How to Pay for One-Time Cell Therapy: The Payer Problem
Cell and gene therapies can deliver a cure in a single dose. The American payment system was built to bill a prescription every month. That gap, not the cost of making the therapy, is where two veterans of the field located the hard commercial problem when they joined Open Door Salon. Matthew Hewitt of Charles River Laboratories and Jeff Holder of L.E.K. Consulting walked through the payment models the industry has tried, why most of them strain against how Americans actually hold insurance, and what is still unsolved.
Why a one-time cure strains a monthly-payment system
The obstacle is structural, not scientific. A single curative dose has to be financed inside a system designed to pay for refills. Jeff Holder, Managing Director and Partner at L.E.K. Consulting, named the mismatch plainly in the full conversation:
the reality is structurally figuring out how to take a system that is effectively most optimized for kind of monthly payments for a pharmacy benefit and deal with a one-time therapy that has either cure-like or curative intent in some of these disease areas.
Both guests were clear that the price tag is not chiefly a manufacturing-cost story, a question we take up separately in our look at why cell and gene therapy is so expensive. The payment problem sits one layer up, in how the money moves between payer, provider, and patient over time.
The payer-churn problem almost nobody prices in
A single payer bears the entire upfront cost but rarely holds the patient long enough to capture the lifetime benefit, because Americans change insurers every couple of years. Holder called the dynamic underappreciated:
when you add something that I think is a little bit underappreciated, is how frequently people change their payer. Your payer is tied to your employment. Typically, your commercial payer is tied to your employment. People change jobs fairly frequently or their significant other changes jobs and therefore depends on the statistic, but it's something like under two years on average for somebody to be on a payer's plan.
That churn creates the core disincentive for any single payer to write the check:
you're asking somebody to pay upfront one time a large sum potentially in the millions of dollars for some of the gene therapies that are out there or the stem cell derived gene therapies. you're asking for a very large sum up front for years of benefit when that patient isn't going to be on your ledger potentially in 18 24 months. So then the question becomes well why should one payer bear all the cost for the benefit that they're not going to really see over the lifetime of that patient.
Outcomes-based contracts tie payment to whether it works
The most discussed fix is to pay only when the therapy delivers, which sounds clean and proves hard to operationalize. Holder, who advises across the reimbursement side of the field, laid out the design challenge:
Question there is you have to decide what are the triggers for a payment. Is there some sort of very clear outcomes measurement that you can use to trigger payments that's linked to the actual value and the benefit of the therapy? That becomes kind of challenging to do in some indications. Others it's much more clear what you would use.
In a cancer with a clean response readout, the trigger is obvious. In a slowly progressing disease, deciding what counts as success and when to measure it becomes its own negotiation between sponsor and payer, which is why a single standard contract has not emerged.
Installments and risk pools move the money around
Two other structures spread the burden rather than tie it to outcomes: paying over several years instead of all at once, and pooling risk across payers. Holder walked through the reinsurance-style idea and the question it leaves open:
there's always been talking about things like risk pooling and instead of having the, you know, almost like a reinsurance pool to some extent for these kind of situations. But then the ultimate question there is who does bear the risk and who's going to take that on if not a commercial payer.
Pay-over-time structures face a related catch. Stretching a multimillion-dollar therapy across five years still requires agreeing on what each installment is buying, which loops back to the same outcomes-measurement problem the value-based models run into.
The data gap that stalls a value-based deal
A value-based contract needs durability data the therapy often does not yet have at launch, because accelerated approvals reach market on short follow-up. Holder put the payer's objection in plain terms:
they're bringing that same data package to the payer and they're saying, "We have a one-time durable outcome going to change the patient's life." ... the payer ... says, "You have 12 months of data. Why should we pay you for durable outcome?"
He noted the picture improves with time. A decade in, the field now has multiyear remission records and real-world evidence that make the durability argument easier to bring to both payers and providers, which gradually loosens the data objection that blocked the earliest deals.
Pay for it like a surgery, not a prescription
A newer reframe is to treat these therapies as one-time procedures, the way the system already pays for major surgery, rather than as drugs. Holder described the analogy:
treating these one-time interventions, cell and gene therapies more like procedures than drugs in the sense of compare them to like a surgery like a heart surgery or a brain surgery, large one-time interventional procedures that have transformative outcomes for patients.
Matthew Hewitt, Vice President and CTO of the Manufacturing Business Division at Charles River Laboratories, has made the same case in a regulatory context, arguing the category does not behave like a conventional therapy:
this is more of a procedure than a therapy because generally a therapy while it is well defined is traditionally seen as something that you either take as a pill or a consistent injection.
Who carries the cash risk today
Until a new model lands, treatment centers absorb the financial exposure, paying for the therapy upfront and recovering it on the back end. Hewitt explained the mechanics:
the medical centers have to generally pay upfront for these therapies and then reimbursed on the back end.
For smaller sites, that cash-flow risk is decisive:
it also impacts how community centers are able to offer these therapies because they're just not equipped from a financial perspective to take on that much risk.
The payment model and the access map turn out to be the same problem viewed from two ends. How the dollars are structured determines which centers can afford to treat patients at all.
What still has to be settled
No single payment model has won, and both guests left the question open rather than declaring a winner. Outcomes-based triggers, installments, risk pools, and the procedure reframe each solve part of the mismatch and leave part unsolved, and the right structure may differ by indication. Andy Holt and Phil Vanek reached the same conclusion from the manufacturing side, on why US insurance is structurally built to treat rather than cure. The throughline of the conversation is that the commercial design, not the science, is the gating step for getting these therapies to more patients. Companies, payers, and the manufacturers who serve them are the audience working this out, and they are exactly the decision-makers we built this audience to reach.