January 5, 2018

First gene therapy for blindness will cost $850K per patient—and that's less than expected

Daily Briefing

    Spark Therapeutics on Wednesday announced that it will charge $850,000 per patient for its recently approved gene therapy Luxturna.

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    Luxturna is the first gene therapy approved by FDA to treat an inherited disorder. It is the third gene therapy FDA has approved for sale in the United States. The other two therapies—Novartis' Kymriah and Gilead Sciences' Yescarta—were approved to treat rare types of blood cancer.

    Luxturna details

    FDA approved Luxturna, an injectable gene therapy, to treat children and adults with RPE65-mutation associated retinal dystrophy. The disease is caused by a defective gene that damages an individual's sight. The disease affects about 1,000 to 2,000 U.S. residents, and often is diagnosed in childhood. Patients generally begin to progress toward total blindness before age 18 and experience difficulty seeing at night.

    For the treatment, doctors inject genetically modified versions of the gene into an individual's eyes to take over the role of the defective gene. Clinical trial data show 93% of the trial's 29 patients, ages four to 44, who received Luxturna reported some improvement in their functional vision, but they did not show a statistically significant improvement in their "visual acuity," which refers to the clarity and sharpness of their vision. There were no side effects associated with the gene therapy, but some patients reported adverse reactions linked to the injection, including permanent damage and a dangerous rise in eye pressure.

    Albert Maguire, a professor of ophthalmology who led the study at the University of Pennsylvania, said, "Many [participants] went from being legally blind to not being legally blind."

    Price details

    According to Reuters, Spark's $850,000 price for Luxturna is lower than the $1 million price investors had anticipated the company would set for the treatment. Spark in a statement said Luxturna's "price reflects the stakeholder considerations we have learned about these past months," as well as Spark's "need to build a sustainable company that addresses the unmet needs of patients with genetic diseases."

    Separately, Spark CEO Jeff Marrazzo said the company "wanted to balance the value and the affordability concerns with a responsible price that would ensure access to patients." He added, "We believe that [the] price reflects the type of life-altering value we're seeing with Luxturna in clinical trials and will allow [Spark] to build on revolutionary science."

    Spark said it would offer various payment models aimed at helping to reduce Luxturna's cost to insurers. For instance, the company said it is seeking CMS approval to waive certain price reporting rules for the drug as a way to allow the company to accept installment payments for the drug over several years. In addition, the company said it would look to sell Luxturna directly to insurers, instead of providers, as a way to avoid having providers mark up the price they charge insurers for the drug.

    Spark also said it would offer partial refunds to insurers if patients' vision does not improve significantly after receiving the treatment. According to the Wall Street Journal, Spark already has reached such an agreement with Harvard Pilgrim Health Care (HPHC). Under the agreement, Spark will partially refund the treatment's cost to HPHC if patients do not meet certain performance metrics on light-sensitivity tests within the first 90 days and 30 months following treatment.

    Further, Spark said it will offer patients financial assistance, including help with travel costs to providers that will be able to administer the drug and other out-of-pocket costs. The company said with the financial assistance, privately insured patients should have no out-of-pocket costs for the drug.

    Justin Kim, an analyst at Cantor Fitzgerald, in a research note wrote, "We believe these pricing initiatives for a one-time treatment may widen the availability of the drug for patients."

    However, Steven Pearson, president of the Institute for Clinical and Economic Review, said a previous analysis of the drug conducted by the group suggests Luxturna's price is too high. The analysis estimated that Luxturna would not be cost-effective if priced above $573,000. Pearson said, "It appears one common strategy being used by drug companies is to get people talking about a high price target that the company then undershoots, thereby gaining some psychological credit for the price being less than expected." He added that the Institute for Clinical and Economic Review later this month will recommend a price for the treatment (Clarke, Reuters, 1/3; Loftus, Wall Street Journal, 1/3; AP/Modern Healthcare, 1/3; Johnson, "Wonkblog," Washington Post, 1/3).

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