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Cell and Gene Therapy (CGT)

July 12, 2023

Scientists already know how genes interact with trillions of human cells to differentiate and form the essential building blocks of the human body and are now turning them into clinical treatments and cures. These genetic and cellular treatments are clinically engineered to correct — or replace — dysfunctional, mutated cells, genes and/or tissue. The results can be life changing for someone struggling with a CGT-targeted disease or condition.

As opposed to treating the symptoms of a disease, CGT targets either the cause of the disease or the genetic defect behind the disease, which may be:

  • Inherited, or missing, at birth; or 
  • The result of a mutation of healthy genes over the course of a lifetime.  

CGT is presently used to treat diseases caused by a single gene mutation and primarily target rare conditions. The number of patients treated are in the hundreds or low thousands. However small the patient pool, it is expected to rapidly increase in the future as more common CGT therapies emerge, focused on curing more common diseases or conditions, such as sickle cell disease. On the horizon are many more common disease targeting CGTs presently making their way through Federal Food and Drug Administration (FDA) clinical trials.

The FDA’s Office of Tissues and Advance Therapies (OTAT) June 2023 published list includes 30 CGT-approved cellular and gene therapy products. Several new cell and gene therapies have been FDA approved over the last few years. The number of these new therapies entering the clinical setting impacting the payer/insurance market, is expected to grow exceedingly fast in the future, to 50 agent therapies available by 2030. As with most novel therapies, CGT comes with a high price tag.

Our self-insured group health plan sponsors now have some difficult decisions to make. Do they lean into their financial responsibilities and minimize the financial impact of CGT on their health benefit plan; or do they lean into their moral and ethical compass to make sure that CGT benefits are available to plan members who may need it? 

Plan sponsors may decide to impose CGT exclusions in order to protect/preserve plan funds for the aggregate benefit of all plan members. As a result they may not fully realize the life-altering, -saving and -giving impacts of CGT for those plan members enduring a potentially curable disease.  

If plan sponsors decide to cover CGT, impacted members may realize a true benefit over the course of a lifetime, avoiding ongoing physical, emotional and financial burdens of intensive, high-cost care to treat symptoms and preserve life. However, the initial cost of CGT may affect the plan sponsor’s ability to cover member claims, in aggregate.  

Now is the time for plan sponsors to take action as it relates to their health benefit plans. 

Plan Design and Plan Document Considerations

Compliance considerations:

  • ERISA: Fiduciary roles balance between sometimes competing goals as:
    • Payer (follow plan terms, paying reasonable plan costs prudently); and 
    • Sponsor (exclusively providing benefits to plan members).
  • PPACA/ACA: Consider aspects related to minimum value calculations, maximum out of pocket limits, essential health benefits and how/if benefits are available in-network/out of network and impact on grandfathered status.
    • Section 1557:  Prohibition on discrimination.  Be sure to incorporate medical management/clinical aspects of care and to not solely consider plan costs when determining whether to cover, exclude or delay coverage for newly approved CGTs.
    • HIPAA/GINA:  A person’s genetic information cannot be taken into account when determining benefits. For example, if you happen to learn of an individual or a certain population with a particular gene/cell mutation requiring CGT, a plan sponsor cannot utilize this knowledge to make plan design decision(s).
  • Determine approach to cover/exclude/impose coverage delay for newly approved CGT;
  • Closely review plan design - For example, does your plan design model a comparable to one of the 51-state benchmark plans? If so, carefully assess essential vs. non-essential benefits
  • Consider updating plan document and other plan materials at renewal time to match your intent to cover/exclude/delay coverage for CGT.  Be sure to consider:
    • Grant of discretionary authority - set clear and concise provisional rights of the plan to make decisions
    • Definitions and plan provisions related to:
      • CGT - CT/GT can fall under prescription therapy or inpatient/outpatient infusion therapy
    • Experimental and investigational;
      • Given advancements in CGT, is your definition still appropriate?
      • Coverage of infusions considered routine patient costs (PPACA/ACA implications)
    • Drugs
    • Medical Necessity
    • Alternative Care 
    • Cost Containment Strategies

Covering the Cost of CGT

CGTs come with significantly higher prices, requiring a new approach to the traditional payment models. CGT novel therapies differ in research and development costs from most conventional biologic therapies and drugs.  It is not only the influence and impact of R&D costs but there are also financial implications related to specialized training/skilled providers, equipment and facilities.  

Risk Sharing

The risk share industry is watching the CGT trials and approvals diligently in order to try and address the cost of CGT care.  
Multiple risk share options are emerging, some focused on how to get the long term value needed for CGT (benefiting both the plan sponsor and the stop loss carrier).  

Currently our risk share partners know that CGT does not fit into the annual stop loss contract/policy term or provisions. The upfront investment and long-term return requires a longer, multi-year commitment. The standard annual stop loss policy/contract does not fulfill cost of coverage requirements for CGT. In consideration of the current model, we are learning that risk share partners/providers feel that their only options are:

  • CGT carve-outs -  Building in a stop loss policy exclusion for CGT.
  • CGT Lasers - Special lasers for individuals known and targeted to have CGT during the year.
  • Cover CGT but promote special CGT requirements or programs 
  • Encouraging plan sponsors to build in a one-year delay in coverage for newly approved CGT agents
  • Network access to the limited, specialized healthcare facilities who perform CGT
  • Price negotiations for claims repricing 
  • CGT referral for clinical and medical management

Emerging CGT Reimbursement/Payment Options/Models

  • Pay-over-time model:  Amortizes the cost of therapy over several years.
  • Pay for performance:  Benchmarking future refunds/rebates if the treatment loses effectiveness over a certain period of time.
  • Stop Loss:  Stop loss coverage exclusively covering CGT.
  • Risk Pools:  Mostly administered at state and federal levels to accommodate for Medicaid and Medicare beneficiaries.  


As additional cell and gene therapies realize FDA approval, it will be exciting to see how this revolutionary aspect of clinical innovation effects new payment and care strategies needed to bridge the gap between increased patient access and innovative concepts and methodologies necessary to finance it.  

CGT Examples and Estimated Costs 

CGTCost (Millions)CGT  (Mode)Disease/Condition
Hemgenix (GT)3.5



Hemophilia B

Zynteglo (GT)




Adults & Pediatrics


blood disorder




Infusion, Car-T


Multiple Myeloma, relapsed, refractory

The latest FDA Approved CGT: Elevidys

CGTCost (Millions)CGT  (Mode)Disease/Condition





Pediatrics (4-5 years old)

Duchenne muscular dystrophy (DMD)


One of latest FDA approval occurred earlier this month (June 2023) when the FDA approved Elevidys, from Sarepta Therapeutics, a Massachusetts-based biotech company took place this month.  Elevidys is approved only for children ages 4 and 5 to treat Duchenne muscular dystrophy.  Duchenne is an inherited genetic disorder affecting the muscular system, causing muscles to progressively weaken and waste away.  In a single injection deliver via a cold virus vector, Elevidys works by replacing Duchenne variant dystrophin genes with manmade versions.  A genetic sequence is activated when the vector is bound specifically to muscle cells (FDA Approves Gene Therapy for Duchenne Muscular Dystrophy | Time ).