As someone who has lived with spinal muscular atrophy for all 30 years of my life, I was perplexed and disappointed that the recent approval of Novartis’ gene therapy Zolgensma was immediately overshadowed by outrage over the drug’s price: $2.125 million.

The Food and Drug Administration’s decision was a pivotal day for those of us in the SMA community. Zolgensma, approved for children under 2, is the only one-dose treatment option for any category of SMA patients and has been highly effective in clinical testing so far.

Sure, it’s the world’s priciest drug. But instead of debating the level of financial profit that is appropriate for Novartis, let’s focus on the needs of patients. How are we going to get treatments for rare diseases if there’s not a financial incentive for doing it? Therapies are being developed because people think they can sell them for a profit. We don’t like to talk about it, but pharmaceutical companies exist to make money. Don’t we realize, though, that all of society profits from each disease we cure and each baby that is saved from SMA and other deadly diseases?

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As a professor of economics and finance, I believe that the cost-related complaints being thrown around social media are short-sighted. Shortly after Zolgensma’s price was announced, I even told a friend, “This is a good problem to have.” Why? It’s a twofold answer:

Competition. Zolgensma is the second treatment approved for SMA, following Biogen’s Spinraza. Now that there’s competition in the marketplace, that will lead to lower prices over the long term, especially if Zolgensma is approved for older SMA patients down the road. Roche currently has a daily pill called risdiplam for SMA in clinical trials. Should it also be approved, there will be further competition and downward pressure on prices for all three therapies.

Long-term value. The first two years of treatment with Spinraza cost around 50% of one Zolgensma infusion, but Spinraza treatments must continue for life at a cost of $375,000 each year. The four initial loading doses of Spinraza in the first year of treatment total $750,000. Over a 10-year period, the cost-effectiveness of Zolgensma is clear.

In terms of quality of life, one IV infusion of Zolgensma is definitely more palatable than multiple spinal infusions of Spinraza each year. I’m currently thrilled with the improvements in stamina and strength I’ve received from five doses of Spinraza. But I certainly wouldn’t miss the pain of having a needle inserted in my cervical spine every four months. (Due to my scoliosis, the less invasive, and less risky, lumbar puncture procedure isn’t possible. Other SMA patients have similar challenges.)

Critics of the eye-popping cost of Zolgensma need to take into account its long-term benefits. Zolgensma’s approval, and that of Spinraza, is the beginning of a new paradigm for treating SMA and for the fight against muscular dystrophy in general. Without any treatments, SMA would remain the top genetic killer of children under 2.

I’m not saying that cost is entirely irrelevant. I currently receive financial assistance through Biogen’s Spinraza copay assistance program. Biogen pays for any part of the drug and infusion procedure costs that my insurance company doesn’t cover (until I meet my $7,900 annual out-of-pocket maximum). In the end, though, I’m going to meet the annual out-of-pocket maximum no matter what due to other medical costs.

You might be skeptical of me saying $2.1 million isn’t too high a price while I receive help paying for Spinraza. A $2.1 million treatment for SMA, though, is no more ludicrous than paying more than $1,000 a month to rent a portable ventilator, especially when that one treatment will likely eliminate the need for the ventilator and many other costs associated with SMA care. I do hope Novartis will work with payers (public and private) as well as patients to maximize the number of children who receive Zolgensma.

We should not put a price tag on life, though. “$2.1 million is too much to spend for that baby’s survival” isn’t the kind of “value assessment” we should ever accept as a society. Instead, think about the parents who will no longer have to receive the heartbreaking news that my parents were given 29 years ago: “Your child has spinal muscular atrophy, and there’s nothing we can do. Survival beyond early childhood is unlikely.” The price of Zolgensma seems insignificant now, don’t you think?

Nathan Yates, M.S., is an adjunct economics and finance professor at Southern New Hampshire University and the founder of ForwardView Consulting.

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  • I find it ironic that some people complain about the cost of drugs that save their lives yet will without hesitating will pay $1,000 for an iPhone, $30 for a case of beer, $50,000 for a truck, $300 for a pair of shoes $10,000 for a diamond (essentially, a rock dug out of the ground.) The markup and profit margin of all of these and most frivolous products are high, yet no complaints there?

    The extreme difficulty and high level PhD brain power needed to make a curative biological product out of a strand on the DNA helix is staggering. The failure rate is high, about 90%, it’s so difficult to do.

    So think about this the next time you pony up $50 for a piece of salmon and some carrots, or $200 for an NFL ticket in the nose bleed section. A treatment with a $50 copay that keeps your heart beating another day doesn’t seem like a bad deal.

