Executive Summary

The first gene therapy approval could be coming soon – followed shortly by the first ever gene therapy coverage decision. An Express Scripts executive argues that the tone may be affected by the initial indication.

Spark Therapeutics Inc.'s voretigene neparvovec is pending at FDA for treatment of a rare form of hereditary blindness and seems likely to become the first-ever gene therapy approval in the US. By default, it will then become the test case for how reimbursement and coverage policy works in the context of gene therapy.

However, Express Scripts Holding Co. Chief Medical Officer Steve Miller told the Biotechnology Industry Organization during its annual meeting in San Diego June 20, one of the features that should help secure FDA approval for the therapy is actually a drawback for payors: the complete lack of alternative therapies.

In the regulatory context, the lack of alternatives makes the efficacy of Spark’s product stand out and simplifies the risk/benefit discussion. For payors, however, that means there is no medical cost to offset by paying for a new therapy, leading Miller to suggest that it might be easier if the first gene therapy treats a condition where there already is medical spend, like hemophilia.

In response to a question about the possibility of reimbursing for high-cost gene therapies, Miller noted the lack of medical offset when new therapies treat conditions where there’s currently no existing treatment to offset.

Miller threw out an estimate of $ 1 million an eye, or $2 million in new spend per patient for Spark’s product. “The question is: are plan sponsors going to be willing to pay $2 million?” Miller said.

“Do not fixate on the idea that all of them [gene therapies] are going to be curative,” Miller added. “Some of these are just going to be palliative.” In the case of the Spark gene therapy, “these kids can see better, but they still can’t see newsprint,” he said.

Miller acknowledged that the efficacy benefits are nevertheless dramatic. For example, the vision improvement allows children to walk around a room without an aide or a parent to help. “We’re supposed to be in the business of providing better health to people,” he said. “So we’re going to have to figure out how to pay for that, which means that we’ve got to cut out every ounce of waste in the system to make sure we have the dollars that are available to pay for it.”

“For the other gene therapies, like hemophilia, where we’re paying on the average $150,000-$200,000 a person” per year, “even at $2 million, there is going to be an RoI on that,” Miller said. “If that was the first one that came to the marketplace it’d be a much easier argument. But the eye one is probably going to be the first gene therapy, it’s probably going to happen this year, and we don’t have a system that’s actually designed to pay for it.”

Because the condition is so rare, Miller said, the challenge will not be felt equally by all payors. “I think we will figure out – especially big payers – the Optums, Express Scripts, we will be able to handle this,” he said. “For small regional health plans, that’s a different issue. If you have a family with multiple kids – that could be a real challenge.”

“Not all medicines … are going to reduce healthcare costs. They could be prolonging life or improving quality of life or productivity." – Amgen Senior VP Joshua Ofman

The issues for gene therapy bring to the fore the broader challenges in biopharma reimbursement when companies focus increasingly on smaller populations with significant unmet medical need, rather than on incremental improvements in treatments for more common diseases. The potential price tag (and potential efficacy outcome) may be higher for gene therapies, but the lessons learned will likely be applied to other breakthrough products across the biopharma sector. (Also see "BIO Notebook, Day 2: Deal Insights, A Payer Perspective And EMA Rumors" - Pink Sheet, 21 Jun, 2017.)

Amgen Inc. Senior VP Global Value, Access and Policy Joshua Ofman highlighted that broader point during a separate presentation June 21. Biopharma has been innovating – but the payment system has not, Ofman said. Without changes, the concerns won’t solely affect gene therapies, but also “any of our genomic or personalized medicine at all.”

The focus on the short term is “tilting and shading the way we think about the potential for innovation,” Ofman said. “We should be demanding innovation and applauding it when we get it.” Instead “everybody is fearing it, because we just focus on short-term budgets.”

Ofman noted that “not all medicines, and not all treatments, are going to reduce healthcare costs. They could be prolonging life or improving quality of life or productivity to massive extents, which have huge social benefits, but not all of our value assessments consider those type of things.”

“We assume we know how much we should be spending on medicine,” Ofman said. In fact, “we have no idea what the right number is. Maybe we should be spending more. Medicines are the things that are driving the greatest improvements in health right now.”