Will the Medicaid Program Catch Up with Innovation?

By Patrick Collins

The last few decades have seen incredible progress in treatment for people with hemophilia. People have many more options today as we have seen the evolution from the original plasma-derived products to recombinant therapies (which were the innovators of the 1990s and 2000s) and are now available as shorter half life and extended half life, and now the advent of monoclonal antibody therapies. These products have become the standard of care for the treatment of both Factor VIII deficiency (hemophilia A) and Factor IX deficiency (hemophilia B). With increased options for inhibitor patients as well, we are in the middle of a treatment renaissance for bleeding disorders.

Now the next innovative advancement in treating people with hemophilia has arrived. Gene therapy, after decades of promise has finally become a reality. The first gene therapy for the treatment of hemophilia B has been approved by the Food and Drug Administration (FDA) in late 2022. A second gene therapy product for hemophilia B is currently in late-stage clinical development and will hopefully prove effective. Specific to hemophilia A, the FDA this year has also approved the first gene therapy. The potential for this evolution in treatment is significant, but this also comes with significant policy questions, most notably surrounding the price and reimbursement of these new gene therapies.

The initial approved gene therapy for hemophilia B comes with a price tag of $3.5 million, which at present would make this product the highest priced FDA approved pharmaceutical ever. However, unlike blood clotting factors, where traditional use requires an infusion every few days, weekly or every two weeks (depending on each patient and therapy being used) via a prophylaxis regimen, the promise of gene therapy is that it would be a one-time infusion, allowing the individual to produce their own blood clotting factor for a period of years (studies illustrate efficacy exceeding twenty years). Therefore, looking at costs over years, gene therapies, despite their high upfront costs, should provide longterm cost savings for the healthcare system.

This brings us to the policy question at hand – will state Medicaid programs catch up with innovation and cover the costs of these therapies?

State Medicaid programs are not presently designed to absorb therapies with high upfront costs even with the promise of little to no costs in future years. Medicaid programs are designed to examine cost on a yearly basis – in fact, that is how most states fund their Medicaid programs, annually, through the passage of a yearly budget (a small minority of states do use twoyear budget cycles) - and not consider the long-term cost savings for the program. Such a situation is ironic in that state Medicaid programs may see the potential for long term savings but may struggle with making the decision to cover gene therapy because of that firstyear cost exceeding their budget parameters.

There is a bright side to this situation in that hemophilia B is such a small population and the target audience for gene therapy with Medicaid as their insurer is even smaller. Therefore, state Medicaid programs will likely have very few covered individuals using this therapy (likely in the single digits for many states or low double digits for larger states). Gene therapy for hemophilia B will not be a budget buster for state Medicaid programs.

On the public policy front, those in the hemophilia B community can join with other communities seeing the promise of gene therapy and advocate for policies that will increase the potential for coverage of such therapies. These include:

Empowering state Medicaid programs with more flexibility in how to pay for expensive gene therapy programs.

Instead of the typical fee for service type of reimbursement, providing Medicaid with the flexibility to pay for gene therapies through valuebased arrangements could allow for greater coverage of these new therapies moving forward. Such value-based arrangements can include a pay for performance type model, payment over time through amortized payments, or any other number of innovative models that can blunt the high upfront costs. Through federal rulemaking, Medicaid’s do have increased ability for such negotiation with pharmaceutical companies, but there is federal legislation proposed that would codify in law such Medicaid flexibility.

Congressman Brett Guthrie (R-KY) who is the Chair of the House Energy and Commerce Committee Subcommittee on Health, led the reintroduction of the Medicaid VBPs for Patients (MVP) Act with Reps. Anna G. Eshoo (D-CA), John Joyce, M.D. (R-PA)), Jake Auchincloss (D-MA), and Mariannette Miller-Meeks (RIA).The MVP Act would provide vulnerable populations with rare diseases access to innovative treatments and cures by enabling states to voluntarily enter into value-based purchasing (VBP) agreements, which tie the cost of treatments to patient outcomes

Allowing Medicaid coverage to cross state lines

Another potential policy measure that can impact access to gene therapy is allowing Medicaid coverage to cross state lines. Because each state has its own Medicaid eligibility requirements, an individual cannot transfer coverage from one state to another, nor can an individual use their coverage when temporarily visiting another state, unless the individual needs emergency health care. Hemophilia treatment centers will likely be the site for gene therapy treatment, but they are not in every state. This may create difficulty for those on Medicaid living in one state from seeking gene therapy treatment in another state.

There have been legislative efforts in the past to address this issue (Senator Charles Grassley (R-IA) has long been such an advocate) and the bleeding disorders community can partner up with others to continue to pursue such efforts.

Overall, the future is bright for those with hemophilia B and having the availability of additional treatment options can only further brighten the prospects. The leaps in innovation for treating hemophilia over the last 30 years have been incredible, but we need to ensure that the healthcare payment models keep up with such innovation.