The Exchange

Commentary and Observations from
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What Price to Save Your Child?

What Price to Save Your Child?

Let’s say you have your first child and are elated to bring him or her home from the hospital. A month later, you notice something isn’t right and soon your pediatrician diagnoses your child with spinal muscular atrophy (SMA). SMA can lead to paralysis, breathing difficulty, and death within months for babies born with type I SMA, the most serious form of the disease. Regardless of the subtype, most children do not live past their second birthday and, until very recently, there simply was no treatment. SMA impacts 1 in 10,000 births and is the leading genetic cause of death in infants.

But Novartis has a gene-therapy that may save your child’s life. Zolgensma, just approved by the US Food and Drug Administration (FDA), is a single-dose infusion of a virus that inserts a healthy copy of the SMA gene, largely—but not entirely—reversing SMA. Children can sit and hold their head up and not be ventilator dependent. The cost is estimated to be $2.1 million for that single dose. This is half the lifetime price of Biogen’s Spinraza, another FDA-approved medication that costs $750,000 for the initial dose and $375,000 annually thereafter. To put this into further perspective, Biogen’s Spinraza had $1.7 billion in sales in 2018.

Balancing all factors involved in developing innovative drugs, what should be the cost of these life savings medications?

Many are not aware that medical economists and bioethicists have developed schemata for making recommendations to insurers and pharmacy benefit managers about both access to and the cost of treatments. Non-profits, such as the Institute for Clinical and Economic Review, use a measure known as “quality-adjusted life year,” in which each year of healthy or near-healthy life resulting from an intervention is estimated. Alternatively, they utilize a benchmark known as life-year gained, based on the additional number of years a person lives due to a treatment.

In either instance—and depending upon which benchmark was utilized for calculation—both drugs should cost dramatically less. Spinraza should cost as little as $72,000 in the first year and as little as $36,000 annually thereafter. Zolgensma should cost as little as $310,000 for the single infusion.

Pharmaceutical manufacturers claim that the cost to bring a new and innovative drug to market is extremely risky and warrants their recouping their investment, otherwise research and development will be stifled. However, the cost to bring a new drug to market is in dispute. A study published in JAMA Internal Medicine in 2017 examined 10 recent and innovative cancer treatments. That study found that the average cost was $648 million per new drug, and ranged from $157 million to $1.95 billion. These 10 cancer drugs collectively cost $7.2 billion to come to market and have earned the manufacturers a combined $67 billion. Revenue to R&D spending is more than 10-fold higher than seen in virtually any other sector of the economy.

Are these costs and associated profits reasonable? Clearly these data do not account for the multitude of failed drugs and associated losses. But what is a fair price? Can we actually put a price on a life? Would each of us answer differently if it were your child as opposed to my child?

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Filed under: Preventive Medicine

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