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 agree completely! My daughter will be four next month and has type 3 SMA. She is not eligible of Zolgensma, but does receive Spinraza. Every four months she goes under anesthesia for this procedure. I’ve seen her burst into tears in the grocery store after seeing someone in scrubs. If other parents don’t have to go through that I think the drug is worth it.

  • Thank you for your article. My grandson has been recently diagnosed with SMA. He is 3 weeks old. We are hoping that he qualifies for Zolgensma. It would change his life and save millions of dollars in medical care over his lifetime.

  • Spring Texan:

    You didn’t really read my post, did you?

    Do you have any idea how incredibly difficult it is to create a curative biologic drug out of someone’s DNA for a small rare disease population?

    Obviously you don’t.

  • Loved your piece. Great feedback representing the SMA community. And with insights that give hope for future evolutions.
    Kind regards, Eva, Rare Diseases Belgium

  • In US alone, SMA affects 10,000 to 25,000 children annually. Let’s say out of these, a 5% (500 to 1250) children can afford paying $425,000/year for 5 installments; what about the rest of them?
    You say the drug’s price will drop over time, but what about those who are unfortunate now? Should they suffer when there’s a cure right in front of their eyes?
    Let’s say the price drops to $100,000. It is still, a freaking high price.
    How are Engineering products valued? They are in years and years of R&D, same as medical products.
    But they are valued not based on competition, but based on number of buyers available, money spent of R&D, saturation point of product.
    I’m sure the treatment’s value will drop drastically if considered those parameters instead of having competition as a parameter.

    • “what about the rest of them?”

      That 95% will have their treatment paid for by either commercial or government insurances and they will have only a copay, which is how all rare disease drugs are currently paid for.

    • Insurance will cover the treatment. It’s cheaper than the alternative therapy and cheaper than untreated SMA.

  • “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.”

    Except that you are missing another point:

    Zolgensma has been developed by Genethon, a French lab financed by donations and public funding.

    Only the second part of your statement is true: “pharmaceutical companies exist to make money.”

    http://www.genethon.fr/wp-content/uploads/2019/05/GENETHON_WELCOMES_THE_FIRST_GENE_THERAPY_FOR_MNM_05_27.pdf

    “On May 24, the Food and Drug Administration approved Zolgensma®, a gene therapy drug for the treatment of spinal muscular atrophy developed by AveXis (Novartis). Genethon, the AFM-Telethon laboratory, played a decisive role in the design of both the product and the route of administration of this first gene therapy for a neuromuscular disease, thanks to the pioneering work lead by Martine Barkats and her team”

    • And what you are missing is that “AFM-Téléthon is an association composed of patients and their families who are affected by a genetic, rare, progressive and severely disabling disease.”
      With out making any return on a very expensive therapy, Genethon would have no employees and wouldn’t be able to fund further research.
      Being funded by a non-profit is a huge part of why the treatment is so high.

    • @sickofthis “With out making any return on a very expensive therapy, Genethon would have no employees and wouldn’t be able to fund further research.”

      But they do, thanks to annual donations and public funding.
      Genethon will not (or almost not) profit from the returns on Zolgensma’s sells, it will be for Novartis, the company who now has the patents.

      This means patients first have to pay to financed the lab through donations and taxes to develop the drugs and now they have to pay again another company in order to have it.

  • That’s pretty easy for a university professor to say, even if competition was a thing in pharmaceutical research it’s rich to say it’s fine people can’t be treated now because they can’t afford it because in 20 years there might be a cheaper competitor.

    Having worked on multiple trials that were terminated not because the IP was ineffective but simply because a competitor got there first, the point is moot anyway.

    Additionally, two wrongs don’t make a right- it can be ludicrous for a portable ventilator to cost $1K AND be ludicrous to have to pay in excess of $2m for a lifesaving treatment.

    It’s insane to me how someone who must be as bright as you can so easily dismiss the very real human cost this price causes because you yourself will be shielded from it.

    Finally, you can spend the savings you mention elsewhere too. Imagine the drug ‘only’ cost $1m; you’d still save a ton of money from not having all the ancillary equipment, Novartis would still make a handsome profit, and the $1,5m you’ve saved can be used in other areas of your terribly underfunded Medicaid and Medicare programs.

    Although I doubt many patients with this disease will live to reach the age they will be eligible for Medicare given that you’re so eager to stop this drug from reaching them in the name of ‘competition’ and ‘savings’.

    • I didn’t write as a professor; I wrote as a patient who happens to have advanced knowledge of economics and finance. Also, you have an error in your logic: You first cast doubt on competition in pharma research before noting,”Having worked on multiple trials that were terminated not because the IP was ineffective but simply because a competitor got there first.” You proved my point. Thank you! Finally, if you think for one moment that I’d prefer that people die from SMA, you didn’t understand my writing at all.

  • Bravo. Thank you for this well-written piece. Zolgensma is a game changer, and its price is within the cost-effectiveness range of the Institute for Clinical and Economic Review (ICER). Critics, especially groups like “Patients for Affordable Drugs,” have failed to acknowledge any of this.

  • Thanks for the clear and powerful position. I hope this and/or other SMA treatments bring you meaningful symptom relief. I too am a rare disease patient who is likely to get relief from new drug development. A victory for one rare disease is a victory for all. Thanks again!

  • I am surprised that a prof of economics hasn’t had the forward view to look at whether price competition even actually exists for pharmaceuticals. Let me save him some time and tell him that it doesn’t. It’s an oligopoly, doc.. and so prices remain fixed. Dismayed that this prof doesn’t know this. Shucks.

    • To an extent, I agree though would find it more accurate to say that what we commonly associate with price competition doesn’t occur in the same way in pharmaceuticals for a number of reasons.
      As has been mentioned, there is a long period of spending without reward, both for an eventually successful drug and for all of the failed efforts that produce the final success. Patents and intellectual property allow companies to recoup some of these costs and during this period, competition is reduced.

      Once a patent expires, there is still a period of time before a similar drug can be manufactured – depending on the complexity of the drug – and prices will not start to shift until other options are available. Even at this stage, the drugs are unlikely to be identical and so competition will only be partial.

      After several similar treatments have been developed and are off-patent, prices will fall but only once sufficient proof has been provided that show that drugs are truly comparable and competitive. Frequently, there will be a preference for the first treatment to remain in use as it is the most familiar and therefore physicians may be more likely to recommend it’s use.

      Drug development is a long process and the timeline for a high initial price to be reduced by competition can be decades but it is still competition.
      Oligopolistic competition with strong rules and oversight in place can lead to socially acceptable outcomes and there are few more scrutinised industries than pharmaceuticals, as this news story demonstrates.

      I would also highlight the benefits of a single-payer system in trying to solve these debates; the socially desirable amount to spend on a person’s treatment can be considered from a societal perspective, taking into account many more of the issues, such as the reduction of other long term healthcare costs as well as ethical questions about what right to healthcare a citizen has.

    • Competition exists in an oligopoly, too. The cellphone service industry is an oligopoly market where price competition is savage. I’m not surprised that you didn’t know this.

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