When a new drug emerges from research largely funded by grants from charities and government agencies, who gets to set the price? In the U.S., that question seems to have been answered — the drug company that makes it. As I’ve learned from a poorly redacted filing with the Securities and Exchange Commission, the answer may be different in France.

In May, the FDA approved Zolgensma, a gene therapy for young children with spinal muscular atrophy (SMA). Its maker, Novartis, set the price at $2.1 million, roughly nine times the median sale price for a home in the U.S. and 33 times the national per capita income.

One explanation for the high price is, why not? Novartis can charge whatever it wants for this therapy, and justifies the high price based on the emotional appeal of treating children with a terrible disease and a carefully nurtured narrative that new treatments are very expensive to develop.

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But there’s more to the story. The early development of Zolgensma was financed by the National Institutes of Health, which funded more than $450 million in grants citing “spinal muscular atrophy,” and also by a plethora of charities such as Sophia’s Cure, Cure SMA, Getty Owl Foundation, Fighting SMA, Jadon’s Hope Foundation, the Gwendolyn Strong Foundation, and Miracle for Madison — and those are just the ones in the U.S. — that are devoted to finding treatments for SMA. These charities called upon patient families and friends to subsidize the early research and clinical trials.

Sophia’s Cure at one point sued Nationwide Children’s Hospital for failing to provide the recognition it had been promised for its role as a sponsor of the investigational therapy.

None of the U.S. charities placed conditions on their grants about pricing if a drug did eventually make it to the market.

The NIH, however, has statutory responsibility under the Bayh-Dole Act to require that funded inventions be “available to the public on reasonable terms,” though NIH Director Francis Collins has decided to leave pricing decisions to drug companies, without any limits.

Things may work out differently in France.

As a recombinant gene therapy, Zolgensma uses the adeno-associated virus 9 (AAV9) as a vehicle to deliver copies of the gene encoding the human survival motor neuron protein to an individual’s cells. Généthon, a French charity focused on designing gene therapies for rare diseases, funded essential work on SMA and the AAV9 vectors used by Zolgensma. The company holds several key patents that were licensed to AveXis, a company created to commercialize Zolgensma.

In a March 31, 2018, submission to the U.S. Securities and Exchange Commission, AveXis included a highly redacted copy of the license from Généthon.

Redacted-contract

When I looked at the file, I noticed that the redactions were flawed, and that only the background color of the redacted parts had been changed. It was simple to load the document into a word processor, change the background colors, and create a completely unredacted version.

I had heard a rumor that Généthon included a reasonable pricing clause in the contract, and there it was, as paragraph 4.5, titled “French Patient Access.” Here’s what it says (“Licensee” refers to AveXis):

“Following the appropriate regulatory approvals, Licensee will use Reasonable Efforts to make available within France all the Licensed Products indicated for SMA at prices that would allow appropriate reimbursement scheme and that would not constitute an obstacle for patients to have access to the therapy. Licensee shall be solely responsible for designing and conducting all Commercialization activities necessary to fulfill its obligations under this Section.”

Unredacted contract

In the U.S., government, private, and public health insurance providers are limiting coverage for Zolgensma because of its record-breaking and access-blocking price. It could be a different story in France, depending upon what Généthon is prepared to do with the leverage it has in its license.

This raises a huge question for U.S. charities and government funding agencies: Why don’t our tax-exempt charities insist on reasonable pricing agreements to protect access to the medicines they help make, and why does the NIH refuse to enforce the contractual obligations in funding agreements to make the benefits of government inventions “available to the public on reasonable terms?”

James Love is director of Knowledge Ecology International, a not-for-profit organization that advocates for access to medical treatments at affordable prices, and is currently a member of the board of directors of the Union for Affordable Cancer Treatment. Knowledge Ecology International and the Union for Affordable Cancer Treatment have both petitioned the NIH and other federal agencies to use their rights regarding federally funded inventions to curb excessive prices. Both organizations are funded by private donations and do not accept funding from the pharmaceutical industry.

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  • I want to make sure that there is no misunderstanding about NIH funding. It is misleading to imply that any of the NIH’s $450 million investment was used in development of this therapy.

    There are many many NIH grants that have the same key words, such as “spinal muscular atrophy”. NIH grants do not require cooperation among researchers, even if they are working on the same stated objective So the funding for SMA may have gone to many hundreds of different investigators, none of whom contributed to the development of the therapy that ended up working.

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