Gene Therapy Lurches Ahead, Sees Thorny Future Questions on Price

Xconomy National — 

Imagine for a minute you’re a teenager with a rare genetic muscle disease nobody has ever heard of. No treatment exists. Your doctor says you might die if you ever eat pepperoni pizza. The medical literature says you’ll never get to be an athlete, get a real job, start a family. You’ll probably die in your 20s or 30s.

Then, one day, along comes a gene therapy. In a single shot, it deploys an armada of modified viruses to shuttle properly functioning copies of the gene you need inside your faulty muscle cells. Within days, the gene starts expressing proteins you need to restore normal cellular functions. The protein keeps expressing itself properly, on its own, for years.

No one knows how long you’ll live, or if it’s really true to say you’ve been “cured.” But all indications are you can eat pizza, go to college, and pursue your dreams. You don’t need to take any drugs. You no longer go about your daily activities constantly reminded that you are a “patient.”

How much should you—or, more accurately, you and all of us who pay insurance premiums—be willing to pay for something like that?

Sure, this story is a fantasy today. But there is already one gene therapy approved for sale in Europe, called alipogene tiparvovec (Glybera), made by Netherlands-based uniQure. That company is attempting to raise about $70 million in an IPO as you read this, and it’s just one of many gene therapy companies that have enjoyed a scientific revival and seized the day to raise money. Cambridge, MA-based Bluebird Bio (NASDAQ: BLUE) was one notable example of a successful gene therapy IPO last year. It’s not far-fetched to imagine that there could be one or two FDA-approved gene therapies within five years.

As the science lurches ahead, it’s forcing people inside the gene therapy world to confront a set of thorny questions on the commercial front. Since a gene therapy drugmaker is often only providing one shot, that means it only has one opportunity to sell a product that can turn a profit and recoup its years of R&D investment.

So if you’re shocked by the six-figure prices of cancer drugs that offer marginal health benefits, brace yourself for what’s to come. If a gene therapy can deliver on the scenario described above, should it charge a single upfront lump sum ($1 million, $5 million, or $10 million, perhaps?) and run the risk of alienating everyone with sticker shock, and making it impossible for many patients to get the drug they need? Or should it try to spread things out in a long-term payment installment plan, or annuity?

Most importantly, what will it take for companies to justify the kind of price they need to make a reasonable profit, so they can develop more important gene therapies?

“A lot of this will boil down to what society says a human life is worth,” says Barrie Carter, the vice president who oversees gene therapy at San Rafael, CA-based BioMarin Pharmaceutical (NADSAQ: BMRN). “What is it worth to take a debilitated person and turn them into a functioning person who can contribute more to society? That’s a fundamental, big question.”

Barrie Carter, past president of the American Society of Gene and Cell Therapy

Barrie Carter, past president of the American Society of Gene and Cell Therapy

Matt Patterson, the CEO of San Francisco-based Audentes Therapeutics, a gene therapy startup that raised $30 million in venture capital last year, says people in the industry are beginning to talk seriously about the best way to pay for gene therapy. “The advances in the science of gene therapy are thrilling, but we also need to begin to think about how to implement these things into the healthcare system if we’re successful,” he says.

As a follower of gene therapy for the past dozen years, it’s fascinating to me that the conversation is moving in this direction. Scientists have been telling us about gene therapy and the yellow brick road to cures for more than 20 years, but none have yet made it all the way to FDA approval. The last decade of the field was overshadowed by the tragic death of a teenager from Arizona in a gene therapy trial, which stymied investment in the field. For years, the savviest executives and investors inside biotech wondered: Is gene therapy safe enough? Will it ever work? Even if it works, will the FDA ever stick its neck out and approve one?

Those questions are still valid, but enough progress has happened over time with different diseases, different companies, and different trials, that people inside the field need to take another step and think about the right way to price this new mode of treatment.

There is, of course, a never-ending debate about the ethics of drug pricing. When a cancer drug extends life for a few months, works for a fraction of patients, and a company still charges $100,000, it’s understandably controversial.

When a new drug comes along that’s life-altering, especially for young people, that’s a whole different story. Genzyme, and now BioMarin, Alexion Pharmaceuticals (NASDAQ: ALXN), and others, have built empires on treatments for rare diseases that are priced way into the six-figures per year range, for a small group of patients that take them for years. Vertex Pharmaceuticals (NASDAQ: VRTX) recently introduced a groundbreaking drug for a small fraction of cystic fibrosis patients, and which costs $300,000 a year. It’s a life-altering pill that people can start taking as young children, and which they might take for 20, or even 30 years or more. It’s no stretch to imagine that we as a society will pay $6 million to $10 million per patient (and maybe more) over the lifetime of those CF patients.

There is already a (somewhat muted) backlash against this drug’s price, but imagine the uproar if they were being asked to pay the full $6 million or $10 million upfront?

UniQure is an important test case for gene therapy, although it doesn’t have the kind of compelling clinical data that would justify that kind of stratospheric price, at least in my mind.

Its treatment is for lipoprotein lipase deficiency, a potentially deadly metabolic disease that can cause flare-ups of pancreatitis. The drug has been tested in three clinical trials with a total of 27 patients, according to uniQure’s prospectus. The gene therapy failed to meet its primary endpoint in a key clinical trial, as it was unable to show it could reduce excessive triglycerides in the blood beyond 12 weeks of observation.

