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.

Pablo Legorreta, founder and CEO of Royalty Pharma AG, speaks at the annual Milken Institute Global Conference in Beverly Hills, California (Patrick T. Fallon/Bloomberg via Getty Images)

Cap­i­tal­iz­ing Pablo: The world’s biggest drug roy­al­ty buy­er is go­ing pub­lic. And the low-key CEO di­vulges a few se­crets along the way

Pablo Legorreta is one of the most influential players in biopharma you likely never heard of.

Over the last 24 years, Legorreta’s Royalty Pharma group has become, by its own reckoning, the biggest buyer of drug royalties in the world. The CEO and founder has bought up a stake in a lengthy list of the world’s biggest drug franchises, spending $18 billion in the process — $2.2 billion last year alone. And he’s become one of the best-paid execs in the industry, reaping $28 million from the cash flow last year while reserving 20% of the cash flow, less expenses, for himself.

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Sanofi brings in 4 new ex­ec­u­tives in con­tin­ued shake-up, as vac­cines and con­sumer health chief head out the door

In the middle of Sanofi’s multi-pronged race to develop a Covid-19 vaccine, David Loew, the head of their sprawling vaccines unit, is leaving – part of the final flurry of moves in the French giant’ months-long corporate shuffle that will give them new-look leadership under new CEO Paul Hudson.

The company also said today that Alan Main, the head of their consumer healthcare unit, is out, and they named 4 executives to fill new or newly vacated positions, 3 of whom come from both outside both Sanofi and from Pharma.

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As­traZeneca trum­pets the 'mo­men­tous' da­ta they found for Tagris­so in an ad­ju­vant set­ting for NSCLC — but many of the ex­perts aren’t cheer­ing along

AstraZeneca is rolling out the big guns this evening to provide a salute to their ADAURA data on Tagrisso at ASCO.

Cancer R&D chief José Baselga calls the disease-free survival data for their drug in an adjuvant setting of early stage, epidermal growth factor receptor-mutated NSCLC patients following surgery “momentous.” Roy Herbst, the principal investigator out of Yale, calls it “transformative.”

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Ab­b­Vie wins an ap­proval in uter­ine fi­broid-as­so­ci­at­ed heavy bleed­ing. Are ri­vals My­ovant and Ob­sE­va far be­hind?

Women expel on average about 2 to 3 tablespoons of blood during their time of the month. But with uterine fibroids, heavy bleeding is typical — a third of a cup or more. Drugmakers have been working on oral therapies to try and stem the flow, and as expected, AbbVie and their partners at Neurocrine Biosciences are the first to make it across the finish line.

Known chemically as elagolix, the drug is already approved as a treatment for endometriosis under the brand name Orilissa. It targets the GnRH receptor to decrease the production of estrogen and progesterone.

Ear­ly sur­vival da­ta boost Zio­phar­m's 'con­trolled IL-12' im­munother­a­py for glioblas­toma

An unconventional pairing of a gene therapy and an oral drug that promises to attack recurrent or progressive glioblastoma with controlled release of IL-12 has turned up more promising — if early — overall survival data. On top of boosting its case as a monotherapy, the data can also bode well for a combination with Regeneron’s PD-1 inhibitor, Libtayo.

Both the treatment and its developer, Ziopharm Oncology, have come a long way. The stock price peaked in 2015 but cratered in 2016 following a patient death in a Phase I.

David Chang, Allogene CEO (Jeff Rumans)

Head­ed to PhII: Al­lo­gene CEO David Chang com­pletes a pos­i­tive ear­ly snap­shot of their off-the-shelf CAR-T pi­o­neer

Allogene CEO David Chang has completed the upbeat first portrait of the biotech’s off-the-shelf CAR-T contender ALLO-501 at virtual ASCO today, keeping all eyes on a drug that will now try to go on to replace the first-wave personalized pioneers he helped create.

The overall response rate outlined in Allogene’s abstract for treatment-resistant patients with non-Hodgkin lymphoma slipped a little from the leadup, but if you narrow the patient profile to treatment-naïve patients — removing the 3 who had previous CAR-T therapy who didn’t respond, leaving 16 — the ORR lands at 75% with a 44% complete response rate. And 9 of the 12 responders remained in response at the data cutoff, offering a glimpse on durability that still has a long way to go before it can be completely nailed down.

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Pfiz­er, Mer­ck KGaA ce­ment Baven­cio blad­der can­cer win with OS da­ta — while carv­ing an­oth­er niche in rare can­cer

Pfizer and Merck KGaA have detailed the Phase III data that inspired FDA regulators to designate Bavencio a “breakthrough” for first-line advanced bladder cancer and offered an early glance at how the PD-L1 can help patients with a rare gynecological cancer — carving out niches in the checkpoint space for itself after being shut out of numerous others.

In JAVELIN Bladder 100, Bavencio led to a 31% reduction in risk of death compared to standard care alone. It also extended median survival by more than seven months — a historic feat in this setting, according to investigators at Queen Mary University of London.

Dan O'Day, Gilead CEO (Andrew Harnik, AP Images)

UP­DAT­ED: Gilead leas­es part­ner rights to TIG­IT, PD-1 in a $2B deal with Ar­cus. Now comes the hard part

Gilead CEO Dan O’Day has brokered his way to a PD-1 and lined up a front row seat in the TIGIT arena, inking a deal worth close to $2 billion to align the big biotech closely with Terry Rosen’s Arcus. And $375 million of that comes upfront, with cash for the buy-in plus equity, along with $400 million for R&D and $1.22 billion in reserve to cover opt-in payments and milestones..

Hotly rumored for weeks, the 2 players have formalized a 10-year alliance that starts with rights to the PD-1, zimberelimab. O’Day also has first dibs on TIGIT and 2 other leading programs, agreeing to an opt-in fee ranging from $200 million to $275 million on each. There’s $500 million in potential TIGIT milestones on US regulatory events — likely capped by an approval — if Gilead partners on it and the stars align on the data. And there’s another $150 million opt-in payments for the rest of the Arcus pipeline.

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Paul Hudson, Sanofi CEO (Getty Images)

Sanofi CEO Paul Hud­son has $23B burn­ing a hole in his pock­et. And here are some hints on how he plans to spend that

Sanofi has reaped $11.1 billion after selling off a big chunk of its Regeneron stock at $515 a share. And now everyone on the M&A side of the business is focused on how CEO Paul Hudson plans to spend it.

After getting stung in France for some awkward politicking — suggesting the US was in the front of the line for Sanofi’s vaccines given American financial support for their work, versus little help from European powers — Hudson now has the much more popular task of managing a major cash cache to pull off something in the order of a big bolt-on. Or two.

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