Cell & gene therapy: Preparing for the next phase of employer health plan risk

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Cell and gene therapies are often viewed as an emerging wave of multimillion-dollar costs for employer health plans. While these therapies can exceed $2 million-$4 million per treatment, current employer exposure remains limited because utilization has been constrained by operational, clinical, and infrastructure barriers. Incidence is measured in cases per million lives, not population-wide utilization.

ANNUAL PREVALENCE AMONG LOCKTON CLIENTS

• Gene therapy: 6.25 cases per million lives

• Cell therapy: 15 cases per million lives

Source: Lockton SAGE Intelligence Platform

That environment is beginning to change. As treatment capacity expands and new indications emerge, employers should expect exposure to evolve, even though the risk will not be uniform across all cell and gene therapies. Understanding where utilization is headed can help employers make informed coverage decisions before these therapies become more common.

Today, cell and gene therapy costs are rare, severe, and unpredictable. Over time, as delivery capacity expands and indications broaden, particularly for autoimmune disease, exposure may soon become more consistent across populations.

Why high prices haven’t translated to broad employer cost pressure

Market concern has largely been driven by high prices, not by probability and use in the commercial market, which has been constrained by a set of practical barriers.

Barriers to utilization:

• Limited number of qualified treatment centers

• Strict clinical eligibility and prior authorization requirements

• Complex manufacturing and scheduling timelines

• High-touch care delivery models concentrated in major health systems

Even when a patient is clinically eligible, access is not straightforward. Beyond limited treatment capacity and strict approval requirements, many therapies require:

• Extended monitoring periods.

• Proximity to specialized treatment centers.

• Significant caregiver support.

• The ability to manage complex post-treatment care.

These constraints have been the primary reason cell and gene therapies have not translated into widespread employer cost pressure.

Not all cell & gene therapy risk is the same

While often grouped together, cell and gene therapies behave differently from an employer risk perspective. There are meaningful differences in how these therapies are used, the populations they impact, and how risk is likely to evolve over the next few years.

Why today is a temporary reprieve

Today’s limited employer exposure should not be mistaken for a permanent state. The barriers that have constrained utilization are beginning to shift, increasing the likelihood that employers will encounter these therapies over time. Two developments are particularly important:

1. Expansion of outpatient delivery

Cell therapies are increasingly moving out of inpatient hospital settings into outpatient models, which:

• Expands treatment capacity

• Reduces logistical barriers

• Enables more patients to access therapy

Removing barriers to access will allow more clinically eligible patients to reach treatment.

2. Growth of autoimmune indications

The next wave of therapy is moving into autoimmune disease, which is:

• More prevalent

• Concentrated in working-age populations

• Already associated with significant specialty drug spend

With over 100 late-stage autoimmune therapies in development, this category has the potential to move cell and gene therapies from rare events to repeatable exposure within employer populations.

Today’s environment doesn’t call for a fundamental redesign of employer health plans, but it does call for preparation. While exposure remains limited, market changes are likely to make these therapies more prevalent over time.

How to approach coverage decisions

There is no universal approach that will work for every employee. When making coverage decisions, it’s important for employers to:

• Navigate potential compliance concerns, including nondiscrimination rules such as the Americans with Disabilities Act and HIPAA.

• Ensure careful drafting of the health plan document, and compliance with employee notice and disclosure requirements under ERISA.

• Understand that exclusions may carry meaningful reputational consequences, especially when treatments are FDA-approved and impact vulnerable populations.

What this means for employers

The key strategic question is no longer whether cell and gene therapies will affect employer health plans, but how employer exposure will evolve as utilization expands over the next few years.

Managing these decisions requires aligning clinical, financial, and compliance considerations in a coordinated and specialized way. The most effective approach is tailored to each employer’s population, risk tolerance, and benefit strategy, and focuses on disciplined readiness:

• Clear eligibility and prior authorization standards

• Site-of-care and center-of-excellence alignment

• Thoughtful coordination with stop loss coverage

• Strong plan governance and documentation

Contact a Lockton expert (opens a new window) to learn more about approaching cell and gene therapy decisions with restraint, clarity, and preparedness to support members, manage volatility, and navigate the next phase of this evolving market.