The high list prices of gene therapies attract the attention of the media and policy makers and payers. Late last year, the Food and Drug Administration (FDA) approved the world’s first gene therapy for severe and moderate hemophilia B; Hemgenix (Etranacogen dezaparvovec). Hemgenix will have a list price of $3.5 million per application, setting a new record for the most expensive single-use gene therapy. Then there is Roctavian (valoctocogene roxaparvovec), which is indicated for severe hemophilia A. This gene therapy could be approved by the FDA as early as spring. List price is expected to be approximately $2.5 million per single use.
However, the net prices of both products will often be significantly lower. Experts and the products’ sponsors anticipate significant discounts on many, if not most, sales because many patients receive the therapies at 340B-eligible treatment centers, which means at 340B-discounted prices.* Although it’s not known this time exactly As to what these discounts will be, it is quite possible that we will see discounts of at least 30% off list prices.
The state 340B program requires drugmakers to offer deep drug discounts to certain so-called covered facilities, including the types of treatment centers commonly used to administer Hemgenix and Roctavian to hemophiliacs.
list and net prices
Wide disparities between list and net prices of prescription drugs and therapies are common, and not just when there are discounts under the 340B program. Yet the media often cite the high price of a drug or gene therapy without properly distinguishing between, or even acknowledging, the existence of a list and a net price. The former is publicly available and is considered a benchmark or starting point for negotiations between drug manufacturers and payers. Net price is generally proprietary, although we can approximate net price from the differences between gross and net sales reported quarterly by publicly traded companies to the Securities and Exchange Commission.
Pharmaceutical companies can calculate the net price by subtracting discounts and a variety of applicable discounts from the list price, bearing in mind that each type of payer – commercial and public – has different discounts, some mandatory, some voluntary. Rebates and rebates in the public sector, and particularly Medicaid, 340B and the Veterans Affairs Administration, are usually mandatory in nature.
List prices are particularly important for uninsured patients, who often have to reckon with the full retail price for treatments. In addition, insured patients are affected by list prices because their co-insurance is often a coinsurance percentage calculated based on list prices.
Still, a pharmaceutical company’s revenue is primarily a function of net price multiplied by the number of insured patients prescribed the treatment.
The Roctavian case
Roctavia is designed to restore production of factor VIII, the blood clotting protein that is defective or absent in hemophilia A patients. As such, it represents a potentially significant improvement in outcomes for patients who, if treatment proves durable, would no longer need to receive periodic recurrent factor VIII replacement prophylactic treatment.
Notably, the cost-efficiency watchdog, the Institute for Clinical and Economic Review (ICER), concluded that even at the high list price of $2.5 million, Roctavians can be cost-effective without a $340 billion rebate or rebate of any kind could. In a draft evidence report, ICER calculated the lifetime cost per patient of treating hemophilia A with a single dose of Roctavian versus the monoclonal antibody Hemlibra (emicizumab), launched in 2018.
Hemlibra is a prophylactic or preventative treatment used to prevent or reduce bleeding in patients with hemophilia A. ICER estimated the cost of preventive Hemlibra treatments at $640,000 per year and compared the cost-effectiveness of Hemlibra to Roctavian in its evidence report.
The report even suggests that Roctavian could be cost-effective compared to Hemlibra, provided gene therapy is proving durable and subject to value-based agreements in the form of a results-based guarantee. Specifically, this would be an agreement between BioMarin and an insurer, where the company would reimburse the payer based on actual performance of the therapy. According to the model, the benefit of Roctavian was assumed to last for 12 years before patients might switch back to prophylaxis. Based on this assumption, ICER calculated that more than 4 million dollars could saved per patient for a lifetime with Roctavian instead of Hemlibra.
Therefore, the evidence appears to support claims that Roctavian is inexpensive even at the $2.5 million list price. The cost-benefit argument is supported by the fact that in most cases Roctavian is not sold at list price. BioMarin’s Jeffrey Ajer has said that most of Roctavian’s sales would be subject to 340 billion rebates and part of what he calls a “gross-to-net calculation.” Similarly, Hemgenix’s sponsor, CSL Behring, has said its gene therapy for hemophilia B will be available at an undisclosed price of $340 billion, which would then also factor into a gross-to-net calculation. As a reminder, Hemgenix’s list price is $3.5 million. In an independent review of Hemgenix, ICER determined that it would be “fair” for Hemgenix to be priced at or near $2.9 million. Less than list price, but likely more than Hemgenix’s net price after a $340bn discount was applied. In addition, analogous to the Roctavian narrative, ICER found that Hemgenix becomes more cost-effective — and possibly even more cost-effective — the more durable it is.
In theory, Roctavian’s 340B rebate in the US could bring its net price pretty close to what the product costs per unit in Europe, around €1.5 million. Roctavian received conditional marketing authorization from the European Medicines Agency in August 2022. And BioMarin has just signed its first market access agreement with a German insurer for Roctavian. The risk-sharing agreement includes reimbursement for companion diagnostic tests and reimbursement for Roctavian, but also includes a guarantee. If a patient must return for prophylaxis, BioMarin will reimburse the cost of Roctavia less the factor VIII replacement that was avoided before therapy failed.
Presumably, similar value-based contracts are also being signed in the US, at least with payers operating outside the 340B program. But for Roctavian, the main discounting will be through 340B.
Although based on the establishment of risk-sharing agreements and assessment of outcomes over time, ICER’s modeled calculations based on plausible assumptions support the notion that Roctavian is cost-effective even at the high list price compared to the current standard of care. Lowering the net price by a 340B discount would make this treatment an even better bargain.