Novartis' SMA gene therapy would not be cost-effective if priced over $1.5M: ICER

Novartis
Novartis' AveXis unit is expecting the FDA to rule on Zolgensma, its gene therapy to treat spinal muscular atrophy, next month. (Novartis)

The pricing analysis done by the Institute for Clinical and Economic Research (ICER) on new therapies for spinal muscular atrophy (SMA) has been no small undertaking. One of the therapies ICER reviewed—Zolgensma from Novartis’ AveXis unit—isn't yet FDA-approved or priced, forcing the influential agency to assess it using hypothetical price ranges.

Now, after considering input from Novartis, ICER has released its final word on the subject—and it hasn't changed. The agency stood by its initial assessment, saying a price of $900,000 or so would make the most sense, but it definitely shouldn't carry a price higher than $1.5 million.

The FDA is expected to decide on Zolgensma in May, and Novartis will reveal its pricing plans then. But Dave Lennon, president of AveXis, has already had plenty to say on the subject. Lennon, who argues that gene therapy cures need an entirely different type of evaluation, created quite a stir last year when he said the gene therapy would be cost-effective at $4 million to $5 million.

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But ICER determined that to meet its threshold of $150,000 per quality-adjusted life year gained, Zolgensma should be priced no higher than $900,000 per year. Even using the less stringent measure of life-year gained, the price should be set at just $1.5 million, according to the ICER report (PDF).

In meetings with ICER ahead of Wednesday's final report, AveXis raised several concerns about the group's process for evaluating Zolgensma, Lennon told FiercePharma.

“The models that are used in the valuation of one-time potentially curative gene therapy are to ICER’s own admission inadequate,” Lennon said. One problem is that the agency has been comparing Zolgensma to best supportive care, which is essentially “a death sentence for patients," he added.

RELATED: Biogen, Novartis need to think smaller—much smaller—on SMA drug prices: ICER

That methodology is flawed largely because of Biogen’s Spinraza, which beats supportive care and has been embraced by the SMA community, Lennon said. If ICER had compared Zolgensma to Spinraza—which is priced at $375,000—it may have come to a different conclusion, he said. That comparison would show Zolgensma “is highly cost-effective in the range of up to $5 million, at much lower cost-effective thresholds than we’re seeing when compared with best supportive care. We think that’s an important consideration because it’s the reality of the marketplace today.” (ICER, incidentally, also declared that Spinraza is not cost-effective at its current price.)

Lennon believes ICER should take a different approach to evaluating one-time treatments that are meant to be cures. “When they’re looking at a rare disease where we’re going to potentially be treating a few hundred patients every year, to be using cost-effectiveness thresholds that are typically reserved for standard medications is inappropriate,” he said.

Peter Pitts, a former policy adviser at the FDA, agrees that ICER should update its methods for evaluating cost-effectiveness to account for advances that make one-time transformative treatments possible. Pitts is the president and co-founder of the Center for Medicine in the Public Interest, a nonprofit think tank in New York.

“Gene therapy either works or it doesn’t,” Pitts said in an interview with FiercePharma. “If the product succeeds, it should be reimbursed at a robust level, because the pharmaco-economics over the course of time are extremely positive. If it doesn’t work, the payer, whether it’s public or private, shouldn’t have to bear the burden. We’re moving in that direction.”

Novartis said in a statement in early March that it is exploring innovative reimbursement models for Zolgensma, including payments that are spread over time and risk-sharing agreements.

The company has its fair share of experience with alternative payment models. Its $475,000 CAR-T cancer treatment, Kymriah, is reimbursed by the Centers for Medicare & Medicaid Services (CMS) only when patients respond by the end of the first month. And Novartis has been working on alternative payment plans for Spark’s eye gene therapy, Luxturna, which it markets in Europe.

RELATED: Novartis: Alternative payments will ‘reset the paradigm’ for covering gene, cell therapies

SVB Leerink analysts are predicting Novartis will price Zolgensma at $2 million per dose and will offer it along with alternative payment models that won’t require insurers to hand over the entire amount up front. But the analysts noted that if the company were to price the product under $2 million, it could get a leg up on Biogen. “If the duration of treatment with Spinraza is greater than five years, the cost savings for Zolgensma would be commensurately greater,” they noted.

Lee Rubin, Ph.D., professor of stem cell and regenerative biology at Harvard University, is predicting the payer community will ultimately embrace Zolgensma. Any positive outcome of gene therapy “could last a very long time, and if it does last a long time, it’s essentially saving a lot on healthcare costs,” Rubin said in a podcast posted earlier this week by the Dana Foundation, a nonprofit that supports brain research. “I think that should be taken into account.”

The folks at ICER are also predicting insurers will pay for Zolgensma regardless of its price, but they're not happy about it.  David Rind, M.D., ICER's chief medical officer, said in a statement that "the ripple effect of pricing decisions like these threatens the overall affordability and sustainability of the U.S. health system."

Zolgensma will be priced at a time when lawmakers are fiercely debating the high cost of drug treatments. Lennon isn’t worried. He said he’s encouraged by the positive stance some politicians are taking toward alternative payment models.

In January, two U.S. senators introduced a bill that would amend the Social Security Act to make it legal for drug and device companies to form deals with insurers that link payments to product performance, for example. “We do need to think about new policies that allow us to implement innovative payment models for products like gene therapies, so that we can either pay products over time, or have outcomes-based guarantees that properly accounted for in the system,” Lennon said.

He also supports ideas that have been proposed to control or eliminate markups for injectable products by pharmacy benefits managers and hospitals. “Those would be important changes that have been proposed that we support—and that would work for gene therapy.” 

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