It costs how much! Pharmaceutical pricing in an ever-changing world Featured Image

It costs how much! Pharmaceutical pricing in an ever-changing world

22 Aug 22

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The price of drugs is a long-standing dispute between the pharmaceutical industry and healthcare payers.

The United States (US) Food and Drug Administration’s (FDA’s) approval of aducanumab and the price of one year’s treatment (US$56,000), was exceedingly controversial as the approval was based on amyloid reduction and not a clinically meaningful endpoint. (ICER 2021) However, many of those criticising the price of medication are often unaware of the efforts and costs involved in developing new treatments.

Until recently, most treatments did not “cure” the patient with the exception of acute conditions such as infections. Treatments were aimed at controlling the disease (e.g., hypertension, hyperlipidaemia, or diabetes mellitus).

Healthcare payers, including National Health Service (NHS) England, are making increasing use of outcomes-based contracts for new drugs. Under these contracts, payment for drugs is tied to real-world effectiveness instead of a fixed price per unit. A typical agreement might entail a manufacturer either wholly or partially refunding drug costs if the agreed outcome (e.g., percentage of patients cured, a reduction in mortality, or percentage patients with a specific biochemical outcome) is not met. (Bartholomew, Naci et al. 2022)

Therefore, patients’ adherence to drugs attains a new importance in outcomes-based contracts. Manufacturers may argue that suboptimal adherence is responsible for a poor outcome rather than ineffectiveness of the drug. Can compliance be accurately assessed? Healthcare practitioners are aware that paper diaries are inaccurate, and patients have been observed to be hurriedly completing their paper diary in the waiting room before seeing the doctor. Electronic diaries have the advantage of time stamping entries, but this does not tell you if the patient swallowed the tablet or not. In 2017, the FDA approved a so-called signalling pill, which contains an ingestible sensor embedded in the pill. After the pill is swallowed, a signal is sent to a wearable Bluetooth patch that connects with the patient’s smartphone, recording the date and time the pill was taken. (Abilifymycite 2022)

Figure 1. Examples of outcomes-based contracts in the UK

NHS, National Health Service
Adapted from (Bartholomew, Naci et al. 2022)

Recently, the NHS announced that it will offer two new treatments for drug-resistant superbugs, which will be part of a new subscription-style payment plan. Manufacturers will receive a fixed yearly fee of £10 million to cover manufacturing costs, instead of receiving individual payments per dose. (Financial Times 2022)

In some cases, the “cure” involves cell-based techniques as well as drugs. An example of this is sustained responses to autologous bone marrow transplants in patients with highly active multiple sclerosis. A second example is chimeric antigen receptor (CAR)-T cell therapy in patients with leukaemia. Although not all patients are cured, two people who were among the first to receive dCAR T cells for treatment of leukaemia remain in remission a decade later. (Penn Medicine News 2022)

So, if we are looking for a “cure”, an obvious area is genetic diseases where the faulty gene can be replaced or corrected using gene therapy. From the patient’s perspective, the holy grail of gene therapy would be a single administration of a product that would return gene function for the rest of their life.

So, what is the cost of a “cure”?

In the USA, CAR-T cell therapy costs about US$400,000. However, this treatment is complex and involves the removal of patient cells, administration of lympho-depleting chemotherapy to prevent rejection of CAR-T cells, production of the CAR-T cells, and finally infusion of the CAR-T cells.

So, let’s assume gene therapy would cure haemophilia A. Garrison and colleagues estimated the projected lifetime medical costs for the treatment of haemophilia A with these different treatments: factor VIII concentrates, the bispecific antibody emicizumab, bypassing agents (for patients who develop inhibitors to factor VIII), and gene therapy. The Institute for Clinical and Economic Review (ICER) produced an estimated lifetime cost for an investigational gene therapy (valoctocogene roxaparvovec) of US$14 million. The projected lifetime medical cost of bypassing agents (approximately US$103 million per patient) vastly exceeds these other treatments. For emicizumab and factor VIII concentrates the costs were similar (US$21.6 million and US$18.7 million, respectively). (Louis P Garrison, Jiao et al. 2021)