    • But – it isn’t the price of the co-pay that’s the problem. It’s the price of the $2 million dollar drugs (and it will be followed by more) to society – which overall displaces spending on things like housing, for instance. Maybe if we didn’t spend such a crazy amount more than any other country on medical care we could get the homeless into housing and finance public day care.

      It’s not a question of “what a life is worth.” Nor is it a question of the “value” of a treatment in terms of the patient’s benefit – this unfair yardstick was developed by the drug industry when even their overinflated estimates of drug development cost (see Merrill Goozner’s The $800 Million Dollar Pill) couldn’t “justify” the prices they now wanted. I think the focus on price is totally appropriate as the question is whether THIS price level is really needed for “incentivization” of discovery. And that is highly questionable based on the evidence.

  • People’s reactions to the costs of medical care are off-tempo.
    Our instincts are wrong because we have been so heavily programmed to navigate financially in a consumer’s free market.

    But health care consumption is not a free market issue.

    For one thing, no one can decline to purchase something because it is priced too high. No one says, “That’s way too much to fix my son’t broken knee. I guess I’ll pass for now and see if the cost comes down over the next few months.”
    So ordinary market forces do not apply.

    Another problem is that the cost per person of health care is potentially “infinite.”
    It is easy to imagine a scenario involving conjoined twins who need surgery lasting 20 hours, involving 70 health care providers, and with many follow-up surgeries — and who have SMA, brain damage, and need heart-lung and bone marrow transplants, along with kidney transplants … and on and on.

    It is unrealistic to think that the general public will tax themselves so harshly that they will pay for all this.
    The taxpayers must necessarily think, “Every penny I spend on paying an essentially infinite medical bill for someone else’s kids is a penny withdrawn from my own kids.”

    We have had enough experience with various forms of government to have seen that when a service (such as buses, food, medical care) is paid for by the taxpayers as a whole, the service does exist, but in a vastly inferior form.

    Buses paid for out of taxes do exist, and charge only nominal fares. But they don’t run often, and they don’t go near your house or your work.

    Food prices in a command economy are low, but the only food available is potatoes, sugar, tea, and sometimes some sausage or potted meat.

    Clothing is cheap, but it is so undesirable that American blue jeans or French bras would buy you whatever you wanted.

    So it would be possible to cover the potentially infinite costs of unlimited health care by taxing the general public, but this has been demonstrated to result in inferior health delivery — including Canadian and British health care.

    • Fraid you are wrong. I live in Britain, have lived in the US and can tell you that the UK NHS system is vastly superior to anything in the US. On the NHS you do not have to worry about insurance, deductibles or anything else. If you need treatment you will get it, and will not need to worry about incurring any expense. And if you need to, you can top up using private insurance, though not many choose this as the NHS is so good.

  • This is covered by insurance companies. As the result insurance companies will raise others premiums. People are mad because their insurance goes up.
    That is the bottom line.

  • The author made a good point! But he is also missing 2 other points: 1. How much should a single person pay for health insurance, when his/her drug costs $750.000 a year? 2. Aren’t those highest “risk pools” only “affordable” for a society where everyone pays into the the same “pool”? I am missing what his opinion is on Single Payer health insurance, being an assistant economics prof. after all.

    • In the 600-700 word allotment that I was given for the article, I couldn’t delve into a review of the entire health insurance system.

  • I see your point. I suffer with fsh muscular dystrophy. But I think the reason people are so angry about the price is because literally almost nobody can afford a treatment that expensive. It’s great what these companies have developed and I commend them. But at the same time, the mass majority of people that suffer with this disease and many others will never see a treatment in their lifetime. I’m all for those developers getting a good share of the money but unless you are basically filthy rich you probably will never see a treatment like this. Honestly I think it’d be hard knowing there’s something out there that can literally give you a normal life again, but you’d have to be astronomically more wealthy to even consider it

    • That’s right. And crazy high prices mean people who could benefit in other countries – don’t. Look at how our government has threatened Colombia over wanting to make Gleevec cheaply available to CML patients – when it’s a literal lifesaver. Our priorities – and our humanity – are really out of whack if these good treatments are only for the rich.

      We found a solution for broad availability of HIV drugs and it could be done for other really good treatments as well – but not with the current price-gouging system.

      The anger is TOTALLY warranted.

    • Umm, you do realize that health insurance will cover Spinraza for you, right? So will Medicaid. Zolgensma will be covered, too.

