- Novartis' experimental gene therapy Zolgensma is being tested in spinal muscular atrophy patients of varying severity and using different delivery methods, a situation that could make it possible for the treatment to have separate prices based on setting.
- Value-based assessments of Zolgensma might be lower for patients with the less-severe SMA Types 2 and 3, potentially justifying reduced reimbursement in this population. However, manufacturing costs would also be reduced because such patients would need a smaller dose.
- Novartis executives are considering such "indication-based" pricing for Zolgensma. "It's certainly possible, given the different formulation and therefore route of administration of the product, to have indication-based pricing," David Lennon, president of Novartis' AveXis division, told BioPharma Dive, noting no decision has been made.
Novartis could soon secure approval for what would be only the second gene therapy for an inherited disease in the U.S., and the first life-saving one.
The company's current application for Zolgensma (onasemnogene abeparvovec) is in SMA Type 1, a severe form of the disease in which babies frequently die before age 2.
Novartis says the health care costs for these patients would be about $6 million over a decade if treated with Biogen's Spinraza (nusinersen), citing estimates from the Institute for Clinical and Economic Review. For Zolgensma, which is a one-time intravenous treatment, Novartis' CEO Vas Narasimhan said Wednesday the company aims to price its therapy "far lower" than the current standard of care.
Novartis is testing Zolgensma in pre-symptomatic Type 1 patients identified through genetic tests as well as those less severe Type 2 patients aged between 6 months and 5 years. The latter population is the subject of the STRONG trial, which delivers a smaller dose of Zolgensma via an infusion into spinal fluid, a process called intrathecal administration.
A smaller dose is possible because Type 2 and 3 patients have more copies of a back-up SMN gene — producing limited quantities of a protein key to the health of motor neurons — and thus need fewer copies of the corrected gene to be delivered. In addition, the central nervous system is smaller in proportion to total body size in older children than in infants, meaning an effective dose can be lower.
Type 2 patients survive and gain motor function, but typically are never able to walk and frequently lose the ability to sit unassisted. The Institute for Clinical and Economic Review calculated the cost of Spinraza and associated care in this population to be nearly $8 million.
A lower, indication-based price for intrathecal Zolgensma, based on fewer health gains, could be withstood by Novartis because the manufacturing costs would be smaller. SVB Leerink anlyst Mani Foroohar wrote in a May 22 note to clients that manufacturing costs would be between 63% and 81% lower.
"In dollar/patient terms, this can be significant, given the cost of manufacturing [Zolgensma] has been estimated to be in the six-figure range, and absorb at least some of the impact from reduced [intrathecal] pricing," Foroohar wrote.
But Novartis was clear that lower manufacturing costs won't drive its pricing calculations.
"Cost of goods does not drive our thinking around pricing," Lennon said. "We believe in a value-based approach to pricing that is based on the condition we are treating and the value that the product brings to that condition."
Ned Pagliarulo and Jacob Bell contributed reporting.