Regulators—and Industry Watchdogs—Approve $2M Gene Therapy For Rare Infant Disorder

United States regulators, this week, approved the most expensive medicine ever to reach the market.  The approval is for a one-time gene therapy from Novartis, called Zolgensma that will treat a rare condition, spinal muscular atrophy (SMA), which affects only about 400 babies born in the United States every year. 

SMA is a disorder that typically—and very rapidly—destroys a baby’s muscle control. Most of the time, this leads to death within only a couple of years.  As such, while the condition is definitely rare, it is also extremely tragic.  Thus, treatment—which involves a one-hour infusion—has been approved by the FDA for children under the age of 2. It should be available within the next two weeks. 

The sticker price for Zolgensma?  $2.125 million.

Obviously, the out-of-pocket cost for this drug will depend on the patient’s health insurance policy.  With cost in mind, Novartis said it will allow insurers to provide patients with an option to pay off the cost of the drug over a five-year period.  In addition, Novartis has promised to provide partial rebates if the drug does not work. Finally, company executives at Novartis have said they will financial assistance available. 

Breaking this down, Novartis points out that this comes to about $425,000 every year for five years. They are also very quick to remind that this is at least 50 percent lower than the 10-year cost of current chronic SMA therapy options.  Novartis’ AveXis developed the drug and are “working closely with payers” to develop this five year outcomes based pact with pay-over-time options for payers.

All this in mind, the record-high price is actually right in line with what analysts had expected.  Watchdogs at the Institute for Clinical and Economic Review (ICER) feel the therapy surpasses early cost-effectiveness estimates, stating that Zolgensma would not be cost effective at any price point above $1.5 million.  New data and a value-based payment plan, however, has changed their collective mind. 

According to ICER President Steven D. Pearson, “Insurers were going to cover Zolgensma no matter the price; and Novartis has spoken publicly about considering prices that approached $5 million. It is a positive outcome for patients and the entire health system that Novartis instead chose to price Zolgensma at a level that more fairly aligns with the benefits for these children and their families.”