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Even at $500K, Gene Therapy Could Be a Bargain for Some Diseases

A one-time gene therapy that costs half a million dollars sounds crazy until you add up what it costs to treat some diseases over a lifetime.
September 21, 2017

The U.S. Food and Drug Administration recently approved what it called the “first gene therapy” in the country. The therapy, called Kymriah and made by Novartis, uses a patient’s own cells—which are genetically modified outside the body—to treat a deadly type of childhood leukemia. The therapy has had astonishing effects, resulting in complete cancer remission in some patients.

The idea behind gene therapy is that genetic material is used as a “living drug” to treat disease. Scientists have been trying to get gene therapies to work for decades, so Kymriah's approval is historic. But the therapy’s $475,000 price tag was immediately met with alarm and criticism from patient advocates. More gene therapies are in development, and those too could cost hundreds of thousands of dollars. And while some see sticker shock, others see a bargain.

That’s because many gene therapies promise to be outright cures with a one-time injection, a fundamentally different approach to medicine. Whether and how much insurers will pay for these therapies are major questions the U.S. health-care system will have to grapple with as more of them come onto the market. Insurance companies have not said yet whether they will cover Kymriah.

A total of 504 gene therapies for cancers, genetic disorders, and infectious diseases are currently in clinical trials—34 of which are in the most advanced stage of testing, according to the Alliance for Regenerative Medicine, an industry group. Some might actually be a better deal than currently available treatments. The cost of treating certain severe medical conditions over a person’s lifetime, or even for just a few years, can quickly add up. We ran the numbers on a few of those.

Sickle cell disease. Patients with sickle cell, an incredibly painful blood disorder, frequently end up in hospital emergency rooms, costing the U.S. health-care system millions a year. A 2009 study in the American Journal of Hematology looked at data from the Florida Medicaid program and found that the average annual cost of health care for sickle cell patients ranged from $10,704 for children up to nine years old to $34,266 for those aged 30 to 39 years. Lifetime health-care costs for a 45-year-old with sickle cell disease reached $953,640. Earlier this year, biotech company Bluebird Bio reported that its experimental gene therapy cured a teenage boy in France.

Hemophilia. People with hemophilia—mostly men—lack the necessary protein the body needs to clot blood. As a result, patients need regular injections of clotting factor, which can cost tens to hundreds of thousands of dollars a year based on a person’s weight. A 2016 analysis in the American Journal of Managed Care found that the annual average cost per patient for men with hemophilia was $155,136. Those with hemophilia A had slightly higher health-care costs—at $162,054 per year—than those with hemophilia B, which were about $127,194 per year. Early clinical trial results from Spark Therapeutics have shown that gene therapy can essentially cure hemophilia B. UniQure and Baxalta are also testing gene therapies for hemophilia, while BioMarin is investigating one for hemophilia A.

Immunodeficiency disorders. Severe combined immunodeficiency, also known as SCID, or “bubble boy disease,” is a rare, inherited disorder that renders the immune system virtually useless against pathogens. This makes babies born with it extremely vulnerable to infectious diseases, and without treatment, children will often die within the first two years of life. A gene therapy is already available in Europe, marketed as Strimvelis by GlaxoSmithKline. It costs 594,000 euros, or about $712,000, but comes with a money-back guarantee if patients aren’t cured. A bone marrow transplant also offers a cure, and the disease can be managed with enzyme replacement therapies. But GlaxoSmithKline has said these can cost more than $4 million for a single patient over the course of a decade. Gene therapy trials for SCID are ongoing in the U.S., and U.K.-based Orchard Therapeutics is developing a therapy that would rival GlaxoSmithKline’s.

Some cancers. Some types of cancer are already incredibly expensive to treat and require that patients take drugs to keep cancer cells at bay and manage side effects of the disease. David Mitchell, founder of the advocacy group Patients for Affordable Drugs, has multiple myeloma, which is incurable but treatable. To stay healthy, he goes to his doctor 22 times a year for an injection of $20,000 worth of drugs. Over a year, that comes to about $440,000. Several new cancer drugs cost upwards of $100,000 per year.

Michael Werner, executive director of the Alliance for Regenerative Medicine, says a gene therapy should be priced based on its value to the patient and to society, which he says includes quality of life improvements for the patient and potential cost savings.

“If we can keep people out of future visits to the hospital and avoid significant future costs to the health-care system, giving someone a gene therapy is for sure a cost-effective way to provide them with health care and perhaps the most cost-effective way,” he says.

Ed Schoonveld, a drug pricing and market access expert at consulting firm ZS Associates, says it’s difficult to put a monetary value on a medicine that could be utterly life-changing—or life-saving. One question that will remain even after some of these therapies get approved is how long their effects last. “The minute we launch a drug, we usually don’t have a full picture of what the long-term effect of the drug is,” Schoonveld says.

Gene therapy trials have followed patients for just a few years after treatment, so it’s not yet known if they offer a long-term cure.

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