Why gene therapy treatments are cheaper and more efficient than pharmaceutical treatments

The Cost of Gene Therapy: How to Save Millions

One-time gene therapies expose the true cost of daily medication

Year after year, gene therapies break cost records

There is a revolution brewing in medicine; a hum that turned into a buzz – and it’s only getting louder. Information technology revolutionized the fields of molecular biology, gene therapy, biotechnology, which in turn, are revolutionizing agriculture, manufacturing, and medicine. On the medical front, loud headlines command attention.

It’s an information overload that weaves a story of unstoppable medical progress, escalating costs, and for the first time: cures instead of treatments. At first glance, the price tags in the headlines above seem outlandish, and many people react negatively upon first exposure. However, as high as these prices may seem, the savings are even greater. Successful gene therapy projects show us how drug developers justify their prices. By understanding the cost of production and the payoff of success, we can apply lessons from successful projects to peer into the near future to see what diseases gene therapy is most likely to address next.

Direct comparison: cost of gene therapy vs cost of traditional treatments

CSL Behring, the company behind the world’s most expensive gene therapy, Hemgenix, which offers a one-time treatment for people with hemophilia B, says its $3.5 million gene therapy could save between $5 million and $5.8 million per patient treated in the U.S. healthcare system. Despite the initial sticker shock, according to CSL Behring’s estimate, this revolutionary treatment method should boost the economic efficiency of hemophilia B care by 30-39.6%. Such a significant cost reduction in conjunction with the expected quality of life increase in these patients exemplifies the ideal use of gene therapy: a win-win-win for patients, payers and producers.

People with hemophilia lack a clotting factor in their blood, making it difficult or impossible to control bleeding. Since this can turn minor cuts into life threatening injuries, hemophilia is treated with regular infusions of the missing clotting factor. By ensuring that there is a significant amount of clotting factor in the blood through regular infusions, modern medicine can prevent the worst case scenario, but the need for repeated infusions accumulates to millions of dollars over the lifetime of an average patient. In the case of Hemgenix, using gene therapy to teach cells how to make the missing clotting factor not only corrects the root cause of the disease, it can also save the health system massive amounts of money.

Beyond the monetary aspects of gene therapy, the patient experience cannot be understated. Removing the need for regular doctor’s visits, side effects of their regular treatment, or supporting medications simply makes life better for patients with conditions such as hemophilia. Broadening our focus to other conditions, gene therapies like Luxturna, which restore sight to people with an inherited form of blindness, drastically improve recipients’ quality of life. On the other side of the “quality of life” argument, there are conditions like Spinal Muscular Atrophy (SMA) which are lethal in childhood but can be addressed for the first time using gene therapy. In lethal conditions like these, years, decades, or even lifetimes enter the equation where before, even cutting-edge medicine could only make patients comfortable.

When gene therapies are approved for use, they are given market authorization, but they are not guaranteed a market. Drug developers still need to get payers to cover the cost of their therapeutic, so in-depth cost analyses are performed to set and justify the cost of their new gene therapy. Between the cost of a one-time or long-lasting gene therapy and the constant cost of administering palliative care, gene therapies just make sense for certain conditions.

The cost of manufacturing gene therapies

In the gene therapy industry, we are often confronted with the question, “Why would anyone cure a disease once when they could make more money selling a pill every single day?” To address this question, we’ll change perspective from a cost saving viewpoint to instead focus on the cost of creating a gene therapy. By understanding the supply side of gene therapy markets, and illustrating the barriers that exist for a prospective supplier to enter the market, we’ll provide further context to understand gene therapy pricing.

The cost of a traditional pharmaceutical is heavily influenced by the cost of R&D that went into design, testing, and engineering at scale. If a pharmaceutical clears human testing and enters the market as the new standard treatment for a disease, pharmaceutical companies price the drug to make up their sunk costs, cover the cost of drugs which failed in development, and make a profit. Often, the materials that went into producing something like a pill are on the scale of cents and dollars, only weakly influencing the end price of the drug relative to other forces. In sharp contrast, the cost of producing gene therapy components can be on the scale of tens to hundreds of thousands of dollars, making manufacturing cost a stronger determinant of price.

