Multimillion-dollar gene therapies offer hope and huge cost concerns

Driving the news: The FDA recently approved two gene therapies, doubling the number on the market for diseases other than cancer.

• Bluebird bio's Zynteglo is for a blood disorder called beta-thalassemia that's customarily treated in the most severe cases through regular transfusions. Zynteglo is marketed as a one-time, custom-designed injection that takes aim at the underlying genetic causes of the disorder, and costs $2.8 million.
• Zynteglo was the most expensive drug on the market for a few weeks, until the FDA approved bluebird's Skysona for a rare neurological disorder called cerebral adrenoleukodystrophy. Skysona had a list price of $3 million.
• Bluebird estimates there are 1,300–1,500 people in the U.S. who are eligible for Zynteglo. CVS estimates there are only 700 potential U.S. candidates for Skysona.

Where it stands: The two previously-approved non-oncological gene therapies came to market with price tags of $850,000 and $2.1 million.

• CAR-Ts, or gene therapies that treat cancer, have their own affordability issues.

• The average gene therapy is likely to cost at least $1.5 million, said Colin Young, director of drug development pipeline research at Tufts Medical Center's NEWDIGS Initiative.
• Including oncology drugs, gene therapies could end up costing the U.S. around $30 billion a year, Young said. Total U.S. prescription drug spending was $348.4 billion in 2020, according to CMS.
• "On a macro scale, it's not a big problem," Young said. "On a micro scale, it's still quite a problem, because if you're a self-insured company and somebody suddenly requires a $3 million gene therapy, that could wipe out the money you have for the rest of your employees."

The big picture: Even though just a handful have been approved, the drug development pipeline is full of gene therapies, and the FDA has estimated that it could be approving between 10 and 20 annually by 2025.

• Even experts and groups generally critical of high drug prices say the cost could be justified if it delivers a lifelong cure that saves the health care system a lot of money in the long run.
• When the modern health system came into existence, "there wasn't an expectation at the time for potentially durable, potentially curable class of therapeutics like gene therapies," said David Barrett, CEO of the American Society of Gene and Cell Therapy.
• "That's creating some issues trying to fit a transformative class of therapeutics into a system that was designed to address almost a more transactional approach with prescription drugs, where the benefit is tied to the administration of the therapy."

What they're saying: "As much as these are challenges in terms of paying for them ... unlike other drugs, you can understand the cost a little bit better here," said Sergio Santiviago, vice president of drug policy at America's Health Insurance Plans, which is generally critical of drug prices.

Between the lines: Payers and pharmaceutical companies are both open to nontraditional payment models to cover the risk if the treatments don't work.

• Bluebird is offering to refund up to 80% of Zynteglo's cost for two years if patients still need blood transfusions, per BioPharma Dive. Another popular idea is to pay for the therapies over time, like a mortgage.
• But "our health care system is highly fragmented, and that mean people churn on and off of insurance, and have different forms of insurance during different times of their lives," said Rachel Sachs, a law professor at Washington University.

• She noted payers may not have an incentive to provide access to a therapy that requires a one-time remittance but provides benefits over years or a lifetime, "because they're not the ones benefiting."

There are other legal and practical barriers that vary by insurance market.

• State Medicaid programs will likely have to be careful about which patients they make eligible for the drugs, Santiviago said, because "if some states have a concentration of these folks, it could destroy their budget within a year."

The intrigue: Because gene therapies are so new, the world is only in the preliminary stages of collecting data on their durability.

• If their effectiveness fades or disappears over time, then they're not as valuable and the high price tags aren't as justified.
• And not all gene therapies are the same. Some use technology that is more likely to permanently cure a patient than others, Young said.
• Questions about durability can pose regulatory challenges for the FDA, and it already has a history of asking manufacturers to gather more data before the agency approves a product.

What we're watching: The approved gene therapies to date are for very small patient populations. But two treatments for sickle cell disease could come onto the market as soon as next year.

• There are an estimated 58,000 potential U.S. patient candidates, according to CVS. A huge portion of these are insured through Medicaid, since the disease often keeps people from working.
• One study published last year in JAMA Pediatrics found that if a $1.85 million sickle cell gene therapy was administered to only 7% of eligible patients annually, the average one-year budget impact per state Medicaid program included in the study would be nearly $30 million.

The bottom line: The question of how to handle an influx of gene therapies has gone from abstract to imminent.

• "There's 2,000 gene therapies in the pipeline in the foreseeable future, and it has the potential to change the way we treat disease," Barrett said.
• "It would be unacceptable to me that scientists, physicians and the patients who volunteer to be part of these clinical trials, that their effort would be wasted if payers and policymakers couldn't find a way to cover and adequately reimburse for these transformative treatments."