The Price of Innovative and Effective Treatments

By / 6.7.2019

Here’s a question that progressives should be asking themselves: How can we encourage the development of innovative and effective treatments like Zolgensma?

Just approved by the FDA, Zolgensma is a powerful new treatment for Spinal Muscular Atrophy (SMA), which is the leading genetic cause of death in infants and toddlers. Roughly one out of every 50 adults carries one copy of the defective gene that causes SMA, and the disease affects roughly one out of every 6,000-10,000 live births.

Zolgensma—developed and marketed by AveXis, now part of Novartis—is given as a single intravenous infusion that delivers a working copy of the defective gene to motor neurons, heading off the debilitating effects of SMA. Based on the clinical trials, the positive effects of the infusion seem to persist for years.

In fact, Zolgensma is only the second gene therapy approved in the U.S. for commercial use. Since the 1970s, medical scientists have been fascinated by the idea of curing genetic diseases by modifying cell genes. However, getting to this point has been a long and winding road, punctuated by expensive setbacks and dead-ends.

Zolgensma’s success points the way to a coming future of cures and innovative treatments for debilitating diseases. That could be a triple win for progressives: Health care outcomes would improve; the long-term resource costs of healthcare to society would fall; and offering quality health care to everyone would be cheaper and easier.

But then comes the sticker shock: AveXis and Novartis are setting an initial price of $2.1 million for the one-dose treatment. For people concerned about the cost of health care, this seems like a ridiculous number.

I don’t want to get into the question of what the “right” price of the treatment should be. But based on the current medical and human cost of SMA, $2.1 million is not as big as it seems. Without a drug treatment, “best supportive care” for infantile onset SMA costs $800,000, and only yields 2.4 life-years, and less than 0.5 quality-adjusted life years (QALY). That’s according to ICER, an independent research institute.

By comparison, giving Zolgensma to pre-symptomatic infants with SMA—a usage that the FDA has approved—could give them 27 life-years and 22 QALYs, according to ICER.* How much would you pay for 25 extra years of life?

Of course, we also have to figure in how much additional medical and nursing care an infant with SMA and treated with Zolgensma will need over time. That needs to be taken into account as well.

It should be noted the initial high price of a gene therapy like Zolgensma, when introduced, may not last long. Competition from other medicines is likely to push down the price. Roche, for example, is planning to submit a new drug for treating SMA to the FDA later in 2019. In addition, AveXis and Novartis will set up 5-year payment plans for states, small insurance firms, and self-insured employers, and provide rebates if the treatment is not successful.

Many people complain that corporations take a short-term perspective and don’t take risks for the future. The truth is, for the past forty years research and development into gene therapy has been one of the best ways for the pharma and biotech sectors to lose money, since the first treatment was only approved for commercial use in 2017.

In the end, progressives who want a better-functioning and fairer healthcare system should also want as many cures and innovative and effective treatments on the market as quickly as possible. That means giving pharma and biotech companies the incentive to take the necessary risks.

*The ICER report was released before the FDA approval. But ICER analyzed what they called “Drug X,” which was the equivalent of Zolgensma given to pre-sympomatic infants.