A new drug, Luxturna, literally allows blind people to see. It does it by using a virus to insert new genes into patients’ eyes. This morning, Luxturna’s maker, Spark Therapeutics, is announcing the cost of this medical miracle: $425,000 per eye, or $850,000 for most patients.
That figure is actually less than investors and outside experts expected. In December, the investment bank Jefferies had forecast a $1 million price. At the same time as it is announcing the wholesale price, which will be discounted in many cases and should be paid mostly by insurers and government agencies, not individuals, Spark is also announcing a series of steps to help hospitals, insurers, and patients deal with the complications of this high one-time cost.
“Many were anticipating this was going to be over a million dollars because it’s a small patient population,” says Steve Miller, the chief medical officer of Express Scripts, who has often criticized high drug prices. “To be very frank, they’ve hit on a responsible price. Is it inexpensive? Absolutely not. But it’s responsible.”
Express Scripts is working with Spark on some of the programs it is announcing, which will allow insurers to have an option to receive rebates two-and-a-half years after Luxturna is giving if patients improvements in vision aren’t maintained. (In clinical trials, the benefit endured that long in more than 9 out of 10 patients.)
Luxturna treats a rare form of blindness, called retinal dystrophy, that occurs when patients inherit a mutation of a non-working form of a gene called RPE65 from each parent. There are about 1,000 cases in the U.S., and there are expected to be 10 to 20 new cases a year. The treatment does not always result in a full restoration of vision, but in a clinical trial allowed most patients to get much better at navigating an obstacle course in low light.
The price is not out of the realm of normal for rare disease drugs. It can cost $1 million a year to treat hemophilia in rare cases where patients develop antibodies to the drugs used to prevent clotting. Spinraza, a drug for a deadly childhood disease called spinal muscular atrophy sold by Ionis Pharmaceuticals and Biogen, can cost $750,000 in its first year, but half as much thereafter. Soliris, made by Alexion Pharmaceuticals, costs a similar amount at doses used to treat a rare kidney disease. Glybera, a gene therapy for another rare disease, was available in Europe at a $1 million price; it didn’t sell and its maker, UniQure, allowed the product’s marketing clearance to lapse.
Jeff Marrazzo, Spark’s chief executive, said that his goal was to create a “menu” of options for insurers, called “payers” in health-care-speak, that would allow Spark to stand behind the company’s faith in Luxturna’s efficacy, present an alternative to the current “buy and bill” model in which drugs are always purchased for a one-time cost, and address the problem of “cost density,” that is, if you’re a hospital, it’s pretty tough to purchase an $850,000 treatment, or, even worse, to keep such a treatment in stock, even if it is worth the money because it represents such a big capital cost. (For the same amount, you could buy a DNA sequencer or two.)
Here are Spark’s solutions:
- Spark has negotiated a plan with Harvard Pilgrim, a not-for-profit health care company that provides coverage to 1.2 million members, to pay rebates in cases when Luxturna is not effective at 30 to 90 days, or at 30 months, based on light-sensitivity tests. Spark wouldn’t specify what these rebates would be, but they will be limited by rules used to make sure Medicaid, the government insurance program for the poor, gets the best price on drugs. On average, Medicaid gets discounts of about 20% to 25% lower for comparable drugs, Marrazzo said. Rebates in these cases would probably be limited to 20% of the wholesale cost, unless the government changes these rules. Spark is offering this plan to many insurers beyond Harvard Pilgrim.
- Spark will partner with Express Scripts on a program that will allow Express Scripts, the pharmacy benefit manager, to buy Luxturna instead of hospitals. This, says Express Scripts’ Miller, would be based on a similar program developed around Spinraza. This arrangement saves insurers from paying a markup added by the hospital, and saves hospitals from having to make a big capital expense and deal with the risk of storing and handling the product. In some of the outcomes-based deals, Miller says, the rebates would actually be paid by Express Scripts, which would take on some of the long-term risks related to the efficacy of the drug.
- Spark is in negotiations with the Centers for Medicaid and Medicare Services to change rules to allow for multi-year payment plans for Luxturna, which is a one-time treatment, and to allow for the payment of bigger rebates in cases where the drug does not work. It has asked to run a demonstration project to test out these ideas.
Express Scripts Miller, while praising the current price, said that he hopes future gene therapies will have lower prices, pointing to the hemophilia treatments Spark is developing. “There will obviously be more patients to treat at that point in time,” Miller says.