A treatment that can stop patients from going blind is poised to be the first gene therapy for an inherited condition approved in the U.S., in what would be a major scientific milestone — and also open the door for record-breaking drug prices and novel ways to pay for them.
Spark Therapeutics Inc.’s Luxturna therapy crossed a key hurdle Thursday when it won backing from a group of advisers to the U.S. Food and Drug Administration. After discussing the trial design, treatment procedure and safety profile, the panel of 16 experts voted unanimously that the drug’s benefits outweighed its risks.
If the FDA, which now has until Jan. 12 to make a final decision, says yes to Luxturna, it will be a landmark moment for the medical industry, which has been trying to get a gene therapy approved for decades. Support for the treatment paradigm, which uses functioning copies of genes to fix diseases caused by DNA mutations, evaporated after a highly-publicized death of a teenager in 1999, before rebounding in recent years as biology has advanced.
The approval of Luxturna could be precedent setting not just in the scientific world. It would pave the way for new payment models for drugs, particularly in the U.S.
Gene therapies are intended to be given only once. Most drugs on the market are given over several doses and many, like drugs to control blood pressure and cholesterol, are taken for years or even a lifetime. As such, U.S. insurers traditionally pay for treatments in increments over time. They may be reluctant to agree to massive, one-time payments that a drug like Luxturna might require: Analysts say Philadelphia-based Spark may charge as much as $1 million for both eyes.
With gene therapy, “we’re likely to end up truly curing some horrific diseases and we’re going to have to figure this stuff out — how we pay for it, how we assess it, what fair pricing is,” said David Rind, chief medical officer for the non-profit Institute for Clinical and Economic Review. ICER is currently evaluating Spark’s treatment for what price would make it cost effective, so Rind said he couldn’t discuss the treatment specifically.
Luxturna targets a small group of patients with mutations in the RPE65 gene. The disorder causes them to lose vision over time, and eventually go blind. There are about 6,000 patients in developed nations, according to Spark, though not all will be eligible for treatment because patients need some viable retinal cells for the therapy to work.
While the treatment can’t help most patients restore full vision, many saw meaningful improvements. Trial participants and their parents who attended the meeting Thursday spoke of how much Luxturna brought back to their day-to-day lives, such as giving them the ability to play sports on cloudy days, see utensils at candle-lit restaurants, or walk through their house without tripping on the dog. Patients recounted how they saw parents’ facial features, or stars in the night sky, for the first time in their lives.
“Within days of the first surgery, I could see vibrant colors again,” said Katelyn Corey, who received Luxturna a few days before her 21st birthday. “I was no longer living in a black and white film.”
While that’s a small number of patients, there are numerous gene therapies currently in clinical trials across a variety of diseases, including hemophilia, the deadly muscle-wasting condition known as Duchenne muscular dystrophy, and sickle cell disease, a red blood cell disorder. Investors are closely watching how Spark prices its treatment.
“We are spending a lot of time with payers and policy makers to educate them and eliminate surprises, and we are continuing to explore novel payment and reimbursement models,” Jeffrey Marrazzo, Spark’s chief executive officer, said in a phone interview before the FDA panel.
Such models could include spreading payments out over a number of years, or a so-called pay-for-performance model in which the manufacturer is only reimbursed if the drug works.
Insurers may be reluctant to pay upfront because gene therapy is a new treatment and while, in theory, its benefits should be long-lasting, none of the drugmakers have proven in human trials that the effects won’t fade over time. Patients who received Luxturna in Spark’s main trial haven’t seen a change in benefit for three years, according to Marrazzo, but that may not be long enough to convince insurers.
“How do you know at two years what the effectiveness is at four years, or 50 years?” said ICER’s Rind. “That’s a big problem.”
One hurdle facing novel payment schemes is legislation that requires Medicaid, the federal health program for low-income and disabled people, to receive the “best price” available on the market. So far pay-for-performance contracts have only been put in place for a few select drugs. Gene therapy would be an extreme example where, in theory, the “best price” would be zero dollars in the scenario where a treatment doesn’t work. The law could be interpreted to mean that Medicaid doesn’t have to pay anything, even for the patients who benefit from Luxturna.
“Based on current price reporting regulations, we would be taking a financial penalty on government business if we offered a pay-for-performance model to commercial plans,” said Marrazzo. He added that Spark is “engaging frequently in DC” to try and overcome this issue.
The Centers for Medicare and Medicaid Services said in an email that it “is committed to further exploring the development of innovative payment arrangements for new and potentially life-saving treatments.”
No matter what pricing model Spark chooses, “it will be a precedent setter,” said David Nierengarten, an analyst at Wedbush Securities Inc. who rates Spark shares underperform. “If payers start saying, ‘Thanks, but no thanks, I’m not going to pay $1 million,’ it’s going to be interesting.”
While a parent might argue that saving his child’s vision is invaluable, insurers might see it differently, Nierengarten said. “They could say, ‘Blindness sucks but it won’t kill you.’ Those are the questions that will come up.”