The company, after an initial regulatory rejection in the European Union, was able to convince European officials that a secondary measurement from the trial—a reduced presence of fat-carrying particles called chylomicrons in the blood after mealtime—was a valid sign of clinical benefit. The company met with the FDA twice in 2013, and U.S. regulators said the data aren’t enough, and that uniQure should design another “adequate and well-controlled trial” to prove a clinical benefit.

Even so, uniQure is now becoming a real business in position to bargain with payers across the pond and start generating real cash flow. Here’s what the company said about those talks in its IPO prospectus:

Gene therapy represents a potential shift in the paradigm of medical care, with the commercialization challenges that often accompany a new approach. With our collaborator Chiesi, we are the first to initiate the market roll-out of an approved gene therapy in the European Union, including designing new models for product pricing and reimbursement based on a one-time intervention, expanding key opinion leader relationships, identifying centers of excellence, and developing physician and patient education and patient access programs. We believe our experience with Glybera in the European Union will facilitate our future efforts, subject to obtaining marketing approval, to commercialize Glybera and additional gene therapies in the United States and elsewhere.

And then the kicker:

We and Chiesi are developing a gene therapy pricing and business model for Glybera that is designed to capture the significant value we believe Glybera delivers to patients.

If uniQure opts for a long-term payment installment plan, you can imagine some complex questions. If a patient and his or her insurance company agree to a five-year payment plan, will the payments be contingent on periodic checkups to verify that the drug is still working? What measurements must be taken at each checkup to verify effectiveness? How often should the checkups be done, especially if invasive measurements like biopsies must be taken? What happens if the drug fails after three years, and the patient/payer are on a five-year payment plan? Will there be an escape clause, or potential for partial refunds? Or, conversely, should the drugmaker continue to get paid for years after an initial contract period if the drug exceeds expectations? Especially in the U.S., what happens if a patient on a long-term payment plan switches jobs, and health insurers?

The one-and-done payment model is the most attractive for gene therapy developers, Patterson says, because it offers a chance to recoup R&D investment quickly, it’s predictable, and it’s simple. An annuity-type system could also offer a predictable, recurring future revenue stream for drugmakers, Carter says.

Payers and patient advocates have gotten savvier about drug development in recent years, and they should be at the table with industry now to work out the fairest system for everyone. If companies don’t include the other parties, then you can expect a series of high-priced drug roll-outs followed by intense backlash.

Carter, a former president of the American Society of Gene & Cell Therapy, says the insiders in gene therapy are beginning to realize that it’s better to get in front of this issue now, before it could blow up in a few years. The gene therapy society is planning some formal meetings about commercial challenges at its annual meeting in May, he says.

“Everyone in the society realizes we have to start thinking about this,” Carter says. “It’s coming to the fore now. We’ve been successful in driving the technology, and now we need to drive thought on how we pay for all this.”

By posting a comment, you agree to our terms and conditions.

3 responses to “Gene Therapy Lurches Ahead, Sees Thorny Future Questions on Price”

  1. Here’s a comment I just got from Vertex Pharmaceuticals spokesman Zach Barber, about what Vertex is doing to show its CF drug is still working over a number of years, as spending adds up over a patient’s lifetime.

    “We recognize that Kalydeco is a medicine that people with CF may take for their entire lives and believe that the price of Kalydeco reflects the significant benefits it provides, the time and cost to develop it and – importantly – our commitment to reinvest to create additional CF medicines. With that in mind, we are currently gathering long-term data for KALYDECO to evaluate its impact over many years, as we believe this type of long-term data will be important for many people involved in the treatment of CF — patients and their doctors and families as well as payers and regulators. These data were presented last year and showed that the safety profile was consistent with earlier studies and that the benefits from Kalydeco in lung function, weight gain and certain quality of life measures were maintained through nearly three years of treatment.”

  2. Timos Papagatsias says:

    Nice post. I think it is unlikely anyone would pay upfront for GT Tx, particularly when you just don’t know how long the vectors will be active (the CMV promoter in the Glybera AAV vector is known to be a bit “funny”); annual installments following appropriate testing is probably adequate at this stage. I am watching Glybera’s commercialization in EU very closely but I see it very difficult making into the US market anytime soon…in fact the EU situation is probably not very good either. Nevertheless, it is indeed a test case for GT and will affect following GT products

  3. Guest says:

    So much of what makes these therapies possible is paid for by society before the drug matures.
    The scientist’s and physician’s years of training are subsidized by government grants to Universities and hospitals.
    The early research is covered by NIH grants.
    The patient treatments are covered by their health plans and the hospitals double bill R&D companies for taking blood pressure and temperature readings from patients enrolled in trials.
    For rare diseases, disease-specific charities pay for much of the clinical work through grants.
    There are many scientists and doctors out there that will be very happy to devote their lives to finding cures even if it will not make them millionaires.

    What is needed is a structuring of rare disease payment model in a way that the NIH will cover the small scale clinical trials required and the patients will get the treatment at cost – the bill is already paid for.

    The only down side is that no one gets to be a millionaire off of someone else’s problem.