By Nader Murad, Associate Consultant
At JPMorgan’s 37th Healthcare Conference in 2019, bluebird bio provided its strategic outlook and plans for the year where it highlighted its pipeline progress and commercial activities. bluebird’s pipeline consists of several gene therapies which have demonstrated in clinical studies a high likelihood of potentially curing severe rare diseases, including severe sickle cell and transfusion-dependent β-Thalassemia.
The company is anticipating regulatory approval for LentiGlobin in β-Thalassemia by the EMA and FDA in the first half of this year. However, what caught the limelight in bluebird bio’s presentation was when the company laid out clear and practical proposals to enable sustainable payment for LentiGlobin. Importantly, the proposals are applicable to most, if not all, cell and gene therapies given the high six-figure to seven-figure price tags for products whose durability of effects are thought to be lifelong yet are lacking the relevant substantiating evidence.
So what is bluebird bio proposing?
In that 23-minute presentation, bluebird bios’ CEO, Nick Leschly, dedicated more than half of his time talking about the company’s intent to “recode the status quo” on drug pricing and funding which is proving to be an obstacle to patients accessing these therapies which they desperately need. In his critique of the status quo, Leschly highlighted that the current approach is not set up to allow payers to recognize the value of one-off curative treatments resulting in a parochial focus on price rather than the value that treatments can provide to patients and healthcare systems.
Instead, Leschly listed the following proposals to ensure that patients have sustainable access to its innovative treatments while addressing justified payer concerns on their long-term efficacy:
- Recognizing a therapy’s fair value through evaluating its cost-effectiveness over the patient’s lifetime and basing that value solely on the therapy’s impact on the patient’s quality of life and life expectancy
- Sharing the risk of treatment failure with payers so that the burden of failure not only falls on the payer / healthcare system. This entails making 80% of payments to manufacturers contingent on treatment outcomes
- Ensuring affordability and minimizing short-term budget impact for payers by spreading payments over a 5-year timeframe, as well as a promise not to increase prices beyond the consumer price index
- No costs after the payment period (i.e. 5 years)
What’s in the detail?
The two components of the first proposal are different from the conventional approach of pharma and payers to recognizing a therapy’s value. Firstly, cost-effectiveness of a therapy is calculated using its duration of efficacy as a component of that calculation. Indeed, gene therapies have the potential to provide a lifelong cure and offer all the benefits a patient would have otherwise forgone had they still had the disease. Not using a lifelong time frame to assess a curative therapy’s cost-effectiveness would significantly undermine its true value. And while payers are right to point out lack of evidence to support long-term durability of efficacy, spreading payments over five years and tying the bulk of the amount payable to treatment outcomes seems like a fair deal. Especially considering that accrued treatment costs for such diseases at a 5-year time point can range between $1.5 – $3 million and would have to continue throughout a patient’s life. Second, bluebird’s proposition that value would solely be based on the therapy’s impact on patient’s quality of life and mortality overlooks healthcare cost offsets and societal value (i.e. wider impact of therapy to society such as the cured patient’s ability to contribute to economic productivity) which are substantial.
The second and third proposals are a logical risk-sharing approach that provide a fair deal for both parties involved but also comes with risks for both. Payers who commit to staged payments for successfully treated patients can end up having paid for a therapy whose side-effects show up at year 6 or 7, or whose efficacy stops after completion of payment.
On the manufacturer side, staged payments can have a detrimental impact on cash-flow which may be unsustainable for smaller biotechs. Moreover, tracking clinical outcomes can represent a significant administrative burden. Finding solutions to overcome these problems will require cooperation of stakeholders . Smaller manufacturers may want to form accounts receivable consortiums to be able to absorb the trickle of payments over time. Healthcare systems may want to further invest in their IT infrastructure and patient record warehousing as this will have benefits beyond tracking treatment outcomes. Additionally, setting clear and measurable clinical endpoints during clinical studies can go a long way in alleviating this burden by allowing second-tier healthcare professional to asses clinical progress after treatment.
The last proposal may be a forgone conclusion at face value, but the fact remains that the current rhetoric from payers does not sufficiently acknowledge the long-term cost savings offered by gene therapies. In transfusion dependent β-Thalassemia, mortality estimates by 30 years of age was 50% in 2006, and according to bluebird bio’s current treatment costs for the disease in the U.S. is ~$130K annually, totalling $3.9 million by the age of 30; and that is without considering the financial impact the disease will have on the patient’s productivity and that of their caregiver / family. During his presentation Nick Leschly hinted at a price point of “south of $2.1 million”.
Despite lack of evidence on long-term efficacy and safety of gene therapies, we should remember that most of the diseases being targeted by gene therapy manufacturers are often fatal and severely impede quality of life even when treatments such has enzyme replacement therapies exist. Moreover, these existing non-curative treatments often stop working or work less better after a handful years and improve quality of life marginally when compared to a curative option.
Lets be positive!
Sooner or later, gene therapies will become common place in the clinic and will transform the lives of patients and their families for the better as well relieving the financial burden of managing severe chronic diseases for healthcare systems. Importantly, clinical experience with such therapies will only serve to further improve their efficacy and safety as well potentially bringing down their costs. While it’s wise to be prudent, it’s also time we stop focusing on the prospective burden of gene therapies and start focusing on how we can improve this technology and make it accessible to all those in need.
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