Imagine for a minute you’re a teenager with a rare genetic muscle disease nobody has ever heard of. No treatment exists. Your doctor says you might die if you ever eat pepperoni pizza. The medical literature says you’ll never get to be an athlete, get a real job, start a family. You’ll probably die in your 20s or 30s.
Then, one day, along comes a gene therapy. In a single shot, it deploys an armada of modified viruses to shuttle properly functioning copies of the gene you need inside your faulty muscle cells. Within days, the gene starts expressing proteins you need to restore normal cellular functions. The protein keeps expressing itself properly, on its own, for years.
No one knows how long you’ll live, or if it’s really true to say you’ve been “cured.” But all indications are you can eat pizza, go to college, and pursue your dreams. You don’t need to take any drugs. You no longer go about your daily activities constantly reminded that you are a “patient.”
How much should you—or, more accurately, you and all of us who pay insurance premiums—be willing to pay for something like that?
Sure, this story is a fantasy today. But there is already one gene therapy approved for sale in Europe, called alipogene tiparvovec (Glybera), made by Netherlands-based uniQure. That company is attempting to raise about $70 million in an IPO as you read this, and it’s just one of many gene therapy companies that have enjoyed a scientific revival and seized the day to raise money. Cambridge, MA-based Bluebird Bio (NASDAQ: BLUE) was one notable example of a successful gene therapy IPO last year. It’s not far-fetched to imagine that there could be one or two FDA-approved gene therapies within five years.
As the science lurches ahead, it’s forcing people inside the gene therapy world to confront a set of thorny questions on the commercial front. Since a gene therapy drugmaker is often only providing one shot, that means it only has one opportunity to sell a product that can turn a profit and recoup its years of R&D investment.
So if you’re shocked by the six-figure prices of cancer drugs that offer marginal health benefits, brace yourself for what’s to come. If a gene therapy can deliver on the scenario described above, should it charge a single upfront lump sum ($1 million, $5 million, or $10 million, perhaps?) and run the risk of alienating everyone with sticker shock, and making it impossible for many patients to get the drug they need? Or should it try to spread things out in a long-term payment installment plan, or annuity?
Most importantly, what will it take for companies to justify the kind of price they need to make a reasonable profit, so they can develop more important gene therapies?
“A lot of this will boil down to what society says a human life is worth,” says Barrie Carter, the vice president who oversees gene therapy at San Rafael, CA-based BioMarin Pharmaceutical (NADSAQ: BMRN). “What is it worth to take a debilitated person and turn them into a functioning person who can contribute more to society? That’s a fundamental, big question.”
Matt Patterson, the CEO of San Francisco-based Audentes Therapeutics, a gene therapy startup that raised $30 million in venture capital last year, says people in the industry are beginning to talk seriously about the best way to pay for gene therapy. “The advances in the science of gene therapy are thrilling, but we also need to begin to think about how to implement these things into the healthcare system if we’re successful,” he says.
As a follower of gene therapy for the past dozen years, it’s fascinating to me that the conversation is moving in this direction. Scientists have been telling us about gene therapy and the yellow brick road to cures for more than 20 years, but none have yet made it all the way to FDA approval. The last decade of the field was overshadowed by the tragic death of a teenager from Arizona in a gene therapy trial, which stymied investment in the field. For years, the savviest executives and investors inside biotech wondered: Is gene therapy safe enough? Will it ever work? Even if it works, will the FDA ever stick its neck out and approve one?
Those questions are still valid, but enough progress has happened over time with different diseases, different companies, and different trials, that people inside the field need to take another step and think about the right way to price this new mode of treatment.
There is, of course, a never-ending debate about the ethics of drug pricing. When a cancer drug extends life for a few months, works for a fraction of patients, and a company still charges $100,000, it’s understandably controversial.
When a new drug comes along that’s life-altering, especially for young people, that’s a whole different story. Genzyme, and now BioMarin, Alexion Pharmaceuticals (NASDAQ: ALXN), and others, have built empires on treatments for rare diseases that are priced way into the six-figures per year range, for a small group of patients that take them for years. Vertex Pharmaceuticals (NASDAQ: VRTX) recently introduced a groundbreaking drug for a small fraction of cystic fibrosis patients, and which costs $300,000 a year. It’s a life-altering pill that people can start taking as young children, and which they might take for 20, or even 30 years or more. It’s no stretch to imagine that we as a society will pay $6 million to $10 million per patient (and maybe more) over the lifetime of those CF patients.
There is already a (somewhat muted) backlash against this drug’s price, but imagine the uproar if they were being asked to pay the full $6 million or $10 million upfront?
UniQure is an important test case for gene therapy, although it doesn’t have the kind of compelling clinical data that would justify … Next Page »
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