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.
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.
The best place to read Endpoints News? In your inbox.
Comprehensive daily news report for those who discover, develop, and market drugs. Join 24,000+ biopharma pros who read Endpoints News by email every day.Free Subscription