Spark sets precedent with outcomes models, $850K gene therapy price tag
- Spark Therapeutics revealed Wednesday morning that it would price its recently approved gene therapy for a rare form of blindness at $425,000 per eye, or $850,000 per patient.
- Alongside the pricing announcement for Luxturna, Spark also unveiled several different pricing programs designed to help mitigate the burden on patients and payers.
- Some patient groups are already pushing back. "Our system cannot handle unjustified prices like this, and the new payment models announced today are merely a way to disguise a price that is simply too high," said David Mitchell, a patient with incurable blood cancer and the president of Patients For Affordable Drugs.
Spark Therapeutics gained approval from the Food and Drug Administration in December for Luxturna (voretigene neparvovec), ahead of its February user fee action date. The gene therapy — the first of its kind — was approved to treat a rare form of hereditary blindness caused by a mutation in the RPE65 gene, and only affects a few hundred people in the U.S.
Speculation about how Spark would price the one-time therapy has been ongoing for several years now. History has shown that a price tag that is too high could push a therapy out of the market — even for a rare disease with few treatment options. Developers in Europe found this out the hard way when they priced gene therapy treatments at upwards of $1 million, and were unable to market the drugs.
Spark's price of $850,000 checks in below the expectations of some analysts, yet is still one of the most expensive treatments currently marketed.
To soften the pressure on the health system, and potentially set a precedent for other companies developing one-time therapies, Spark also set up several different payment plans.
The biotech said it has reached an agreement in principle with New England-based insurer Harvard Pilgrim that would base pricing on outcomes.
Under such an agreement, Spark will pay certain rebates if Luxturna's efficacy falls short of certain thresholds, measured on both a short-term horizon of 30 to 90 days and on long-term durability of 30 months. Should the therapy not perform as expected and meet certain undisclosed criteria after the one-time administration at those specified time points, Spark will pay rebates to payers.
Spark is also in talks with other insurers for similar arrangements.
The company also plans to arrange for a new type of contracting model with payers to help ease the potential burden of upfront costs on providers.
Traditional models usually require the hospital or institution administering a specialty medication to purchase it upfront and then charge the payer. By contrast, Spark is working with Express Scripts affiliates and others to have the payer make the upfront purchase through their own specialty pharmacy — eliminating the mark-up by the institution. Under the agreement, payers would expedite benefits processing and cap patient out-of-pocket costs at in-network limits.
Beyond these agreements, Spark has discussed with the Center for Medicare and Medicaid Services (CMS) a proposal allowing the company to offer payers the option to spread payments over multiple years in a payment-plan type model. Current government price reporting requirements do not allow for payment models of this type, but Spark is hoping to change the paradigm.
Luxturna is just the first of many one-time gene therapy treatments likely to hit in the market over the coming years, and therefore will necessitate changes in how payment and reimbursement are conducted.
"We are committed to finding a novel solution to providing an installment payment option to payers that ensures access for patients while helping to address the budgetary challenges of one-time payments for a long-term outcome," said Spark CEO Jeff Marrazzo in a statement. "We are encouraged by CMS' willingness to engage with us in exploring a new model."
Spark will also offer patient assistance programs with the aim that all eligible patients have access to Luxturna.
While Luxturna only serves a very small patient population, other therapies that Spark (and competitors) are developing will treat greater numbers of patients, making it critical to the healthcare system to determine sustainable ways to pay for these life-altering medicines.
Despite Spark's efforts to offer alternative payment options (while still bringing in a profit), patient groups are already up in arms about the cost of Luxturna.
"Luxturna offers hope to hundreds of patients," said Patients For Affordable Drugs' Mitchell. "But the question that must be asked is this: What is a fair price that will maximize affordability and accessibility and provide a reasonable return for the drug? The answer to that is certainly not the $850,000 price tag announced today," he added.
Some critics of Spark are questioning the efficacy and durability of the treatment. While the therapy improves sight dramatically for these patients, it does not cure the hereditary blindness completely. It is also unclear just how long the one-time treatment will last. So far, Spark has up to four years of efficacy data from its clinical trial program for Luxturna.
The success of Spark's pricing strategy could also be the push that acquirers need to finally make a bid on the hot biotech.
Speculation about Spark as a takeover target has been rampant for almost two years. Yet, many potential acquirers were waiting on the sidelines to see how well the gene therapy technology worked and whether the therapy had commercial potential.
The next year will be critical in showing that gene therapies are marketable. Luxturna will be distributed through just six to eight treatment centers in the U.S. initially and is expected to be available later in the first quarter.
- Spark Therapeutics Statement
- BioPharma Dive Spark CEO Marrazzo hints at million dollar price tag
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