The first gene therapy in the U.S., approved last month to treat a rare, inherited form of blindness, now has a price tag: $850,000.
That makes the treatment, called Luxturna and made by Spark Therapeutics, the most expensive medicine sold in the U.S., ranked by sticker price.
But Spark CEO Jeff Marrazzo says Luxturna’s ability to restore vision in a small number of people with a defective gene justifies the high cost, particularly because the gene therapy is only injected one time in each eye for a long-term benefit. Many investors expected Spark to charge $1 million or more for Luxturna, so the actual price will be considered a bargain by some.
“I feel like we made the right middle ground decision,” Marrazzo said in an interview, balancing the company’s desire to capture the economic value of Luxturna while ensuring patients will have access to the therapy.
To further smooth reimbursement—and mute the inevitable criticism about the price—Spark on Wednesday announced a commitment to offer rebates to health insurers if patients fail to meet specified vision thresholds 30-90 days and 30 months following Luxturna treatment. One-time gene therapies are meant to be curative, but patients in clinical trials have not been followed long enough to determine if treatment benefits are durable for decades.
Spark reached an agreement in principle with nonprofit health plan Harvard Pilgrim, which insures 1.2 million people across New England, for the first outcomes-based rebate arrangement. Additional rebate contracts with other commercial insurance companies are being negotiated, Spark said.
How much of the $850,000 cost of Luxturna would be returned to insurers if patients don’t benefit from treatment was not disclosed.
Harvard Pilgrim and Express Scripts, the country’s largest pharmacy benefits manager, have also agreed to a new contracting arrangement with Spark that guarantees patient access to Luxturna in exchange for reducing the financial burden and risk for treatment providers and insurers.
Under another proposal still in the conceptual stage, Spark would allow insurers to spread the payments for Luxturna over multiple years.
“As far as the price, and the structures to pay the price, I think it’s all pretty much in line with what we’re seeing in other innovative therapies,” said Dr. Stuart Orkin, a pediatric oncologist at the Dana-Farber Cancer Institute and Boston Children’s Hospital. He cited CAR-T therapies for cancer, which cost hundreds of thousands of dollars, and newfangled immuno-oncology treatments with similar price tags.
The question for Orkin, who has written extensively about how society should pay for gene therapy, will be just how Spark determines whether an individual patient treated with Luxturna has “failed” and thus merits a rebate.
“But I do applaud them for thinking through the payment schemes,” Orkin said. “It’s better than if they had just put out a price and said, you know, ‘You’re paying it.”
The Food and Drug Administration approved Luxturna in December to treat people with a type of inherited retinal disease caused by a mutation in a gene called RPE65. People born with mutated RPE65 genes suffer from severe vision problems, including night blindness. As the disease progresses, people lose all functional vision and can eventually become totally blind.
The condition is rare, affecting between 1,000 and 2,000 people in the U.S. About 10-20 babies are born each year with RPE65-mutated retinal disease, Spark estimates.
Wall Street analysts, on average, are forecasting Luxturna sales to reach $364 million by 2022, according to Evaluate. By drug industry standards, which anoint blockbuster status to products that generate $1 billion in sales, Luxturna is expected to be only modestly successful. But that’s also likely another reason why Spark is choosing not to price more aggressively.
Botching Luxturna’s commercial launch by angering insurers and providers with too high of a price won’t serve Spark well in the future when its other gene therapies—targeting larger and more commercially lucrative diseases like hemophilia—reach the market, assuming promising data seen to date lead to approvals.
Spark shares closed Tuesday at $53.31, ahead of the Luxturna pricing announcement.