Gene Therapy Was Hailed as a Revolution – Then Came the Bill

https://www.bloomberg.com/news/articles/2019-04-07/gene-therapy-was-hailed-as-a-revolution-then-came-the-bill

by pseudolus • 7 years ago

77 85 7 years ago

refurb11• 7 years ago

What this article misses is that even with a price tag of more than $1M, many of these therapies will save the system money.

They kind of gloss over it when talking about Zolgensma, but the current treatment, Spinraza, costs ~$750K in the first year and $375K every year after. So even by year 2, you've already spent one million and you pay that indefinitely.

So if Zolgensma shows 5 years of efficacy and Zolgensma costs $2M, it's already 10% cheaper than current costs.

Yes of course, paying it in a lump sum is challenging, but these companies are all exploring alternative payment methods; either paying installments ($500K per year for 4 years) or performance based models (you pay me $500K, every year, until the drug stops working).

Gene therapy will certainly require a new payment plan, but it's not something the system can't handle.

anfilt2• 7 years ago

At that point it's probably just cheaper to get a plane ticket to a country that does not patent or enforce a patent for the treatment.

refurb11• 7 years ago

Unlike small molecules, gene therapy isn't something that somebody can just whip up in a lab. Similar to biologics, there are often some trade secrets involved in the manufacturing that require a lot of time and money to figure out.

rayiner4• 7 years ago

How many life-saving gene therapies have been developed in these countries?

Not_a_pizza2• 7 years ago

Or a different planet!!!

sytelus• 7 years ago

I don't think if the question is whether large bills can be handled by distributing $1M payments over N years. The question is, should this really be costing $1M? I understand if there is a billion dollar investment by big pharma that benefits 1000 people and so there is no other way but to charge $1M. However, it appears that fundamental techniques are all same and it gets reused for hundreds or thousands different treatments. So with cost spread, the cost to patient shouldn't be $1M. If big pharma has life saving treatment and they thought they got people by their balls to pay up any ransom amount then its just wrong.

refurb11• 7 years ago

For many of these diseases, yes there are only a a few thousand patients in the world.

And although gene therapy might be a fundamental technique, creating a gene therapy for a different disease is really hard because human biology is really hard.

skwb• 7 years ago

But due to insurance churn, you don’t want to be footing the bill for your competitor down the road. As an insurance manager, your unit of analysis is not healthcare system or society, but your quarterly bottom line.

aaronbrethorst2• 7 years ago

Sounds like a great argument for Medicare for All, the NHS, or other nationalized systems.

yread• 7 years ago

From a more general pricing perspective: how should you price your product versus the status quo? Is it really appealing if it's only 10% cheaper? For my SaaS I was aiming more at 50% cheaper. Am I leaving money on the table?

Brakenshire• 7 years ago

It’s a bit different to have a product which is demonstrated as better in a massive, independently audited, randomized control trial.

refurb11• 7 years ago

There is a whole specialized field of pricing. The answer is it depends. And even then there are often multiple “correct” strategies.

empath75• 7 years ago

Letting people die is even cheaper.

hycaria• 7 years ago

Yeah I really don't get enabling the outrageously expensive carrying of genetic diseases such as SMA, especially at a time where prenatal screening can be done.

Not_a_pizza2• 7 years ago

The expectation I have is that these sky high prices will drive a boom not unlike the computer electronics boom of the 60's. When money of this amount is at stake, people are willing to do almost anything to get in on the action.

ryanmarsh• 7 years ago

I think advancements in DNA sequencing (ie nano pore) are going to change the landscape. Once it costs $50 to do a proper sequencing (not the messy bullshit 23andMe does), along with the analytical tools needed to isolate problematic sequences, patients and caregivers are going to be clamoring for targeted treatments. Big pharma will see the money and deliver.

bonniemuffin• 7 years ago

I totally disagree. I don't think the cost of sequencing is the bottleneck here, and it doesn't need to come down to $50. Even at $1k for a full genome sequence (which I think is in the range of a good high-quality sequence these days), it's totally feasible for anyone with a disease to get themselves sequenced.

