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Biotechnology and health

Gene-Therapy Cure Has Money-Back Guarantee

The most expensive drugs in history, or medicine’s biggest bargains? Gene therapy could be both.

A gene therapy will be offered for sale in Europe with a money-back guarantee, according to GlaxoSmithKline, the company commercializing it.

The treatment, called Strimvelis, is the first outright cure for a rare disorder to emerge from gene therapy, and its price tag of 594,000 euros ($665,000), announced last week, makes it one of the most expensive one-time treatments ever sold by a drug firm.

Now, we’ve learned, it’s also the first genetic fix to come with a warranty.

“The drug has to deliver what you say or we don’t pay,” says Luca Pani, director general of the Italian Medicines Agency, known as AIFA, which set the price and terms during negotiations with the British drug giant. “If it does not work, they will return the money.”

The treatment employs a virus to add a missing gene to the bone marrow of children with ADA-SCID, a sometimes fatal inability to fight infections. In a study involving eighteen children, carried out at a Milan hospital, all but three were cured outright.  

GSK bought rights to the treatment in 2010 and won approval earlier this year to sell it in Europe, but because of its complexity the company will offer it only in Milan, requiring families to travel and spend weeks there. That means the Italian price will apply to all of Europe, says Pani. 

By some measures, Strimvelis’s price counts as a bargain. The cost of a bone marrow transplant from another person—the established way to treat ADA-SCID—can reach $1 million. Some other patients get treated with enzyme injections that cost $250,000 a year. The expense of these drugs and the care needed for a sick child quickly add up to millions.

“I was expecting a higher price,” says Christian Hill, managing director with Map Biopharma, a consultancy in Cambridge, U.K. “My initial gut feeling was ‘Hmmm, that’s really surprising.’”

According to Pani, GSK approached the Italian agency with a price “nearly double” what was eventually settled on—or of about $1 million. But AIFA was in a strong negotiating position because the therapy had been developed in Italy with charitable donations. GSK declined to comment on the negotiations. “It’s really difficult, because everyone’s [economic] models involve regular drugs and these are not regular drugs,” says Pani. “It’s a symbol of the future, absolutely.”

The idea behind gene therapy is that a one-time correction to a patient’s DNA will lead to a lifelong cure. Strimvelis is the first treatment to be commercialized that lives up to the promise. But potential cures for hemophilia, a rare eye disease, and a fatal brain illness could reach the market next, and they could be similarly expensive.

The Italian agency is unusual in that it already imposes pay-for-performance rules on some cancer drugs. It maintains 135 patient registries to track how well they work and Pani says Italy has collected more than 250 million euros in refunds. Patients receiving GSK’s gene therapy will also be tracked in a registry, the company confirmed. Based on experience gained so far, GSK might end up refunding about one in six treatments. 

But the big question isn’t whether gene therapy costs too much—it’s whether companies can make any money at it, especially treating ultra-rare diseases. Only about a dozen children are born with ADA-SCID each year in Europe. Treating all of them would generate about $8 million in revenue—barely a blip for GSK, which sells $30 billion worth of drugs a year.

“Treating 12 kids a year—it’s just not commercially viable, at any price,” says Phil Reilly, a partner at Third Rock Ventures in Boston, who invests in gene-therapy companies. “But there are hundreds if not thousands of disorders that fall into this category. We need a new model for ultra-rare disorders, because we are going to develop these treatments.” Reilly says money-back guarantees and pay-as-you-go schemes are two ways to make high sticker prices palatable. 

GSK says it won’t make much money off Strimvelis. Instead, it sees the treatment as a way to help patients and gain experience with treatments involving cells and genes. It’s also working with a small company, Adaptimmune, to genetically alter immune cells to battle cancer. “We do not expect to recover all of the costs of building a platform to deliver gene and cell therapy from Strimvelis alone,” says Anna Padula, a spokesperson for GSK’s rare-diseases group. “We hope that Strimvelis will be the first of a number of innovative gene-therapy medicines that we will bring to patients.” The company recognizes, she adds, “that the industry will need to adapt the way in which medicines are priced and funded.”

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