Is Spinraza the next Sovaldi? That’s the question on the minds of health insurers, analysts and investors as Biogen launches Spinraza (nusinersen), its highly anticipated spinal muscular atrophy (SMA) drug. The drug will cost $125,000 per injection, amounting to $750,000 for the first year and $375,000 after that. That’s why Spinraza is bringing to mind Gilead’s $84,000 hepatitis C drug, Sovaldi, which was heralded for its ability to cure most patients, but at the same time blasted for its sky-high price tag.
The latest health industry player to raise a red flag about Spinraza’s price is Molina Healthcare, which warned in its recent annual report that it didn’t factor the drug into its expectations for this year and that it might affect earnings. “The inordinate cost of Spinraza was not contemplated in the development of our 2017 capitation rates,” Molina wrote in its 10K. The company reminded investors that the cost of Sovaldi, similarly, was generally not factored into its 2014 rates. “Further, the relatively high incidence of hepatitis C in Medicaid populations coupled with the exorbitant cost of Sovaldi created a public health and public financing problem across the country,” the 10K says.
A spokeswoman for Biogen told FiercePharma in an e-mail that the $375,000 maintenance price for Spinraza “is in line with the annual cost of other rare disease therapies.” She added that the price tag “was determined through a rigorous and thoughtful process that evaluated a range of information and strived to achieve an appropriate balance among three key pricing principles—clinical value, impact to the healthcare system and stakeholder returns.”
Perhaps, but Spinraza is hitting the market at a time of unprecedented pressure on the biopharma industry to hold down drug prices. When President Donald Trump said earlier this year that the industry is “getting away with murder” on drug prices, it may have seemed like idle talk. But he’s clearly not dropping the issue.
Trump has repeatedly expressed his interest in allowing Medicare to negotiate drug prices. And on March 8, Rep. Elijah Cummings met with the president to discuss striking the noninterference clause from current laws, which would open up the possibility of government price negotiations.
The folks at Biogen are working hard to ease Wall Street concerns about pushback on Spinraza’s price. Salim Syed, senior biotech analyst for Mizuho Securities USA said in a note to investors that he spoke with the management team after Molina’s disclosure and concluded that the insurer isn’t quite as big a worry as Medicaid, which could also get the numbers wrong on Spinraza. “There may be some short-term pressure on the Medicaid side of things,” Syed said in a video accompanying his note. “But I think the states will eventually catch up and … the numbers will iron themselves out.”
More than 50 regional and national health plans have added Spinraza to their formularies, according to Biogen, and about 20 Medicaid plans are approving prescriptions on a claim-by-claim basis. The spokeswoman says the company has vowed that “no family has to forgo treatment based on financial limitations or insurance status,” and that it created a patient-access program to provide financial assistance to patients when needed.
SMA is a rare disease, affecting about 35,000 patients worldwide. It’s a progressive brain disorder that destroys motor function, and there were few treatment options prior to Spinraza.
Biogen should have the market to itself for quite some time, though there is competition looming. AveXis is working on a gene therapy treatment for SMA, and last October, it released data from a phase 1 trial showing that some patients regained the ability to walk without support.
One good thing about Spinraza’s high price out of the gate is that it has some analysts predicting a very strong launch. In February, Barclays analysts raised their 2017 estimates for the drug by 10% and their longer-term estimate even more. They predict worldwide sales of over $2.3 billion by the early 2020s. The bank surveyed 25 doctors and came to an encouraging conclusion: “Most physicians expect to be treating more SMA patients 12 months from now,” Barclays wrote in a summary report on the survey.