New Drug Costs $2.1 Million – A Plan Sponsor’s “Poison Pill”

“Specialty drugs account for about 1% of prescriptions but 95% of prescription costs.” A new drug approved this year will bankrupt health plans……………..Plan sponsors should carefully study their Rx formularies to determine if there are other “Poison Pills” lurking…….then take action.

A new drug costs $2.1 million for children with a muscle-wasting disease

Ken Alltucker, USA TODAY Published 4:18 p.m. ET May 24, 2019 | Updated 5:44 p.m. ET May 24, 2019

The Food and Drug Administration on Friday approved a $2.125 million gene therapy for a rare disease called spinal muscular atrophy in infants and toddlers.

Novartis said it will price the one-time drug, called Zolgensma, at $425,000 per year over five years. (SEE HEALTH FUND REFUSING TO PAY FOR LIFE-SAVING DRUG)

The FDA approved Zolgensma for children under the age of two with spinal muscular atrophy, a rare inherited disease caused by a mutation in the survival motor neuron (SMN) gene. This defect can disrupt production of a protein and cause muscle-controlling motor neurons to die.

About one in 11,000 babies are born with spinal muscular atrophy. Children with the most severe form of the disease have trouble holding up their head, swallowing or breathing. The condition is often fatal or may require children to use breathing masks or machines.

Acting FDA Commissioner Ned Sharpless described the approval as a “milestone in the transformational power of gene and cell therapies” that have the potential to treat a range of diseases.

“The potential for gene therapy products to change the lives of those patients who may have faced a terminal condition, or worse, death, provides hope for the future,” Sharpless said.

But the cost of the therapy likely will trigger debates about the escalating costs of prescription drugs and medical technology. It will also confront private and government insurers with challenge of covering the costs of what is poised to become the nation’s most expensive drug.

Novartis said the drug is priced at half of the estimated $4 million-plus cost of managing the disease with therapy for one decade. Zolgensma is a one-time therapy that uses a virus to deliver a copy of human SMN gene to prevent the death of motor neurons.

“We believe by taking this responsible approach, we will help patients benefit from this transformative medical innovation and generate significant cost savings for the system over time,” said Novartis CEO Vas Narasimhan.

More: Novartis buying AveXis for $8.7B in big gene therapy bet

More: Big Pharma CEOs tell senators they won’t reduce drug costs without other reforms

More: A ‘one-off opportunity:’ Drug company hikes price of blood pressure drugs after competitors’ drugs recalled

The Institute for Clinical and Economic Review, which analyzes the cost and effectiveness of drugs, said on Friday updated its “value-based pricing” estimate for the drug to a range of $1.2 million to $2.1 million.

“Insurers were going to cover Zolgensma no matter the price, and Novartis has spoken publicly about considering prices that approached $5 million,” said Steven D. Pearson, President of ICER. “It is a positive outcome for patients and the entire health system that Novartis instead chose to price Zolgensma at a level that more fairly aligns with the benefits for these children and their families.”

Although specialty drugs such as Zolgensma are taken by a small portion of the population, their costs can ripple beyond an individual family or insurer.

Thomas Goetz is Chief of Research at GoodRx, a consumer website and mobile app that tracks drug prices.

Goetz said specialty drugs account for about 1% of prescriptions but 95% of prescription costs.

“Those costs translate into higher premiums and more restrictive formularies for everyone,” Goetz said


Just an FYI….in our risk pool of 30,000 lives less than 100 people account for 33% of all RX costs.
Wow. There is only so much money available to pay for health care. Self-funded employers want to spend what they can (afford) for the greater good. That may mean excluding high cost drugs for the few who need them. That’s a tough moral choice but it’s tempered by the reality of today’s broken health care system. It’s broken because we have allowed it to be so. If plans would say “enough is enough, we are not going to pay that much for drugs anymore” I suspect people would not end up dying for lack of access. Thanks for sharing.