Blue­bird en­dors­es plan for in­stall­ment-based pay­ments for cost­ly gene ther­a­py

Pay­ment-by-in­stall­ment to tack­le the sky­rock­et­ing costs of drugs has long been de­lib­er­at­ed in health pol­i­cy cir­cles, but is now gain­ing trac­tion on the man­u­fac­tur­er side in the field of gene ther­a­py, as back­lash to $1 mil­lion-plus prices of these one-shot treat­ments whose long-term dura­bil­i­ty has not been es­tab­lished forces drug­mak­ers to seek cre­ative so­lu­tions to en­sure re­im­burse­ment.

Nick Leschly. GET­TY

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Blue­bird bio $BLUE CEO Nick Leschly float­ed such a mod­el in an in­ter­view with the Wall Street Jour­nal on Tues­day at the JP Mor­gan Health­care con­fer­ence, in re­la­tion to its gene-re­place­ment ther­a­py Lenti­Glo­bin for be­ta tha­lassemia — a rare, in­her­it­ed blood dis­or­der — which is ex­pect­ed to win EU ap­proval this year, and US ap­proval in 2020. Pa­tients with the dis­or­der usu­al­ly re­quire life­long treat­ment with blood trans­fu­sions and med­ica­tion.

The to­tal price of the com­pa­ny’s gene ther­a­py has not been an­nounced, but is ex­pect­ed to be in the sev­en-fig­ure range, al­beit be­low $2.1 mil­lion — which the com­pa­ny be­lieves is the “in­trin­sic val­ue” of the treat­ment — the WSJ re­port said. The com­pa­ny’s pric­ing plan in­volves an up­front 20% of the cost of the treat­ment, while the rest is ex­pect­ed to come in 20% in­stall­ments per year via the in­sur­er if the drug does in­deed work as in­tend­ed.

Leerink an­a­lysts said they had mod­eled the launch price of Lenti­Glo­bin as $1.2 mil­lion in the US and $0.9 mil­lion in the EU.

“How­ev­er, 80% of the cost of gene ther­a­py would be at risk, and while the da­ta for Lenti­Glo­bin has been promis­ing in our view, long-term dura­bil­i­ty is still an un­known and low­er than ex­pect­ed dura­bil­i­ty could erode the as­sumed price,” they wrote in a note on Tues­day.

Blue­bird’s plan — akin to a mort­gage — in­volves an up­front cost, fol­lowed by in­stall­ments of pay­ment. Ex­cept un­like a mort­gage, the in­di­vid­ual (or in this case a pa­tient) sel­dom en­joys the free­dom of treat­ment choice, and pay­ments are based on out­comes. Be­fore he be­came FDA com­mis­sion­er, Scott Got­tlieb, in a re­port for the Wash­ing­ton-based pub­lic pol­i­cy think tank AEI Re­search in 2014, wrote that med­ical ad­vance­ments tan­ta­mount to cures ne­ces­si­tat­ed pay­ment mod­els that can spread the high up­front costs over time dur­ing which the pub­lic health and eco­nom­ic ben­e­fits can be re­al­ized.

In health­care for ex­am­ple the cost of a ro­bot­ic tool for per­form­ing surgery is typ­i­cal­ly spread out (or amor­tized) over the sev­en years dur­ing which the de­vice is pre­sumed to be use­ful, he not­ed. In terms of med­ical treat­ment, amor­ti­za­tion is a more op­er­a­tive con­cept. “In­stead of spread­ing out the costs over the use­ful life of a piece of cap­i­tal equip­ment, amor­ti­za­tion in this con­text would al­low a pay­er to spread out the costs over the pe­ri­od dur­ing which it would ac­crue the ben­e­fits of the re­duced down­stream costs from dis­ease avert­ed,” he wrote.

More re­cent­ly, an ICER re­port pub­lished in 2017 de­bat­ed the mer­its of the amor­ti­za­tion mod­el for gene ther­a­pies, sug­gest­ing that al­though the idea was com­mend­able it may ac­tu­al­ly con­tribute to in­creased over­all prices for al­ready ex­pen­sive treat­ments. Mean­while, there are al­so oth­er chal­lenges to im­ple­ment­ing such a scheme — for in­stance, in the Unit­ed States, where in­sur­ance is of­ten tied to em­ploy­ment, drug­mak­ers will be on the hook if pa­tients change jobs or in­sur­ance car­ri­ers.

The furor sur­round­ing drug price goug­ing has spawned oth­er ideas such as val­ue-based pay­ments, in which in­sur­ers are el­i­gi­ble to re­ceive retroac­tive re­bates if drugs don’t work as in­tend­ed. For in­stance, Spark Ther­a­peu­tic­s'$ONCE has de­ployed a sim­i­lar plan by agree­ing to re­bate cer­tain in­sur­ers if its $850,000-gene ther­a­py for in­her­it­ed vi­sion loss Lux­tur­na doesn’t work as promised. Tra­di­tion­al­ly, in­sur­ers pay for a drug — re­gard­less of whether it works or not.

Com­mu­ni­cat­ing the val­ue of pre­ci­sion med­i­cine

By Natasha Cowan, Content Marketing Manager at Blue Latitude Health.
Many stakeholders are confused by novel precision medicines, including patients and healthcare professionals. So, how can industry help them to navigate this complexity?

Precision medicine represents a new paradigm in healthcare. It embodies the shift from treating many patients with the same therapy, to having the tools to identify the best treatment for every patient.

(Image: Associated Press)

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