eyeforpharma Philadelphia Conference VIRTUAL

Apr 14, 2020 - Apr 17, 2020, Philadelphia

FREE TO ATTEND: The world’s greatest gathering of pharma’s value-designers with 6000+ pharma decision-makers from marketing, patient engagement, advocacy, clinical, medical affairs, market access, RWE and IT,

Putting a price on life: Is the answer outside pharma?

Gene replacement and cell-based therapies are here to cure, but are we ready for them? The current difficulty pricing groundbreaking healthcare advancements suggests maybe not.


To cure the previously incurable we must take two giant steps: the first towards better understanding the science behind a cure, and the second towards ensuring accessibility for those people in need of the treatment. 


Although there is still much to discover, we got the science right some time ago. The first gene replacement therapy – Gendicine (Shenzhen SiBiono GeneTech) – was approved in China in 2003 and has been successfully administered to more than 30,000 patients with head and neck squamous cell carcinoma. A single dose of this medication costs $400. 


Another example of early innovation is Neovasculgen (Russian Human Stem Cells Institute), a non-viral gene therapy developed and approved in Russia in 2012 for the treatment of atherosclerotic peripheral arterial disease. It costs less than $50 and its efficacy has been proven in a post-marketing surveillance study. 


Similar but more recently developed therapeutics bear a much higher cost. For example, Novartis’ Zolgensma (onasemnogene abeparvovec), released in the US for the treatment of spinal muscular atrophy, costs $2.1 million per patient. Despite Gendicine and Zolgensma both being AAV-based therapeutics, Zolgensma is 5,000 times higher than Gendicine. 


Pricing curative treatments – sky high vs. rock bottom

Dan Ollendorf, Director of Value Measurement and Global Health Initiatives at the Center for the Evaluation of Value and Risk in Health (CEVR), says the contrasting cost of these drugs is understandable: “One gene therapy was developed in a large, diverse and developing economy with a national health system infrastructure that is really just getting going. Both the market conditions and willingness to pay differs between the two geographies, hence the price difference.” 


Indeed, context influences how CEVR assesses value. “We do a lot of work in low- and middle-income settings, where a curative treatment would facilitate other events such as completing certain levels of education, which in these settings has an outsized benefit relative to higher-income settings,” says Ollendorf. “The elements of value to consider are highly situation- and context-dependent.”

It could be argued that what is still pending for the western world is to put the prices of curative medicines under some sort of constraint. Until such a system has been implemented, are we likely to see any early price falls? According to Professor Arthur Caplan, Head of Medical Ethics at the New York University Langone Medical Center, this is unlikely. 


“These curative treatments are costly in part because they are new and they are not being made at scale, so they are going to remain boutique interventions. Most of them are under patent protection. That means there is no motivation to lower the price because monopoly exists on them around the world.” 


Is long-term efficacy the right pricing metric? 

There has been some discussion over whether curative treatments, just like other new drugs, could undergo Institute for Clinical and Economic Review (ICER) evaluation. In other words, is it reasonable to price curative medicines based on the degree of expected long-term improvement in patient health? After reviewing Zolgensma, ICER concluded that despite the uproar over price, the drug is in fact cost-effective.


Nevertheless, David Whitrap, Vice President of Communications and Outreach at ICER, expresses concerns about this conclusion: “My fear is that the market may wrongly translate these conclusions to mean that ALL gene therapies can be indiscriminately priced within a $1-$2 million range. That would be the absolute wrong takeaway, and a $1-$2 million false price anchor would be disastrous for the US health system that’s expecting 20+ more of these therapies over the next five years.” 


ICER has evaluated another three FDA-approved gene and cell-based therapies. Kymriah (tisagenlecleucel; Novartis) and Yescarta (axicabtagene ciloleucel; Kite Pharma/Gilead), which were developed for relapsing or refractory B-cell lymphoma and have the price tag of $475,000 and $373,000, respectively, were found to be fairly priced. However, Luxturna (voretigene neparvovec; Spark Therapeutics), which is for the treatment of retinal disease and costs $850,000, was way above ICER’s evaluation; its price needs to be reduced by at least 50% to meet cost-effectiveness thresholds. 


ICER’s pricing recommendations have led the way to price falls before: Novartis initially considered a figure approaching $5 million for Zolgensma but settled on a price in accordance with ICER’s recommendations.   


Valuing curative treatments – a different ball game 

ICER recognizes that its framework isn’t the answer to valuing curative treatments and there is a growing need to learn how to effectively evaluate the prices of single or short-term therapies in a way that enables both patient access and manufacturing feasibility. 


Consequently, it has announced a new project where they are collaborating with methodology experts, international Health Technology Assessment (HTA) groups such as the UK’s National Institute for Health and Care Excellence (NICE) and the Canadian Agency for Drugs and Technologies in Health (CADTH), and other stakeholders to consider if methods for evaluating curative medicines should differ from methods for evaluating ongoing maintenance medications. 


