by Natalie Morrison
LONDON, 7 Dec (APM) - The healthcare sector needs to “think differently” when it comes to reimbursing high-cost, one-off, potentially curative therapies or risk “punishing” developers who will then stop investing in these treatments, David Lennon, chief executive officer of Novartis’ AveXis, told APM.
Critics have slammed Lennon’s previous assertion that $4 to $5 million per patient is a “cost-effective” level for its spinal muscular atrophy (SMA) type 1 gene therapy Zolgensma (onasemnogene abeparvovec - formerly AVXS-101), branding the price “unsupportable” (APMHE 60741
Though Lennon told APM in a Thursday afternoon call “that does not mean that’s what we will charge”, he stood by the $4 to $5 million cost as reasonable and based on cost-effectiveness thresholds typical to rare disease therapies.
“A lot of commenters are not realising we are already spending this kind of money,” he added.
Explaining this conclusion, he noted that SMA type 1 is an ultra-rare and life-threatening infant neuromuscular disorder, noting that only 240 patients are born every year in the U.S. These patients have shorter lives, heavy disabilities and high hospitalisation rates, and that can cost millions of dollars, he said.
The annual cost of many rare disease medicines is as high as $250,000 to $500,000 - “if you look cumulatively over 10 years, that’s $2.5 to $5 million in drug costs alone,” he said. “Society is already paying this kind of money.”
Most ultra-rare treatments are approved at annual costs of a few hundred thousand dollars, for instance those in Fabry disease, Huntington’s disease and SMA itself, Lennon said.
On average, orphan drugs cost $140,000 per year for patients in the U.S. in 2017, he said, citing Evaluate Pharma figures. Chronic use over 10 years would therefore be $1.5 million to $2.5 million before adding in ancillary costs like hospitalisation.
“And that’s spending on non-transformational products, non-curative therapy,” Lennon said.
“The challenge for potentially curative therapies is that we have to price that all up front at once, it gives a transparency to this situation,” he added.
“I do believe we need robust conversations and to develop better and more flexible options for this, and we need to look at the outcomes these treatments deliver. We need the system to address the problem to make sure they are not disincentivising innovation. The worst thing for us would be to stop developing curative innovation.”
The $4 to $5 million cost bandied about for Zolgensma takes all of this into consideration, Lennon said, stressing it does not mean this will be the price, but that “a lot of this is about educating and trying to provide context”.
Do not punish curative therapy developers
The price for Zolgensma is still not decided, with the product many months from approval, he added. It was granted U.S. priority review earlier this month (APMHE 60874
), with a decision expected in May, while a decision in Japan is expected within the first half of 2019 and in Europe around mid-year.
Nevertheless, AveXis recognises that whatever the eventual price is, it will be a “large number” for healthcare systems, who will find it a challenge to manage on a one-off basis.
Payment systems currently largely work on an annual basis, meaning they are not set up for the high one-time costs which are often associated with advanced therapy medicinal products (ATMPs) that are dosed once only, but which are believed to be cures, he said.
But despite the challenges, if payers do not find ways to reimburse curative products, developers will stop investing and the pipeline will dry up, said Lennon.
A similar phenomenon occurred in the antibiotics space, he added.
Lennon told APM that innovative payment models are the way forward to ensure potentially curative treatments are reimbursed and developers rewarded. Both developers and payers need to think differently about reimbursement if this is to happen, he said.
For instance, AveXis is considering outcomes-based payment models based on survival endpoints at three to five years, as well as payments spread over five-year periods for gene therapy Zolgensma for spinal muscular atrophy type 1 (APMHE 60970
The company is also working on immediate access issues which could hinder Zolgensma, such as ensuring it invests in incentives that would encourage SMA screening for newborn babies, as well as other incentives to encourage payers to expedite review so that patients need not wait months for access, Lennon said.
On considerations when pricing Zolgensma, Lennon added that clinical value, patient value, the value to the healthcare system and overall societal value will all need to be taken into account.
However, unlike for autologous CAR-T products - such as Novartis’ Kymriah (tisagenlecleucel) - manufacturing costs are not “as important a factor” in terms of overall pricing, he said.
Though the manufacturing process is expensive for Zolgensma as a biologic system, ultimately the costs for CAR-T are “very high right now, partially because the technology is very new”, he said.
For Zolgensma, the key factors to account for are that it takes a lot of investment and manpower and infrastructure to bring it to market, Lennon said. Over $1 billion will have been spent by the time it reaches the market, and though people see low patient numbers in clinical trials, “it has taken close to 1,000 people as of next year to bring this product to market,” he said.