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.

Has the mo­ment fi­nal­ly ar­rived for val­ue-based health­care?

RBC Capital Markets’ Healthcare Technology Analyst, Sean Dodge, spotlights a new breed of tech-enabled providers who are rapidly transforming the way clinicians deliver healthcare, and explores the key question: can this accelerating revolution overturn the US healthcare system?

Key points

Tech-enabled healthcare providers are poised to help the US transition to value, not volume, as the basis for reward.
The move to value-based care has policy momentum, but is risky and complex for clinicians.
Outsourced tech specialists are emerging to provide the required expertise, while healthcare and tech are also converging through M&A.
Value-based care remains in its early stages, but the transition is accelerating and represents a huge addressable market.

Lat­est on ul­tra-rare dis­ease ap­proval; Pos­i­tive, if mixed, signs for Bio­gen's ALS drug; Clay Sie­gall finds a new job; and more

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FDA ad­vi­sors unan­i­mous­ly rec­om­mend ac­cel­er­at­ed ap­proval for Bio­gen's ALS drug

A panel of outside advisors to the FDA unanimously recommended that the agency grant accelerated approval to Biogen’s ALS drug tofersen despite the drug failing the primary goal of its Phase III study, an endorsement that could pave a path forward for the treatment.

By a 9-0 vote, members of the Peripheral and Central Nervous System Drugs Advisory Committee said there was sufficient evidence that tofersen’s effect on a certain protein associated with ALS is reasonably likely to predict a benefit for patients. But panelists stopped short of advocating for a full approval, voting 3-5 against (with one abstention) and largely citing the failed pivotal study.

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No­vo Nordisk oral semaglu­tide tri­al shows re­duc­tion in blood sug­ar, plus weight loss

Novo Nordisk is testing higher levels of its oral version of its GLP-1, semaglutide, and its type 2 diabetes trial results released today show reductions in blood sugar as well as weight loss.

In the Phase IIIb trial, Novo compared its oral semaglutide in 25 mg and 50 mg doses with the 14 mg version that’s currently the maximum approved dose. The trial looked at how the doses compared when added to a stable dose of one to three oral antidiabetic medicines in people with type 2 diabetes who were in need of an intensified treatment.

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FDA spells out how can­cer drug de­vel­op­ers can use one tri­al for both ac­cel­er­at­ed and full ap­provals

The FDA’s Oncology Center of Excellence has been a bright spot within the agency in terms of speeding new treatments to patients. That flexibility was on full display this morning as FDA released new draft guidance spelling out exactly how oncology drug developers can fulfill both the accelerated and full approval’s requirements with just a single randomized controlled trial.

While Congress recently passed legislation that will allow FDA to require confirmatory trials to be recruiting and ongoing prior to granting an accelerated approval, the agency is now making clear that the initial trial used to win the AA, if designed appropriately, can also serve as the trial for converting the accelerated approval into a full approval.

Clay Siegall, Morphimmune CEO

Up­dat­ed: Ex-Seagen chief Clay Sie­gall emerges as CEO of pri­vate biotech

Clay Siegall will be back in the CEO seat, taking the helm of a private startup working on targeted cancer therapies.

It’s been almost a year since Siegall resigned from Seagen, the biotech he co-founded and led for more than 20 years, in the wake of domestic violence allegations by his then-wife. His eventual successor, David Epstein, sold the company to Pfizer in a $43 billion deal unveiled last week.

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Eu­ro­pean doc­tors di­al up dig­i­tal com­mu­ni­ca­tion with phar­mas, but still lean to­ward in-per­son med meet­ings, study finds

As in-person sales rep access declines in the big five European countries, a corresponding uptick in virtual rep access is happening. It’s not surprising, but it does run counter to pharma companies’ assessment – along with long-held sales rep sway in Europe – that in-person access hadn’t changed.

CMI Media Group and Medscape’s recent study reports that 75% of physicians in the EU5 countries of Spain, Germany, Italy, France and the UK already limit engagements with pharma sales reps, and 25% of those surveyed plan to decrease time with reps.

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Judge al­lows ex­pert tes­ti­mo­ny in GSK tri­al al­leg­ing Zan­tac link to can­cer

A California judge will allow a plaintiff in a state court case to introduce expert testimony connecting a potential carcinogen in former blockbuster medicine Zantac to cancer.

The order was handed down on Thursday from state judge Evelio Grillo, who is now allowing both parties to introduce expert testimony in an upcoming trial after what’s known as a Sargon hearing, where a judge determines the admissibility of expert witnesses and expert opinions.

Ly­me vac­cine test com­ple­tion is pushed back by a year as Pfiz­er, Val­ne­va say they'll ad­just tri­al

Valneva and Pfizer have adjusted the end date for the Phase III study of their investigational Lyme disease vaccine, pushing it back by a year after issues at a contract researcher led to thousands of US patients being dropped from the test.

In a March 20 update to clinicaltrials.gov, Valneva and Pfizer moved the primary completion date on the trial, called VALOR, from the end of 2024 to the end of 2025.

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