Skip to NavigationSkip to content

The Truth Behind the £1.8 Million Drug

Published on 31/03/21 at 12:13pm

As NICE approves the most expensive drug ever for use by the NHS, Jack Goddard takes a look at drug pricing in the UK, how it compares to the US, and the kind of crisis that not having a national health service could cause

Zolgensma, the one-off gene therapy for babies with spinal muscular atrophy (SMA), was finally approved by NICE for use by the NHS. The treatment is life changing – it can save the lives of children who otherwise have a life expectancy of less than two years. As such, it was approved by the FDA two years ago, and the EMA one year ago – so why can it only be used in the UK now?

The answer is simple: a single dose of Zolgensma costs almost £1.8 million. One point eight million. For one dose.

The treatment, made by Novartis, is the most expensive drug in the world, but there is a caveat. Zolgensma only needs to be administered once, meaning the previous NICE-recommended medicine for type 1 SMA, Biogen’s Spinraza, can ultimately be more costly; the first year of treatment ordinarily costs £450,000, with every following year costing £225,000 (although NICE did arrange a discount for the NHS). Spinraza is required for every year of a patient’s life.

The price of Zolgensma has nonetheless come into criticism, not least because it was initially funded by several charities that used donations from patients’ families to subsidise the price of research and development.

For some, however, the price is reasonable for now. When the cost of the treatment was first announced in 2019, Nathan Yates, SMA patient and Economics and Finance Professor at New Hampshire University, wrote for Stat News: “Zolgensma is the second treatment approved for SMA, following Biogen’s Spinraza. Now that there’s competition in the marketplace, that will lead to lower prices over the long-term, especially if Zolgensma is approved for older SMA patients down the road.

“Biogen pays for any part of the drug and infusion procedure costs that my insurance company doesn’t cover – until I meet my $7,900 annual out-of-pocket maximum. In the end though, I’m going to meet the annual out-of-pocket maximum no matter what due to other medical costs.”

Yates should turn out to be correct, with Roche’s competitor treatment, Evrysdi, approved by the FDA last August. Although the price for this new medicine isn’t yet set, the drug can be administered orally, unlike Spinraza which usually requires a lumbar puncture. Novartis themselves are now also working on an oral therapy, Branaplam, which is currently in Phase II development. Every new treatment option should lead to a downturn in price.

Yates explained how the method of infusion takes the sting out of the price: "In terms of quality of life, one IV infusion of Zolgensma is definitely more palatable than multiple spinal infusions of Spinraza each year. I’m currently thrilled with the improvements in stamina and strength I’ve received from five doses of Spinraza. But I certainly wouldn’t miss the pain of having a needle inserted in my cervical spine every four months. Due to my scoliosis, the less invasive, and less risky, lumbar puncture procedure isn’t possible.”

NICE will take this into consideration, along with the price, when recommending treatments to the NHS.

Meindert Boysen, Deputy Chief Executive and Director of the Centre for Health Technology Evaluation at NICE, explained the decision: “Being able to support access to one of the most exciting recent innovations in life sciences, a one-off therapy designed to address the genetic root cause of SMA, is both humbling and rewarding.

“The committee concluded that Zolgensma represents an important development in treating SMA which could not only allow babies to gain important motor milestones such as independent sitting and walking, but for some babies who are diagnosed before they have symptoms, it might come close to being a cure.”

Despite the extortionate headline cost for Zolgensma, pharmaceutical companies cannot simply charge the NHS what they want for any given drug. There are checks in place and, if NICE believe that the drug is not cost-effective, they simply won’t recommend it to the NHS.

Pharmafocus spoke to David Watson, Director of Economic Health and Commercial Policy at The Association of the British Pharmaceutical Industry (ABPI), who explained how the system works: “The basis of NICE’s work is to try to establish the number of years, and quality of life that a medicine gives,” he said. “There's a very tricky economic and ethical aspect to it as they try to work out what the cost is to achieve that extra life – a good quality life. And they are able to put a value, which sadly is what it boils down to, on one year's worth of life for a patient, and they’re trying to do that in a consistent way.

“And so, if you've got a medicine and NICE look at the evidence and they say, ‘Look, this medicine is going to extend somebody's life by six months, but it's £100,000,’ that is not going to be cost effective. If it's £5,000, it is. And literally, it's as simple as that.”

This would go some way to explaining the rationale over the approval of Zolgensma – a single dose of a treatment used on children under two years old will secure countless extra years of quality life.

Watson continued: “Sometimes the [belief over] medicine pricing is that it’s a complete monopoly and companies can just charge what they want, but that's quite far from the truth. There’s multiple levels in place that manage the costs, the prices, and the overall spend.”

As such, the ABPI have negotiated a Voluntary Pricing and Access Scheme (VPAS) with the NHS, meaning that the NHS’s overall spend on branded medicines can only increase by 2% a year for each of the next five years. Any spend over this is paid back by the pharma industry.

