Gene Therapies Will Be A Bigger Cost Issue In 2021, PwC Predicts

BY JESSICA MERRILL

Executive Summary

The expected launch of BioMarin’s Roctavian for hemophilia A is expected to heighten the profile of expensive gene therapies on payers’ radar. Specialty drug costs are expected to continue to grow in 2021.

The anticipated launch of BioMarin Pharmaceutical Inc.’s gene therapy Roctavian (valoctocogene roxaparvovec) for hemophilia A later this year is expected to put the high cost of one-time therapies squarely on payers’ radar, according to a new report from PwC’s Health Research Institute (HRI) that explores medical cost trends in the US for 2021, with a focus on the impact for commercial plans and employers.

BioMarin hasn’t finalized the price for Roctavian, but it’s clear a drug with a $1m-plus price tag in an indication like hemophilia A – with more patients eligible for treatment than for other gene therapies – is going to heighten concerns about paying for them. The company has floated a price tag of $2m-$3m as one that would fairly reflect the treatment’s value. PwC estimated in its report released on 24 June that Roctavian could cost as much as $76 per American in 2021, depending on its price and how widely it is used.

In contrast, Novartis AG’s gene therapy Zolgensma (onasemnogene abeparvovec), which is priced at $2.1m for spinal muscular atrophy (SMA), costs about $3 per American, PwC said. Zolgensma was approved in 2019 with a relatively narrow indication for children under the age of two. (Also see “It’s Official: Novartis SMA Gene Therapy Zolgensma Is World’s Most Expensive Drug” - Scrip, 24 May, 2019.)

“While the per-treatment cost of Zolgensma and Roctavian may be similar, the annual cost of Roctavian to the US health system may be much higher in the next few years because of the number of hemophilia A patients who could be treated,” PwC said.

While Novartis has said that about 100 patients are being treated with Zolgensma each quarter in the US, the bolus of patients awaiting a hemophilia A gene therapy could be much bigger. Around 20,000 people in the US with hemophilia A could be eligible for treatment with Roctavian, and there are an estimated 400 babies born with the condition each year, according to PwC.

BioMarin has estimated that about 5,000 patients per year in the US may be likely to receive the therapy, since it is expected to be restricted to certain patients, including those over 18 with severe hemophilia A and without Factor VIII inhibitors or a history of them. The gene therapy is pending at the US Food and Drug Administration with a 21 August action date.

While the cost of the one-time treatment is expected to break boundaries, it will offset the cost of long-term treatment with prophylactic Factor VIII, which BioMarin estimates averages $700,000-$750,000 per year. (Also see “BioMarin All Set For Hemophilia Gene Therapy Approval, But Is It Overestimating Demand? “ - Scrip, 27 Feb, 2020.)

Specialty Drug Spend Drives Costs Upwards

Gene therapies with multimillion-dollar price tags are attention-grabbing but spending on specialty drugs in the US more generally continues as a concern for insurers and employers. Specialty drug spend is expected to rise in 2021, driven by new high-priced specialty drug launches and indication expansions for existing specialty drugs, PwC said.

An analysis of UnitedHealth’s pharmacy benefit manager OptumRx’s brand pipeline forecast from the first quarter of 2020 showed 62% of projected drug launches in 2020 and 73% in 2021 are expected to be specialty drugs, according to the report.

“Seventy percent of employers surveyed by PwC ranked managing specialty drug cost trend as a top five pharmacy concern,” the report says.

The growth rate for retail drug spending for private insurance is expected to increase slightly in 2021 to 2.6% from 1.5% in 2020, the firm said.

The PwC report aims to estimate the potential medical cost trend as payers and employers try to determine what they will need to charge for insurance premiums next year. Medical cost trend refers to the projected percentage increase in the cost to treat patients from one year to the next, assuming benefits remain the same. In the PwC report, the term refers to projected increase in per capita costs of medical services and prescription medicines that affects commercial insurers’ large group plans and large self-insured businesses.

An unprecedented drop in health care utilization in 2020 caused by the COVID-19 pandemic has made costs even harder to predict. Because of the reduction in health care utilization and employer health care spending in the first half of 2020, HRI is projecting 2021 medical cost trend relative to

2020 estimated health care costs, normalizing for COVID-19, rather than actual 2020 costs, the firm said.

HRI developed three scenarios to guide employers and health plans when determining 2021 medical cost trend, ranging from 4%-10%. Last year, HRI projected a 6% trend for 2020, but that figure does not reflect the impact of COVID-19 on 2020 employer health care spending; actual spending is expected to be lower than in 2019 because of deferred care. Individuals with complex chronic conditions on employer-sponsored insurance were more likely to have delayed care than those in other groups, HRI found in a survey.

“Getting those people in for necessary care is important for their health and for employer spending,” PwC said. “On average, people with complex chronic illnesses cost employers eight times more than healthy individuals with an average annual cost per person of over $11,000 – a number that could balloon even higher if their illness is left unmanaged for too long.”