Gene therapy’s potential pricing problem

It’s taken more than three decades of trial and error to get it right, but gene therapy is nearly ready for prime time. The first approved treatment in Europe — for a rare enzyme deficiency — is expected to hit the market later this year. The question for many is how much should it cost?

Although no official price has been set, the groundbreaking product, sold under the name Glybera, is expected to fetch more than a million Euros per patient, which would make it one of the most expensive drugs ever.

The high price has some in the research community concerned.

“I think it’s bad policy and bad politics to have $1.5 million treatments,” said Jim Wilson, a physician-scientist at the University of Pennsylvania’s Perleman School of Medicine.

There are several different types of gene therapy, but for disorders linked to a single gene, the basic idea is to restore the missing or mutated gene to cure the disease.

More than almost anyone else, Wilson knows how hard it’s been to make gene therapy a reality.

“The drug here is a gene,” he said. “And this gene is at least 10,000-fold larger than most drugs, and it also for it to work, has to be delivered to cells, and not only to the cell, but into the nucleus of the cell.”

Wilson pioneered the development of the pieces of viral DNA, or vectors, that do this delivery. In 1999, he was also the lead investigator on an early clinical trial that resulted in the death of an 18-year-old named Jesse Gelsinger — an event that frightened scientists and companies away from the technology for many years.

Since then, the safety has improved.  In Philadelphia alone, Novartis has partnered with Penn to develop a gene therapy technique to treat leukemia. Spark Therapeutics, a spin-off from the Children’s Hospital of Philadelphia, has had success in clinical trials treating a rare form of blindness and hemophilia. (This disclosure, the CEO and co-founder of Spark, Jeffrey Marrazzo is son of WHYY’s CEO Bill Marrazzo.)

“An infinite increase”One of those trial participants is Mike Marlier of Paducah, Kentucky. Because of hemophilia B, or a deficiency in factor IX — one of the critical proteins used to clot blood — he was only supposed to live to age 20. But the 69-year-old defied expectations, living through every major revolution in the management of the disease.

“The treatment when I was young consisted of being hospitalized and having blood transfusions, which meant I was often out of action,” says Marlier. “I missed most of what should have been first and second grade.”

Over time, plasma replaced blood, making it easier to find donors. By the 1970s, artificial clotting factor was available. It was even more convenient, and removed the risk of catching diseases lurking in blood donations.

The problem continuing to plague Marlier into adulthood was spontaneous bleeding in joints. It’s not visible, but blood can fill elbows or knees until there’s no range of motion.

“At that point, the pain takes off exponentially,” he says. “As the pressure continues to build, it literally feels like it’s pushing your bones apart.”

Two summers ago, as a retiree wanting to give back, he volunteered to take part in the Pittsburgh-based arm of one of Spark Therapeutics’ gene therapy clinical trials. Following the injection of DNA, Marlier’s liver began to make a small amount of factor IX, although still less than five percent of normal.

“Going from zero to two or three percent is almost an infinite increase in what I had,” he says. “It’s been enough to eliminate the spontaneous bleeds, which used to be the vast majority of my need for clotting factor.”

Before, Marlier had to use clotting factor several times a month. In the year and half since the gene therapy, he’s needed it once.

It’s not yet a cure, but it’s progress.

“The dirty little secret”Given the advances, Wilson thinks it’s time people on the commercial side begin to think about pricing.

“I call it the dirty little secret,” he said. “About the challenges of reimbursement and the lack of a business model that with time, as we mature this field, is going to surface and become, I think, a real problem.”

As he sees it, gene therapy is the rare high tech treatment that doesn’t have to cost healthcare systems tons of money. Diseases now requiring hundreds of thousands of dollars or more of treatment every year could be cured with a single injection that costs little to manufacture.

Wilson and others, including the pharmacy benefit manager CVS Caremark, are advocating for a payment plan approach. Instead of a single, giant bill, companies would be paid smaller amounts each year as long as the therapy continued to work.

“It puts the responsibility on the biopharmaceutical company to bring forward truly effective treatments that last for a long period of time, because their reimbursement would be based actually on performance,” said Wilson.

But not everyone is convinced.

“A complete rethink””It’s mind boggling on how hard that would be,” said Brian Corvino, a consultant with Decision Resources Group in Yardley, Pennsylvania. “That would require a complete rethink.”

Cost savings over a lifetime, he says, don’t mean much in the business world if the same entity doesn’t reap the rewards of the investment. And in the U.S., many people have different providers for prescription drugs and medical care.

“If you have an argument that says, pay for this expensive drug because you’ll minimize emergency room visits,” said Corvino, “you can see how the incentives might look very different.”

Complicating the issue further, the American healthcare system — unlike those in Europe — isn’t a single payer that will stay with a person from cradle to grave. “The average person will switch insurers many, many times over their lifetime,” said Corvino.

Would a new company be obligated to pay the cost of a drug that has already been delivered? The details matter, and it’s not clear how they would be resolved.

Patricia Danzon, a professor of healthcare management at the Wharton School, says the experimental nature of gene therapy is also cause for concern.

“It’s easy to deal with the perfect cure,” she said. “What’s not so easy is how to deal with something that has uncertainty on both the benefits and the side effects — and on what the future evolution will be of subsequent therapies.”

One possible approach, she says, would be for gene therapy to try out a plan in which the price changes over time.

“If the efficacy is as good as everybody hoped, then the price can be raised. And if it’s not as good as people hoped, the price can be lowered or coverage may be discontinued,” said Danzon. “It’s almost like launching a drug before the clinical trials are completed.”

The method might or might not involve multiple payments. In Europe, it’s being used more and more, but in the U.S. the arrangement is extremely rare.

Both Danzon and Corvino think payment for gene therapy will happen — at least at first — more or less like the new hepatitis C drugs that cure a majority of patients: in one large, upfront fee.