How Will We Pay for the World’s Most-Expensive Drug?

May 29, 2019

With a more than $2 million price tag, how are payers going to deal with the recently approved Zolgensma?

Zolgensma (onasemnogene abeparvovec-xioi, Novartis) won approval as the first gene therapy to treat children under two years of age who have spinal muscular atrophy (SMA). 

“A diagnosis of SMA is devastating, leaving untreated babies who have the most severe form with painfully short, highly medicalized lives, during which they are unable to lift their heads, sit or roll, have difficulty swallowing and breathing and need 24-hour care,” Jerry Mendell, MD, principal investigator at the Center for Gene Therapy at The Abigail Wexner Research Institute of Nationwide Children's Hospital in Columbus, Ohio, said in a Novartis press release.

Priced at more than $2 million, it is also the world’s most expensive drug.

“This approval continues a trend for large investments in personalized/genomic medicine for a small percent of population, and beyond just cancer, that also is moving out of the hospitals’ medical benefit based on mix in this class of drugs,” says Randy Vogenberg, board chair for the Employer-Provider Interface Council of the Hospital Quality Foundation (HQF), a Greenville, South Carolina not-for-profit organization dedicated to improving the practice of hospital medicine through the development and delivery of high-impact information and education.

“For health executives the question will be who is going to pay for this therapy? Is this just a medical benefit issue or also a pharmacy benefit coverage issue? How do I plan my benefits structure for 2020 in my own organization?” he says.

Insurers will be able to make payments over five years, at $425,000 per year, and will give partial rebates if the treatment doesn’t work, according to Reuters.

Related: Top Considerations When Determining Whether to Approve Expensive Drugs

Vogenberg believes that Zolgensma is likely to be covered in many plans after an initial moratorium during 2019.

“For employer purchasers of care, the vast majority-85% plus-are not prepared to deal with such an investment trend in healthcare benefits,” he says. “Therefore, the bigger question is what will happen in 2020? Increasingly, commercial plan sponsors are saying to coverage and creating more exclusions to help control the escalating costs of healthcare.”

Due to the complexities of healthcare coverage and inaction by Congress expected through 2020, Vogenberg predicts that the commercial market will be left to figure out solutions on its own.

“That process takes time and manufacturers need to collaborate with employers as plan sponsors along with care providers/organizations who already are working with those employers,” he says.

“The approval of Zolgensma is a testament to the transformational impact gene therapies can have in reimagining the treatment of life-threatening genetic diseases like spinal muscular atrophy,” Vas Narasimhan, CEO of Novartis, said in a press release. “We believe Zolgensma could create a lifetime of possibilities for the children and families impacted by this devastating condition.”