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INSIGHT-Paying for gene therapy: are annuities a subsequent large thing?

LOS ANGELES Feb 19 (Reuters) – As U.S. drugmakers face
growing insurgency to a high cost of cutting-edge treatments,
a handful of companies are operative on a new remuneration indication that
rewards them for a long-term opening of their medicines.

The effort, attention executives told Reuters, is being led
by firms building supposed gene therapies, that aim to cure
inherited diseases like hemophilia by “fixing” a singular faulty
gene obliged for a disorder. They embody BioMarin
Pharmaceutical Inc in San Rafael, California, and
Sangamo BioSciences Inc in Richmond, California.

If these new hemophilia drugs and others like them succeed,
a one-time distillate could reinstate a need for frequent,
life-long injections of blood clotting proteins that can cost up
to $300,000 a year for a singular patient. These existing
treatments, including Pfizer Inc’s Xyntha and Baxter
International’s Advate, are approaching to authority annual
sales of some-more than $11 billion by 2016.

Drugmakers contend that a one-time cure, even during a cost of
more than $1 million, would save income over a prolonged term. But
there are concerns that health insurers will frustrate during covering
that kind of upfront cost.

“The place that we are relocating toward is some-more of a
pay-for-performance form of strategy,” pronounced Edward Lanphier,
Sangamo’s arch executive officer. Under this model, a price
would be amortized over a duration of time and fortuitous on proof
that a diagnosis is effective and safe.

The annuity-like payments would be stopped if medical
testing, such as a turn of clotting protein totalled in a
patient’s blood sample, showed that a therapy was not working.

Many barriers sojourn to implementing such a model, and the
drugs for that it is being deliberate might not strech a market
for several some-more years, if during all. Since Americans mostly switch
health insurers, contracts – or even legislation – would be
needed to need payers to collect adult a ongoing add-on for patients
who change their coverage.

But a seductiveness in new remuneration models reflects the
healthcare industry’s goal to find new ways to bolster
profits as insurers pull behind opposite drug prices. Some backers
of a new indication contend a remuneration streams could eventually be
packaged and sole to investors, as happens now with securities
backed by financial resources like credit label receivables.

“Our proceed to this critical funding-benefit doubt is
to settle a financing car where a comparatively large
upfront cost is amortized in and with a advantage of
these innovative, antidote or medicine therapies,” said
Michael Meyers, handling executive and conduct of investment banking
at T.R. Winston Company, that is deliberating such funding
models with curative and biotechnology companies.

Dr. Troyen Brennan, arch medical officer during CVS Health Corp
, a second largest U.S. pharmacy advantage manager, is
supportive of such efforts.

“Some arrange of indication where there was a prejudiced remuneration over
time could work well,” Brennan pronounced in an interview.


Gene therapy has been a aim of Big Pharma for some-more than
20 years, though investigate has been stubborn by a array of
disappointments and reserve concerns. More new scientific
advances have paved a approach for a potentially life-changing

No gene therapies have been authorized in a United States,
but Europe authorized a initial gene therapy final year. Glybera
treats a singular commotion that clogs a blood with fat and has
been privileged for remuneration in Germany during a cost of 850,000
euros, or around $1 million. It will be sole for a one-time
payment since it is too formidable to magnitude how good it
works, pronounced Joern Aldag, CEO during Dutch biotech organisation UniQure NV
, that grown Glybera.

Aldag pronounced gene therapies for incomparable studious populations in
development during UniQure, including hemophilia and congestive
heart failure, would expected be labelled on an amortized basis.

“Gene therapy might be an initial really high weight for the
healthcare system,” Aldag said. “The ubiquitous accord is that
asking for a one-off remuneration of over a million dollars becomes

U.S. health insurers and other organisation payers customarily pay
annual prices in a hundreds of thousands of dollars for enzyme
replacement therapies for intensely rare, “orphan” diseases.
BioMarin’s Vimizin costs scarcely $400,000 per year for a genetic
disorder that causes fundamental monster and other problems.

But insurers are most reduction peaceful to feet that kind of bill
for drugs used in vast numbers of patients. Last year, they
pressured Gilead Sciences Inc to cut a $1,000
per-pill cost of a new hepatitis C drug, observant a cost of
treating some-more than 3 million Americans putrescent with a virus
was unacceptable. Gilead pronounced recently that it is discounting
its prices by scarcely 50 percent.

About 20,000 Americans are estimated to have hemophilia,
which is caused by a forsake in a gene carried on a X

“Distributing remuneration over many years recognizes the
fact that we don’t know how prolonged these (gene therapy treatments)
are going to last,” pronounced Dr James Wilson, a gene therapy expert
at a University of Pennsylvania.

(Reporting By Deena Beasley, additional stating by Jessica
Toonkel; Editing by Michele Gershberg and Hank Gilman)

Article source: http://www.reuters.com/article/2015/02/19/usa-healthcare-payments-idUSL1N0VR01120150219

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