The gene ther­a­py pric­ing de­bate gets re­al as Spark sets $850,000 charge for its pi­o­neer­ing drug

Years of de­bate, spec­u­la­tion and analy­sis have boiled down to this: Spark $ONCE Ther­a­peu­tics has set an $850,000 whole­sale ac­qui­si­tion cost for the US’s first gene ther­a­py — $425,000 per eye dam­aged by an RPE65 gene mu­ta­tion.

Set to roll out in a mat­ter of weeks, the WAC price for Lux­tur­na falls to­ward the high­er end of an­a­lysts’ bets, which ranged from about $600,000 to just un­der the $1 mil­lion mark for what’s in­tend­ed as a one-time treat­ment for the rare, sight-steal­ing ge­net­ic con­di­tion. Now the high­est priced ther­a­py in the coun­try — out­pac­ing drugs like Spin­raza at $750,000 for the first year of ther­a­py — it falls on Spark to come up with the right pric­ing mod­el that can per­suade pay­ers to cov­er the pro­ce­dure for a small group of un­der 2,000 po­ten­tial pa­tients, with few­er than 20 new pa­tients per year.

Spark’s ex­pe­ri­ence will have an im­mense im­pact on the en­tire gene ther­a­py field, blaz­ing a far wider path that will heav­i­ly in­flu­ence the com­mer­cial for­tunes of a whole wave of gene ther­a­py com­pa­nies look­ing to field once-and-done cures for some of the worst dis­eases to af­flict mankind. And know­ing full well just how much to­day’s close­ly-watched mar­ket­ing plan will be re­viewed by the health­care sys­tem, Spark’s pric­ing team has come up with a mix of re­bates and pro­posed stag­gered pay­ment mod­els de­signed to ease past barbed pay­er bar­ri­ers that can crip­ple any drug launch.

From the time that Jeff Mar­raz­zo first start­ed at the helm of up­start Spark Ther­a­peu­tics about 5 years ago, he’s been think­ing about what the first gene ther­a­py in the US would cost.

And think­ing. And think­ing. And think­ing.

“Did you ever see The Nev­erEnd­ing Sto­ry?” Mar­raz­zo asks me jok­ing­ly in a rare break from his care­ful­ly pre­pared pre­view of the plan, still sound­ing some­what amazed that he’s ac­tu­al­ly reached this stage of the game.

To­day, fi­nal­ly, is the be­gin­ning of an­oth­er im­por­tant chap­ter in the gene ther­a­py sto­ry. And the $850,000 tal­ly Spark is rolling out now is, like all health­care pric­ing in the US, a lot more com­pli­cat­ed than the big round WAC fig­ures peo­ple re­act to.

True to his metic­u­lous na­ture, Mar­raz­zo wants to care­ful­ly ex­plain the mul­ti-tier pay­ment mod­el Spark’s team has been craft­ing and the ob­jec­tive be­hind it all: Not just steer­ing the first gene ther­a­py to an ap­proval, but mak­ing sure that pay­ers will cov­er it so that pa­tients will be able use it to save their vi­sion.

In do­ing this, Mar­raz­zo is al­so acute­ly aware that the first pay­ment mod­el will like­ly heav­i­ly in­flu­ence what and how he charges for a gene ther­a­py for he­mo­phil­ia, now well down the clin­i­cal path. And left un­said is the im­pact that his plan will bear on the en­tire field in­volv­ing blue­bird bio and every­one else press­ing in be­hind him.

Keep in mind, he notes in Busi­ness 101 mode, that there are two key items that de­ter­mine the com­mer­cial val­ue of any new ther­a­py. The price you charge, and the units you sell.

“If the units sold is ze­ro you have ze­ro in the rev­enue line,” says the CEO, what­ev­er the price. And that’s not what Mar­raz­zo and this pub­licly trad­ed com­pa­ny have been in the hunt for.

For some time Mar­raz­zo has re­sist­ed the idea of of­fer­ing re­bates for pa­tients who fail to ben­e­fit fol­low­ing treat­ment. That, he tells me, had more to do with man­ag­ing ex­pec­ta­tions as the com­pa­ny nav­i­gates a com­plex set of hur­dles built in to fed­er­al and com­mer­cial pric­ing poli­cies. But the Spark pric­ing team has worked it out so that un­der one mod­el Spark can of­fer pay­ers un­spec­i­fied re­bates at 30 days and 30 months — which is about the av­er­age amount of time a pa­tient stays in a com­mer­cial plan — if Lux­tur­na falls short of es­tab­lished ef­fi­ca­cy goals on vi­sion.

