Amid the sector’s struggle to come up with a plausible financing structure for million-dollar gene therapies, one obvious question has yet to be answered: how much of the cost will be borne by patients?
The share of a drug’s cost that must be shouldered by patients has become a barrier to the use of therapies even as old and essential as insulin, so the issue is not theoretical when it comes to bigger-ticket items. Assuming no limit on cost-sharing, a family whose child is treated with Novartis’s Zolgensma could be on the hook for $520,000, and at present the main idea to defray these costs is a long-term loan.
“Price is the Achilles’ heel of precision medicine,» Professor Arthur Caplan, head of the medical ethics division at NYU School of Medicine in New York City, tells Vantage. “Price is just as important as the science if you’re going to see the genomic revolution fulfil its promise.”
Bluebird Bio’s chief executive, Nick Leschly, threw some light on financing questions at the JP Morgan healthcare conference earlier this month when he outlined plans for reimbursement of the group’s Lentiglobin. At a presumed price of $2.1m payers would spend $420,000 a year for five years as long as Lentiglobin was working.
Left out of Mr Leschly’s presentation was any discussion of how patients could be cushioned against their cost-sharing obligations – if at all.
This is a glaring omission, and suggests that payers and biopharma companies are waiting for the other to blink first. It may very well be that payers expect biopharma to stump up the cash to cover patient costs, as they do with many other expensive medicines, and are waiting for Mr Leschly and others to make the first move (Vantage point – Are charities the best way to pay for costly drugs?, May 17, 2017). Drug companies, meanwhile, might expect payers to propose a solution.
What could patients end up paying? According to the Kaiser Family Foundation’s annual survey of employer-provided health insurance, in 2018 enrollees covered 26% of their drug costs in those plans that had a separate tier for high-cost speciality drugs and required co-insurance rather than a flat copayment.
Many plans limit what enrollees pay. However, 19% of those paying co-insurance did not, according to the survey. For an enrollee unlucky enough to be in this situation and needing a gene therapy the costs could be extraordinary. Using the $2m price point for Zolgensma (AVXS-101) assumed by the cost-effectiveness body Icer, and the 26% average co-insurance, the patient share would be $520,000.
Another way to analyse this question is to look at high-deductible health plans, an increasingly popular option for people who want to limit their monthly premiums. In a “bronze select” family plan offered by Excellus Blue Cross Blue Shield in upstate New York an enrollee would have a $13,100 total out of pocket liability per year.
In this scenario Mr Leschly’s plan to spread payments out over five years puts patients at potential liability of $65,500.
“With drugs that cost in the million-dollar range, if you have very high out-of-pocket costs then you just run into the issue that the patient can’t take the drug,” says Sung Hee Choe, managing director of the health consulting firm Avalere. “Studies find that the more patients have to absorb the cost themselves [the more] the adherence will go down. There has to be a balance to that.”
These issues need to be worked out soon: Novartis expects an FDA approval decision on Zolgensma by May.
And, given that this therapy is designed to treat severe spinal muscular atrophy in infants, parents will be under pressure to say yes when offered treatment for their children. “If I’m a parent and I don’t want to spend the million dollars I’m going to appear to most people as morally flawed,” says Professor Caplan.
There might be an assumption that payers will waive cost-sharing for gene therapy because of the high price. However, current practice shows this cannot be assumed: beta thalassemia, one condition addressed by Bluebird’s Lentiglobin, is already treated with transfusions and iron chelation therapy, at a cost of $75,000 a year, according to an analysis prepared by Bluebird, yet patient cost-sharing is not routinely waived in the current system.
To waive cost-sharing for a specific disease just because a gene therapy has been approved might not be a precedent payers want to set.
Moreover, more than 60 gene therapies are in development, with sales forecast to reach $15bn in 2024, according to EvaluatePharma, something that will only increase payers’ wariness about exemptions (Gene therapy deal-making shows no signs of stopping, September 24, 2018).
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