Advanced therapies and the high-profile pricing dilemma

Views & Analysis

The advancements made in drug development over the last decade have seen the arrival of a number of treatments that offer one-time cures and more effective therapies for conditions in smaller patient populations. However, alongside this progress, Ben Hargreaves finds that there is also a conundrum over how to price these therapies.

It is no secret that the drug development process for the pharmaceutical industry has undergone a major transition in the last few decades. Previously, the discovery of small molecule treatments had been the priority, with their development and manufacturing process being an established formula. However, R&D efforts into biological medicine have moved into the ascendency in recent times, as the treatments often offer targeted therapy and better outcomes. Biologic treatments also fit into the general trend across the industry – as it becomes increasingly difficult to find new small molecule treatments that offer benefits to broad patient populations, new therapies are more likely to focus on smaller groups through targeted treatment.

This is the case for the new generation of treatments known as advanced therapies, which encompasses cell and gene therapies, as well as tissue engineering. Of the innovations that have happened recently in pharma drug development, it is cell and gene therapy that have received the most attention. Firstly, due to the remarkable results that are made possible for patients, such as one-time curative treatments, and also because of the controversy over their pricing.

Changing the model

Advanced therapies have changed the treatment landscape for the industry and for patients. Rather than requiring repeated doses, the treatments can often deliver lifelong benefits. While this is of tremendous benefit to patients, it provides a headache to the pharma industry and to healthcare systems. The model for making a profit from medicine is geared towards delivering medicines regularly, usually for chronic conditions. This is how small molecule treatments typically work and, as a result, this was how the entire industry formed over the last century to create a profitable enterprise. Yet, in the space of a decade, certain treatments have come along that have raised important questions over the future of treatment, reimbursement, and the value of the quality of life for patients.

The debates over pricing and profits have always existed in the industry, but the arrival of CAR-T treatments, such as Kymriah (tisagenlecleucel), which is priced at $475,000 per dose, immediately raised a discussion on how far prices should be raised. The UK’s NICE, the cost-effectiveness body for the country, immediately ruled that such pricing was beyond what the healthcare system could afford.

Only a few years later, bluebird bio’s gene therapy, Zynteglo (betibeglogene autotemcel), was approved in the European market for the treatment of the rare blood disorder, beta thalassaemia. However, with a price tag of €1.58 million, the company could not find government and payers ready to meet the cost and chose to withdraw from the European market, rather than lower the price.

How to navigate the new climate

The confrontation over pricing is a logical outcome when both companies and payers are trying to understand the value of new treatment arriving on the market. The difficulty in negotiating the area is that both sides are arriving from opposing standpoints: the industry will charge what it believes the market can bear, while the countries want to pay a price that leaves sufficient budget to reimburse other treatments and solutions. There is no official middleman to determine the fair price, but there is an unofficial one.

ICER (the Institute for Clinical and Economic Review) is based in the US and is a non-profit organisation that provides an independent source of evidence review to address questions over the value of a treatment and pricing. The body has often gone against industry pricing models, notably in the case of Novartis’ Zolgensma (onasemnogene abeparvovec), which was previously the most expensive treatment in the world. At more than $2.1 million dollars for the one-time treatment, which is used to treat children less than two years old with spinal muscular atrophy, it is listed far higher than ICER’s recommendation of between $310,000-$900,000 per treatment.

However, a recently released report from the organisation could blow the price tag of Zolgensma out of the water. In guidance for CSL Behring’s etranacogene dezaparvovec, the ICER’s assessment found that the potential treatment could be fairly priced at $2.93-$2.96 million. During the same report, the body also stated that BioMarin’s valoctocogene roxaparvovec would be fairly priced at a cost of approximately $1.9 million. Both of the treatments are gene therapies for haemophilia, and both are one-time therapies.

Explaining how the ICER reached this pricing conclusion, the report states: “In the case of these two gene therapies, more than 99% of the traditional cost-effectiveness ‘value’ is generated by cost offsets of eliminating prophylactic treatment that itself is widely considered to be far too expensive to be cost-effective. Therefore, to calculate the HBPB for these gene therapies we have applied our alternative cost-effectiveness methodology that shares the savings from cost offsets between the life science company and the health system.”

The organisation’s conclusion is that one-time gene therapies can be priced in the millions because the potential lifelong benefits outweigh both the costs of alternative, repeated treatments, and due to other benefits provided to the US healthcare system. With such a conclusion, the future of pricing for curative treatments seems set to be potentially in the millions per treatment.

Equity of access

The issue when taking a broader view of advanced therapy pricing is that countries with the economic means of the US can afford to spend millions on single-dose treatments, but there are many more countries where that is not possible. The pandemic showcased on a global scale that economic firepower equates to having earlier access or even priority to medical treatments, and there is a danger that a similar situation could occur with advanced therapies.

A recent article published by the World Economic Forum asked this question, specifically in regard to the most expensive branch of advanced therapies: gene therapies. Though costing could potentially be adjusted to allow access to treatments, there are more fundamental issues that would need to be addressed to ensure that more countries have the potential to offer such ground-breaking treatments. The article outlines, “The complex equipment, expert personnel, and mature regulatory environments necessary to develop, test, and administer gene therapies are largely insufficient or absent in low- and middle-income countries.”

The authors write that the majority of the world is excluded from the benefits of modern medicine, and called for greater effort to cater research and financing for low- to middle-income countries. The alternative is to allow a divergence in health outcomes to grow between high-income countries and the rest of the world. When even high-income regions like Europe are refusing to meet the price tag of certain gene therapies, it is likely the debate on pricing is set to continue in the long-term.