The first gene therapies could hit the US market next year, but with their arrival comes a painstaking conundrum: how to pay for single-dose medicines that promise a quick cure, but have sky-high price tags.
Consider a drug called Glybera. While approved in Europe to treat an ultrarare enzyme disorder, its $1 million cost precluded coverage in most European countries. The manufacturer subsequently ended plans to win regulatory approval in the United States and sold off its European marketing rights.
This is a cautionary tale. European countries have very different systems for paying for medicines, but the increasingly high cost of many prescription drugs is already straining health care budgets across the United States.
Take the recent batch of hepatitis C treatments. These drugs are capable of curing an intractable disease and saving untold dollars in the long run by helping patients to avoid liver transplants, cancer, and hospital stays. But the high, upfront costs have led to rationing by many budget-strapped states.
Gene therapies will pose a similar problem. These treatments transplant normal genes into cells, replacing missing or defective ones to correct genetic disorders. The therapies are designed to be administered just once, so drug companies are expected to charge a lot more than they do for a bottle of pills patients take every day.
But how can countries afford these one-and-done medicines?
In an essay published last week in Science, a physician and a venture capitalist proposed shifting more of the burden onto drug makers.
Some of their ideas may be difficult to achieve, but they are certainly timely, since the first gene therapies could appear in the United States as soon as 2017.
Spark Therapeutics (ONCE), a spinoff of the Children’s Hospital of Philadelphia, expects to seek regulatory approval this year for a therapy to combat an inherited eye disease. And GlaxoSmithKline (GSK), which on Friday won European approval for its Strimvelis gene fix for a rare immune disorder, could follow suit next year with its US marketing application.
One suggestion is for companies to issue the equivalent of a manufacturer’s warranty. If a pricey therapy eventually stops working, the drug maker could issue a refund or pay for additional rounds of treatment. Or, insurers might negotiate to pay in installments so long as the drug stays effective.
“It’s really an attempt to push quality and for companies to stand by their products,” said Dr. Stuart Orkin, a pediatric oncologist at the Dana-Farber Cancer Institute and Boston Children’s Hospital. The point, he added, is to cap drug costs.
Orkin coauthored the Science essay with Dr. Philip Reilly of Third Rock Ventures, a biotech investor that has helped launch gene therapy companies.
Whether their proposal will gain traction is unclear. A drug maker could respond by deciding to charge an even higher price in order to speed the return on investment.
But if fair prices are set, an installment plan could successfully help spread out the costs for such expensive medicines, at least in principle.
“The notion of paying over time for a cure makes sense,” said John Crowley, chief executive at Amicus Therapeutics (FOLD), a New Jersey-based company developing several rare disease drugs that’s exploring gene therapies. “But I also think that if you develop a therapy that really does cure somebody, the system will figure out how to pay for it.”
The other trial balloon being floated by Orkin and Reilly is to redirect tax breaks.
Under the Orphan Drug Act, a company is awarded tax credits for developing treatments for a rare disease that affects fewer than 200,000 people. Orkin and Reilly suggest that companies essentially take some of those dollars and use them to reduce the cost of their medicine.
This is a provocative notion that is likely to meet stiff resistance from the pharmaceutical industry, which cherishes these sorts of incentives for drug development. And implementing it would require Congress to change the law.
Joel Hay, a professor of health economics and policy at the University of Southern California, doesn’t expect that to happen anytime soon.
“The whole point of the Orphan Drug Act is to make more drugs available,” he said. “I think if you diminish those benefits, companies will be less likely to develop drugs for those conditions.”
He may be right. It will take imagination and compromise to find the necessary balance rewarding innovation and ensuring society can benefit. No one is calling 9-1-1 just yet, but it’s also true that, unless there is a clear path to make gene therapies economically feasible, then everyone loses.
After all, if no one can pay for a therapy, what good is the cure?