Novartis has gained FDA approval for its new rare disease gene therapy Zolgensma, unveiling a price of $2.12m per patient, making it the first US drug costing over one million dollars, and the world’s most expensive medicine.
Cell and gene therapy is the biopharma sector’s current big innovation area, but the profitability of the first products, such as Novartis and Gilead’s rival CAR-T therapies, has failed so far to match their groundbreaking results in patients, which includes a potential cure.
Novartis hope that one-time gene therapy Zolgensma (onasemnogene abeparvovec-xioi) can not only deliver a lasting cure for infants with spinal muscular atrophy (SMA), but also provide it with a new blockbuster product – via an entirely new model of outcomes-based instalment payments.
For the growing number of cell and gene therapies in the pipeline, Zolgensma will be a test of how commercially sustainable the field is.
Approved on Friday, Novartis’ product is the first gene therapy for paediatric patients under two years of age with spinal muscular atrophy (SMA), a rare genetic disorder which until recently meant a death sentence within a few short years for these children.
Zolgensma now has Biogen’s existing biologic treatment for SMA, Spinraza, in its sights. Launched in December 2016, Spinraza has helped transform expectations for these children and people who develop SMA in later life – but Novartis are now arguing that its gene therapy is more clinically and cost effective than Biogen’s drug.
In the pivotal phase 3 STR1VE and the completed phase 1 START trials used by the FDA to make its decision, all 15 infants treated with Zolgensma were alive and off permanent breathing assistance at two years.
Follow-up result presented by Novartis last month showed the 10 patients who continued with follow-up study maintained all motor function gains from treatment, such as sitting without support, and were alive at three to five years of age.
As well as clinching evidence of the drug’s effectiveness in clinical trials, Novartis has also been meticulous in laying the groundwork with payers in the US and beyond for many months ahead – having flagged that the drug would cost millions, but arguing that it would be worth it.
Novartis CEO Vas Narasimhan says his company is creating a new clinical and payment model for gene therapy, helping patients and also generate cost savings for healthcare systems.
After having argued last year that the drug could be priced in excess of $4m per patient, Novartis’ decision to price it at the much lower $2.12m per patient has been greeted warmly by US payers and ICER, the Boston-based independent medicines cost-effectiveness watchdog.
Novartis say this $2.12m cost will be payable via a series of five instalments of $425,000 – a level which it says represents a 50% cost reduction compared to the 10-year cost of Biogen’s Spinraza, which must be administered for life.
Spinraza is priced at $750,000 for the first year, and $350,000 afterwards.
“Zolgensma is a historic advance for the treatment of SMA and a landmark one-time gene therapy. Our goal is to ensure broad patient access to this transformational medicine and to share value with the healthcare system,” said Vas Narasimhan. “We have used value based pricing frameworks to price Zolgensma at around 50% less than multiple established benchmarks including the 10-year current cost of chronic SMA therapy.
Significantly, ICER has confirmed that it believes Zolgensma’s price just sneaks into the range it considers value for money.
ICER’s Steven Pearson
Speaking on Friday, Steven D. Pearson, MD, MSc, president of ICER said:
“Zolgensma is dramatically transforming the lives of families affected by this devastating disease, and given the new efficacy data for the presymptomatic population, the price announced today falls within the upper bound of ICER’s value-based price benchmark range.”
Given the severity of the condition, and Zolgensma’s early results, Pearson said insurers would going “cover Zolgensma no matter the price” even when Novartis has publicly floated the idea of a price approaching $5m.
He added: “It is a positive outcome for patients and the entire health system that Novartis instead chose to price Zolgensma at a level that more fairly aligns with the benefits for these children and their families.”
The company is offering this “pay-over-time model”, which it says fits with the US healthcare system, and has already established outcomes-based agreements in principle with as many as 15 payers.
The drug has been developed by gene therapy specialist AveXis, which Novartis acquired in April last year. It has established a partnership with finance lender Accredo to offer credit to healthcare payers via the five yearly instalment option. Novartis says this will ease any short-term budget constraints, especially for US states, small payers and self-insured employers who wouldn’t be able to pay these sums upfront.
Among these payers is Harvard Pilgrim Health Care, which has made a name for itself in pioneering outcomes-based deals with the industry.
“We are thrilled to be able to offer our members access to this groundbreaking gene therapy, particularly in light of AveXis agreeing to place a portion of the cost at risk, contingent upon demonstrating continued performance over a five-year period,” said Michael Sherman, M.D., M.B.A., chief medical officer of Harvard Pilgrim Health Care.
Analysts forecast the gene therapy could hit peak annual sales of between $1.8 – $2.6bn.
A few key questions remain for Novartis and the success of Zolgensma. Chief among these is the long-term efficacy of the treatment – whether or not patients who respond initially to the gene therapy will see it maintained over years is yet to be seen.
The treatment hasn’t been without some safety concerns, either: an infection-related death in one patient in the STR1VE EU study is currently being investigated.
Another unknown is just how many patients Novartis can treat over the longer term, after an initial surge of patients come forward in the US.
According to David Lennon of AveXis, there are currently around 1,100 patients eligible for treatment with Zolgensma in the US. In addition to that, around 400 children are newly diagnosed with the condition in the US every year.
Novartis will need to treat all of these patients, and a similar amount in the rest of the world every year, in order to reach those peak sales forecasts.
Zolgensma could hit a sweet spot in the market -a relatively small number of patients being treated, and partially replacing an older drug (Spinraza) with a more cost-effective option.
Novartis isn’t expected to wipe out Spinraza, however – and it will also see competition from PTC Therapeutics/Roche’s late-stage SMA candidate risdiplam.
Analysts at Jefferies recently forecast the three therapies will split the market into roughly equal thirds, with Zolgensma claiming newly-diagnosed patients who stand to gain the most from early intervention, driving sales of the therapy to $2.6bn at its peak.
Zolgensma is expected to gain approval in the EU and Japan in the coming months, where similar financing deals are being discussed. Another gene therapy pioneer, with a similar payment model looks likely to beat Novartis to the European market, however – Bluebird Bio and its beta thalassemia treatment Zynteglo.