Vasant Narasimhan, CEO of Novartis, speaking at the Healthy Returns conference in New York City on May 21, 2019.
Astrid Stawiarz | CNBC
The Food and Drug Administration on Friday approved Novartis $2.13 million gene therapy for spinal muscular atrophy, sending the companys shares traded in the U.S. 4% higher in midday trading.
The therapy, Zolgensma, is a one-time treatment for spinal muscular atrophy — a muscle-wasting disease and leading genetic cause of infant mortality that affects one in every 11,000 births. Novartis had previously said it could price the treatment between $1.5 million to $5 million.
Novartis said the treatment will cost $2.1 million — or $425,000 per year for five years. The company said its "working closely with insurers to create 5-year agreements based on success of the treatment as well as other novel pay-over-time options. Its currently in "advanced discussions" with more than 15 insurers on payment options.
Novartis CEO Vas Narasimhan has called for new ways to pay for innovative gene therapies.
"Zolgensma is a historic advance for the treatment of SMA and a landmark one-time gene therapy. Our goal is to ensure broad patient access to this transformational medicine and to share value with the healthcare system," Narasimhan said a statement Friday.
The company in explaining the rationale for its price said the one-time treatment is 50% less than the 10-year cost of current chronic management for the disease.
"We believe by taking this responsible approach, we will help patients benefit from this transformative medical innovation and generate significant cost savings for the system over time," Narasimhan said.
The Institute for Clinical and Economic Review, which evaluates drug prices, earlier this year said Zolgensma was worth up to only $1.5 million. On Friday, ICER said that after further studying the clinical results and the FDAs approval, it decided Zolgensmas price "falls within the upper bound of ICERs value-based price benchmark range."
"Insurers were going to cover Zolgensma no matter the price, and Novartis has spoken publicly about considering prices that approached $5 million," ICER President Steven Pearson said in a statement. "It is a positive outcome for patients and the entire health system that Novartis instead chose to price Zolgensma at a level that more fairly aligns with the benefits for these children and their families."
Another current treatment for spinal muscular atrophy for children and adults is Biogens Spinraza, which has a list price of $750,000 for the first year and $375,000 annually thereafter. Biogens stock was down marginally in midday trading.
"As a global leader in the treatment of spinal muscular atrophy, a life threatening, devastating disease, Biogen welcomes additional therapeutic options to help individuals with this rare disease," Biogen said in a statement.
"Todays approval marks another milestone in the transformational power of gene and cell therapies to treat a wide range of diseases," Acting FDA Commissioner Ned Sharpless said in a statement. "With each new approval, we see this exciting area of science continue to move beyond the concept phase into reality."