Why A Miracle Drug Should Cost $2.1 Million

Tayjus Surampudi
May 31 · 5 min read

On May 24, the FDA approved Novartis’ new drug, Zolgensma, which now holds the title of the most expensive drug in the world at $2.125 million. Zolgensma is also the first gene therapy for spinal muscular atrophy, a disease that robs children of their physical strength. These children often never even gain the ability to walk let alone the ability to crawl, are unable to even eat, and eventually lose their ability to breathe unassisted. It’s known to be the number one genetic cause of death in infants.

My concern now however is that Zolgensma will be used as an example of how drug pricing is broken in the U.S. rather than as an example of how far gene therapy has come. It’s troubling to already see op-eds like “No Miracle Drug Should Cost $2.1 million”.

Simply put, I am a strong proponent of rewarding drug companies that have developed novel and efficacious drugs with a clear benefit in the lives of its patients. Drug development is a long and challenging process from drug discovery to approval and it’s a highly regulated industry. The chance of success is very low. Only 1 out of every 12.5 potential drugs ever reaches patients, the average drug takes 11–14 years to develop, and the costs of bringing a drug to market range from $1 to $2.6 billion. So, when a drug company is even willing to try to treat an orphan disease, a disease that affects fewer than 200,000 people nationwide, and there are no other treatments available, they deserve to be rewarded. If we fail to reward this innovation, then we disincentivize any interest in treating orphan diseases. There is a reason why most of this innovation happens in one place: the U.S. A 2010 study published in Nature Reviews Drug Discovery found that of the 252 drugs approved by the FDA between 1998 and 2007, 47% were developed in the U.S and amongst orphan drugs, almost all were developed by U.S. based biotechs.

The U.S. actually makes it possible for drug companies to even consider developing drugs for orphan diseases. The orphan drug designation comes with a whole menu of incentives including a 50% of tax credit, fast track designation, accelerated approval, extended exclusivity, and priority review programs. Drug companies also know that they will be rewarded as the market sees fit and will be able to recoup their costs, enabling them to develop other drugs as well.

Of course, it cannot be denied that some drug companies have also been able to reap the benefits of orphan drug designation including a high price, despite not actually developing something groundbreaking. Emflaza, for example, was already a standard of care for Duchenne Muscular Dystrophy and patients were allowed to import deflazacort from abroad for only about $1200 annually. Marathon received the orphan drug designation for Emflaza with all the benefits, and priced it at $89,000 annually. If U.S. drug pricing critics want a rallying call, then they have it with Emflaza. But, Zolgensma should most certainly not be their rallying call.

Unlike Emflaza, Zolgensma is actually a pioneering drug and has a clear and unique benefit to its patients. Using a re-engineered virus, Zolgensma is able to deliver a functional copy of the defective SMN1 gene that causes SMA. In Zolgensma’s clinical trial and ongoing trial, infants and young children, who normally would have died before age two, are approaching their 5th birthdays, are able to breathe unassisted, and have shown improvements in motor milestones like being able to sit unassisted. Around 700 families like the Andersons, whose son was enrolled in the Zolgensma clinical trial and received the treatment, can actually start to think about their child’s future just like other parents. The Andersons’ son, Malachi, can now push the wheels on his wheelchair, feed himself, and can be a normal toddler.

As Novartis CEO, Vas Narasimhan put it “parents will know right away that this is a medicine that performs extremely, extremely well in these infants and has this kind of marked effect on their well-being.” But, it’s not just Novartis saying this. The acting FDA Commissioner Ned Sharpless said that the approval marks “another milestone in the transformational power of gene and cell therapies to treat a wide range of diseases.”

Even the Institute for Clinical and Economic Review, known for being an unofficial force for assessing the economic benefits of new medicines in the U.S, has endorsed Novartis’ pricing strategy. ICER’s cost-effectiveness analysis found that Zolgensma’s price was just slightly higher than ICER’s value-based pricing benchmark of $1.5 million. The president of ICER, Dr. Steven D. Pearson, said “Zolgensma is dramatically transforming the lives of families affected by this devastating disease, and given the new efficacy data for the pre-symptomatic population, the price announced today falls within the upper bound of ICER’s value-based price benchmark range.”

To better understand ICER’s cost-effectiveness analysis, I also looked at the economic burden data for early onset SMA provided in a 2012 study conducted by the Lewin Group on behalf of the Muscular Dystrophy Association. This study is referenced in ICER’s final review for Zolgensma. Based on 2010 data, the study found that total costs for early onset SMA, which included medical costs, non-medical costs, income loss, and out-of-pocket medical costs, were around $193,725 annually or about $227,033 annually in 2019. Novartis’s $2.125 million cost is annualized for 5 years, so the total costs for 5 years is around $1.135 million. But the reality is that Zolgensma is literally the difference between life and death. As the father of Malachi Anderson put it in the recent New York Times article on Zolgensma,“To me, it’s worth giving up everything — my house, my car, everything. Nothing could put a cost on saving my child’s life.” Now, it is important to note, that no patient in U.S. will actually have to pay even close to $2.125 million. Insurance companies will be covering the Zolgensma. Insurers will be able to pay for the treatment over 5 years and Novartis will also provide a discount if a patient on the drug dies or needs permanent ventilator support.

But ultimately, it is clear that for most parents, $2.125 million is a small price to pay to save their child’s life. If that isn’t enough of a reason for why we shouldn’t use cost-effectiveness analysis as a basis for FDA approval, then I’m not sure what is. And this is where the U.S. healthcare system is doing things right. We don’t approve drugs on the basis of cost. When it comes to orphan disease drugs, we reward those drug companies that can save lives and offer individuals and their families some semblance of hope. Novartis and AveXis have done just that with Zolgensma and for that hope, $2.125 million is worth it.

Tayjus Surampudi

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Harvard ’18. Duchenne Muscular Dystrophy patient advocate. Bringing a unique perspective to technology and healthcare. @suramput