Gene therapy may not be as expensive as people think: challenges in assessing the value of single and short-term therapies

At an upfront price of $2.125 million, the one-time gene therapy onasemnogene abeparvovec for spinal muscular atrophy, a rare neuromuscular disorder that is usually fatal by 2 years of age if untreated, has been called the “most expensive drug ever.” This flawed characterization raises important methodological and policy issues regarding valuation of high-cost treatments. We reviewed several other high-cost therapies—with a particular focus on hemophilia A treatment—studied by the nonprofit Institute for Clinical and Economic Review (ICER). In ICER’s summary report of 2 treatments for managing hemophilia A, published in this month’s JMCP issue, the estimated $15-$18 million lifetime cost of factor VIII is characterized as “far too high,” representing “a failure of competition [that] … builds a platform for pricing of treatments … that will only exacerbate these problems.” Current literature indicates several factors underlying high factor VIII treatment cost (eg, historical pattern of innovation and lack of market competition) that may also drive the pricing dynamics of advanced therapies for other rare diseases. When a treatment’s price is driven high (or “distorted”), an economic principle known as “theory of the second best” suggests that market price becomes a poor estimate of social opportunity cost, and adjustments should be made for such distortions. In any case, a high-cost standard of care creates an opportunity for new technology to generate cost savings, providing an inducement for market entry. Recognizing that this potentially creates a tendency to produce price distortions for new treatments, ICER has attempted to apply some ad hoc adjustments. However, challenges remain in creating a “level playing field” across different disease-modifying or potentially curative innovations (eg, one-time therapy vs ongoing or lifelong treatment with repeated doses). While additional policy work is needed to address this dilemma, it would clearly be misleading to assume that gene therapies are inherently expensive. Rigorous economic evaluation of novel therapies requires careful comparison of lifetime cost and benefits vs standard of care, including adjustments for pricing distortions. Fortunately, economic theory suggests that we could adjust to this circumstance by using the social opportunity costs of interventions based on an appropriate variable cost-effectiveness threshold that would be higher for rare severe diseases.