CMS Cell and Gene Therapy (CGT) Access Model Explained: The Most Significant Drug Pricing Legislation You’ve Never Heard Of

• Voluntary participation by states: state Medicaid authorities have until February to decide whether to participate. Participation guarantees agreed upon rebates for the state and specific access policies for the manufacturer
• Key Terms of Outcome-Based Agreements (OBAs) negotiated by CMS on behalf of states: contracts will include a rebate structure, standardized access policy, and CMS support in OBA implementation. States will be responsible for their share of the gene therapy cost, but at a discounted price tied to specific outcomes, as negotiated by CMS.
• Pooled purchasing power: by creating a single national negotiation framework, CMS enables Medicaid programs to leverage collective purchasing power, potentially leading to steeper discounts than states could negotiate individually.
• Administrative responsibilities for federal government: CMS will provide technical assistance for model implementation and will be responsible for monitoring, reconciling, and evaluating the financial and clinical outcomes outlined in the OBAs
• Streamlined access across states: Medicaid beneficiaries often face delays or state-to-state disparities in accessing cutting-edge treatments. The model aims to harmonize access policies across states and will support out-of-state treatment if not available in a patient’s home state
• Federal funding for program: the model earmarks funds to cover CMS’ increased responsibilities. States can also apply for supplemental funding to support administration of the program
• Funding for fertility protection: CMS intends to require manufacturers to pay for a defined scope of fertility preservation services. Potential loss of fertility is a key barrier to uptake of gene therapy for sickle cell disease and most Medicaid programs do not cover such services

The Inflation Reduction Act of 2022 has had a huge impact on the US pharma industry. For the first time, the US government (in the form of CMS on behalf of Medicare) is engaging in price negotiating, taking a tiny bite out of the “free pricing” system that has stimulated drug development and made the US the most lucrative pharmaceutical market in the world.

Somewhat surprisingly, then, the CGT Access Model has not received much attention. While impacting a smaller number of products, in some respects the CGT Access Model is more impactful than IRA on the pricing potential of impacted products.

Why is this the case?

CGT Access model impacts prices for Medicaid from launch: in contrast, the IRA-negotiated drugs are years past their FDA approval dates (7 year for small-molecule drugs, and 11 years for biologics)

Impacts large share of potential market: Medicaid covers more beneficiaries than Medicare and is anticipated to be the primary payer for about 50% of sickle cell gene therapy recipients

More efficient than OBAs of the past: outcomes-based agreements between manufacturers and managed care have existed in the US for at least 15 years, but the piecemeal nature and administrative challenges have limited their impact. A single administrator (CMS) for the OBA means it is much more likely to be successful in tracking patients as they move across Medicaid plans and securing rebates.

Potentially larger discounts than Medicare IRA negotiations: although the details of the contracts have not yet been released to the public, materials from CMS indicate the agency plans to utilize its greater negotiation leverage to extract “multiple, layered” rebates from manufacturers, including price concessions not linked to performance.