Zolgensma Adds to SMA Options but Raises Multiple Questions

With the FDA’s approval of Zolgensma, the industry receives another data point in the pricing strategies for new gene therapies. As reported in Radar on Specialty Pharmacy, the two payment options offered by AveXis, makers of Zolgensma, both follow the movement to value-based purchasing. Larry Blandford, executive vice president of Precision Value and Health, discusses the rationale for and potential issues of these strategies.

Read the full article below.

 

Zolgensma Adds to SMA Options but Raises Multiple Questions
by Angela Maas
AIS Health

As expected, the FDA approved AveXis, Inc.’s gene therapy Zolgensma (onasemnogene abeparvovec-xioi) last month for the treatment of spinal muscular atrophy (SMA). But perhaps what was not as expected is that the drug is priced at $2.125 million for a one-time 60-minute infusion — a price point lower than that anticipated by analysts. Also potentially surprising is the fact that the Institute for Clinical and Economic Review (ICER) said this was a fair price. And while AveXis — which last year was acquired by Novartis AG — is offering a couple of reimbursement options for the innovative new product, questions remain over the ultimate impact on the U.S. health care system as more gene therapies are expected to launch onto the market.

The FDA approved Zolgensma on May 24 for the treatment of patients less than two years old with SMA with bi-allelic mutations in the survival motor neuron 1 (SMN1) gene, including those who are presymptomatic when diagnosed (see brief, p. 8). It’s the second gene replacement therapy to gain FDA approval following Spark Therapeutics Inc.’s Luxturna (voretigene neparvovec-rzyl), approved in December 2017 for a rare form of blindness (RSP 1/18, p. 6). People with SMA cannot produce enough SMN protein, leading to the loss of motor neurons, which results in problems breathing, swallowing, speaking and walking. Zolgensma is designed to replace the defective or missing SMN1 gene, stopping the disease’s progression. Before a therapy was available to treat SMA, the condition was the No. 1 genetic cause of infant death.

The FDA approved Spinraza (nusinersen) — which was developed by Ionis Pharmaceuticals, Inc. and Biogen and licensed to Biogen — in December 2016 for the treatment of both pediatric and adult patients with SMA (RSP 1/17, p. 5). It is administered intrathecally through four loading doses during the first year and then once every four months. According to Biogen, more than 2,600 people in the United States and Puerto Rico had been treated with the drug as of December 2018, and more than 95% of those who started the therapy were still being treated. Eighty percent were in the maintenance dosing phase.

Both Drugs Have Premium Prices

That drug’s price is certainly not cheap: Spinraza costs $750,000 for the first year of treatment and then $375,000 for each successive year.

But while that may seem like a pretty large cost, before Zolgensma’s approval, AveXis had said a one-time price of $4 million to $5 million per patient would be cost-effective for that treatment (RSP 1/19, p. 1). So when the company revealed the $2.125 million cost, a collective sigh of relief was heard across the industry. At this price, Zolgensma costs less than half of the 10-year price of $4.1 million for Spinraza.

The same day Zolgensma was approved, ICER weighed in: Based on “encouraging” early phase III trial results among people with presymptomatic SMA (see p. 12 for a summary of SMA types), the agency had updated its evaluation of Zolgensma, concluding that “to reach the alternative thresholds of $100,000 to $150,000 per life year gained (LYG), a value-based price benchmark for Zolgensma would be between $1.2 million to $2.1 million.”

“Zolgensma is dramatically transforming the lives of families affected by this devastating disease, and given the new efficacy data for the presymptomatic population, the price announced today falls within the upper bound of ICER’s value-based price benchmark range,” said Steven D. Pearson, M.D., ICER president. “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.”

AveXis is offering two payment deals for payers: a five-year pay-over-time option that it is executing via Accredo and a five-year outcomes-based deal. CuraScript SD will be the sole distributor of the drug. When Zolgensma was approved, AveXis said it was in “advanced discussions” with more than 15 payers, “with some having already agreed, in principle, to terms.”

Options Follow Value-Based Trend

These two models, maintains Alex Shekhdar, founder of Sycamore Creek Healthcare Advisors, are “right in line with the larger movement to value-based-purchasing and basically mortgaging an effective cure.”

Eric Althoff, a Novartis spokesperson, clarifies that the “pay-over-time model provides payers with a choice to pay for Zolgensma over a period of up to five years regardless of patient response.” As far as what would happen if a patient changes health insurers during that time, he tells AIS Health, “We don’t expect plan switching to be a significant issue for Zolgensma patients, as research shows that families of children with rare diseases remain on commercial health plans longer than average.” AveXis sponsored that research, which was published in the February 2019 issue of the Journal of Managed Care & Specialty Pharmacy.

Original Payer Is Responsible for Cost

But on the occasion that it does happen, “currently, there is no portability for the payment installments — so the original payer will be responsible for the cost of treatment, whether or not they retain the patient, for the duration of the payment plan.”

According to Larry Blandford, executive vice president of Precision Value and Health, “the challenge of patients moving between benefit plans remains in these installment approaches, but we are seeing several entities positioning themselves to support alternative payment approaches such as installments.”

Asked for details about the outcomes-based agreement, including outcomes tracked and thresholds that need to be met, Althoff says, “exact details…are individual to each payer.” As to whether the two models are either/or options, he says no: “Payers can opt to do one or the other, or both.”

“With therapies carrying these price tags, manufacturers and payers will need to work together to manage the cost and risk,” says April M. Kunze, Pharm.D., senior director, clinical formulary development and trend management strategy at Prime Therapeutics LLC. “Making strategies such as these available will help maintain accessibility and mitigate risk that can be associated with a new-to-market therapy with limited clinical data.”