Some of the key modifications that ICER is considering are:

Standardizing the inclusion of multiple methods to evaluate and address uncertainty resulting from evidentiary limitations.

Adding two additional elements to ICER’s list of ‘potential other benefits or disadvantages,’ including consideration of whether therapies offer special advantages such as a different timing or balance of risks and benefits, and the potential for treatments to alter or even preclude the chance of effectiveness of future treatments.

Producing an alternative ‘shared savings’ cost-effectiveness scenario in which the economic surplus of single or short-term therapies is shared in different proportions between the innovator and the health system. 


According to Whitrap the shared savings approach is most relevant to outlier situations where a therapy represents a potential cure for an extremely costly disease, such as haemophilia. “Many people with haemophilia live long lives yet have treatment costs that can exceed $1 million per year,” he says. 


“If a cure was developed, traditional cost-effectiveness methods would total up all of those long-term cost offsets over the lifetime of the patient and bake that into what a ‘fair price’ would be for the manufacturer to charge.” 


This would make the cure inaccessible to patients. “So the goal of our shared savings proposal is to identify the situations where a one-time treatment would offset extremely high downstream medical costs, and then discuss how this ‘economic surplus’ could be fairly apportioned between the innovator and society in way that best promotes fair pricing, fair access, and incentives for future innovation.”


Teaching an old system new tricks

Several academic and government non-profit organizations are also working to tackle this complicated issue – a complexity that stems from various factors, but primarily uncertainty about the efficacy and durability of curative treatments and health care systems that are not structured to accommodate substantially high cost one-time treatments. 


“In many ways, health systems are structured around delivering maintenance medications for chronic conditions,” explains Ollendorf. “Many are currently ill-equipped to handle the core challenges posed by single and short-term treatments.


These include the short-term budget impact; the mobility of beneficiaries from one health plan to another; uncertainty around the long-term durability of benefits and side-effects; a determination of what a fair price may be for this level of clinical benefit; and downstream medical cost offsets. 


Several potentially viable models for financing innovative gene replacement and cell-based therapies have been proposed and each has its own advantages and disadvantages. One solution creating debate within the industry is for manufacturers and payers to go into outcomes-based agreements that oblige the manufacturers to provide a full refund for each patient with whom the treatment fails. 


“Outcomes-based agreements may be useful in certain situations, but they are in no way sufficient to fix the market dysfunction around affordability, access and innovation, and they can sometimes serve as a feel-good distraction from prices that are way too high to begin with,” says Whitrap. 


Ollendorf isn’t convinced by outcomes-based agreements either. “It all depends on how easy they are to design, implement, and monitor,” he says. “They are one way to guard against uncertainty in the data, but their burden on the payer or health system would need to be relatively minimal.  For example, most evaluations of the first CAR-Ts found them to be good value, but now there is talk that the real-world relapse rate is climbing. A useful outcomes-based agreement would need to catch this phenomenon and generate an appropriate financial penalty.”


But what other options are there? “What’s needed is a separate financial pool for these therapies, one that involves risk-sharing between government, payers and industry,” suggests Ollendorf. “The pool would have a global budget that all involved therapies would need to abide by and that could be funded by premium taxes as well as savings from eliminating the drugs that curative therapies might displace.”

Is the answer outside pharma?


Ultimately, by putting a value on a cure, we put a value on a human life. But this is nothing new, says Caplan: “Economists do this all the time in pricing how much it is worth to prevent a car accident and death, to prevent an airplane crash or bridge collapse.” 


The value of a human life is not beyond measure and just as treatments for more common conditions must be priced in a way that meets the needs of all stakeholders, so too must curative treatments. The challenge is determining how such value assessments might differ from treatments for more common diseases.


Some further food for thought is offered by Caplan who suggests the answer to increasing patient access to expensive cures lies far outside pharma. “The answer lies in political will,” he says. “The answer lies in recognizing that the market is bound to fail because high-priced medications are for very sick people who are not going to bargain and are not going to ‘shop’ for medications like they would shop for a new car or a living room chair. High-priced curative medicines need to be protected by a regulated system and be treated as a public utility or a public good with pricing policy constraints.” 


Perhaps the future is a scenario in which political intervention could assign manufacturing and administration of these invaluable lifesavers to non-profit organizations such as hospitals and research institutes.

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eyeforpharma Philadelphia Conference VIRTUAL

Apr 14, 2020 - Apr 17, 2020, Philadelphia

FREE TO ATTEND: The world’s greatest gathering of pharma’s value-designers with 6000+ pharma decision-makers from marketing, patient engagement, advocacy, clinical, medical affairs, market access, RWE and IT,