R&D pioneer tackles the next hurdle in gene therapy: Paying for $1M-plus drugs

Over the last few years, new vector technology has helped inspire a wave of biotech startups involved in developing gene therapies. Now, worried that sticker shock for the $1 million-plus treatments working their way down the pipeline could wind up poisoning the well for everyone, one of the principal academic investigators behind the new technology has been working on a suggestion for a new payment model for these therapies.

One of the biggest hurdles gene therapies face, writes James M. Wilson, a notable gene therapy researcher at the University of Pennsylvania, is that they may work too well. Where the pharma industry now makes billions off of long-term care for the chronically ill, a one-off gene therapy could partially or completely cure a disease. And with the kind of rare diseases they're focused on, biotechs looking to market these drugs may want to charge millions of dollars to make the economics work.

James M. Wilson

In a column for Nature Biotechnology, written with CVS' chief medical officer Troyen Brennan, Wilson suggests that a price of more than $1 million could well freeze the crowd of payers in the U.S. who would be responsible for covering the bulk of the cost. Payers wouldn't like being on the hook for a one-time bill without any guarantee that the treatment will work as long as expected. No insurer would want to be the first to provide coverage, worried that they would become the most popular payer for that disease group.

Wilson's solution: A capped annuity, or annual payment, stretching out as long as the treatment was patent protected and delivering a benefit.

"This payment could continue as long as the treatment continued to work, up to a limit established at the time of administration that would be commensurate with a discount off the price of an existing therapy," write the authors. "The original annuity payment could also be set with certain types of 're-opener' clauses, such as with patent expiration, or if a less expensive new therapy came on line--thus subjecting the gene therapy annuity to the same vagaries of market competition that standard pharmaceuticals face. If that insurer withdrew its policy, another qualified plan would have to accept the patient and--to make a system like the one outlined here work--also accept the annuity fee."

Unlike Europe, which operates with a single-payer system, negotiating a price in the U.S.--where a mix of payers play a role in establishing a drug's price--could be difficult. But Medicare could step in and set the benchmark for everyone.

Wilson is a well known figure in the gene therapy world. Back in 1999 he was running Penn's Institute for Human Gene Therapy when one of the patients in a trial--18-year-old Jesse Gelsinger--died as his organs failed. The death clamped a lid on gene therapy research for years. But Wilson--now director of the gene therapy program at Penn--also went on to help develop new technology that was used to start ReGenX, which in turn has outlicensed the vector tech to Third Rock's Voyager, Lysogene, and AAVLife, and spun out Dimension, which raised a startup round from the deep-pocketed players at Fidelity.

So far, only one gene therapy has been approved by regulators. UniQure landed an OK in Europe two years ago, but is still working on pricing as well as a U.S. approval. Now a slate of biotechs are crowding in behind them, and Wilson is still thinking about the future.

Joern Aldag, the CEO at uniQure, tells FierceBiotech that he expects more than one payment model to emerge for gene therapies.

"First and foremost: payers recognize the benefit of curative treatments to patients and they understand that curative treatments can lead to a strong reduction of the burden to the healthcare system, even if one time treatment costs are higher than that of 2-3 years of currently priced orphan drugs," he noted in a message this morning. "There will not be one pricing model for gene therapies: pay-for-performance may work well if the performance measure is sufficiently simple and reliable so that it does not require a scientific debate between the payer and the manufacturer about whether the therapy still performs or not. In addition, there will be a significant number of non-orphan diseases, such as uniQure's programs for congestive heart failure or Parkinson's, where pricing will not reach anywhere near the level of 7 digits, yet still be attractive."

"The article outlines an interesting thesis but it's a little premature for me/bluebird bio to be weighing in," responded Nick Leschly, the CEO at bluebird bio. "Our focus is on the development of our programs…we will be in a better position to comment on this topic once we understand the value our therapies contribute in a tangible way for patients. Look forward to discussing the topic in the future."

-- John Carroll (email | Twitter)

Suggested Articles

Fifteen of the 22 patients in a gene therapy trial no longer needed transfusions, while the remainder needed fewer transfusions.

Argos Therapeutics is ending its kidney cancer trial and mulling options, including a merger or sale, to stay alive.

CNS Pharma says berubicin is the first anthracycline drug to cross the blood-brain barrier and could transform treatment of the highly invasive brain tumor.