The FDA today has made Zolgensma, a Novartis treatment for the rare genetic disease spinal muscular atrophy, the second approved gene therapy in the US.
The news marks a milestone for SMA patients, who have only one other approved medicine available. But it comes with a cost: At $2.125 million, Zolgensma’s price tag creates a critical test for the economic viability of gene therapy as it goes head-to-head with an established treatment. The new therapy promises a long-lasting effect—if not an outright cure—through a single procedure, but the drug’s experimental track record is too short for now to guarantee results that match the hefty cost.
Novartis (NYSE: [[ticker:NVS]]) says it is working with insurers to offer payment plans for Zolgensma through installments over as long as five years. A five-year plan, for instance, would consist of annual payments of $425,000. Novartis is also discussing “outcomes-based agreements,” which would tie the therapy’s performance to its price tag over that timeframe, the company said in a statement.
More than 15 insurers are in “advanced discussions of terms” with Novartis, and some have agreed, in principle, to terms. The company didn’t disclose specifics.
Novartis CEO Vas Narasimhan said Zolgensma’s price tag comes in “around 50 percent less than multiple established benchmarks.” That includes the “10-year current cost of chronic SMA therapy” that Novartis estimates at more than $4 million for the first decade of life of a child diagnosed with SMA. The price tag is “expected to be within the range of traditional cost-effectiveness thresholds” used by the Institute for Clinical and Economic Review (ICER) a drug price watchdog, Narasimhan said.
“We believe by taking this responsible approach, we will help patients benefit from this transformative medical innovation and generate significant cost savings for the system over time,” he added.
On a conference call with reporters, Narasimhan said that Zolgensma will be available to ship within two weeks.
A Novartis executive had indicated earlier this year that Zolgensma would have been cost-effective at a price as high as $5 million per patient. “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,” ICER president Steven Pearson said in a separate statement.
For families, doctors, and insurance companies, the scramble is now on to weigh the high costs and benefits of Zolgensma and its rival drug, Biogen’s nusinersen (Spinraza), which is not a gene therapy and must be taken repeatedly.
The FDA complicated matters further by approving Zolgensma for a wide range of patients with SMA, which has several subtypes, even though Novartis has provided only early indications that Zolgensma might help patients beyond those with Type 1, the most severe form of the disease. The agency specifically approved Zolgensma for children less than 2 years old whose SMA is confirmed via newborn screening, regardless of type. The approval includes patients who have yet to show symptoms. Novartis estimates that the total number of patients eligible for its therapy is 1,100, given the approval’s parameters.
Then there’s another complicating factor. While the FDA approved the Zolgensma dose given intravenously to Type 1 patients, Novartis has tested a different dose in Type 2 and Type 3 SMA patients that is infused into the spine. How will payers react? “Will the IV formulation be covered only for Type 1s & presymptomatic [patients] … or Type 2s as well?” Evercore ISI analyst Umer Raffat wrote in a research note.
There is precedent for such a decision. In 2016, the FDA approved the first-ever SMA drug, nusinersen (Spinraza), for patients with any form of the disease despite a lack of evidence beyond Type 1. The drug’s owner, Biogen (NASDAQ: [[ticker:BIIB]]), soon followed with data showing a benefit for patients with other types of SMA.
As Xconomy reported in 2017, some SMA patients had trouble getting treatment—either because of issues with insurers or because hospitals couldn’t keep a stock of the pricey drug, which costs $750,000 for the first year and $375,000 each year after. Additionally, treatment centers faced logistical challenges attempting to use nusinersen, an RNA-based therapy infused into the spine.
Those early problems seem to have abated, and big revenue numbers have followed for Biogen; Spinraza generated $518 million in its most recent quarter and $1.7 billion in 2018.
But Spinraza’s launch is a cautionary tale
