Drugmakers See a Pricing Blueprint in An $850,000 Gene Therapy

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A man receives an eye exam
A man receives an eye exam in a file photo. REUTERS/Joshua Roberts
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By Caroline Humer
SAN FRANCISCO (Reuters)

Global drugmakers are looking to a tiny biotech’s $850,000 therapy for a rare type of blindness as a model for getting paid for highly expensive – and effective – new medicines

Spark Therapeutics Inc <ONCE.O> plans to launch its recently approved Luxturna treatment for an inherited genetic mutation that causes blindness in March. The drug is to be administered only once, by injection, and Spark plans to charge $425,000 per eye, an unprecedented price.

 

 

But what is grabbing the attention of other drugmakers is not just what might be called an eye-popping price to treat a condition that Spark estimates affects 1,000 to 2,000 people in the United States, but the ways Spark is looking to help payers ranging from the federal government to private insurers absorb the drug’s high cost, including spreading out payments over several years.

“We’re laying the groundwork for the future of our pipeline and the future of one-time curative gene therapy treatments,” Spark’s chief executive officer, Jeffrey Marrazzo, said in an interview at the JPMorgan Healthcare Conference in San Francisco this week.

The high cost of prescription drugs has become an increasingly critical and contentious issue.

 

 

The independent Institute for Clinical and Economic Review (ICER) issued a report on Friday saying the proposed Luxturna price was far too high in most cases.

Healthcare spending accounts for 18 percent of the U.S. economy and has been rising faster than the rate of inflation as drugs and medical services costs increase. An influx of very expensive drugs that offer a one-time cure – such as a hepatitis C treatment from Gilead Sciences Inc <GILD.O> – has already stretched state and federal budgets.

 

The U.S. Centers for Medicare and Medicaid Services (CMS), which provides coverage for 125 million elderly, poor and disabled Americans, spends hundreds of billions of dollars annually on medicines

CMS is trying to tackle the overall high drug costs. It has asked for input from private health insurers and drugmakers on payment models that are expected to influence how medical breakthroughs for millions more patients are covered.

Spark itself is working with CMS on a legal structure to allow government and private-sector health plans to pay for Luxturna, which restores some vision for most patients with the inherited mutation, over several years, rather than in a single payment, without hurting its profits.

 

 

Spark has also offered refunds if the treatment stops working and ways for payers to buy the drug outside of hospitals, which can significantly mark up the price of a medicine administered in their facilities.

In interviews with Reuters, executives from large drugmakers including Eli Lilly & Co <LLY.N>, GlaxoSmithKline Plc <GSK.L>, Roche Holding AG <ROG.S>, Merck & Co Inc <MRK.N> and Bristol-Myers Squibb Co <BMY.N> said they would pay close attention to the outcome of Spark’s payment discussions.

 

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