What Is Precision Medicine, and What It Means for Self-Funded Health Plans and Funds

Precision medicine is an approach to care that uses information about a person’s genes, environment and lifestyle to choose the prevention or treatment most likely to work for that person. Instead of treating the average patient, clinicians match the therapy to the individual or to the specific biology of the disease.

For the trustees and administrators who run a fund, the term usually shows up as a conference session, a headline or a single claim that lands on the desk. These therapies can be rare, but they are also expensive, and a self-funded plan or fund pays for them from its own assets. One claim can shape a fund’s entire year.

The good news is that your fund does not need to predict which therapy comes next. It needs to know where precision medicine shows up, what it means for claims and how to set the rules before a member’s claim arrives. This article walks through each. It is educational and is not medical or legal advice.

Where Precision Medicine Shows Up in Treatment Today

Precision medicine is a broad label, and three areas draw most of the attention from plan sponsors. Some, like targeted therapies, are already part of everyday cancer care. Others, like individualized cancer vaccines, are still in clinical trials. Knowing where each one stands helps your fund see which claims may reach you first and how they differ in cost.

Targeted Therapies and Genetic Testing

Many cancer drugs now work against a specific genetic change or molecular marker in a tumor. Whether a patient is a candidate depends on testing, often next-generation sequencing, which reads large sections of a person’s genome to find variants that guide diagnosis and treatment. For your fund, that means a test and a specialty drug can arrive as a pair, so coverage rules should address both.

Cell and Gene Therapies

Gene therapies add, replace or correct genes to treat or prevent disease. Cell therapies introduce new or modified cells to restore function or fight disease. According to the Employee Benefit Research Institute (EBRI), the FDA had approved 48 cell and gene therapies as of 2025. EBRI reports that cell therapies typically cost $400,000 to $500,000 per treatment, while many gene therapies cost more than $1 million and several reach $2 million to $3 million.

Individualized Cancer Vaccines

The newest category is the individualized cancer vaccine. On August 19, 2026, Merck and Moderna announced positive topline results from a phase 3 trial of intismeran autogene, given with Keytruda, for patients with completely resected stage IIB to IV melanoma.

The companies report that patients in the trial went longer without their cancer coming back or spreading, meeting the trial’s main goals. They describe it as the first late-stage study to show this kind of personalized cancer vaccine can work.Each treatment is designed and produced from a sample of the patient’s own tumor.

Two cautions apply. The therapy is still investigational, and the companies plan to present the data at a medical meeting and engage with regulators on filing submissions. Nothing in the announcement changes what your fund is asked to pay today. It does show where the pipeline is headed: treatments made one patient at a time.

Why Precision Medicine Is a Challenge for Self-Funded Funds

These therapies are often rare in any given year, which is exactly why they are hard to plan for. A fund can go several years without seeing one and then face a single claim that reshapes its budget. Three pressure points tend to matter most: how concentrated the cost is, how little cost sharing can offset it and where stop-loss coverage leaves gaps.

Few Claims, Concentrated Cost

EBRI found that cell and gene therapy users made up fewer than one-tenth of one percent of enrollees but about one-half of one percent of total spending. Across a very large population that is manageable. Many Taft-Hartley funds cover a few hundred to several thousand people, and at that size one claim can move the year. In EBRI’s illustration, a single $1 million claim equals about 12 percent of total health spending for an employer with 1,000 covered employees. An employer with 100,000 would expect about nine such claims, and together they would total only about 1.1 percent.

Cost Sharing Does Little at This Scale

Deductibles and out-of-pocket maximums sit far below the price of these therapies, so the plan carries nearly all of the cost. EBRI also notes that spending extends beyond the therapy itself, since diagnosis, administration and post-treatment monitoring all generate claims.

Stop-Loss Helps but Has Gaps

Stop-loss coverage is the familiar backstop, and EBRI reports that most carriers cover these claims like any other. The gaps deserve attention. Carriers can apply a laser, which sets the deductible for a known high-cost individual at or near the expected cost of that person’s care. EBRI adds that because these treatments are one-time events, the claims are often not counted in the claims history used at renewal. Some carriers offer stand-alone coverage for cell and gene therapies, which EBRI says typically avoids lasers.

Newer financing ideas are emerging, including spreading payment over time, pooling risk across groups and tying payment to clinical results. EBRI calls these promising but largely unproven.

The stakes reach beyond the budget. Without a policy in place, the decision lands on your trustees in the middle of a member’s crisis, when the pressure to say yes is highest and the cost of getting it wrong is greatest.

The Advantage of Setting the Rules Before the Claim Arrives

Trustees are fiduciaries, and the strongest position is a documented policy set before a specific member’s claim arrives. A fund that does this decides on clinical grounds instead of under pressure, treats every member consistently and gives trustees a clear path when a high-cost request comes in. Four decisions do most of the work.

1. Settle what your plan document covers. Decide how the plan treats gene and cell therapies, individualized therapies and genetic testing, and how it defines experimental or investigational treatment. As costly gene therapies emerge, the Summary Plan Description should say whether and how they are covered.
2. Write down the clinical criteria. A written eligibility policy lets your fund decide on consistent clinical grounds instead of reacting to one member’s case.
3. Review funding before renewal. Ask the stop-loss carrier about lasers and gene therapy terms, look at stand-alone options and discuss payment-over-time or risk-pooling arrangements with your consultant and counsel.
4. Build the approval path. Decide who signs off on a high-cost therapy and make sure the claims system holds payment until that approval is in place.

Frequently Asked Questions

Is precision medicine the same as personalized medicine?

In everyday use, yes. The FDA notes that precision medicine is sometimes known as personalized medicine. For a benefit plan the label matters less than the list: plan language should name the categories of therapy and testing it covers or excludes rather than rely on either term.

How likely is a fund to see one of these claims?

Uncommon in any single year but not negligible. EBRI reports 9.2 cell and gene therapy users per 100,000 enrollees in 2022 and cautions that its count may miss some users because of coding gaps. At that rate a fund covering 5,000 people would expect fewer than one such patient in a typical year. The exposure comes from the size of the claim rather than the frequency, and EBRI cites projections of 85 new gene therapy approvals by 2032.

Does a fund have to cover a member’s participation in a clinical trial?

Partly. Under Section 2709 of the Public Health Service Act, non-grandfathered group health plans generally cannot deny a qualified individual participation in an approved clinical trial for cancer or another life-threatening condition, and cannot limit coverage of routine patient costs tied to the trial. Routine patient costs generally do not include the investigational therapy itself. Grandfathered plans are not subject to this requirement, so your fund’s status and your counsel’s view matter.

Can a fund cover genetic testing without covering the therapy it points to?

Yes, if the plan document says so, but the two sets of rules should be written together. A test that identifies a candidate for a therapy the plan excludes can leave a member with a diagnosis and no covered path forward, which can generate appeals and difficult conversations with trustees. Aligning testing, therapy and experimental-treatment language in advance closes that gap.

Preparing Your Fund for High-Impact Therapies

Precision medicine is changing how cancer and rare diseases are treated, from targeted drugs guided by genetic testing to gene therapies and individualized cancer vaccines that are still in trials. These treatments may be rare, but a single claim can carry an outsized share of a fund’s spending, and deductibles and stop-loss coverage only go so far.

Your fund can get ahead of that by settling what the plan document covers, writing down clinical criteria, reviewing funding before renewal and building an approval path. Doing that work before a claim arrives lets your trustees decide on clinical grounds instead of under pressure.

To talk through how your fund can prepare for high-impact therapies, reach out to our team today.