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.

89bio said its drug was better than placebo at lessening fibrosis without worsening nonalcoholic steatohepatitis, or NASH, in two of three dose groups.

The San Francisco biotech said it thinks the Phase IIb data pave the way for a potential Phase III, following in the footsteps of another biotech in its drug class, Akero Therapeutics. To fund a late-stage study, CEO Rohan Palekar told Endpoints News 89bio “would need to raise additional capital,” with the company having about $188 million at the end of last year.

The National Institutes of Health has again declined to use so-called “march-in” rights to lower the price of Astellas and Pfizer’s prostate cancer drug Xtandi despite being invented at UCLA with grants from the US Army and NIH.

“Given the remaining patent life and the lengthy administrative process involved for a march-in proceeding, NIH does not believe that use of the march-in authority would be an effective means of lowering the price of the drug,” NIH told prostate cancer patients Robert Sachs and Clare Love, in a letter shared with Endpoints News. The institutes’ analyses found Xtandi “to be widely available to the public,” an indication that there was not a pressing need for the US to act.