Novartis is weighing an insurance method often associated with natural disasters to help win coverage for its pricey next-generation cell and gene therapies.
Reinsurance—which puts a third-party insurer on the hook for catastrophic events—would underwrite a different sort of disaster, Novartis CEO Vas Narasimhan told the Financial Times. Under such a setup, that reinsurer would cover “the catastrophic case of a child having” a rare disease treatable or curable by expensive pharmaceuticals, Novartis CEO Vas Narasimhan told the newspaper.
The idea is still in the conceptual stage, but Narasimhan added that if his company and others “can deliver either cures or transformative efficiency,” he believes payment models will adapt. Reinsurance partnerships could help by pooling risks and costs for the drugs from different companies or countries, according to the FT.
Using reinsurance to gain access for new drugs wouldn’t be unprecedented. Roche took that tack in China to help win funding for its top-selling cancer drugs.
What’s driving the discussion now? Next-generation pharmaceutical treatments that can potentially cure devastating diseases, but at high costs. Drugmakers say the treatments could be worth millions of dollars per patient, but current payment models aren’t set up to take that kind of a financial hit up front.
Previously, Novartis staff said a new gene therapy for spinal muscular atrophy, a rare disease that saps strength from infants and young children, would be cost-effective at $4 million to $5 million for each child treated, setting off a wave of discussion over pricing in the field. Biogen’s Spinraza treats the disease for $750,000 for the first year and $375,000 for subsequent years, before discounts, but it’s an ongoing treatment. Gene therapy would be designed as a one-time cure.
Novartis has been a leading player in the cell and gene therapy field and has been exploring newer payment models for years. The company won the world’s first CAR-T approval last year for Kymriah to treat acute lymphoblastic leukemia and introduced a money-back guarantee if patients don’t respond within 30 days. The drug has since won a second indication in diffuse large B-cell lymphoma.
The reinsurance setup could work to help fund expensive drugs in a government-payer system or for private insurance markets, according to the FT. Previously, reinsurance leader Swiss Re teamed with Roche to help fund cancer therapies in China.
The discussion over funding expensive new therapies comes amid a larger pricing debate in the U.S., where lawmakers and others have scrutinized pharma for years. Meanwhile, biopharma companies are winning FDA approvals for next-generation therapies carrying price tags in the hundreds of thousands of dollars, such as Spark Therapeutics’ blindness gene therapy Luxturna that costs $850,000.
To support that launch, Spark has introduced pay-for-performance contracts and is exploring options to fund the drug over several years.
By Eric Sagonowsky
Source: Fierce Pharma
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