By: Kendall Jackson, Esq.

The U.S. Food and Drug Administration (FDA) stoked the fire that is the ever-present discussion surrounding gene therapy when it approved Lenmeldy on March 18, 2024. Lenmeldy is the first FDA- approved gene therapy to treat metachromatic leukodystrophy (MLD), a rare disease that affects the brains and nervous systems of children in their late infantile and early juvenile years.

Lenmeldy is just one of several gene and cell therapies that, due to their high cost, lead plans to consider implementing plan exclusions for these therapies. While a self-funded plan has broad discretion as to what benefits it does or does not cover and, generally, may exclude gene therapies completely, plans must also consider the impact of doing so. The avoidance of these costly drugs often seems very appealing until employers come to terms with the real impact of the approach – the fact that participants will likely be left with no coverage whatsoever for treatments which may be their only option. In the case of MLD, Lenmeldy is the only FDA-approved treatment and has a significant impact on the progression of the disease. The risks of severe motor impairment and death substantially decreased in children who were treated with Lenmeldy in comparison to untreated children. As the only treatment for this disease, this gene therapy can drastically improve the quality of life for affected children, which highlights the importance of its availability to those suffering from this disease.

On the other hand, the debate of whether to cover or exclude gene therapies largely stems from the high costs associated with these drugs. Lenmeldy carries a hefty price tag with a wholesale acquisition cost of $4.25 million in the United States, making it the most expensive drug in the world. While this gene therapy is a one-time, single-dose infusion, a cost of this magnitude would be debilitating to many plans. Due to these high-cost drugs, plans may elect to generally exclude gene therapies, but this decision also carries compliance considerations. The first concern would be the language used in the plan document. Gene and cell therapies are new and broad, which can pose difficulties when crafting plan definitions and exclusions.  Specificity within the plan is necessary as any ambiguity in the plan language could be troublesome to the plan.  Given the broad nature of these terms, the plan must be clear in differentiating between gene therapy in cell therapy if the intent is to treat them differently. The plan should also be sure to not impose a plan limitation that would target a specific individual. While a plan may exclude gene therapies, it is unable to do so in response to an individual’s new diagnosis which necessitates an expensive gene therapy as this would be discriminatory under HIPAA.

There are plenty of factors to consider when discussing the coverage or exclusion of gene therapy. The FDA approval of Lenmeldy is an indication that there is likely a host of other gene therapies that may be approved by the FDA in the future. Considering the topic of gene therapy is not going anywhere, it will be interesting to see if costs will change and what effects these drugs will have on the industry as a whole.