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SouthViews 


No. 182, 11 July 2019
 
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The most expensive drug in the history of the pharmaceutical industry


By Germán Velásquez

On May 27, 2019 the US FDA gave  marketing authorization for Zolgensma gene therapy, from the Swiss firm Novartis. The price of the drug, administered in a single dose, is 2.125 million dollars, making it the most expensive drug in the history of the pharmaceutical industry.
On May 27, 2019, the Swiss firm Novartis announced the obtaining of marketing authorization  in the United States for Zolgensma gene therapy. The price of the drug administered in a single dose, set by Novartis is 2.125 million dollars, which makes it the most expensive drug in the history of the pharmaceutical industry.[1]
 
The drug Zolgensma is for the treatment of pediatric patients less than 2 years of age with spinal muscular atrophy (SMA) with bi-allelic mutations in the survival motor neuron 1 (SMN1) gene.[2] Zolgensma is a historic advance for the treatment of SMA and a landmark one-time gene therapy.
 
Novartis CEO Vas Narasimhan said he relied on "value-based pricing models" to offer prices “around 50% less than multiple established benchmarks including the 10-year current cost of chronic SMA therapy”, estimated at $ 4 million.[3]
 
Only one other drug is currently authorized for this disease, Biogen’s Spinraza (nusinersen), whose price is $ 750,000 the first year and then at $ 375,000 per year.
According to Novartis, the price of Zolgensma is also half the value of each year of life gained adjusted to the quality of life (QALY), established by the Institute for Clinical and Economic Review (ICER).[4]
 
According to an analyst at RBC Capital Management quoted by Reuters, the price set by Novartis could serve as a reference point for other genetic therapies in development. On that basis, the Duchenne gene therapy from Sarepta could cost $ 2.5 million, if approved. It is estimated that Novartis' annual revenues for Zolgensma will be 2.4 billion dollars, according to Reuters.[5]
 
As the firm Gilead did with Sofosbuvir for Hepatitis C, Novartis intends to completely separate the price of the drug from its production and research and development costs. If the governments and the international reference agency for health, that is the WHO, accept the philosophy of "pricing models based on value", the sustainability of health systems will be in danger.
 
The issue here is not to discuss whether the pharmaceutical industry can make a profit or not. The recovery of production and R & D costs and an adequate profit, in line with the profitability of other manufacturing companies in a comparable situation, is perfectly normal. However, in dealing with products, such as medicines, which can save a life or recover health, the concept of "prices based on value" can lead to speculative prices that most of the patients or health systems cannot afford. If there is a small group of patients that can get access to treatment at a high price, there may undoubtedly be a commercial success, but it is a failure in terms of public health. It is here where ethical aspect and public health concerns should be considered above commercial interests.
 
The problem that arises in the background is whether a medicine should be sold at  prices that can make it affordable to ALL those who need the product, making reasonable profits in the end, or to sell it at "prices based on value" to a small group of people who can pay for the product in order to reach a very high profitability.
 
Initially, the Zolgensma was financed with public monies
 
The monies that the citizens give to the state through taxes to be invested in infrastructure and public services are normally called "public monies". And when the public gives money directly to a not-for-profit institution for a cause of common interest, they have the legitimate expectation that this money will be used for the public good.
 
In France, Téléthon is a charitable initiative organized by the Muscular Dystrophy Association created by two parents (Bernard Barataud, Pierre Birambeau) who had children suffering from myopathy, which has been going on for 32 years. It finances research projects on neuromuscular genetic diseases, mainly, but also on other diseases of genetic origin.[6]
 
Téléthon is organized with the help of French television, which carries out a 48-hour "television marathon" every year on its channels on the first weekend of December of each year, with the help of scientists, television animators and famous people. They call on viewers to donate money to research and development of medicines for neuromuscular genetic diseases. Television viewers call a unique telephone number and make donations.
 
Thanks to the mobilization of the viewers, Téléthon manages to raise from 60 to 80 million Euros each year.
 
In 1990, the AFM-Téléthon created a research laboratory called "Genethon", a non-profit public laboratory that published the first maps of the human genome between 1992 and 1996. This advance accelerated the discovery of genes responsible for genetic diseases. Available to the scientific community, these maps were the starting point for the decoding of the human genome.
 
Genethon has worked for years on spinal muscular atrophy, which paralyzes the muscles and respiratory system of babies. The team discovered that the injection of a certain "viral vector" could correct the defective gene. [7]
 
While Genethon had spent 12 to 15 million euros to carry out its research on mice, on March 8, 2018, Genethon sold the rights to its patent to the American start-up AveXis for 15 million dollars (13.3 million euros). A month later, on April 9, AveXis, which had the Zolgensma in its portfolio, was bought by the Swiss giant Novartis for 8.7 billion dollars (7.7 billion euros).
 
So the firm Novartis brings to the market of the United States and will bring soon to Europe and Japan the most expensive drug in history, initially developed with public funds generated by donations from Téléthon.
 
It seems that Zolgensma can save lives and that it may substitute other expensive treatments. But it was developed with public money with the expectation of providing a solution to a serious public health problem, not to allow a particular company or individual to get an extraordinary profit. The contributing public may, with justification, feel betrayed and the capacity of philanthropic organizations to get new funding may be severely affected in the future.
 
The choice of a value-based pricing strategy for Zolgensma with the prospect that a majority of suffering patients will not be able to obtain it, particularly in developing countries, is a matter of major concern from a public health perspective. Most probably, civil society will not remain passive and Novartis strategy is likely to raise a reaction comparable to that created by litigation against South Africa in relation to access to HIV-AIDS drugs after the adoption of the TRIPS Agreement.  International organizations, such as the World Health Organization, and national authorities should take effective actions to address this and other situations in which the inelasticity of demand may confront desperate parents or patients with a major ethical problem: the availability of a cure that, due to unregulated commercial practices, will never be accessible to them.
 

[1] APM News, «AMM américaine pour Zolgensma*, médicament le plus cher du monde», 27 mai 2019. Available from https://www.apmnews.com/freestory/10/336278/amm-americaine-pour-zolgensma--medicament-le-plus-cher-du-monde.
[2] Ibid.
[3] Ibid.
[4]  Ibid.
[5] Ibid.
[6] AFM-Telethon, «NOTRE HISTOIRE; Un combat sans merci contre la maladie». Available from https://www.afm-telethon.fr/association/notre-histoire-632
[7]  Stéphanie Benz, « Comment Novartis va s'enrichir grâce à l'argent du Téléthon », l’express, 3 June 2019. Available from https://www.lexpress.fr/actualite/comment-novartis-va-s-enrichir-grace-a-l-argent-du-telethon_2081823.html

 

Author: Germán Velásquez is Special Adviser on Policy and Health of the South Centre. 
 

* The views contained in this article are attributable to the author and do not represent the institutional views of the South Centre or its Member States.
 


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