A Dolon Institute report
Gene therapies represent a potentially transformative shift in the treatment of disease, particularly for rare genetic conditions where patients may have few or no effective treatment options. By addressing the underlying cause of disease, rather than managing symptoms over time, gene therapies have the potential to deliver substantial and potentially long-lasting health benefits. However, these benefits are accompanied by significant questions about price, affordability, uncertainty and the sustainability of continued innovation.
Exploring the economics of gene therapy innovation and price examines the economic forces behind gene therapy development and considers how pricing and reimbursement (P&R) systems can balance the value of these treatments with the need to maintain incentives for future innovation.
The paper begins by examining why gene therapies can appear particularly expensive when compared with conventional medicines. For rare diseases, the potential patient population is often extremely small, limiting the revenue that can be generated from a treatment. Gene therapies also have distinctive economic characteristics: unlike conventional medicines that may generate revenue through repeated treatment over many years, gene therapies are generally administered once, meaning manufacturers receive a single payment. At the same time, development, manufacturing, distribution and treatment infrastructure can be complex and costly.
The paper argues that headline prices alone do not provide a complete picture of value or affordability. The actual price paid by healthcare systems is often considerably lower than publicly reported list prices because of confidential discounts, rebates and other agreements. More importantly, the value proposition needs to consider the potential duration of benefit. When the cost of a one-time gene therapy is spread across its anticipated duration of effect, its annualised equivalent can be comparable to, and in some cases lower than, existing treatments for the same condition.
Gene therapies can also generate value beyond their direct clinical benefits. A successful one-time treatment may reduce the need for lifelong medicines and ongoing healthcare interventions, while reducing the wider social and economic burden of disease. These benefits can extend to patients, families, carers and society through improvements in productivity, education and participation.
However, assessing this value is challenging. Gene therapies are often approved with relatively limited long-term evidence, meaning uncertainty remains around the durability of treatment effect and long-term safety. The paper argues that P&R systems therefore need to become better equipped to manage uncertainty rather than simply discounting potential long-term benefits. Approaches such as real-world evidence collection, outcomes-based agreements and payment mechanisms that spread costs over time can help manage both uncertainty and short-term budget impact.
The paper ultimately argues for value-based pricing that recognises the specific economics of rare disease and one-time gene therapies, alongside greater flexibility in how evidence and uncertainty are assessed. Without appropriate P&R frameworks, investment may shift towards more predictable conventional treatments, potentially limiting the development of future gene therapies.