Biogen's $375K Spinraza price puts a Sovaldi-style spotlight on rare disease meds

It was big news for Biogen when its spinal muscular atrophy drug Spinraza (nusinersen) won approval just before Christmas. But in the first big drug-price controversy of the new year, the headlines really got going when Biogen unveiled Spinraza’s sticker.

The company set Spinraza’s price at $125,000 per injection, which adds up to $750,000 for the first year of treatment and $375,000 after that. Twitter lit up with critical comments—and messages urging action from lawmakers, including President-elect Donald Trump. Biogen and its development partner Ionis saw their shares drop.

Spinraza’s price isn’t far out of the ballpark in the ultra-orphan drug world, where some treatments top $400,000 per year on a list-price basis. But unfortunately for Biogen, Spinraza has made its debut at a time when public attention on drug prices is at an all-time high.

Unfortunately for other drugmakers that rely on costly rare disease meds, Spinraza’s price could bring some unwelcome attention to the entire field, just as Gilead Sciences’ $84,000 sticker price on its groundbreaking hepatitis C drug Sovaldi did for hep C and beyond. Unfortunately for patients, analysts said, the pricing decision and ensuing backlash is likely to tighten up access to the treatment.

“The sticker-shock presented in the media could turn Spinraza into the Sovaldi of rare disease drugs,” Leerink Partners analyst Geoffrey Porges wrote to investors over the weekend. It could be “the straw that breaks the camel’s back in terms of the U.S. market’s tolerance for rare disease drug pricing.”

As Piper Jaffray analyst Joshua Schimmer pointed out in a Tuesday note, the $375,000 annual cost fits within the realm of ultra-orphan disease therapies such as Alexion’s Soliris, with a list price north of $500,000 per year. In that context, “we think this is quite reasonable, especially considering the high unmet need and meaningful benefit from Spinraza,” Schimmer wrote.

That’s Biogen’s contention as well. The company “carefully considered” the price ahead of launch, spokesman Matt Fearer told CBS News. In the context of its clinical value—and Biogen’s need to fund other R&D—Spinraza’s price “is fairly in line with other therapies for rare orphan diseases,” Fearer said.

Ultra-orphan drugs tend to face much less pricing pressure than their less-expensive counterparts in other fields. That’s because the diseases they treat are so rare, only a few patients need them. The hit to payers’ budgets is relatively small, even compared with much cheaper meds used to treat thousands.

Regardless of how fair or reasonable Spinraza’s sticker might be in the ultra-orphan context, however, the outsize price tag was guaranteed to raise eyebrows, given the close scrutiny drug prices currently face. Most of Twitter’s audience—and most of the general public—doesn’t understand the economics of rare disease drugs.

Therein lies the risk, not just for Biogen and Spinraza, but other rare disease drugs and their makers. Ahead of Spinraza’s approval, Piper Jaffray included a Trump pricing tweet on its list of potential provocative events of the year. “Will Trump feel some sticker shock and rush to his Twitter account?” the analysts wrote Dec. 20. And that’s just what many on Twitter demanded over the weekend. Others tweeted to former presidential candidates Sen. Bernie Sanders and Sen. Marco Rubio, as well as other U.S. lawmakers.

At the very least, the quick pushback on Biogen’s pricing decision is likely to inspire payers to look more closely at Spinraza than they might have otherwise, Porges said. One feature of Spinraza—its standard dosing regardless of body weight—could end up a liability. Many other rare disease doses increase as weight does. And as dosing rises, so does cost, sometimes far beyond the numbers generally reported.

“This inherent price inflation dynamic is one of the ‘undiscussables’ of rare disease that drive pricing well above even the stratospheric ranges that are commonly discussed, frequently debated and occasionally justified for rare diseases,” Porges notes.

Biogen can’t benefit from those dosing-related sales increases, so the company decided to capture the value of its drug in the first-year loading phase, he said. Long term, the cost for Spinraza will be equivalent to, or even less than, that for many other rare disease drugs, but Biogen “will be unable to hide the true price in the back-end through weight-driven price escalation.”

“In turn, patient access is likely to be harmed by this price and its counter-reaction,” he said, “but the decision is ultimately not too out-of-line with other rare disease treatments with life saving, or life extending, potential.”