The hard part is interpreting which part of the sequence is causing the problem, and developing targeted therapies to treat it. Sequencing any patient's genome has already been totally feasible for a few years now, but we still don't understand how to make the information actionable once we have it.

droithomme• 7 years ago

Reliable whole genome sequencing runs about $1000 these days. Reducing it to $50 would shave $950 off the cost of identifying genomic disorders.

It wouldn't affect much the cost of producing therapies that are tailored to individual genomes.

aaavl2821• 7 years ago

As mentioned in the article, a prominent cost-effectiveness research group, ICER, suggests that the treatment may be cost effective at prices of up to $1.5M, but with a different set of the assumptions, the cost-effectiveness threshold could be as low as $310K.

Other studies suggest CAR-T drugs are cost-effective at current prices, but they are not widely covered by payers. In these cases, it is less clear whether drug companies or payers are to blame for access to treatment

The article also does not mention what the gene therapy in question actually does. In small studies, it has essentially cured a disease that would otherwise kill babies before they are two. It's a pretty amazing product. And there are many companies hot on their heels, some of which are developing small molecule drugs -- much cheaper to develop and manufacture than gene therapy -- that actually seem to be potentially nearly as effective

The detailed ICER review is a good read if you're looking to understand how drugs are valued: https://icer-review.org/wp-content/uploads/2018/07/ICER_SMA_...

celinehh943• 7 years ago

Quick interesting note on this front - ICER is a US non-profit, but has basically zero influence in the actual pricing of drugs. It's actually illegal to value drugs this way in the US

celinehh943• 7 years ago

Sorry - should say use the valuation of the drug to determine patient access to it in the US. AKA, ICER could determine that drug 1 is massively un-cost-effective in comparison to drug 2, but you cannot restrict access to drug 1 due to this information. Most other countries tie drug price somewhat to health gain delivered by said drug.

refurb11• 7 years ago

I wouldn't say it has zero influence. Their assessments definitely impact the public perception of pricing in the US, so companies pay attention. But yes, it's not like NICE in the UK where the decisions have a direct impact on how much insurers pay for drugs.

devoply• 7 years ago

In capitalism no one sheds any tears if you can't make a business work. If you won't someone else will. Probably in China or India. They'll happily read all your papers, develop a copy-cat cure and sell it for 100k maybe even 10k in the name of Humanism. No one will shed a tear for all the profit investors lost out on.

refurb11• 7 years ago

Are you arguing that Chinese or Indian drug companies don't make a profit? If so, that wouldn't be accurate at all.

DubiousPusher• 7 years ago

This article is way way too early.

Gatsky• 7 years ago

I'm ashamed when I see how much they are trying to charge. Glybera was a gene therapy that nobody used basically because it cost too much. This is a clear example that a company will never reduce the price of such a therapy. The actions of Mylan and the scumbag Shkreli also highlights the thought processes of pharma companies. As such, we shouldn't waste our time. The government should be allowed to negotiate pricing. I don't believe this will suppress research into rare conditions. There has in fact been an explosion of therapies for rare conditions in the last 10 years.

refurb11• 7 years ago

One of the reasons Glybera failed is that it just wasn't that good of a drug. It did reduce the symptoms of the disease, but they had zero evidence it actually reduce medical costs associated with it (hospitalization, etc).

awongh2• 7 years ago

One thing that I'd like to know is if the profit margin is the same for one of these one time treatments as a repeat treatment.

If we assume that these things must be produced within a market system, it seems like the real moral question isn't what the dollar amount is, (since it logically follows that the cost to produce it must increase with the total revenue it's going to produce) but it would seem troublesome to say that we only produce treatments that have %20 profit because our shareholders expect blah blah, etc. etc.

