Science / Healthcare

Putting a Price on Life

How much would you be willing to pay for your life?

If you’re one of 3,100 young Americans living with B-Cell Acute Lymphoblastic Leukemia (ALL), the current asking price is $475,000. In August of 2017, the FDA approved a groundbreaking gene therapy to treat this specific type of cancer. The treatment is called Kymriah, and it was developed by the Swedish pharmaceutical company Novartis.

What makes a drug worth half a million dollars? Well, Kymriah is unlike any treatment that medicine has seen before. It’s the first of a new class of drugs called gene therapy drugs to be approved by the FDA in the United States. These drugs are individually tailored to each person; immune system cells are removed from the patient, sent off to a lab, modified to attack the patient’s cancer, and then returned to the patient and infused into his or her body. In the clinical trial that won FDA approval, eighty-three percent of patients went into remission within the first month. This breakthrough is revolutionary, because it is a single-dose cure.

Before the creation of Kymriah, only forty percent of patients with B-Cell ALL would survive the diagnosis, and, for that forty percent, the road to survival was extremely difficult. The typical treatment plan is two years long and consists of a combination of chemotherapy, radiation treatments and, in extreme cases, a bone marrow transplant. These therapies cause hair loss, extreme skin burns, nausea, mental fogginess, as well as a whole host of other side effects. Bone marrow transplants are an incredibly invasive procedure with side effects such as organ damage, graft-versus-host disease, and death. Any treatment that could potentially alleviate these symptoms, giving patients back their quality of life while also increasing their chances of survival, would be groundbreaking. Five years ago, a treatment like Kymriah would have seemed as likely as running into a unicorn on the street. Now, it’s a reality and it’s saving lives.

Despite the revolutionary nature of immuno oncology treatments, there has been significant criticism surrounding the hefty price tag that it comes with. Many people in the medical ethics field have gone after Novartis for pricing Kymriah so high, equating their pricing strategy with a fire department showing up at a burning home and asking the family, “How much is it worth to you to save your house?” This criticism is only amplified by the public outrage that has arisen in the past year at drug manufacturers jacking up the prices of life-saving treatments such as EpiPens. However, gene therapy drugs are fundamentally different from the treatments that we are used to, and will therefore need to be priced using an entirely new model.

The first thing to take into consideration is that Kymriah is a cure, not just a treatment that mediates the effects of a disease, or manages the disease in the short term. Therefore, the drug is eliminating all future costs that stem from future treatments, surgeries, or complications. The makers of the drug have cited the cost of the average bone marrow transplant, between $540,000 and $800,000, as justification for the high price of their drug. The theory is that no one who receives Kymriah will need any other treatment during the course of their lives. Because it is a single-dose cure, there is also an element of quality of life that is built into the price of the drug.

Additionally, Kymriah is individually tailored to each patient. Cells from the patient are taken through blood samples, sent off to processing centers, and physically changed in order to make the cells more effective at fighting cancer. This is an incredibly time-intensive and expensive process. Therefore, the price of this drug is not just based on trying to recoup the initial investment; it is a consequence of the drug and its materials actually costing upwards of $200,000 per dose to manufacture. This level of personalization and required skill has not yet been seen in medications. Because of this high level of personalization combined with the high price tag, gene therapies will have to follow an efficacy-based pricing model. This means that patients will not be charged for the drug unless remission is induced within a certain time frame. In the case of Kymriah, Novartis is only going to charge for the drug if the patient is in remission within a month of the drug being administered.

Kymriah is revolutionary not only because it is a single-dose cure, but also because FDA approval of a drug like this increases the likelihood that other gene therapies will be approved in the future. The approval of more gene therapy drugs might even lead to cures for the rarest of orphan diseases, saving the lives of thousands of people each year. As wonderful as this is, medicine, like everything else, exists within our free market economy. The price of Kymriah is already thirty-six percent lower than investors expected, which could cause them to avoid investing in future gene therapies like this one. Gene therapy cures for cancer and other kinds of orphan diseases will never reach those who need it the most if investors think they are going to lose money on their investments. In order to keep investors interested, and to therefore keep hope alive for patients with rare diseases who have not responded to traditional treatments, the price needs to remain higher than traditional treatments.

That being said, half a million dollars is still a monumental amount of money. Many gene therapies will cost even more than this one, some reaching upwards of two million dollars per dose. Most patients cannot afford to pay for these treatments, and as gene therapies become available for more diseases and more patients, insurance companies will not be able to either. The payer system will need to change to accommodate this new single-dose, effectiveness-driven treatment strategy. The current model being suggested is similar to a mortgage on a house. When a patient receives treatment and is covered by insurance, the payer (an insurance company) takes on the liability for the cost of the treatment. The insurance company then pays back the pharmaceutical company in installments until the treatment is paid off.

Theoretically, this model makes sense. However, in practice, it would require unprecedented coordination between insurance companies, because if a patient switches payers after receiving treatment, there is no incentive for the new payer to continue payment to the creator of the gene therapy. Integration like this unlikely, because it would be seen as consolidation into a single-payer system. Such a change is unsupported by today’s political climate, so the payer system will have to accommodate these new therapies in a way that is completely unprecedented. This transition will need to be supported by insurance companies, politicians, investors, and pharmaceutical companies. Currently, there is no economic model that would be able to support wide usage of gene therapies. However, creativity is typically a by-product of necessity. In the coming years, it is possible that the way people in the United States pay for healthcare will change dramatically, and that this new system will have no basis in any other payer system we have seen before. It is impossible to predict what this solution will be, but hopefully it will open up the gene therapy market to everyone, not just the super rich or well-insured.

FDA approval of gene therapy treatments has become an exclamation point for patients and a question mark for payers. Never before has the medical community seen a treatment that will change every aspect of treatment like gene therapy. However, people are used to adapting to never-before-seen technologies and have become particularly adept at this over the past few decades as groundbreaking technology has continued to develop. Gene therapies present a hope for the future in terms of curing horrible diseases, but also a push for solving the current crisis that the United States is experiencing in healthcare.