New Federal Program Expands Access to Gene Therapies for Sickle Cell and More

The federal government just made it significantly easier for states to pay for multimillion-dollar gene therapies, potentially providing a new lifeline for biotech companies that have struggled with reimbursement challenges.

The Centers for Medicare & Medicaid Services launched its Cell and Gene Therapy Access Model this week, with 33 states plus Washington D.C. and Puerto Rico signing on to participate. The program marks the first time the federal government negotiated pricing deals with drugmakers on behalf of state Medicaid programs. The initial program will focus on sickle cell disease and treatments approved before May 2024.

“This agreement is a major win for American patients and for Medicaid to provide patients new access to groundbreaking therapies for sickle cell disease,” said U.S. Health and Human Services Secretary Robert F. Kennedy, Jr. in a news release.

Breaking Down Payment Barriers for CGT

Gene therapies present a financial puzzle unlike other medicines. These one-time treatments can potentially cure patients, eliminating years of expensive ongoing care. But the upfront costs create sticker shock for state budget managers who operate on annual cycles. Even when treatments prove effective, states often struggle to justify the immediate financial hit, especially if patients move out of state.

The new model changes this dynamic by pooling states' negotiating power and creating standardized contracts, ones that are outcomes-based agreements.

If a therapy doesn't work as promised, manufacturers must provide rebates to participating states. This shifts financial risk away from state programs and onto the companies developing these treatments. It also may provide drug manufacturers access to a much larger patient population through a single negotiation process.

Two companies currently have FDA-approved gene therapies for sickle cell disease that launched before the May 2024 cutoff: Bluebird Bio's Lyfgenia and Vertex Pharmaceuticals' Casgevy, developed with CRISPR Therapeutics.

The program's initial focus on sickle cell disease makes strategic sense given the patient population's heavy reliance on government insurance. Patient advocates have long pushed for better access to new treatments.

"For a long time, the only disease-modifying therapy for sickle cell disease was hydroxyurea, which doesn't work for many sickle cell patients and leaves the community with limited options for care," said Edward Donnell Ivy, MD, Chief Medical Officer at the Sickle Cell Disease Association of America, in a statement.

Expanding Market Access for CGT

Beyond the immediate participants, this program signals a broader shift in how expensive therapies might be covered. CMS officials have already indicated they're discussing potential expansion to other conditions, creating opportunities for companies developing treatments for rare diseases.

The program comes at a critical time for the gene therapy manufacturers. While these medicines win FDA approval at a rate double that of other therapies, commercial success has proven elusive.

According to industry data, only two cell and gene therapies have reached blockbuster status with more than $1 billion in annual sales, despite more than 30 approvals since 2017. The gap between regulatory success and market adoption has left many promising treatments struggling to reach patients (see “Despite Twice the FDA Success Rate, Gene Therapies Still Miss Patients”).

Even with commercial challenges, investment in gene therapy development remains strong. More than 2,100 gene therapies are in development worldwide, spanning from early laboratory research to final approval stages, according to a report by the American Society of Gene and Cell Therapy.

These experimental treatments target a wide range of conditions, with cancer and rare diseases leading development efforts. Beyond oncology, companies are pursuing gene therapies for neurological disorders, eye diseases, blood conditions and metabolic diseases.

Removing Financial Barriers to Medicines

The program's structure could particularly benefit smaller biotech companies that lack the resources for extensive state-by-state negotiations. Rather than hiring teams to convince individual Medicaid programs, entrepreneurs can focus on a single federal negotiation process.

To implement the program, CMS is providing states with up to nearly $10 million each in federal support, covering costs for provider contracts, data collection and patient support services. The inclusion of comprehensive coverage requirements beyond the therapy itself is a crucial aspect.

Preparing for gene therapy can require extended hospital stays, multiple specialty visits, and fertility preservation services due to the effects of chemotherapy, a burden that CMS aims to offset by including coverage for patient travel and ancillary care.

Proving CGT Outcomes Matter

The outcomes-based payment structure provides protection for states against CGT failures. CMS negotiated contracts that include supplemental rebates if therapies fail to deliver promised therapeutic benefits.

Drugmakers confident in their clinical data can use these agreements to demonstrate real-world effectiveness. The model also includes volume-based pricing discounts and predefined metrics to assess treatment success over time, creating predictable frameworks for both sides.

Looking Ahead: New CMS Program May be Model for Other Disease Areas

CMS designed the program as a multi-year voluntary model, with states beginning participation starting this year. This timeline provides companies with visibility into potential opportunities to expand the program in the future.

"This model has the potential to improve health outcomes for patients with sickle cell disease while also ensuring state and taxpayer dollars are being used more effectively," said Abe Sutton, Director of the Innovation Center and CMS Deputy Director, in the news release.

For companies developing gene therapies, this could solve one of their biggest challenges: convincing cash-strapped state Medicaid programs to cover treatments that can cost more than $2 million per patient.

The success of this model could pave the way for similar federal intervention in other therapeutic areas where cost barriers limit patient access. For biotech startups, that means potentially easier paths to market for future innovations.

"This initiative underscores CMS' commitment to accelerating access to innovative therapies, improving patient health, and ensuring the smart use of Medicaid resources," the agency said.