$2 Million Drug? Treatment For Rare Genetic Disease Is Expected To Break Price Record

Kate Brown is almost 2 years old. She seemed fine when she was born, sweet and quiet, good at nursing and sleeping.

"She was just a dream baby in the beginning," says her mother, Rachael. "Looking back now I see all the signs — hindsight is kind of cruel in that way. But we didn't know — we had no idea we were carriers for this disease. I had no idea the disease even existed."

The disease is called spinal muscular atrophy. It's a rare gene defect; the severe form affects about 300 American infants a year. And until recently, it was a death sentence for babies like Kate.

By the time she was 10 weeks old, she was going downhill fast. Her limbs were floppy, and she hadn't gained any weight in over a month. The spinal muscular atrophy was destroying motor neurons, the nerve cells that control movements like breathing and swallowing.

Rachael and her husband Patrick were preparing for Kate's baptism when they got a call from their pediatrician, Dr. Rosa Rincon.

"She said to me: I have been up all night. I have been reading. Something is not right with your daughter," Rachael remembers. "You need to go to Children's Hospital. I have called them. Go now."

If Kate had been diagnosed even just a few years earlier, nothing could have been done for her. But she was eligible for a new drug, called Spinraza, that compensates for the defective gene. It's not a cure, but it can make a big difference.

Hanging on a wall in the dining room of the Brown family home in West Boylston, Massachusetts, is a framed label from the Spinraza box that held Kate's first dose.

"To other people it's a piece of cardboard, but to me, it's hope, and it's my child's life," Rachael says. "Because without this, I know Kate would not be alive today. We have options, when so many people before us didn't. So many people, so many families, took risks to find this drug. And without them, I wouldn't have my baby."

For all its benefits, Spinraza caused some sticker shock when it came out in late 2016. Its cost: $750,000 for the first dose, and about half that every year for the patient's lifetime. Last year, a gene therapy treatment called Luxturna, for a genetic form of blindness, came out with a price tag of $850,000.

Now, a new treatment called Zolgensma (pronounced zohl-JEN-smah), which replaces the gene that's defective in spinal muscular atrophy, is expected to break that price record this month. The FDA is expected to approve Zolgensma sometime in May, and the biopharma company Novartis is then expected to announce the price.

Novartis executives have made clear it will be in the seven figures. Dave Lennon, president of AveXis, the company that developed Zolgensma and was bought last year by Novartis, says the one-time treatment would be cost-effective even at $4 or $5 million, Reuters reported.

"We're betting $2 million, within a small amount of that range," predicts Michael Sherman, chief medical officer of the health insurer Harvard Pilgrim Health Care.

In the great national debate under way about drug prices, Zolgensma is sure to be a hot topic. But not a simple one: It illustrates the complex balance between the good news — saving children from a horrible disease — and the bad news — stratospheric prices.

"This has been anticipated to be the most expensive treatment ever launched in the United States and perhaps in the world — for several reasons," says Dr. Steve Pearson. "One is because it is creating tremendously improved outcomes. It's taking an always-fatal condition, and it could be a true cure."

"... It's taking an always-fatal condition, and it could be a true cure."

Dr. Steve Pearson, Institute for Clinical and Economic Review

Pearson is no fan of high drug prices. He leads a Boston-based nonprofit called ICER — the Institute for Clinical and Economic Review — that's known as a drug cost watchdog. ICER calculates the value that a drug delivers and compares it to the price, and usually calls for the price to be lowered.

When ICER recently analyzed Zolgensma, it found so much benefit for patients that it broke its own record and said a fair price could be as high as $1.5 million.

One major factor, according to Pearson, is that Zolgensma is a one-time treatment.

"So you try to capture all that value in a one-time price. It's different than trying to figure out the price for something that you would take every day for the rest of your life, where you could spread out that cost," he says. "We need to wrap up all that value and reward it. And that's why the price, if you will, is going to be the highest sticker price that the U.S. or medicine anywhere in the world has seen."

Here's a bit of math: if Zolgensma were a daily pill, and a baby lived to 80 years old, the $2 million price tag works out to $25,000 a year. Not so bad, especially compared to the six-figure annual cost of the existing treatment, Spinraza.

But Michael Sherman from Harvard Pilgrim Health Care takes issue with calculating a one-time drug's value based on the number of years it saves: "If you go to the hospital and have your appendix out as a child, or they save your life through some other mechanism, we don't pay the hospital $10 million for saving a child's life. That's absurd. So it may not be the right model for a one-time innovative treatment."

"It isn't about saying no. It's about how do we say yes? But it's also about coming up with fair pricing."

Michael Sherman, Harvard Pilgrim Health Care

On the other hand, unlike a routine appendectomy, developing Zolgensma — and Spinraza and another new spinal atrophy treatment called risdiplam -- involved cutting-edge science and extensive investment. Central to the drug price debate is the argument that innovation should be rewarded — but how much?

Debate aside, Sherman says that health insurers will cover Zolgensma. It would be unthinkable not to.

"It isn't about saying no. It's about how do we say yes? But it's also about coming up with fair pricing," he says.

Novartis plans to work with health insurers and others to be innovative about payments and ensure patients have access to Zolgensma, it says in a written statement.

Active discussions about creative ways to pay for the most expensive new drugs  — like paying over time, and money-back guarantees — are already under way among pharma companies, health insurers and others. Sherman says Zolgensma could add to their urgency.

"Now that we have the specter of a new drug coming to market which is going to be seven figures, and several others that we expect to hit the market over the next 12 to 24 months, I think that's enough of a call to action that we're going to see more attention," he says.

Whatever the payment schemes, under-insured and Medicaid patients may have trouble getting Zolgensma, worries associate professor Rena Conti from Boston University's Questrom School of Business. Similar issues arose with Spinraza, as strapped state Medicaid programs struggled to pay for it.

"This can really create some very difficult optics, both for what our health care system in America looks like right now, but also for the companies," Conti says.

"We should be able to gain access ... without bankrupting our families or bankrupting the system at large."

Professor Rena Conti, Boston University

And it could fuel public anger about high drug prices.

"We've been sold on this idea that we pay high prices, we want to encourage innovation," Conti says. "But at the end of the day, we've paid into the system in all these different ways. We've helped these companies bring these things to market, we should be able to gain access to them without bankrupting our families or bankrupting the system at large."

For the Browns, Kate's parents, the price of Zolgensma or Spinraza is a moot point because it's not something they can control. They try to focus on issues where they can make a difference, like advocating for newborn screening for spinal muscular atrophy so that babies can be treated before they start to deteriorate.

Kate requires a lot of medical care and other support, but she's growing and thriving and cognitively normal; she teases her older siblings, Henry and Amelia, and recently, Rachael Brown says, she has started tickling people, "and it's just the sweetest little thing."

It's not clear yet whether Kate will be eligible to get Zolgensma if it's approved by the FDA, but if it could help her, her parents want it for her.

Rachael says she understands the sticker shock.

"But I don't want to get bogged down in that one price tag, because you can't put a price tag on somebody's life," she says. "This is my baby, it's my child. I'm going to do everything I can to get her everything she needs, just as any parent is going to do."