Spark Prices Gene Therapy for Eye Disease at $850,000, Introduces Outcomes-Based Rebates

Rare Daily Staff

Spark Therapeutics said it would charge $850,000 for Luxturna, its gene therapy to treat a certain form of an inherited eye disease that causes blindness, and introduced programs to reduce risk and allow payers to spread payments out over several years.

Because Luxturna is the first gene therapy approved in the United States for a genetic disease, the pricing has been closely watched. It sets the bar on the pricing of future gene therapies, and its payer and access programs provide a yardstick against which other gene therapy programs will likely be measured.

Luxturna is approved for the treatment of patients with confirmed biallelic RPE65 mutation-associated retinal dystrophy that leads to vision loss and may cause complete blindness in certain patients. The condition affects about 1,000 to 2,000 patients in the United States. The RPE65 gene provides instructions for making an enzyme that is essential for normal vision. There are currently no approved pharmacologic treatment options for IRD due to biallelic RPE65 gene mutations.

Luxturna works by delivering a normal copy of the RPE65 gene directly to retinal cells. These retinal cells then produce the normal protein that converts light to an electrical signal in the retina to restore patient’s vision loss. Luxturna uses a naturally occurring adeno-associated virus, which has been modified using recombinant DNA techniques, as a vehicle to deliver the normal human RPE65 gene to the retinal cells to restore vision.

Spark announced three payer programs: an outcomes-based rebate arrangement with a long-term durability measure, a contracting model, and a proposal to CMS under which payments for Luxturna would be made over time. The programs are intended to help ensure eligible U.S. patients have access to Luxturna.

The company noted that Luxturna and other potential one-time therapies face unique health insurance challenges given current practices and regulations in the U.S. healthcare system. Barriers to offering alternate models include the system’s focus on short-term value, largely because most patients switch health insurance companies on average every three years. There are also barriers tied to government price reporting requirements that are not designed to reflect certain outcomes-based arrangements, therefore limiting a manufacturer’s ability to offer significant performance-based rebates, particularly for diseases with small patient populations. There is also the additional challenge of complicated distribution models, which add costs and financial risk to parties involved in the delivery and reimbursement of specialty drugs and specialized medical care.

“Over these past few months, we have been working with health insurers to create innovative pathways for access to Luxturna that may serve as models for other one-time administered gene therapies in the future,” said Jeffrey Marrazzo, CEO of Spark. “Our work is not done, but we believe that the offerings we are announcing today will help ensure that eligible U.S. patients have the coverage and financial support they need to gain access to both Luxturna and the specialized medical care required to deliver the product at treatment centers.”

The company said it has reached agreement in principle with Harvard Pilgrim to make Luxturna available under the outcomes-based rebate arrangement, which seeks to reduce risk and financial burden for payers and treatment centers. Spark also said it reached an agreement in principle with affiliates of Express Scripts to enable its contracting model.

“To help ensure eligible patients have access to Luxturna, we are striving to bring the same level of innovation applied in development to the delivery of, and access to, this product,” said Jeffrey Marrazzo, CEO of Spark. “We believe that access to therapy is a shared responsibility among Spark Therapeutics, payers, health benefit providers, physicians and treatment centers. We have been working with stakeholders across the health care sector to help ensure that appropriate patients have access to a product that challenges all of the current conventions of how patients are treated, how products are delivered and how payments are handled.”

Spark said it will share risk with certain health insurers by paying rebates if patient outcomes fail to meet a specified threshold, thereby linking the payment for Luxturna to both short-term efficacy (30-90 days) and longer-term durability (30 months) measures that are unique to its one-time gene therapy.

In addition to its agreement in principle with Harvard Pilgrim, Spark is in active discussions with other commercial insurers regarding this offering.

“This outcomes-based rebate arrangement is truly innovative, as it ties payment for the therapeutic not only to a short-term goal, but also to a longer-term, 30-month assessment of efficacy,” said Michael Sherman, senior vice president and chief medical officer at Harvard Pilgrim, a leading not-for-profit health services in New England providing coverage to more than 1.2 million members.

Spark said it is also introducing a contracting model that supports patient access while reducing costs to payers, as well as financial burden and risk of traditional “buy and bill” models for treatment centers. Under Spark’s contracting model, the company would enter into an agreement with commercial payers under which the payer or payer’s specialty pharmacy, rather than the treatment center, purchases Luxturna. As a part of this agreement, the payer agrees to provide coverage for its members, expedite benefits processing, and cap patient out-of-pocket amounts at in-network limits.

Separately, the payer would independently agree with the treatment center on reimbursement that is commensurate with the type of specialized medical care required to deliver Luxturna. Under this arrangement, Spark Therapeutics will assume all drug in-transit, storage and handling risks.

Spark Therapeutics is working with affiliates of Express Scripts to enable this contracting model by leveraging its specialty distribution and specialty pharmacy capabilities.

“This is the first of what we expect to be many transformative gene therapies coming to market, with the potential to provide life-changing health benefits to patients we serve,” said Steve Miller, senior vice president and chief medical officer of Express Scripts, a leading pharmacy benefits provider serving patients across the United States. “For one-time therapies like Luxturna, we believe non-traditional payment and distribution models are needed to ensure that the needs of patients, payers and providers are fully represented and result in a balanced solution for all parties.”

Spark is in active discussions with other national and regional payers regarding its contracting model for Luxturna, which could serve as a model for other one-time therapies.

The company is also in discussions with CMS on a proposal that would enable the company to offer payers the option to spread payment over multiple years, while providing flexibility for greater outcomes-based rebates

Based on feedback from payers, Spark has been seeking solutions that would allow customers to pay for Luxturna in installments over several years rather than in a single, up-front payment. Due to current government price reporting requirements, it is not feasible for Spark to offer installment payments, or to offer outcomes-based rebates above a certain threshold. The company submitted a proposal to CMS to conduct a demonstration project for Luxturna that would enable Spark to offer commercial and government payers an installment payment option, as well as greater rebates tied to clinical outcomes.

“We are committed to finding a novel solution to providing an installment payment option to payers that ensures access for patients while helping to address the budgetary challenges of one-time payments for a long-term outcome. We are encouraged by CMS’ willingness to engage with us in exploring a new model,” said Marrazzo. “We are also eager to work with CMS to enable more meaningful rebates as part of the pay-for-performance model. We are confident in the clinical meaningfulness of Luxturna and willing to stand behind the product’s efficacy and durability from a single dose.”

If discussions with CMS do not result in Spark Therapeutics being able to offer an installment option, Spark Therapeutics has developed an approach that would permit its distributor to independently make alternative payment options available to payers, which may include an installment or financing option.

The company has also established a patient assistance program to support commercially insured patients and their caregivers in the United States through the treatment experience. Spark’s patient assistant program will help eligible patients in navigating the insurance process, and will provide options to support their travel and accommodation logistics and costs to and from treatment centers, as well as assistance with other out-of-pocket costs related to the treatment. The company said for a commercially-insured patient who seeks treatment in-network, there should be zero cost to the patient for Luxturna and immediate follow-up care.

January 3, 2018

Photo: Jeffrey Marrazzo, CEO of Spark