May 22, 2019

The real drug pricing debate is upon us

Illustration: Sarah Grillo/Axios

The first FDA approval of a multi-million dollar drug is expected any day now, sparking a new national debate over what we're willing to pay for medical breakthroughs.

Why it matters: The future of medicine is in personalized and scientifically advanced drugs, meaning that Zolgensma's imminent approval is just the beginning of the seven-digit price tag era. While drug companies say the drugs' effectiveness justifies their costs, some experts are pushing back.

Driving the news: The approval of Zolgensma, a gene therapy with the potential to cure spinal muscular atrophy, "could come any day," said Dave Lennon, president of Novartis-acquired AveXis.

  • The company hasn't yet announced the drug's list price, but it's estimated to cost around $2 million, the WSJ reported. Lennon said that the value of the product is between $4 and $5 million.
  • To help with the sticker shock, the company has floated allowing insurers to pay for the one-time drug over 3–5 years. It will also offer outcome-based arrangements, meaning insurers will receive rebates if patients don't have the expected results, Lennon said.
  • “We are currently in discussions with all of the largest payers within the U.S. around reimbursement for Zolgensma, and there’s high interest in completing contracts for that," he added.

The big picture: The list price drugmakers set isn't the price insurance plans will actually pay. Still, their decisions about how to cover Zolgensma could have a ripple effect: 68 gene therapies are expected to launch by 2024, according to Evaluate.

  • Lennon said that Novartis is looking at leveraging the same technology to address 4 other diseases, including Rett Syndrome and Lou Gehrig's disease.

What they're saying: "Outcomes-based arrangements are not a panacea to the root problem of excessively high drug prices," a spokeswoman for America's Health Insurance Plans said. "As with any new drug or therapy, insurance providers will evaluate the evidence to make coverage policy decisions."

  • "These are not real prices. This is their asking price," said Peter Bach of the Memorial Sloan-Kettering Cancer Center, who added that Novartis's proposed alternative payment structures don't solve the root problem: "These outcomes guarantees are intended to distract from the fundamental question of the price itself.”

Questions about gene therapies' affordability will be particularly pronounced in state Medicaid programs, which are constrained by state budgets.

  • "Not any one of them is going to break the camel’s back. But there’s a tsunami coming and all together it’s going to be problematic," said Matt Salo, executive director of the National Association of Medicaid Directors.

The bottom line: "There’s no doubt people and companies that bring to market gene-based therapy that cure previously incurable diseases should become rich. The question is how rich," said Walid Gellad, a professor at the University of Pittsburgh Department of Medicine.

  • "There are many other life saving therapies that cure conditions that we don’t pay $5 million for," he added.

Editor's note: This piece was clarified to show Novartis hasn't announced if it will allow patients to pay for the one-time drug over 3-5 years.

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U.S. and Taliban sign peace deal

US Special Representative for Afghanistan Reconciliation Zalmay Khalilzad (L) and Taliban co-founder Mullah Abdul Ghani Baradar (R) sign a peace agreement during a ceremony in Qatar. Photo: Giuseppe Cacace/AFP via Getty Images

The United States signed a peace deal with the Taliban in Doha, Qatar on Saturday after over a year of off-and-on negotiations, The New York Times reports.

Why it matters: The signing of the deal officially begins the process of ending the United States' longest war, which has spanned nearly two decades. The agreement sets a timetable for the U.S. to pull its remaining 13,000 troops out of Afghanistan, per the Times, but is contingent on the Taliban's completion of commitments, including breaking ties with international terrorist groups, such as al Qaeda.

Biden bets it all on South Carolina

Illustration: Eniola Odetunde/Axios

COLUMBIA, S.C. — Most Joe Biden admirers Axios interviewed in South Carolina, where he's vowed to win today's primary, said they're unfazed by his embarrassing losses in Iowa, New Hampshire and Nevada.

Why it matters: Biden has bet it all on South Carolina to position himself as the best alternative to Bernie Sanders — his "good buddy," he tells voters before skewering Sanders' record and ideas.

Coronavirus updates: Market ends worst week since financial crisis

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. Note: China numbers are for the mainland only and U.S. numbers include repatriated citizens.

The stock market ended its worst week since the financial crisis, prompting the Fed to release a statement. Meanwhile, the WHO warned that countries are losing their chance to contain the novel coronavirus and raised its global risk assessment to "very high" Friday.

The big picture: COVID-19 has killed more than 2,860 people and infected more than 84,000 others in over 60 countries and territories outside the epicenter in mainland China. The number of new cases reported outside China now exceed those inside the country.

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