health technology assessment (HTA) organization, employs a value assessment framework in its pricing reports that considers multiple factors, including health benefits (such as longer life expectancy and improved functionality), cost offsets (such as reduced hospitalizations), and broader societal impacts. According to Rind, the goal is to calculate a cost per quality-adjusted life year (QALY), a measure that reflects both the length and quality of life a treatment provides. By using this model, ICER determines a fair price range that balances affordability while maximizing health outcomes.

“You can imagine a QALY is 1 year of perfect health. You can add up the costs and the qualities in the model and report the additional cost per quality. If you do value-based pricing successfully, you will maximize health for the dollars spent by maximizing qualities,” Rind said. “But there’s no other inherent notion of fairness in this, and what this does is create incentives to develop drugs that either produce more QALYs or are inexpensive.”

According to Rind, ICER calculates the cost per QALY for an equal-value life year (EVLY). EVLY is a measure related to QALY that looks at cost consequences. For example, the cost of preventing 1 case of blindness with a therapy or avoiding 1 hospitalization may make more sense to the general public as a metric than a cost per quality, which would require a deeper knowledge of the pharmaceutical landscape.

Another important factor in drug pricing is the health maximization threshold range, according to Rind. “If a new therapy comes along, it typically will be more effective and cost more. Another therapy might come along that’s even more effective and costs even more. How do you decide what a fair price is [for these drugs]?” Rind said. “You need some sort of threshold. ICER thinks about this in terms of a health maximization threshold range. [If] that first therapy is in the cost-effective range, and the second one isn’t but is providing additional benefit, you could bring that price down, so it falls within the range.” Once the second therapy is within this health maximization threshold range, the second therapy would also become cost-effective, making it possible for ICER to suggest a cost-effective price for the drug.

When determining value thresholds, Rind explained that various approaches exist, including societal willingness to pay (often set at 1 to 3 times per capita gross domestic product) and opportunity cost analysis, which considers the impact of high drug prices on the overall health care system. ICER typically applies a threshold of $100,000 to $150,000 per QALY, although studies suggest that exceeding $84,000 per QALY may result in greater harm than benefit to the health care system due to financial constraints.

Rind highlighted several real-world examples of drug pricing discrepancies. Tafamidis (Vyndamax; Pfizer), a breakthrough treatment for transthyretin amyloidosis, is valued by ICER at approximately $39,000 per year but is priced closer to $200,000. Similarly, the inhaler ensifentrine (Ohtuvayre; Verona Pharma), which offers modest benefits over existing therapies, is priced at $35,000 despite being worth only about $13,000. These cases exemplify the misalignment between drug value and market pricing.

Gene and cell therapies introduce additional complexities, according to Rind. Although some, such as onasemnogene abeparvovec-xioi (Zolgensma; Novartis) for spinal muscular atrophy, are fairly priced relative to their benefits, others, such as lovotibeglogene autotemcel (Lyfgenia; bluebird bio), a gene therapy for sickle cell disease, may be significantly overpriced. The high cost of gene therapies is often justified by their 1-time administration and potential for

lifelong benefits. However, some therapies have not demonstrated significant benefits in clinical trials or have offered uncertain benefits, making their multimillion-dollar price tags difficult to justify. ICER recommends approaches such as cost-sharing agreements to ensure that price-setting reflects genuine value rather than inflated industry standards.

Rind underscored the need for cost-effectiveness analysis to guide drug pricing and reimbursement decisions. Without such assessments, the health care system risks overpaying for mediocre treatments while struggling to afford groundbreaking therapies. Although ICER lacks regulatory authority, its reports influence market dynamics by encouraging fair pricing and improved patient access. However, as drug manufacturers continue to push higher pricing thresholds, the challenge of balancing innovation with affordability remains a critical concern for the future of health care.

“We have no authority. Our goal is a grand bargain where fair pricing by manufacturers leads to fair access by payers. There is some evidence of influence, at least at the margins. When an ICER report comes out before a drug is priced, it usually only has to reduce its price by about 16% to reach our price, as opposed to 37% if we don’t say it ahead of time,” Rind said. “Every report we do, somebody is unhappy.”

According to Rind, without HTA and cost-effectiveness analysis, overpaying for mediocre drugs will become inevitable. “Gene therapies to date and some cell therapies are often more appropriately priced than many drugs on the US market, but the future is less clear. Manufacturers are addicted to the prior price in a space, and the price of gene therapies is now more than $3 million, and soon it’ll be more than $4 million,” Rind said. “We can’t pay that much for mediocre gene therapies.”

REFERENCE

Cutler C, Rind D. Plenary: economics of novel cell and gene therapies. Presented at: 2025 ASTCT and CIBMTR Tandem Meeting; February 12-15, 2025; Honolulu, Hawaii.