Medicaid Pays for Gene Therapy Only If It Works

Serenity Cole spent last Christmas making crafts and visiting friends near her St. Louis home instead of lying in a hospital bed. For an 18-year-old who lived with daily pain from sickle cell disease, that's nothing short of a miracle.

"With sickle cell it hurts every day," Cole said. "It might be more tolerable some days, but it's a constant thing."

In May, Cole completed a gene therapy treatment that reprograms the body to produce healthy red blood cells. She was one of the first Medicaid patients to benefit from a groundbreaking payment model that's changing how America pays for expensive medical treatments.

Here's what makes this special: Drug companies only get their money if the therapy works. If it doesn't, they have to refund Medicaid through discounts and rebates.

The stakes are high. Two gene therapies approved for sickle cell disease cost $2.2 million and $3.1 million per patient, not including hospital stays. About 100,000 Americans, mostly Black, live with the condition that shortens lifespans by more than 20 years.

Medicaid covers roughly half of all Americans with sickle cell disease. Without a smarter payment model, states would struggle to afford treatments that could genuinely cure patients.

The federal government negotiated these deals with Vertex Pharmaceuticals and Bluebird Bio in December 2024. So far, 33 states, Washington D.C., and Puerto Rico have joined the program.

The Ripple Effect

This payment model could transform how America handles the next wave of expensive medical breakthroughs. Hundreds of gene therapies are currently in clinical trials, with dozens expected to get approval in the coming years.

State Medicaid officials now feel confident offering these therapies without complicated restrictions. Maryland's chief medical officer, Djinge Lindsay, put it simply: "What we care about is whether services actually improve health."

The approach also makes financial sense for everyone involved. Sickle cell disease already costs the healthcare system nearly $3 billion yearly in emergency visits, hospitalizations, and complications like strokes and organ damage. A one-time cure, even at millions of dollars, could save money over a patient's lifetime.

The model started under President Biden and continued under the Trump administration, becoming one of the rare health programs to survive a change in power. CMS Administrator Mehmet Oz called it "a game changer" in July.

For Serenity Cole, the policy details matter less than the result. She's living without the constant pain that once forced her to cancel plans and miss school.

More patients like her will get the chance to experience the same freedom as this model proves itself and expands to other expensive treatments on the horizon.