Novartis Claims New Gene Therapy is Cost-Effective at $4 Million Per Treatment

This week the Swiss pharmaceutical company Novartis, which has been moving into the rare disease market, said it that its new gene therapy for the fatal condition of spinal muscular atrophy (SMA) could be “cost-effective” at $4-5 million per treatment. This therapy, called AVXS-101, is Novartis’ leading gene therapy and is at the center of their $8.7 billion acquisition of US biotech firm AveXis previously this year. As per the company’s research and development update yesterday, the treatment could receive marketing approval for type 1 SMA (the most severe SMA) in the US, Japan, and Europe as early as next year.

This staggering price tag is likely due in part to the expensive initial price of $750,000 tied to Biogen’s Spinraza (nusinersen), an antisense drug that was the first of its kind approved for SMA treatment. Biogen’s Spinraza has since lowered in price to $375,000, however, the medication requires administration on a continuous basis.

Clinical trials such as those conducted with AVXS-101 have brought great expectations to gene therapy in assisting patients with rare diseases such as SMA. SMA results in debilitating atrophy, or muscular deterioration, resulting from nervous system death in the spinal cord. The disease can be fatal in patients with serious cases, resulting in death within two years. Novartis’s gene therapy offers a one-time treatment that restores the integrity of the spine. Specifically, the therapy restores healthy production of the SMN protein that is missing in patients with SMA.

Novartis’s declared cost-effective price around $4 million is based on 10-year cost set against quality-adjusted life years (QALY) gained, representing a QALY score of 13.3. This price is in great excess of the $100,000 to $150,000 per QALY commonly used in health technology assessment agencies but is reported to be within range for lifelong medicines for rare diseases.

The debate of whether one can charge that much money for a therapy, regardless of how impactful, will be prevalent given the current politics surrounding pharmaceutical pricing. Novartis made note of this difficulty in their update, stating that they would have to get creative in crafting value and pricing arguments for AVXS-101 to get insurers to cover screening, as well as treatment programs. Novartis has not yet decided exactly what it will charge if the gene therapy receives approval.

This elevation in prices of emerging treatments brought about by gene therapies was acknowledged last year by Institute for Clinical and Economic Review (ICER). They acknowledged that the lack of guarantee of long-term safety or strength of clinical benefit make these medications particularly difficult to price. ICER estimates that 10% of Americans “have a rare condition related to a genetic defect.”

“Based on the initial pricing experience with gene therapy in Europe, should a growing number of gene therapies come into use at costs of $1-$2 million, the cumulative budget impact would be substantial, and perhaps unsustainable.” ICER suggested that the cost of producing gene therapies for only 1% of the effected rare disease population could amass costs up to $3 trillion.

Nonetheless, Novartis has still developed an extremely unique gene therapy, allowing one-time treatment to provide long term benefit in those with a potentially fatal disease. Estimates put the number of Americans affected by SMA type 1 at roughly 1,300. Assuming this $4 million price tag sticks, treating all of these patients would yield a total cost to this community of roughly $5 billion. Novartis is also trying to extend its gene therapy to help those with other forms of SMA.

“Four million dollars is a significant amount of money, but we believe this is a cost-effective point,” said Dave Lennon, president of AveXis. “We’ve shown through other studies we are cost effective in the range of $4-$5 million,” Lennon said. “And ultimately, this is important context as we consider how we’re going to evaluate value for (the therapy called) AVXS-101.”

Novartis says $5 million would be “cost-effective” for SMA gene therapy. https://t.co/Kz7cObA4rV

— Emily Mullin (@emilylmullin) November 5, 2018

Sources: PharmaPhorum, Reuters