Michael Sher­man

He al­so per­suad­ed Har­vard Pil­grim CMO Michael Sher­man to of­fer a key en­dorse­ment: “This out­comes-based re­bate arrange­ment is tru­ly in­no­v­a­tive, as it ties pay­ment for the ther­a­peu­tic not on­ly to a short-term goal, but al­so to a longer-term, 30-month as­sess­ment of ef­fi­ca­cy.”

Mar­raz­zo’s not say­ing how much he’s of­fer­ing in re­bates, but when I asked him why not a full re­fund for pa­tients who don’t re­spond ad­e­quate­ly, he said that’s not pos­si­ble. There are so few pa­tients in­volved for each health plan that a full or near full re­bate would take the low­est pos­si­ble price down to ze­ro, which he would have to of­fer to fed­er­al pay­ers — mak­ing it a com­mer­cial dis­as­ter.

To avoid putting hos­pi­tals in a fix over the “buy and bill” re­im­burse­ment mod­el, which leaves them on the hook for the ini­tial cost of the treat­ment, Spark is con­tract­ing di­rect­ly with pay­ers on the price, leav­ing the providers to charge for their end of the pro­ce­dure.

Still in the works is a pro­pos­al to CMS for stag­gered pay­ments, with an up­front amount and bills due through a set pe­ri­od of time. And the com­pa­ny is al­so work­ing on cov­er­ing pa­tients’ out of pock­et costs as part of the over­all price.

Tak­en as a whole, he says, the Spark pric­ing strat­e­gy of­fers the best chance of win­ning cov­er­age for a rad­i­cal­ly new and ex­pen­sive ther­a­peu­tic ap­proach.

In Eu­rope, where the first two gene ther­a­pies have been rolled out to a mere hand­ful of pa­tients in sin­gle pay­er sys­tems, the fail­ure to gain ac­cep­tance has been a vir­tu­al death sen­tence for man­u­fac­tur­ers. Up against a much more in­tri­cate set of US hur­dles, Spark’s team think they have many of the ba­sics worked out.

We’ll know soon whether Mar­raz­zo found the key to open­ing the mar­ket to gene ther­a­pies, or fash­ioned a jour­ney in­to a blind al­ley.

Biotech and Big Phar­ma: A blue­print for a suc­cess­ful part­ner­ship

Strategic partnerships have long been an important contributor to how drugs are discovered and developed. For decades, big pharma companies have been forming alliances with biotech innovators to increase R&D productivity, expand geographical reach and better manage late-stage commercialization costs.

Noël Brown, Managing Director and Head of Biotechnology Investment Banking, and Greg Wiederrecht, Ph.D., Managing Director in the Global Healthcare Investment Banking Group at RBC Capital Markets, are no strangers to the importance of these tie-ups. Noël has over 20 years of investment banking experience in the industry. Before moving to the banking world in 2015, Greg was the Vice President and Head of External Scientific Affairs (ESA) at Merck, where he was responsible for the scientific assessment of strategic partnership opportunities worldwide.

No­var­tis' sec­ond at­tempt to repli­cate a stun­ning can­cer re­sult falls flat

Novartis’ hopes of turning one of the most surprising trial data points of the last decade into a lung cancer drug has taken another setback.

The Swiss pharma announced Monday that its IL-1 inhibitor canakinumab did not significantly extend the lives or slow the disease progression of patients with previously untreated locally advanced or metastatic non-small cell lung cancer when compared to standard of-care alone.

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How Chi­na turned the ta­bles on bio­phar­ma's glob­al deal­mak­ing

Fenlai Tan still gets chills thinking about the darkest day of his life.

Three out of eight lung cancer patients who received a tyrosine kinase inhibitor developed by his company, Betta Pharma, died in the span of a month. Tan, the chief medical officer, was summoned to Peking Union Medical College Hospital, where the head of the clinical trial department told him that the trial investigators would be conducting an autopsy to see if the patients had died of the disease — they were all very sick by the time they enrolled — or of interstitial lung disease, a deadly side effect tied to the TKI class that’s been reported in Japan.

