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.

John Hood [file photo]

UP­DATE: Cel­gene and the sci­en­tist who cham­pi­oned fe­dra­tinib's rise from Sanofi's R&D grave­yard win FDA OK

Six years after Sanofi gave it up for dead, the FDA has approved the myelofibrosis drug fedratinib, now owned by Celgene.

The drug will be sold as Inrebic, and will soon land in the portfolio at Bristol-Myers Squibb, which is finalizing a deal to acquire Celgene.

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UP­DAT­ED: AveX­is sci­en­tif­ic founder was axed — and No­var­tis names a new CSO in wake of an ethics scan­dal

Now at the center of a storm of controversy over its decision to keep its knowledge of manipulated data hidden from regulators during an FDA review, Novartis CEO Vas Narasimhan has found a longtime veteran in the ranks to head the scientific work underway at AveXis, where the incident occurred. And the scientific founder has hit the exit.

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Ab­b­Vie gets its FDA OK for JAK in­hibitor upadac­i­tinib, but don’t look for this one to hit ex­ecs’ lofty ex­pec­ta­tions

Another big drug approval came through on Friday afternoon as the FDA OK’d AbbVie’s upadacitinib — an oral JAK1 inhibitor that is hitting the rheumatoid arthritis market with a black box warning of serious malignancies, infections and thrombosis reflecting fears associated with the class.

It will be sold as Rinvoq — at a wholesale price of $59,000 a year — and will likely soon face competition from a drug that AbbVie once controlled, and spurned. Reuters reports that a 4-week supply of Humira, by comparison, is $5,174, adding up to about $67,000 a year.

The top 10 fran­chise drugs in bio­phar­ma his­to­ry will earn a to­tal of $1.4T (tril­lion) by 2024 — what does that tell us?

Just in case you were looking for more evidence of just how important Amgen’s patent win on Enbrel is for the company and its investors, EvaluatePharma has come up with a forward-looking consensus estimate on what the list of top 10 drugs will look like in 2024.

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ICER blasts FDA, PTC and Sarep­ta for high prices on DMD drugs Em­flaza, Ex­ondys 51

ICER has some strong words for PTC, Sarepta and the FDA as the US drug price watchdog concludes that as currently priced, their respective new treatments for Duchenne muscular dystrophy are decidedly not cost-effective.

The final report — which cements the conclusions of a draft issued in May — incorporates the opinion of a panel of 17 experts ICER convened in a public meeting last month. It also based its analysis of Emflaza (deflazacort) and Exondys 51 (eteplirsen) on updated annual costs of $81,400 and over $1 million, respectively, after citing “incorrect” lower numbers in the initial calculations.

The key dates for KRAS watch­ers through the end of the year — the trail is nar­row and risks are ex­treme

There’s nothing quite like a big patent win when it comes to burnishing your prospects in the pipeline. And for Amgen, which seems to have rescued Enbrel for a run to 2029, the cheering section on Wall Street is now fixed on AMG 510 and a key rival.

And it didn’t take much data to do it. 

There was the first snapshot of a handful of patients, with a 50% response rate. Then came word that Amgen researchers are also tracking responses in different cancers, at least one in colorectal cancer and appendiceal too. 

Bain's Or­ly Mis­han joins Pfiz­er's neu­ro spin­out Cerev­el; On­colyt­ic virus biotech taps Sil­la­Jen ex­ec He­le­na Chaye as CEO

→ Bain Capital is deploying one of its top investors to Cerevel Therapeutics, steering a $350 million-plus neuro play carved out of Pfizer. Orly Mishan — a co-founder and principal of Bain’s life sciences unit — was involved in the partnership that birthed the biotech spinout in the first place. As Cerevel’s first chief business officer, she is tasked with corporate development, program management as well as technical operations. 

UP­DAT­ED: Sci­en­tist-CEO ac­cused of im­prop­er­ly us­ing con­fi­den­tial in­fo from uni­corn Alec­tor

The executive team at Alector $ALEC has a bone to pick with scientific co-founder Asa Abeliovich. Their latest quarterly rundown has this brief note buried inside:

On June 18, 2019, we initiated a confidential arbitration proceeding against Dr. Asa Abeliovich, our former consulting co-founder, related to alleged breaches of his consulting agreement and the improper use of our confidential information that he learned during the course of rendering services to us as our consulting Chief Scientific Officer/Chief Innovation Officer. We are in the early stage of this arbitration proceeding and are unable to assess or provide any assurances regarding its possible outcome.

There’s no explicit word in the filing on what kind of confidential info was involved, but the proceeding got started 2 days ahead of Abeliovich’s IPO.

Abeliovich, formerly a tenured associate professor at Columbia, is a top scientist in the field of neurodegeneration, which is where Alector is targeted. More recently, he’s also helped start up Prevail Therapeutics as the CEO, which raised $125 million in an IPO. And there he’s planning on working on new gene therapies that target genetically defined subpopulations of Parkinson’s disease. Followup programs target Gaucher disease, frontotemporal dementia and synucleinopathies.

But this time Abeliovich is the CEO rather than a founding scientist. And some of their pipeline overlaps with Alector’s.

Abeliovich and Prevail, though, aren’t taking this one lying down.

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Chi­na has be­come a CEO-lev­el pri­or­i­ty for multi­na­tion­al phar­ma­ceu­ti­cal com­pa­nies: the trend and the im­pli­ca­tions

After a “hot” period of rapid growth between 2009 and 2012, and a relatively “cooler” period of slower growth from 2013 to 2015, China has once again become a top-of-mind priority for the CEOs of most large, multinational pharmaceutical companies.

At the International Pharma Forum, hosted in March in Beijing by the R&D Based Pharmaceutical Association Committee (RDPAC) and the Pharmaceutical Research and Manufacturers of America (PhRMA), no fewer than seven CEOs of major multinational pharmaceutical firms participated, including GSK, Eli Lilly, LEO Pharma, Merck KGaA, Pfizer, Sanofi and UCB. A few days earlier, the CEOs of several other large multinationals attended the China Development Forum, an annual business forum hosted by the research arm of China’s State Council. It’s hard to imagine any other country, except the US, having such drawing power at CEO level.