When the FDA issued its first approval for a gene therapy for an inherited disease nearly a year ago—a cure for a type of blindness—it was heralded as breakthrough, a moment decades in the making. With dozens of other genetically engineered therapies moving through clinical trials, the long-promised era of personalized, gene-based medicine seemed to be at hand.
But there was a catch: the one-time treatment, Luxturna from Spark Therapeutics, costs $850,000.
In a recent Goldman Sachs research report about the promise of gene therapies, analysts asked a question that gets to the heart of a growing dilemma for the healthcare sector: “Is curing patients a sustainable business model?” As this first wave of genetic treatments hits the market, industry leaders face a stark choice. These therapies could save or change lives, but they come at unprecedented cost. Indeed, Novartis recently said that its life-saving gene therapy for spinal muscular atrophy would be “cost-effective” at $4 million to $5 million – hinting at the pricing the company has in mind. As the use of these expensive drugs grows, there seems to be no way traditional insurance models will be able to pay for them without breaking the bank or requiring patients to assume a big chunk of the cost.
Consider what happened to Amsterdam-based UniQure. In 2016, the company had to pull its gene therapy for potentially fatal fat-processing deficiencies from the E.U. market. With a $1 million price tag, limited data on efficacy and just 700 potential patients in Europe, health systems were unwilling to pay for treatment. Biopharma companies now have 58 gene therapies and gene-modified cell treatments in Phase III clinical trials, with about 35 expected to be FDA-approved by 2022, out of about 1,000 candidates in the total pipeline. These new therapies could face a similar fate if prices can’t be brought down. Something has got to give.
New business models
Our research on major innovations finds that when disruption occurs, technologies don’t replace technologies; systems replace systems. Put another way, product classes with fundamentally new performance profiles can’t be dropped into an existing business model and expected to work. The business model — how value is created, captured, and delivered — needs to be reinvented to support the new proposition.
When it comes to gene therapies, there’s a growing recognition that harnessing breakthrough science to cure diseases simply isn’t enough. Some industry innovators are creating novel payment models that share the risks and costs in ways that may help jump-start new markets and cure more patients. Some of these new models are already being rolled out — and others are more theoretical. But they illustrate the levers companies can pull in order to make therapies more affordable and accessible.
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Source: Innosight
3 Business Models That Could Bring Million-Dollar Cures to Everyone