This past Christmas weekend, Ana Memedovich had her best two days in more than a decade.
Her 23-year-old son Mikhail has spinal muscular atrophy, or SMA, a rare genetic disease that has slowly robbed him of the ability to walk and function independently. On Dec. 23, the FDA approved nusinersen (Spinraza), the first-ever drug for the disease. More than a decade after his diagnosis, Mikhail only has the strength to take a few steps on his own. With the approval, Memedovich finally had hope.
But just after Christmas, she saw the price. Cambridge, MA-based Biogen (NASDAQ: BIIB), the drug’s developer, priced nusinersen, a chronic treatment, at $750,000 for the first year of treatment, and $375,000 every year thereafter. The numbers blew past analyst estimates, and they push the envelope even further for drugs for rare diseases, which are priced high to begin with because of the lack of alternative treatments and small patient numbers.
Memedovich froze. She sensed the battle ahead with insurers, and knew Mikhail would likely have to wait even longer to get nusinersen. His condition could get worse. “I thought we were finally going to get some help, that the path was clear,” she says with a sigh. “This is going to be a huge problem.”
Mikhail’s wait has already begun. Memedovich has been feverishly calling and e-mailing the Gillette Lifetime Specialty Healthcare Clinic in St. Paul, MN, trying to contact her son’s neurologist to get a nusinersen prescription. Mikhail’s neurologist this week told her that “critical patients”—younger patients, or those with the more severe type 1 or type 2 SMA—would be treated first.
According to his mother, Mikhail might not get a prescription until the end of the summer, meaning he might not actually get nusinersen until next year. Memedovich says Mikhail’s neurologist told her the clinic would have to triage patients because of “bottlenecks.” There is only one doctor at Gillette giving nusinersen injections, she says. Triaging is a common medical practice in emergencies to treat the most severe cases first.
Xconomy asked Gillette to respond to Memedovich’s claims. This is the response a spokesperson sent via email: “The determination of when and to whom this drug is administered is based solely on clinical factors, beginning with a patient’s SMA type and age. Administration of [nusinersen] requires a very specific and complicated clinical schedule involving a series of precisely timed lumbar punctures over a several-month period.”
That doesn’t make it any easier for Memedovich, who must now sit and wait for a phone call. “Why are we supposed to sit back and relax until we hear from them down the road? We are not taking anyone’s place,” she says. “We just want treatment and are flat out being denied one.”
Memedovich and other parents of SMA patients are worried that the high price will add another obstacle to their loved ones getting nusinersen. “The concern that insurance companies will deny coverage has echoed throughout the SMA community,” says Khrystal Davis, whose five-year-old son, Hunter, has type 1 SMA. “However, the concern is not restricted to those with type 3 and type 4 of the disease—we all fear our insurance companies will deny coverage.”
SMA affects 10,000 to 25,000 people in the U.S., according to the SMA Foundation, and comes in a variety of forms—type 0 through type 4. Type 0 is diagnosed in utero. Patients with type 1 are diagnosed within six months of birth, might never walk or even sit up, and often die within a few years. Patients with type 2 through type 4 have a better prognosis, but their lives are still compromised. Type 2 patients live longer but might need a wheelchair. Type 3 patients, like Mikhail, can often walk when young but tend to be diagnosed before adolescence, with a deterioration of motor skills to follow.
Insurers have yet to issue decisions about nusinersen. Most insurers contacted by Xconomy, including Anthem, Aetna, UnitedHealthcare, Molina Healthcare (which administers Medicaid plans), and Harvard Pilgrim Health Care, either 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.
“Nusinersen received an unrestricted label for treating SMA, and that is how it should be applied and covered by insurance,” Davis says. “To do otherwise would be unethical.”