GlaxoSmithKline has developed what looks like a cure for a rare and deadly disease, and it’s going to cost $665,000 for a single dose.
That sky-high price tag — more than twice the average price of a house — is likely to stir what’s already a long-simmering debate in health care: How much should curative therapies cost, and how should society pay for them?
GSK’s drug, called Strimvelis, is a gene therapy for severe combined immune deficiency, an inborn illness that leaves children unable to protect themselves against infection. It’s the same condition that forced David Vetter to live his life in a protective plastic sphere, depicted in the documentary “The Boy in the Bubble.”
Without treatment, children with the disease die before the age of 2. But a single administration of GSK’s therapy kept 100 percent of patients alive after three years in a small clinical trial, and that was enough to convince European regulators to approve it in May.
And those results are worth $665,000, according to the Italian Medicines Agency, which agreed to reimburse for GSK’s drug. Severe combined immune deficiency is otherwise treated with risky bone marrow transplants or enzyme replacement therapies that must be taken for life and can cost more than $4 million over the course of a decade, GSK said. Strimvelis, by contrast, could be a bargain.
Gilead Sciences (GILD) uses a similar calculus to defend its hepatitis C treatments, which carry a list price of more than $80,000 for 12 weeks of treatment. The alternative, Gilead says, is hospitalization and liver transplant, which cost much more than drug therapy in the long run.
But GSK and other gene therapy developers will need to convince payers to fork over huge, one-time sums for treatments whose long-term effects are still unknown.
Philadelphia’s Spark Therapeutics is expected to win FDA approval next year for a treatment for a rare eye disorder, a drug that would become the US’s first gene therapy. Like GSK, Spark has demonstrated excellent results in a small clinical trial, but no one knows how well its therapy will hold up over a patient’s lifetime.
That could be worrisome to insurers, who don’t want to shell out top dollar for a purported cure that wears off over time. Furthermore, even if gene therapies work as promised, reimbursing for them could present a sunk cost for payers. If a patient changes insurance providers after receiving a curative therapy, the insurer that paid for it is essentially subsidizing a competitor.
Some argue the rise of gene therapy demands new approaches to how drugs are reimbursed. One idea, put forth in Science earlier this year, is requiring drug makers to issue a sort of warranty, promising to give a refund or pay for additional treatment if a gene therapy stops working. Insurers could also negotiate an installment plan, the Science essay suggested, paying only as long as the drug is doing its job.
Meanwhile, drug companies and venture capitalists are pouring billions of dollars into gene therapy projects in hopes of shuttling more one-time treatments onto the market in the coming years. Pfizer (PFE), which has partnered with Spark, just acquired a small biotech company to develop gene therapies of its own. Bayer (BAYRY) has invested in the space, as have Biogen (BIIB), Sanofi (SNY), and Novartis (NVS).
There’s already at least one cautionary tale on the books. Glybera, a gene therapy approved in Europe in 2012, sputtered to commercial failure after reimbursement agencies balked at its $1 million price tag. UniQure, the company that invented it, eventually scrapped plans for a US application and sold the drug’s marketing rights to another firm.
Despite its high cost, Strimvelis is unlikely to be a blockbuster for GSK. The disease it treats affects only about 15 people each year in Europe, according to the company. In the US, where GSK intends to seek approval next year, that number is closer to 12.
The drug maker plans to administer its gene therapy at Milan’s San Raffaele Hospital, which helped develop the treatment. Children from around the European Union will be able to get Strimvelis there thanks to cross-border health care provisions, GSK said, with their home countries picking up the cost.