Working Paper: NBER ID: w28628
Authors: Chi Heem Wong; Dexin Li; Nina Wang; Jonathan Gruber; Rena M. Conti; Andrew W. Lo
Abstract: We empirically assess the potential financial impact of future gene therapies on the US economy. After identifying 109 late-stage gene therapy clinical trials currently underway, we estimate the number of new and existing patients with corresponding diseases to be treated by these gene therapies, developing and applying novel mathematical models to estimate the increase in quality-adjusted life years for each approved gene therapy. We then simulate the launch prices and the expected spending for these therapies over a 15-year time horizon. Under conservative assumptions, the results of our simulation suggest that an expected total of 1.09 million patients will be treated by gene therapy from January 2020 to December 2034. The expected peak annual spending on these therapies is $25.3 billion, and the expected total spending from January 2020 to December 2034 is $306 billion. Assuming a linear pace of future gene therapy development fitted to past experience, our spending estimate increases by only 15.7% under conservative assumptions. As a proxy for the impact of expected spending on different public and private payers, we decompose the estimated annual spending by treated age group. Since experience suggests that insurers with annual budget constraints may restrict access to therapies with expected benefit to the patient, we consider various methods of payment to ensure access to these therapies even among those insured by the most budget-constrained payers.
Keywords: gene therapy; financial impact; healthcare spending; quality adjusted life years; insurance coverage
JEL Codes: G17; I11; I13; I18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| number of gene therapy approvals (I19) | number of patients treated (I11) |
| number of patients treated (I11) | overall spending in the healthcare system (H51) |
| spending on gene therapies (H51) | patient age group (J14) |
| spending on gene therapies (H51) | insurance coverage and budget constraints (G52) |