No­var­tis dumps AveX­is pro­gram for Rett syn­drome af­ter fail­ing re­peat round of pre­clin­i­cal test­ing

Say goodbye to AVXS-201.

The Rett syndrome gene therapy drug made by AveXis — the biotech that was bought, kept separate, then renamed and finally absorbed by Novartis into its R&D division — has been dropped by the biopharma.

In Novartis’ third quarter financial report, the pharma had found that preclinical data did not support development of the gene therapy into IND-enabling trials and beyond. The announcement comes a year after Novartis told the Rett Society how excited it was by the drug — and its potential benefits and uses.

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As pres­sure to share tech­nol­o­gy mounts, BioN­Tech se­lects Rwan­da for lat­est vac­cine site

BioNTech’s first mRNA-based vaccine site in Africa will call Rwanda home, and construction is set to start in mid-2022, the company announced Tuesday at a public health forum.

The German company signed a memorandum of understanding, after a meeting between Rwanda’s Minister of Health, Daniel Ngamije, Senegal’s Minister of Foreign Affairs Aïssata Tall Sall, and senior BioNTech officials. Construction plans have been finalized, and assets have been ordered. The agreement will help bring end-to-end manufacturing to Africa, and as many as several hundred million doses of vaccines per year, though initial production will be more modest.

Robert Spurr, President Salix Pharmaceuticals

Bausch Health’s Sal­ix pi­lots study to shine light on chron­ic liv­er dis­ease and push back on stereo­types

October is both breast cancer awareness and liver disease awareness month. While there’s no doubt which condition draws more attention during the month, Salix wants to change that.

Salix, Bausch Health’s gastroenterology arm, piloted its first chronic liver disease report and physician survey with results out this week aimed at raising awareness and dispelling stereotypes.

While 4.5 million people have chronic liver disease or cirrhosis – which is even more than 3.8 million women diagnosed with breast cancer – the research found chronic liver disease “has not received the attention or level of effort needed for adequate prevention, diagnosis, and standardization of its management.”

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Peter Nell, Mammoth Biosciences CBO

UP­DAT­ED: Jen­nifer Doud­na spin­out inks a Mam­moth CRISPR deal with Ver­tex worth near­ly $700M

When a company gets its start in gene editing pioneer Jennifer Doudna’s lab, it’s bound to make headlines. But three years in, the fanfare still hasn’t died down for Mammoth Biosciences. Now, the Brisbane, CA-based company is cheering on its first major R&D pact.

Mammoth unveiled a nearly $700 million deal with Vertex on Tuesday morning, good for the development of in vivo gene therapies for two mystery diseases. The stars of the show are Mammoth’s ultra-small CRISPR systems, including two Cas enzymes licensed from Doudna’s lab over the past couple years, Cas14 and Casɸ.

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Katie Fanning, Mozart Therapeutics CEO

Mozart Ther­a­peu­tics makes its of­fi­cial de­but, jump­ing in­to the hot Treg R&D field with some big-name in­vestors back­ing it

Treg cells have been getting more and more attention recently among autoimmune specialists. There’s been Jeff Bluestone’s Sonoma, the $157 million launch of GentiBio this summer and Egle Therapeutics — which launched just last week — to name a few.

Now, there’s a new Treg player jumping in that wants to distinguish itself in the market: Mozart Therapeutics. Today, the biotech is emerging from stealth in its official debut with a $55 million Series A — with a bunch of A-list Big Pharma names on board a syndicate led by ARCH.

Vas Narasimhan, Novartis CEO (Simon Dawson/Bloomberg via Getty Images)

With San­doz con­tin­u­ing to drag on No­var­tis, Vas Narasimhan says he may fi­nal­ly be ready for a sale or spin­off

After years of rehab work aimed at getting Sandoz in fighting trim to compete in a market overshadowed by declining prices, CEO Vas Narasimhan took a big step toward possibly selling or spinning off the giant generic drug player.

The pharma giant flagged plans to launch a strategic review of the business in its Q3 update, noting that “options range from retaining the business to separation.”

Analysts have been poking and prodding Novartis execs for years now as Narasimhan attempted to remodel a business that has been a drag on its performance during most of his reign in the CEO suite. The former R&D chief has made it well known that he’s devoted to the innovative meds side of the business, where they see the greatest potential for growth.

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