A Life-Saving Drug Could Come with a $4 Million Price Tag
Health Care

A Life-Saving Drug Could Come with a $4 Million Price Tag

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Swiss drugmaker Novartis hinted Monday that it is considering charging an eye-popping price as high as $4 million to $5 million for a life-saving new gene therapy to cure rare cases of a disease called spinal muscular atrophy, the leading genetic cause of infant mortality.

The drug: The gene therapy, called AVXS-101, hasn’t yet been approved, but Novartis sees it as a potential blockbuster. Earlier this year, the drug giant paid $8.7 billion to acquire AveXis, the startup gene therapy developer, which was spun out of research that originated at Nationwide Children’s Hospital and Ohio State University.

The price: Novartis hasn’t announced a price for the gene therapy, and it may not actually seek $4 million or more for its drug. CEO Vas Narasimhan told investors Monday that the pricing would be determined in talks with insurers and government payers in the United States, Europe and Japan, according to Reuters. But Dave Lennon, the president of AveXis, told investors that the therapy could justifiably cost $4 million or more.

“Four million dollars is a significant amount of money, but we believe this is a cost-effective point,” he said, according to Reuters. “We’ve shown through other studies we are cost effective in the range of $4-$5 million. And ultimately, this is important context as we consider how we’re going to evaluate value for AVXS-101.”

Why charge so much? “The only way to turn a rare-disease treatment that’s given just once into a profit-maker is to charge ultra-high prices,” MIT Technology Review explains.

Why it matters: The new gene therapy, if approved and priced this way, would become far and away the most expensive drug in the world. (The previous record was for a gene therapy called Glybera, used to treat a rare blood disorder, which cost about $1 million, but was pulled from the market due to lack of demand.) “[T]hey seem intent on softening up the payer market for something significantly higher than $1 million — once considered a jaw-dropping, break-the-bank sum,” John Carroll wrote at Endpoints News, noting that a rival drug treatment for spinal muscular atrophy costs $750,000 for the first year and $375,000 a year after that. But a potential $4 million price tag, even for a one-and-done life-saving treatment, is bound to drive further debate over “cost effectiveness” and justifiable drug prices.