EXCLUSIVE-Novartis pitches discounts on pricey gene therapy for deadly muscle disorder
By Deena Beasley and John Miller
LOS ANGELES/ZURICH, May 10 (Reuters) - Novartis AG NOVN.S is offering price discounts in negotiations with U.S. health insurers on its gene therapy for spinal muscular atrophy (SMA), a treatment that could cost more than a million dollars, but the gesture comes with strings attached.
The Swiss drugmaker wants insurers to commit to coverage for patients identified with the rare and often deadly disease, according to Dave Lennon, head of Novartis' AveXis unit.
Novartis also seeks their support for widespread screening to identify newborns with SMA, and to ensure quick authorization for the gene therapy, with the aim of starting treatment within two weeks of diagnosis, he said.
The U.S. Food and Drug Administration is due to decide this month on approval for Novartis' Zolgensma. Novartis, which has made a huge bet on gene therapy for future growth, says the one-time treatment could be a cure for SMA and is pushing for a price in the range of $1.5 million to $5 million. That would make Zolgensma the most expensive new therapy to date.
SMA is the leading genetic cause of infant mortality, affecting one in every 10,000 live births. There are up to 500 new U.S. cases of SMA annually. About 60 percent of patients have the most severe Type 1 form of the disease, which often leads to paralysis, impaired breathing and death by their second birthday.
Insurers have balked, saying a multimillion-dollar price tag is too high for society to bear. Their argument is supported by a U.S. drug price watchdog, which concluded Zolgensma is cost effective at about $900,000.
It is unusual for drugmakers to offer discounts on a novel and potentially life-saving treatment. But getting insurers to assure quick coverage for eligible patients, rather than subjecting them to a lengthy individual review, could help Novartis as it seeks to displace Biogen Inc's BIIB.O SMA therapy Spinraza.
"We are very much interested in making sure that payers (support) newborn screening, that they establish fast turnaround on coverage decisions, and that they have specific policies that cover gene therapy for SMA," Lennon told Reuters.
"As we negotiate discounts, et cetera, with payers, and the contracts with those payers, we're trying to make sure they put those elements in place," Lennon said.
Both Zolgensma and Spinraza have shown the best results when infants with SMA are treated within the first few weeks of life before symptoms emerge, helping preserve development of motor neurons necessary for walking and breathing. Only a small number of Zolgensma patients have been followed for up to four years, while Spinraza has been used by thousands of patients since it was approved in 2016.
Spinraza is also costly. It is administered by spinal injection every four months at a price of $750,000 for the first year and $375,000 annually thereafter. Wall Street forecasts for Zolgensma assume many families will seek the potential one-time gene therapy first, and consider Spinraza if needed later on.
"Early treatment allows payers to reap much more benefit for the patients," Lennon said.
Negotiations with payers are in advanced stages, but final pricing will only be set after the drug's approval. Novartis has offered payment alternatives, such as reimbursement in installments over three to five years, or providing discounts if a patient does not see specific benefits from the therapy.
Most payers, however, are focused on a one-time payment and seek discounts to secure reimbursement, Lennon said.
Novartis expects to have agreements with insurers covering 30% of the 160 million Americans who have commercial health plans within 30 days of Zolgensma's approval, he said.
The therapy is key to Novartis Chief Executive Vas Narasimhan's push into treatments for rare diseases. Wall Street analysts forecast Zolgensma sales of $350 million this year, rising to $2 billion in 2024, according to Refinitiv data.
Clinical trials for both Zolgensma and Spinraza have shown that early treatment produces better results, potentially reducing the total cost of care.
"The difference is, the child walks and is pretty normal in their lifetime, versus they are very weak, on a (respiratory machine), have a feeding tube," said Dr. Russell Butterfield, a neurologist at the University of Utah in Salt Lake City. "Newborn screening is really the only way to get to that dramatically higher outcome."
But U.S. testing for SMA in newborns is spotty. Only six U.S. states have added it to mandatory screening panels at birth. It could take until 2022 to become standard nationwide, according to patient advocacy group Cure SMA.
Novartis, as well as Biogen, is working with Cure SMA to accelerate the adoption of screening and wants to ensure that payers are supportive. Lennon did not provide details on the extent of a potential discount, but the offer could help health plans struggling with the economics of Zolgensma.
David Lassen, chief clinical officer at Prime Therapeutics, is working on Zolgensma coverage recommendations for Blue Cross Blue Shield health plans covering 15 million Americans. Lassen has urged Novartis to price Zolgensma closer to the $900,000 deemed appropriate by the Institute for Clinical and Economic Review (ICER). That was based on a calculation of the cost per year of healthy life gained.
"Anything over that is not going to achieve that price to value," Lassen said.
Prime Therapeutics estimates that its Blue Cross Blue Shield plans will identify up to 35 patients with SMA Type 1 in the next year, making the cost of therapy an important factor for them.
Small insurer SelectHealth covers nearly 1 million people in Idaho and in Utah, where statewide newborn SMA testing began in 2018. SelectHealth said it has also pushed Novartis to lower the price.
"Even if we amortize it across a lifetime," said Eric Cannon, SelectHealth's assistant vice president of pharmacy benefits, "we will still never collect enough premium to cover the cost of that treatment."
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(Additional reporting by Caroline Humer in New York; Editing by Michele Gershberg, Bill Berkrot, Edward Tobin)