Payers also are likely to employ various strategies to manage Zolgensma to ensure it — as well as Spinraza — is dosed appropriately (see article, p. 10).

According to one industry expert who declines to be identified, “One problem with pay-over-time options and outcomes-based agreement is that you have to be pretty confident/sure about your treatment durability and outcomes as a manufacturer. For more common therapies, manufacturers who have to meet quarterly targets for shareholders where revenue predictability is king are less likely to go in for these types of value-based agreements/pay for outcomes.”

Gene Therapies’ Prices ‘Will Stun Many’

Opinions on the price vary.

Gene therapies, says Blandford, “represent breakthroughs on multiple fronts — clinically, as major advancements for patients often with devastating conditions, and also financially, with list prices crossing the $1 million threshold. While the price tags will stun many, it’s important to note that when you spread the costs over several years, it isn’t too different from existing chronic treatments for some rare conditions or some of the combination regimens being used in oncology today on an annualized basis.”

“$2.125 million is a BIG price tag,” says Winston Wong, Pharm.D., president of W-Squared Group. “No matter how you spin it, it is expensive. I suppose I am supposed to feel fortunate that Novartis was being compassionate by lowering the price from the original $5 million.” But is the price reasonable? “There is no doubt that the clinical and quality-of-life benefit is significant. There is no doubt that payers are going to have to cover this, especially since ICER has stated that at the $2.125 million cost, it falls within cost-effective parameters. However, it is still a big number. But the question to be asked is if the current health care system can afford these high-cost medications. Is the cost high because we will pay what cost has been set at, or is it based on the cost to manufacture the product?”

“Pricing drugs based on the costs they will replace is a flawed long-term strategy for society,” Lee Newcomer, M.D., principal at Lee N. Newcomer Consulting LLC, tells AIS Health.

“If we are simply replacing a huge cost (supportive care) for another huge cost (therapy), our society goals of broader care for everyone can’t be realized. I believe this pricing strategy will invite government intervention, and I’d like to avoid that possibility,” he says.

Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates, tells AIS Health that “this cost would be difficult if shared evenly across the insured population, but, as SMA Type 1 is a wildcard event, it will be far more difficult for small groups without deep pockets.” He points to a Health Affairs blog from last summer that was based on a payer survey and revealed that “almost one-third of respondents the survey termed ‘small employer’ said they would exclude coverage of very low frequency but very expensive gene therapy — understandable, because, if not for stop-loss reinsurance typically carried by self-insured employers, a huge unexpected cost may be unmanageable for a small employer. But an employer’s cost of reinsurance is likely to increase over time to reflect the reinsurer’s exposure due to the growing number of very expensive gene therapies for treatment of rare conditions.”

Another population also may have an access issue: “Medicaid recipients should have access to this new life-
saving/life-sustaining therapy. At its current price tag, this seems unlikely,” Gerard A. Vitti, CEO of Healthcare Financial Inc., tells AIS Health. “The cost will be overwhelming for the Medicaid program and will force decisions by state Medicaid agencies about whether and how to fund them.”

“In principle, spreading the cost over a five-year period and putting the cost installments at risk based upon efficacy is a good approach,” says Wong. “However, the devil is in the details. Do we have the systems in place that have the capability to administer a five-year contract?” In addition, he asks, “Who is responsible for the billing of the installment, and who is actually making the annual payment? Is it the insurance carrier in all cases, or is that passed on to the self-funded employer? Under the payment installment option, how does the provider, who has to obtain the product, get reimbursed?”

Are Systems Available to Execute Models?

“We do not have the systems in place to handle the tracking and processing of installment billing over a period of five years, as well as having the ability to track patients once they have left the health plan,” Wong says, which “will be a major obstacle to overcome for any value-based agreement where payment will be dependent upon continued efficacy of the therapy. From the manufacturer perspective, a value-based contract implies that no payment would be made if the patient relapses or passes on. Systems are not in place to have the ability to track the patient once therapy is administered.”

“The pay-over-time is a deflection from the real issue — how do we value the drugs?” says Newcomer. “These patients will all be covered by reinsurance companies; they will determine if the tactic is useful or not. I suspect they will be more interested in discounts over delayed payment. Clearly there should be no payment if patients fail to respond or require additional supplementary therapy like Spinraza.”

Distribution Logistical Issues Could Arise

According to Blandford, “The greatest challenge with managing high-cost, single treatment therapies will be assuring the distribution process maintains quality and efficiency with providers. Since most will have a limited set of centers of excellence to provide the treatment, several logistical challenges could arise for both providers and patients. Additionally, the determination of who holds financial liability along each step of the distribution and administration will influence both coverage and prescribing decisions. Payers will certainly provide coverage given the clinical benefits, but how they handle provider reimbursement and patients where the duration of effect isn’t achieved will influence the path for additional curative therapies that are increasingly filling the pharmaceutical pipeline.”

“Zolgensma is a ground-breaking treatment for a very debilitating disease associated with premature mortality,” says Kunze. “There is a lot of excitement around the positive and substantial outcomes associated with this therapy, albeit with concern about the therapy durability.”

Contact Althoff at eric.althoff@novartis.com, Blandford via Tess Rollano at trollano@coynepr.com, Kunze via Jenine Anderson at jenine.anderson@primetherapeutics.com, Newcomer at leenewcomer1@gmail.com, Rubinstein at elan.b.rubinstein@gmail.com, Shekhdar and Vitti through Joe Reblando at joe@joereblando.com and Wong at w2sqgroup@gmail.com.

Precision Medicine Group is an integrated team of experts in fields from advanced lab sciences to translational informatics and regulatory affairs, payer insights to marketing communications. Together, we help our pharmaceutical and life-sciences clients conquer product development and commercialization challenges in a rapidly evolving environment.