Novartis CEO says Zolgensma won't cost anywhere near the $4M to $5M once quoted

Novartis CEO Vas Narasimhan said the company plans to price its spinal muscular atrophy gene therapy "far lower" than the $4 million to $5 million range the drugmaker previously floated. (Novartis)

Novartis has said its forthcoming spinal muscular atrophy gene therapy could be cost-effective at a price of up to $5 million, but now the company's CEO says to think "far lower."

As the Swiss drugmaker inches toward a likely approval this month, Novartis' CEO Vas Narasimhan said the company "won’t be announcing the price until we get the approval," as quoted by Reuters. But, he added, the company's "overall goal is to be at a fraction of what is the current standard of care, and the current standard of care for treating these patients is $4 million to $5 million over 10 years." 

Analysts, for their part, have been zeroing in on a price of around $2 million for the one-time treatment intended to cure SMA, a muscle-wasting disease that typically starts early in a patient's life and is often fatal. Bernstein analyst Ronny Gal, whose team has discussed the drug with payers, said in a Friday note that coverage gatekeepers “are hearing Zolgensma will be priced at $2.3M per patient and are pretty comfortable with that range."

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Novartis has floated alternative payment models—such as annuity payments made in installments over time—in addition to money-back arrangements if the drug doesn’t work. But Gal wrote that it’s “not clear those are needed.” 

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

Novartis made headlines late last year when Dave Lennon, president of the company's gene therapy outfit AveXis, said the drug could be cost-effective at up to $5 million. More recently, the U.S. cost watchdog Institute for Clinical and Economic Review concluded the drug wouldn’t be worth its benefits at a price of more than $1.5 million. 

For now, Biogen’s Spinraza is the main treatment in the disease area after its approval in late 2016. The drug—which costs $750,000 for the first year and $375,000 for subsequent years—has surpassed initial sales expectations and climbed to $1.7 billion last year.

RELATED: Novartis CEO calls for new drug payment model ahead of Zolgensma launch 

Ahead of Novartis' likely Zolgensma approval, Narasimhan called for changes to current drug pricing models. Drugs are now sold on a “pay-as-you-go” basis, the CEO wrote in a recent CNBC commentary. For potential cures, it’s tough to assess value but even tougher for payers to shell out the full cost upfront. And Medicare and Medicaid billing systems aren’t set up to pay for cures, either, the CEO wrote.

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