all the information, none of the junk | biotech • healthcare • life sciences

Why Spark and Watchdog ICER Don’t See Eye-to-Eye on $850K Gene Therapy

(Page 2 of 2)

present valuation problems. No one knows how long they’ll last, and it is often difficult to connect the real benefit of treatment to the real impact on a patient’s quality of life. Spark’s case is even more challenging. While some diseases have itemized savings that insurers can plug into their spreadsheets—for example, eliminating the yearly cost of a hemophilia patient’s blood-clotting drugs —vision loss has a lot of intangibles.

Those intangibles have left Spark and ICER both feeling their way to determine Luxturna’s value through computer simulations; each came up with very different answers.

Spark’s calculation included a variety of measures, according to CEO Jeff Marrazzo. The most important measure was the improvement Luxturna patients gained, over time, in navigation through a maze in dimly lit conditions. (This improvement was also the main goal of Spark’s main clinical study, one that had never been used before.)

Spark believed the improvement was worth more than $1 million, in part because Spark found around 25 court-ordered disability payouts “in states that release award information for people who partially or fully lost their sight.” The payouts ranged from $250,000 to $4 million Marrazzo says.

Another data point that went into Spark’s formula for societal benefits was the productivity of caregivers for children with poor eyesight.

In an e-mail to Xconomy, Spark said this figure, measured over 18 years, ranges from $594,000 to $1.26 million. The company combined a 2006 study from the journal Retina (on people with a different eye disease, age-related macular degeneration) with caregiver wages from the Bureau of Labor Statistics and Social Security Administration.

Spark also used data from the consulting firm Precision Health Economics that tabbed annual productivity loss for visually impaired or blind people—that is, how much less they’ll earn in yearly wages than people without such vision problems— between $15,000 and $53,000, depending on their education level.

“We worked to try to do this as transparently as I think you can do it, and certainly more so than has been standard in this industry,” Marrazzo told Xconomy.

From what ICER’s Pearson has seen of Spark’s pricing model, however, he has identified key differences.

One, Pearson says, is ICER and Spark have different ideas how improvements in the low-light maze test translate to a better life for a patient. ICER and Spark also had different assumptions how long the therapy would last.

But the indirect costs—the change in quality of life for caregivers—is where the big discrepancy lies, and why it won’t be solved anytime soon. Spark says ICER doesn’t account for the impact Luxturna has on caregivers. ICER acknowledges this. But it counters that Spark hasn’t shown any clear data, either from its own clinical studies or elsewhere, that the burden on caregivers for Luxturna patients is “more significant than the burden associated with other conditions.”

“The company didn’t gather any data on that,” Pearson says.

MIT health economist Gruber says the back and forth between ICER and Spark shows just how hard it is to define the scope and price of indirect societal benefits. Say, as a result of treatment, a caregiver who is a family member can now get a job. That job then pays taxes, and those taxes have a multiplier effect. How far should those benefits extend? How should a caregiver’s time should be valued? And how much of the value in these calculations should flow back to the drug maker, especially if they do multiply over years or even decades?

Pearson says there is no easy answer to these questions, no “silver bullet.” Perhaps there won’t be a silver bullet, but some standardized measures will be necessary, says Gruber. In the U.K., where the government runs the healthcare system, one entity creates those measures. But in the U.S., will any single party be trusted to do the analysis? And would its judgments wield influence or just the power of shaming?

“We need to raise these questions and start thinking about them,” says Gruber. “We’ve been putting that off, but we can’t anymore.”

Single PageCurrently on Page: 1 2 previous page