[Updated 3:19 p.m.] The latest price tag for a gene therapy, a treatment meant to provide a long-lasting effect with a single dose, is now set. The treatment, Zynteglo, developed for the rare blood disease beta thalassemia, will cost roughly $1.8 million.
Bluebird Bio (NASDAQ: BLUE), which just won approval of Zynteglo in Europe two weeks ago, announced the price Friday during the European Hematology Association’s (EHA) annual meeting in Amsterdam. The news makes Zynteglo the second-ever medicine to come to market with a list price more than a million dollars. The first, also a gene therapy, was the spinal muscular atrophy treatment Zolgensma, which was approved by the FDA last month. Its developer, Novartis (NYSE: NVS), priced the therapy at about $2.1 million.
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The Zolgensma and Zynteglo approvals are crucial test cases for the economic viability of gene therapies. The therapeutic effects of these one-time treatments are intended to last for life, in contrast to traditional medicines that people take chronically. But those effects aren’t guaranteed. To this point, it’s unclear how long gene therapies will last, as their clinical track records are too short. Thus, developers and insurers are grappling with how to pay for them while accounting for the uncertainty.
In setting its price, Bluebird followed the playbook of Novartis, which is working on “outcomes-based agreements” with insurers that tie Zolgensma’s price tag to its performance. Novartis also said that it was talking with insurers about options to pay for the gene therapy over a period as long as five years.
In its EHA presentation, Bluebird said that the full price of Zynteglo could be spread out over five years, at approximately $357,567 annually. Payment models may vary by country, and the company is working with each country on the next steps to bring the gene therapy to the market. It vows not to boost the price of Zynteglo above changes in the consumer price index. Zynteglo could be priced within a “reasonably close range” in the US, should the FDA eventually approve it, according to a Reuters report.
In setting Zynteglo’s price, Bluebird points to the therapy’s potential to lower healthcare costs. Patients who have beta thalassemia are unable to produce sufficient amounts of hemoglobin, the oxygen-carrying protein in blood. Depending on the severity of their disorder, beta thalassemia patients may need blood transfusions every two to four weeks for the duration of their lives. The goal of Bluebird’s gene therapy is to reduce, or eliminate the need for such transfusions, ideally for life.
[The following three paragraphs added with analyst comments.] Zynteglo’s price is double the $900,000 estimate calculated by SVB Leerink. Mani Foroohar, an analyst for the firm, wrote in a research note that even though the Zynteglo and Zolgensma prices work out to be lower over time compared to currently available rare disease treatments, the Bluebird gene therapy is a transplant medicine product, which adds more costs to the healthcare system. In contrast, the Novartis gene therapy is a simple intravenous infusion, he wrote.
Foroohar also expressed concerns about the manufacturing of Zynteglo. Despite being in development for years, the Bluebird gene therapy won’t be available commercially until 2020 “due to lack of manufacturing readiness,” he wrote. Bluebird is making changes to its manufacturing process, and Foroohar said it’s unclear whether the Bluebird gene therapy that reaches the market will live up to what was seen in clinical trials.
“More concerning is that [Bluebird] was unable to execute on the manufacturing process development that is the critical core competency of any cell therapy franchise, perhaps raising questions on the company’s ability to hit stated timelines for many of its programs,” Foroohar wrote.
New long-term data presented at EHA showed that Bluebird’s therapy has freed a genetic subset of patients in an early stage trial from transfusions for a median of 3.8 years. European regulators granted a “conditional” approval to Bluebird a few weeks ago for that particular genetic subset of beta thalassemia patients.
The conditional approval means Bluebird must continue to provide additional data demonstrating the benefit of its therapy. Bluebird must also renew its gene therapy’s approval annually until it has enough data to convert the drug’s status to standard marketing authorization. Trials supporting a potential US approval, meanwhile, are ongoing. Bluebird aims to begin selling Zynteglo in the US in 2020. It’s also testing the drug in patients with sickle cell disease, another rare blood disorder.
Shares of Bluebird sank 3 percent, to about $120 apiece, in midday trading Friday.