Unlike small molecule therapies, gene therapies can be broken into components and cross-licensed between companies, which speeds up R&D significantly through a high degree of specialization. If company A develops a method to deliver genes to liver cells and company B designs a gene that solves the root cause of disease in liver cells, the two companies can collaborate to try and cure the disease in a human trial. Both companies have specialized technology platforms that can be modified and applied to different problems within their specialty. Further specifics on the R&D efficiencies enjoyed in gene therapy development can be found in our companion article: Gene Therapies are Designed, Not Discovered: R&D Advantages Squeeze Traditional Medicine. The interplay between materials, R&D, risk profile, and market forces makes gene therapy attractive for drug developers and investors alike. Lowering costs of production, prevalent innovation, and high value to the end user make it very possible to revolutionize the standard of care for a disease by building on pre-existing components. Since there is significant demand for gene therapies that replace daily medications, address previously untouchable diseases, or approach certain forms of cancer in a new way, gene therapy companies are increasingly willing to take the risk and dive into clinical development.

Regulatory barriers cost drug developers time and money for both traditional medicines and gene therapies, but the structure of gene therapy clinical trials is advantageous for drug developers. For example, Phase 1 testing is all about safety, and for most small molecule drugs, that means giving a pill to healthy volunteers to see if the treatment itself is toxic at different doses. This way, toxicity is not masked by any positive effects from treating people affected by the target condition. If toxicity is observed, participants are simply taken off the pill and monitored. Since gene therapies are typically designed to make long-lasting changes, it would be irresponsible and possibly dangerous to test them on healthy volunteers, so Phase 1 testing features individuals affected by the target condition, providing early efficacy signals that would otherwise be unavailable until Phase 2.

Drawbacks to gene therapy development include increased caution during clinical trials, long-term follow-ups, and the extra negotiations necessary to appeal to payers who may be slow to adopt gene therapy payment structures. In the U.S., the predominant fee-for-service model allows for mostly laminar cash flow from insurers to providers. The movement of large sums of money for up-front payments on gene therapy may not be palatable to certain payers, and alternative models such as performance payments may take longer to negotiate than structures which fit inside a pre-existing financial model.

Predicting the gene therapy market: where will genetic medicine help first?

Gene therapy has already addressed certain inherited disorders, multiple forms of cancers, and may address acquired infections soon. Addimmune is currently progressing through clinical trials for AGT103-T, a gene therapy which is designed to teach the immune system how to counter HIV. Markets like these, where gene therapy can save huge amounts of money over time, or deliver therapeutic value that traditional medicine cannot, are the first places where genetic medicine will enter healthcare. While the processes used to manufacture gene therapies are becoming more efficient, manufacturing costs remain high, so gene therapies are most economically viable for conditions with chronic effects or lethality in the absence of gene therapy.

As we continue our journey through clinical trials, we encourage you to follow along with our progress as well as others in the industry. If you plan on fueling, cheering, or even just watching the gene therapy revolution, tracking clinical trials like this will provide valuable insight on what medical progress looks like in this new era of genetic medicine. The resources below may be useful to keep you in the know:

  • CVS Health’s 2022 gene therapy pipeline resource tracks gene therapies through clinical trials. The projected clinical/approval timelines of gene therapies in late stage clinical trials is a useful tool for market surveillance and shows you where innovations may occur in:
    • Melanoma
    • Sarcoma
    • Sickle Cell
    • Hemophilia
    • Muscular Dystrophy
    • And more
  • For a deeper look at the larger trends influencing the gene therapy sector, this BioPharmaDive article provides further details on where the industry may change most acutely.
  • To understand the current status of issues such as patient access to gene therapy, and international differences in medical regulatory systems, be sure to read this opinion piece from In Vivo Pharma Intelligence. By synthesizing information on the global gene therapy pipeline, the current investment climate, and the ethical driver for better medicine, they offer multiple new perspectives.

As we set foot firmly in the age of gene therapy, the healthcare market can be expected to change drastically. Identifying the conditions which can be addressed by gene therapy, and are not currently addressable by traditional medicine, can indicate areas ripe for disruption. Whether you’re investing to help fuel the gene therapy revolution, watching clinical trials in hopes of a better treatment, or simply observing medical progress, can you see areas where gene therapy makes sense? For us here at Addimmune, we see the forgotten HIV epidemic as a challenge worth accepting – and due to the economics of treating HIV, gene therapy for HIV simply makes sense. Here’s to progress moving forward, hope for millions, and a more efficient healthcare system.

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