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 The effort, industry executives told Reuters, is being led by firms
developing so-called gene therapies, which aim to cure inherited
diseases like hemophilia by “fixing” the single faulty gene
responsible for the disorder. They include BioMarin Pharmaceutical
Inc in San Rafael, California, and Sangamo BioSciences Inc in
Richmond, California.
If these new hemophilia drugs and others like them succeed, a
one-time infusion could replace the need for frequent, life-long
injections of blood clotting proteins that can cost up to $300,000 a
year for a single patient. These existing treatments, including
Pfizer Inc's Xyntha and Baxter International's Advate, are expected
to command annual sales of more than $11 billion by 2016.
Drugmakers contend that a one-time cure, even at a price of more
than $1 million, would save money over the long term. But there are
concerns that health insurers will balk at covering that kind of
upfront cost.
"The place that we are moving toward is more of a
pay-for-performance type of strategy," said Edward Lanphier,
Sangamo's chief executive officer. Under this model, the price would
be amortized over a period of time and contingent on proof that the
treatment is effective and safe.
The annuity-like payments would be stopped if medical testing, such
as the level of clotting protein measured in a patient's blood
sample, showed that the therapy was not working.
Many barriers remain to implementing such a model, and the drugs for
which it is being considered may not reach the market for several
more years, if at all. Since Americans often switch health insurers,
contracts - or even legislation - would be needed to require payers
to pick up the ongoing tab for patients who change their coverage.
But the interest in new payment models reflects the healthcare
industry's intention to find new ways to bolster profits as insurers
push back against drug prices. Some backers of the new model say the
payment streams could eventually be packaged and sold to investors,
as happens now with securities backed by financial assets like
credit card receivables.
"Our approach to this important funding-benefit question is to
establish a financing vehicle where the relatively large upfront
cost is amortized in conjunction with the benefit of these
innovative, curative or preventative therapies," said Michael
Meyers, managing director and head of investment banking at T.R.
Winston & Company, which is discussing such funding models with
pharmaceutical and biotechnology companies.
Dr. Troyen Brennan, chief medical officer at CVS Health Corp, the
second largest U.S. pharmacy benefit manager, is supportive of such
efforts.
"Some sort of model where there was a partial payment over time
could work well," Brennan said in an interview.
THE PRICE OF PROGRESS
Gene therapy has been a target of Big Pharma for more than 20 years,
but research has been dogged by a series of disappointments and
safety concerns. More recent scientific advances have paved the way
for the potentially life-changing treatments.
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No gene therapies have been approved in the United States, but
Europe approved its first gene therapy last year. Glybera treats a
rare disorder that clogs the blood with fat and has been cleared for
reimbursement in Germany at a price of 850,000 euros, or around $1
million. It will be sold for a one-time payment because it is too
difficult to measure how well it works, said Joern Aldag, CEO at
Dutch biotech firm UniQure NV, which developed Glybera.
Aldag said gene therapies for larger patient populations in
development at UniQure, including hemophilia and congestive heart
failure, would likely be priced on an amortized basis.
"Gene therapy may be an initial very high burden for the healthcare
system," Aldag said. "The general consensus is that asking for a
one-off payment of over a million dollars becomes unacceptable."
U.S. health insurers and other group payers routinely pay annual
prices in the hundreds of thousands of dollars for enzyme
replacement therapies for extremely rare, "orphan" diseases.
BioMarin's Vimizin costs nearly $400,000 per year for a genetic
disorder that causes skeletal malformation and other problems.
But insurers are much less willing to foot that kind of bill for
drugs used in large numbers of patients. Last year, they pressured
Gilead Sciences Inc to cut the $1,000 per-pill cost of its new
hepatitis C drug, saying the cost of treating more than 3 million
Americans infected with the virus was unacceptable. Gilead said
recently that it is discounting its prices by nearly 50 percent.
About 20,000 Americans are estimated to have hemophilia, which is
caused by a defect in a gene carried on the X chromosome.
"Distributing reimbursement over many years recognizes the fact that
we don't know how long these (gene therapy treatments) are going to
last," said Dr James Wilson, a gene therapy expert at the University
of Pennsylvania.
(Reporting By Deena Beasley, additional reporting by Jessica Toonkel;
Editing by Michele Gershberg and Hank Gilman)
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