Japan To Reimburse Zolgensma – But At Lower Price Than US

BY IAN HAYDOCK

Executive Summary

Novartis gene therapy gets insurance coverage at record price although small patient population will limit system costs.

Japan’s regulatory authorities have decided to grant reimbursement to Novartis AG/AveXis Inc.’s gene therapy Zolgensma (onasemnogene abeparvovec) under the national health insurance scheme, marking a watershed in drug pricing in the country, although the annualized cost will be less than many other big-selling products.

The decision also suggests a continued willingness in Japan to support novel therapies and gene therapies in particular, following the reimbursement of the first such product last year.

At the equivalent of around $1.56m per administration (at current exchange rates) for the one-time only therapy, the final Japanese price of around JPY167m comes in substantially below its roughly $2.1m price tag in the US, where Zolgensma was launched in May 2019 and Novartis has offered various pay-over-time and outcomes-based pricing schemes.

Even so, it will be by far the most expensive single-unit price given to any medicine in Japan, surpassing the roughly JPY33.5m per dose awarded to another Novartis product, the CAR-T drug Kymriah (tisagenlecleucel) for leukemia/ lymphoma, a year ago.

Given the differences from the US in drug insurance, provision and payment systems, Japan’s health system usually reimburses the full cost of a drug at the official price once this has been agreed, as opposed to the negotiations with multiple payers that take place in the US.

However, while patient co-payments are usually set at 30% of under Japan’s NHI scheme, there is a government-supported cap on out-of-pocket costs for very expensive treatments above a certain threshold, as well as support schemes for pediatric care administered by local authorities.

Following an October 2018 filing, an advisory panel to Japan’s ministry of health, labour and welfare recommended Zolgensma for spinal muscular atrophy (SMA) type 1 in children aged under two years this February, which led to a formal final approval on 19 March.

The therapy has “sakigake” (pioneering therapy) and orphan status in Japan, which confers expedited review for high-need products, although the review time was extended in apparent relation to the manipulation of preclinical safety data during the global development program, which came to light at Novartis last year.

Pricing Mechanisms

Following discussions with Novartis, the reimbursement of Zolgensma was approved by the Central Social Insurance Medical Council (Chuikyo), which advises the health ministry, on May 13, with the product to be added to the NHI tariff on 20 May this week, allowing nationwide commercial launch.

Japan has a complex drug price calculation scheme, which for novel products with an existing comparator is usually based on daily costs plus a range of other available premiums which take account of medical need and innovativeness, and also a cost comparison with other major markets, which may result in adjustments.

Given that Biogen Inc.’s antisense oligonucleotide Spinraza (nusinersen) became the first therapy for SMA in Japan when it was launched in August 2017, Zolgensma’s proposed price was based on this product, which is reimbursed at JPY9.4m per vial and is usually administered two or three times a year for multiple years.

The calculated cost was then raised in consideration of various factors such as usability and efficacy, and Zolgensma’s sakigake status.

Policies, Concerns

Japan has in general shown a policy willingness to reimburse new modalities of treatment such as cell and gene therapies, with AnGes Inc./ Mitsubishi Tanabe Pharma Corp.’s Collategene (beperminogene perplasmid) becoming the first gene therapy in the country to be paid for by the NHI scheme in August 2019.

But the rising unit cost of new drugs, however effective, has been in the political and public spotlight since 2016, after Ono Pharmaceutical Co. Ltd.’s immuno-oncology blockbuster Opdivo (nivolumab) was approved for non-small cell lung cancer. Budget pressure eventually led to the product’s price being halved and there have been further reductions since.

Zolgensma’s high unit price has also already attracted some negative attention from medical

groups and there would seem to be a need for the authorities and Novartis to address the benefits and lifetime costs of the therapy.

Meanwhile, Novartis has had to deal with a backlash against a “lottery-style” managed access program for the product outside the US.

Small Patient Population

SMA1, an ultra-rare disorder caused by bi-allelic mutations in the survival motor neuron 1 (SMN1) gene, leads to a decrease in motor neurons, muscle wasting and respiratory problems. It is a designated intractable disease in Japan, affecting around 850 people in total.

But the pediatric population aged 0-9 years numbers only around 30 and Zolgensma is expected to be given to just 15-20 patients annually given its age range restrictions.

Despite the high unit cost, the total expense to Japan’s medical system will therefore be limited and probably less than JPY4bn annually. By comparison, Chugai Pharmaceutical Co. Ltd. ’s anticancer Avastin (bevacizumab), one of the top-selling conventional drugs in Japan, logged reported sales of JPY95.6bn last year.

Companion Diagnostic Free Until Reimbursed

Zolgensma can be administered only to patients confirmed negative for anti-AAV9 (adenoassociated virus 9) antibodies by tests through an approved diagnostics, which Novartis Japan said would be offered for free until any NHI reimbursement is granted.

The MEBCDX AAV9 serum-based ELISA test was approved in late April and released by the Medical and Biology Research Institute, Inc. on 7 May, with testing outsourced to Japanese firm LSI Medience Co., Ltd. The test uses technology licensed from US firm Quest Diagnostics Inc.