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didn’t respond or said their reviews were underway and declined to comment further. Anthem spokesperson Leslie Porras said Anthem is reviewing the data to “fully understand the benefits and harms of [nusinersen].”
Part of that review includes negotiation. Insurers and their agents—powerful bulk purchasers like CVS Caremark and Express Scripts—hammer out secret discounts and rebates with drug companies. The details rarely, if ever, come to light; a drug’s real world cost is typically lower than its headline grabbing list price. But the list price is the only way for observers to measure the market.
The average list price for a rare disease treatment between 2010 and 2014 was $111,820 per patient, per year, according to a 2015 report from EvaluatePharma.
After its controversial FDA approval last year, Sarepta Therapeutics (NASDAQ: SRPT) said the first approved drug for Duchenne muscular dystrophy, eteplirsen (Exondys 51), would cost an average of $300,000 per patient, per year. Alexion Pharmaceuticals’ (NASDAQ: ALXN) rare blood disease treatment eculizumab (Soliris) costs more than $500,000 per year.
Roger Longman, CEO of drug reimbursement specialist Real Endpoints, says insurers haven’t fought back against orphan drug prices because they account for a small fraction of total costs. That’s changing. As prices creep upward, these drugs are “moving [away] from the protective space” they were in, much like the prices for so-called “specialty drugs” for more common diseases like hepatitis C or rheumatoid arthritis. Though Gilead Sciences’ (NASDAQ: GILD) sofosbuvir (Sovaldi) was a breakthrough that cured many cases of hepatitis C, its $84,000 price tag and immediate explosion of sales “busted payer’s budgets,” Longman says. There continue to be fights over access to the drug, particularly in prisons, where inmates across the country have filed lawsuits.
“This could be a wake-up call to payers, not unlike the wake-up call they got when Gilead Sciences priced Sovaldi,” Longman says of nusinersen.
Asked how Biogen came up with nusinersen’s list price, spokesperson Matt Fearer says the company evaluated “a number of important factors, including its clinical value, its impact to patients and the health care system as a whole, and the need for Biogen to fund further research and development to make the next innovation possible.”
“Biogen conducted primary research with several key stakeholder groups, including healthcare providers, hospital administrators, and payers, in order to solicit feedback on multiple proposed pricing approaches before moving forward,” he says.
One argument drug companies use to justify high prices is that drugs save society money by keeping people out of hospitals, or away from expensive chronic care, and giving them back productive lives. Memedovich recalls how her son Mikhail was athletic and loved basketball as a kid. Around the time of his diagnosis at the age of 10, he began falling. One day, trying to keep up with his friends running across the street, he almost got hit by a car. Now he uses a wheelchair and scooters, and Memedovich took out a loan to buy him a special car. He had to take a leave of absence from college at UC San Diego because of respiratory problems, a common problem for SMA patients. Memedovich now cares for him at home and worries about the loss Mikhail feels, no longer having the everyday abilities many take for granted.
She wonders about the physical and psychological relief that a drug like nusinersen might have brought if available a decade ago. When asked about the financial relief—how much would a drug have saved the family?—she replies with a question: “How do you translate that into money?”
But that is exactly what insurance companies will be doing as they begin negotiations. And there are rumblings of potential trouble. Some insurers have drawn a hard line on eteplirsen, for instance, despite the fact that there are no other treatments available for Duchenne muscular dystrophy. Nusinersen appears to have a better case to make. It showed a clear benefit in placebo-controlled trials, while eteplirsen was approved because it was “reasonably likely” to benefit patients.
Kenneth Hobby, president of the nonprofit patient advocacy group Cure SMA, pointed to the “high-quality, robust data” that Biogen and partner Ionis Pharmaceuticals (NASDAQ: IONS) produced for nusinersen. “We would hope [the data] would help confirm the potential value to patients and families from this therapy for insurers,” says Hobby. He also cited the FDA’s approval for all types of SMA—“a broad label”—and the agency’s unusually enthusiastic comments about the drug. (Cure SMA receives a small portion of its yearly funding from drug makers.)
But many expect a fight. Leerink Partners analyst Geoffrey Porges recently wrote in a research note that nusinersen’s price is “likely to invite a storm of criticism, up to and including Presidential tweets” and may lead to backlash from insurers. “At the very least… the price is going to force payers to closely scrutinize which patients receive access and limit the overall access provided,” Porges wrote, adding that it “seems certain” that older patients with type 3 or type 4 SMA and milder symptoms will “find it difficult to obtain treatment.” (Mikhail Memedovich fits that description to a tee.)
Reimbursement consultant Longman also expects some restrictions from payers, “I think Biogen made a misstep,” he says. After talking to payers, Longman says they’re “beginning to plan how to restrict things.”
One purchasing agent hinted that paying for nusinersen might affect spending on other drugs. Jennifer Luddy, a spokesperson for the pharmacy benefit manager Express Scripts (NASDAQ: ESRX), says that drugs like nusinersen “make it imperative for payers to tightly manage their pharmacy spend in other areas to create headroom to afford more expensive, breakthrough therapies.”
That said, Khrystal Davis looks at her son Hunter and “firmly believes” that insurers will ultimately pay for nusinersen. She says it would be “arbitrary and discriminatory” if, as analyst Porges suggested, insurers draw a line within the SMA population. Both Davis and Memedovich spoke of class action lawsuits if patients are denied coverage.