  • Hi Nathan
    You know who else exists to make money? Insurance companies. As an economics and finance expert I’m surprised you don’t address the impact on our economy when an already woefully inadequate healthcare system becomes additionally stressed by insurance companies who are compelled to pass along these costs to the average consumer/patient. I also don’t think that all patients have equal access to these overpriced treatments.
    Here’s the point: I am a career scientist whose sole professional mission is to discover life saving medicines. When we do this everyone deserves equal access to said medicine. That’s why we do what we do. Anything that impedes that access is just plain wrong. If this doesn’t get fixed soon it will all come crumbling down and the people who will be hurt are the patients.

    • Exactly!!!??? How could anyone really justify making a drug so expensive that only the elite could afford it? How does that help the average person? I respect and commend all the wonderful people that find cures to rare diseases, and it’s not their fault, but again what’s the point of a cure if everyone afflicted can’t have equal access? Sorry but it sickens my stomach that anyone would try to justify making cures so expensive that the masses can’t receive it. Basically if you’re wealthy congrats you can have access to this cure, if not then sorry. Tough luck. I’m all for the developers making a profit but damn this is too much. All this does is give that big CEO a huge salary. Also considering our tax money helps fund this, that means prices shouldn’t be this ridiculous

    • Everyone does have access to these drugs for rare diseases. You are either being willfully ignorant, or trying to make some false ideological point.

      The truth of the matter is 90% of all patients receiving biologics for rare diseases are covered by either their prescription or medical benefits, with a minimal monthly copay. The other 10% of patients receive some kind of assistance or get the drug for free.

      So please, cut the drama and stop putting out false claims and accusations.

    • Thank you, Gene Petrella. I’m sure LOTS of scientists are happy to work on improving life for people and don’t want these kind of prices – it is heartbreaking for some of them when they see what happens. We don’t need to act as though money is the only motivation even though everyone yes needs to make some. And thank you for your work.

      But for the amoral drug companies and executives – in many cases yes it IS their only motivation.

      My brother has a retired friend who worked all his life for pharmaceutical companies and felt good about what he did for years but toward the end of his career and now he became very unhappy about the direction that whole industry has taken.

    • Bob – no, everyone does NOT have access to these drugs. And you miss the point that even if a large number get access through insurance – in the long run “minimal co-pay” or not that drives up insurance premium costs, drives up government healthcare spending, and keeps down wages and crowds out other worthwhile spending.

      It’s become very clear that one of the major motivators for passage of Medicare Part D was to allow the drug industry to raise prices on a heretofore-unheard-of scale – and they have.

  • So glad you raised the lifetime costs associated with the current treatment regimens. Everyone focuses on the acquisition costs for transformational therapies and ignores the savings that accrue over a lifetime – not to mention ignoring the reduction in suffering and inconvenience. This is a symptom of our insurance system where an insurer isn’t sure whether you will be on their plan next year or the year after that, so they don’t take into account the future savings because those benefits may accrue to another insurer. This is one situation where a single payer system has an advantage because they are responsible for your lifetime costs and as such, may be more willing to pay a larger acquisition costs up front that will yield larger system cost savings over a lifetime.

  • Your article is right on. I was in the pharmaceutical industry for 15 years. Prior to that I was a nurse practitioner in oncology. It cost so much to develop drugs and bring them to market which is borne by the pharmaceutical companies until it is approved. The cost to provide patients supportive care for many disease is astronomical. So, let’s stop palliative care where appropriate and give patients the opportunity for a possible cure and or improve their quality of life.

  • Great article. I feel the same way. I grew more and more angry with every article I read focusing only on the cost. Lets keep things in perspective, a life is certainly worth the cost of the treatment. The drug company should make a nice profit for taking the risk and developing a new drug. More power to them. Not price gouging. It’s a miracle. We fritter away billions on wasted aid to soybean farmers, on lottery tickets and paying sports stars. a couple million to save a life or cure a disease is a no brainer.

  • ……are we putting a price on ‘LIFE’? Seems to me that pharm companies make plenty of money….why not ‘give’ a needy person what they need to live?

    • Because no company can exist if they are losing money on their product.

      Your “gift” would be great for whichever patient received it, the problem is that no future cures would be developed for millions of other patients with other diseases.

    • Because big pharm is a collection of little individuals like lab techs, chemists, scientists and the people who maintain the buildings as well as the secondary business from that business. Giving away these people’s lively hood seems good to someone who isn’t involved. Big pharma is not some nebulous group, it is made up of thousands of individuals, all of which have to be paid or they wouldn’t bother going to work. Not unlike yourself.

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