If they already have the treatment and don't want to sell it because they can't price it profitably enough that seems pretty wrong to me. Not sure what the solution is though. I see how all the incentives could be aligned this way. And the article seems to hint that this is already the case.

mruts2• 7 years ago

I’m not that well versed in gene therapy, but for pharmaceuticals the calculus is as follows: It takes billions of dollars and decades for a new drug to be put on the market. In addition to the cost, there’s the risk of the FDA not approving it. Once approved, the drug can essentially be produced for free. The government gives the company the right to charge whatever they want for a set number of years until the patent expires (including much of the research time). After that period, competition is allowed in.

It seems clear to me that costs and profits need to come from somewhere. But I wonder if there is a better system than just making each pill super expensive for a long period of time.

bluGill3• 7 years ago

Lower than you might think. Not only do you need to account for all the costs of developing that treatment, you also need to account for the costs to looking at a treatment that after some amount of study turns out not to work. This latter can be very expensive, and worse is an unknown cost, sometimes you are lucky and a few treatments work out, while other times you hit an unlucky streak and try a bunch of treatments that don't work out.

awongh2• 7 years ago

i theorize it isn’t lower than i think because the article hints that companies not selling the product at what the market will bear, and instead would rather price it to a specific margin. to me this is a special industry in that, if your gamble of profitability doesn’t pay off for something that already has sunk cost, don’t take it off the market, just sell it for whatever price the market will bear. that’s your moral responsibility.... not sure what the argument against that would be

cf• 7 years ago

Not to be too snarky but to the question in the article, “The question for health systems: how much are one-time therapies worth?”, you mean like vaccines? Presumably, it should cost a similar amount.

dalbasal2• 7 years ago

Good analogy.

To the article's point, there is currently a dynamic where long term/chronic prescriptions such as anti-depression drugs "win out" relative to antibiotics & vaccines, which have the same pricing issue. It's mitigated by the large out-of-patent portfolio and (especially for vaccines) the large potential volume, but the problem is there.

To some extent, this is a problem economist don't like. The pricing system shouldn't matter too much. If X has Y value and A cost, those (alongside competition, which should be driving price to A)... If the value/efficacy is identical, those are supposed to be the main determinates of price.

Non-academic pricers understand that these pricing paradigms are big determinates though, in practice. Membership vs pay-as-you-go. Software & updates vs SAAS. These change demand & pricing dynamics enormously.

A one-time pill, with measured effectiveness against depression on par with one-a-day alternatives is very unlikely to make as much money, in practice... blackboard reasoning be damned.

celinehh943• 7 years ago

Vaccines are actually super unprofitable for Pharma companies, so this isn't a great model to emulate (although I agree with the general metaphor of gene therapy -> vaccines)

https://www.nber.org/papers/w9833

refurb11• 7 years ago

Pricing it like a vaccine entirely ignores the number of patients treated. Unlike vaccines, you'd never give gene therapy to most of the population. It all likelihood, you give gene therapy to a few thousand patients.

Hard to even break even if you're charging $100 and treating 2000 patients.

dalbasal2• 7 years ago

Are these price tags inherent in the treatment itself, or is this a "bleeding edge prices" issue that will ultimately subside with time and patient volume?

Aser• 7 years ago

The cost will come down. 20 years ago, the cost of sequencing one person's genome was over $100 million. Today it's $1000.

mruts2• 7 years ago

Not if the government/insurance gets involved.

snarf21• 7 years ago

Not disagreeing with you but can you get a full genome for $1K? I assumed that was only partial.

bluGill3• 7 years ago

Do you need a full genome? If a person has symptoms the doctor doesn't need a full genome sequence, just enough to verify that it is the/a sequence the treatment can fix. The cheaper the better, accuracy is important but but quantity outside the sequence in question is not useful.

Gene Therapy Was Hailed as a Revolution – Then Came the Bill

Related Stories