This not only benefits the NHS, but pharma companies too, as Watson explained: “VPAS gives companies a sense of stability about how the market’s going to work, so they know it’s going to be capped, but at the same time it’s much less likely that the government says, ‘Actually we're going to completely change the way that some aspects of the medicines market works.’ So, the voluntary scheme fixes the cost effectiveness threshold that NICE use – that’s not going to be changed. [The cap] is not going to be reduced or increased outside of the voluntary scheme, so it gives industry a degree of stability, and obviously benefits government and the NHS as well.”

Companies aren’t obliged to join the VPAS but the UK government have a statutory scheme too, meaning that even those that aren’t part of the voluntary scheme have to pay money back to cap spending. Furthermore, the government’s budget impact test means that, even if a treatment is deemed to be cost-effective, the NHS may choose not to buy the drug if it is still considered too expensive.

In countries without a national health service, however, the price of drugs doesn’t fall on the NHS, or even necessarily insurance companies, but the patient themselves. There is no better example of this than the US.

Insulin prices in the US have been a big topic of debate worldwide over the last few years, in particular since 2017, when Minnesotan Alec Holt passed away in 2017 aged just 26 because he was rationing insulin. After ageing out of his family’s health insurance, the hormone was costing him $1,300 (£937) a month, which he couldn’t afford.

Alec’s mum, Nicole Smith Holt, has since been campaigning for insulin access for everyone who needs it. Last year, Alec’s Law, otherwise known as the Alec Smith Insulin Affordability Act, was approved by the Minnesota Senate. It was announced this month that, since coming into effect in July 2020, the act has helped 465 diabetes patients in the state access insulin that they may not have been able to afford otherwise.

But the battle for uniform nationwide access has only just begun. Pharmafile spoke to Elizabeth Pfiester, Founder and Executive Director of T1International, a non-profit that advocates for cheaper access to insulin and other diabetes supplies for Type 1 diabetes sufferers worldwide. She explained the situation in the US: “It’s [the US healthcare system] set up in such a way that the pharma companies are charging the highest prices in the world – [up to] about $300 per vial for one little small vial of insulin. If you don't have insurance in the US, then you're paying that amount out of pocket and most people need at least two vials a month, if not more.

“Even if you do have health insurance, there’s a deductible that can be anything from $1,000 to $14,000 or more – you have to spend that amount of money out of pocket before your insurance kicks in. And then there are co-pays which are the additional fees that you have to pay on top of already having insurance coverage. So there's so many cost barriers just for people to get what they need and this is causing people to ration their insulin, which is incredibly dangerous, or to stop taking it.”

Not every vial of insulin has a cost price of $300, with many manufacturers, such as Eli Lilly, also producing cheaper, more generic versions of their product. Early last year, Lilly announced that they would be selling two versions of their insulin products at half their previous prices, reducing the cost to $265.20 for a pack of five KwikPens, a price of $53.04 (£38.23) per pen. In April, when the COVID-19 pandemic took full hold, Lilly announced that they would be slashing out-of-pocket costs to $35 a month to offset the financial effects of the global health crisis. Despite this, a report published by the Rand Corporation in November still found the average cost of an insulin vial to be $98.70 (£71.15); the same study found that a vial in the UK costs £8.58 on average.

Speaking about the overall reduction in price, Pfeister said: “I think there's a couple of reasons why that made the community of people with diabetes quite angry. First and foremost, it shows that at any time these companies can decide to lower the price of their insulin and to make it affordable for people and they are not making that choice, they did that because of a huge amount of public pressure and public outcry and highlighting of these deaths.”

This is further compounded by the fact that the average vial of insulin costs just $6 to produce, and when insulin was first discovered it was sold to the University of Toronto for just $1, in order to make it more affordable for all. The reason for the extortionate prices now doesn’t just lie with the pharma companies, but, as Watson explained: “There's a lot of intermediaries who take a chunk in price and actually they are quite keen that prices go up each year because they get a little bit more. The problem for patients in the US is the difference between the list price and the paid price is huge.”

There is no doubt US patients pay too much for insulin – eight times more than those in the UK, but Watson argues that the burden of general higher healthcare costs needs to fall with richer countries. He said: “The ethical issue is almost that companies need to make medicines available at prices that most of the world can afford, because there are needs everywhere. And then the argument is that it ought to be slightly more expensive in developed countries, because if the US is paying the same as, let's say Ukraine or Kazakhstan, then there's something wrong with the economics of pricing, and this is where it gets very tricky.”

Tricky is the right word. The balance between price and effectiveness, between profits and universal access, between costs for richer and poorer countries, are all incredibly complicated to get right. Life-saving innovation, schemes like VPAS, and political pressure have all helped level the scales, but there’s still work to be done.

 

Mission Statement
Pharmafile.com is a leading portal for the pharmaceutical industry, providing industry professionals with pharma news, pharma events, pharma service company listings and pharma jobs,
Site content is produced by our editorial team exclusively for Pharmafile.com and our industry newspaper Pharmafocus. Service company profiles and listings are taken from our pharmaceutical industry directory, Pharmafile, and presented in a unique Find and Compare format to ensure the most relevant matches