For quite some time now, Genetic Engineering has been promising to reshape the Health Care landscape and to help humanity overcome diseases and avoid health problems by providing us with the tools to manipulate two of the pillars of the evolution: random mutation and natural selection. These promises have become a reality and the understanding and knowledge of how genes function have given place to several treatments/drugs to fight orphan diseases, cancer, and other chronic conditions. All these treatments can be summarized under one name: Gene Therapy.

Although the option of Gene Therapy is a reality, its novelty, along with the limited number of manufacturers developing these treatments and the small number of patients with low incidence diseases that can be treated with these therapies, has introduced several challenges into the health care system worldwide. Manufacturers, health care providers and the insurance/reinsurance industry must collaborate to be able to cope with, for example, the challenges that Gene Therapy brings to the current system in terms of product development, pricing, treatment accessibility, and financial coverage.

Otherwise, just a select number of patients with the financial means will have access to this innovative therapy which remains unregulated in terms of pricing.

For the insurance sector, cost of treatment of these therapies is at the center of the many factors that influence the decision making process, and there are several areas that need to be reevaluated and redesigned by payers under the current insurance structure to be able to cover, fund, and follow up the outcome of these new treatments.

The first factor that a health plan or plan sponsor should consider is that of evaluating the financial risk that Gene Therapy represents due to the uncertainty of the number of members in the insured population that could qualify for gene therapy treatment. Innovative actuarial evaluation and working with experts in risk management is necessary now more than ever to develop new solutions, new products, and tools to help payers to evaluate their exposure. Making coverage decisions for treatments with six or seven figure prices is a big challenge in a market that is always looking to offer competitive and sustainable premium rates, while also expanding the plan benefits to make products more competitive. For the big payers, offsetting the cost of these expensive treatments is possible, with some major players already announcing that Gene Therapies will be part of their standard medical benefit.

"To achieve the best solutions, payers from different geographic areas must learn from each other and adopt the reimbursement mechanism that best fits their needs and budget"

The situation for small payers and self-funded plans is very different. In addition to the difficulties in pricing the coverage and spreading the cost, there are other important aspects of the treatment that affect how they can approach these modern solutions. Development of a network of providers that meet guidelines imposed by manufacturers, that can offer fair pricing marking up and flexibility in the reimbursement process, is essential in the benefit implementation.

There is call for innovation in the reimbursement mechanism to providers delivering these treatments. To achieve the best solutions, payers from different geographic areas must learn from each other and adopt the reimbursement mechanism that best fits their needs and budget, especially in the U.S. market where the health care system is highly fragmented. Currently, the most popular solutions are the concept of payment in installments or tying the payment to the provider/manufacturer to patient outcomes achieved on each individual patient. The reimbursement structure of paying with installments over multiple years takes into account how the individual responds to the treatment. This approach helps with issues related to budget caused by the high upfront payments that are required for these