Since 2017, the FDA and the European Medicines Agency (EMA) have approved three gene therapies between them. The FDA and EMA approved Spark Therapeutics’ Luxturna for retinal dystrophy associated with mutations in biallelic retinal pigment epithelium-specific 65 kilodaltons protein; the FDA approved Novartis’ Zolgensma designed to treat spinal muscular atrophy; and the EMA provided conditional approval for bluebird bio’s Zynteglo for beta-thalassemia. (Durante 2020)

Bluebird bio has withdrawn Zynteglo, along with the rest of its gene therapy portfolio from Europe. In Germany, the only country for which bluebird bio disclosed details, authorities offered US$790,000 for the one-time treatment per patient, with the payout moving to US$950,000 if the therapy is still working after several years. However, bluebird bio wanted US$1.8 million paid over 5 years, with payouts conditioned on a patient’s response. (Pagliarulo 2021)

To complicate things further, many genetic disorders have multiple mutations. For example, spinal muscular atrophy has 5 types, of which Type 0 is very severe and results in death in the first few months of life, and Type 1 is the most common (60%) and severe form, usually diagnosed during an infant’s first 6 months. If not treated, Type 1 can be fatal early on in life. Types 3 and 4 are less severe but patient’s mobility is reduced resulting the need for wheel chair use. (Cure SMA 2022)
This leads to the question of what gene therapy might achieve: improvements in symptoms and quality of life, or prevent premature death?

A final consideration is the duration of effect. If you administer a single dose of gene therapy to a patient with haemophilia A, will this prevent abnormal bleeding for the patient’s entire life? Theoretically yes, but at this stage, data are lacking.

Even the FDA appears worried about the commercial viability of gene and cell therapies. At the recent American Society of Gene & Cell Therapy’s 25th annual meeting in Washington, D.C., USA, Peter Marks (Director of the Center for Biologics Evaluation and Research at the FDA) said “Reimbursement is the 800-pound gorilla in the room.” and “We have to give serious consideration to these products. If it’s designed to [treat]10-20 per 100 million people, any one country won’t have enough patients to sustain commercialization”. (Brennan 2022)

We must not forget that gene therapy has had issues; several patients have died during gene therapy trials and others have developed malignancy. In a way, gene therapy can be compared to “messing around with the fuel rods of a nuclear reactor”. As changes are being made in the patient’s DNA, lifetime follow up may be required, which could contribute to the cost of this therapy.

For patients, of course, this therapy would be truly life changing and provide invaluable improvements to their quality of life.


Abilifymycite. (2022). “How the ABILIFY MYCITE® System Works.” Abilifymycite. Available at: Accessed 12 Aug 2022.

Bartholomew, T., H. Naci, E. Robertson and H. Schmidt (2022). “Use of adherence monitoring in drug contracts tied to outcomes: put patients first.” BMJ 376: e062188.

Brennan, Z. (2022). “Even FDA’s Peter Marks is worried about the commercial viability of gene and cell therapies.” Endpoints News. Available at: Accessed 12 Aug 2022.

Cure SMA (2022). “Types of SMA.” Cure SMA. Available at: Accessed 12 Aug 2022.

Durante, R. (2020). “Solving the Gene Therapy Cost-Effectiveness Conundrum.” Maru Group. Available at: Accessed 12 Aug 2022.

Financial Times. (2022). “How will UK’s fixed-fee scheme for antibiotics help tackle the growing health crisis?” Financial Times. Available at: Accessed 12 Aug 2022.

ICER (2021). “ICER Issues Statement on the FDA’s Approval of Aducanumab for Alzheimer’s Disease.” Institute for Clinical and Economic Review. Available at: Accessed 12 Aug 2022.

Louis P Garrison, J., B. Jiao and O. Dabbous (2021). “Gene therapy may not be as expensive as people think: challenges in assessing the value of single and short-term therapies.” Journal of Managed Care & Specialty Pharmacy 27(5): 674-681.

Pagliarulo, N. (2021). “Bluebird, winding down in Europe, withdraws another rare disease gene therapy.” BioPharma Dive. Available at: Accessed 12 Aug 2022.

Penn Medicine News (2022). “Study of Penn Patients with Decade-Long Leukemia Remissions after CAR T Cell Therapy Reveals New Details About Persistence of Personalized “Living Drug” Cells.” Penn Medicine News. Available at: Accessed 12 Aug 2022.

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