Twitter. Babies born with a severe form of a rare genetic condition known as spinal muscular atrophy almost always die before their second birthday. Notably, that also would include patients with the less severe SMA Types 2 and 3. Now that Pfizer is the vaccine front-runner, should you buy the stock? Anderson joins a chorus of other moms praising the FDA’s ruling. Priced at $2.125 million per patient, the one-dose gene therapy is a potential life-saver for children with spinal muscular atrophy (SMA). I authored the Washington Post bestseller, "Mistreated: Why We Think We're Getting Good Healthcare--And Why We're Usually Wrong," and am a board-certified plastic and reconstructive surgeon, a clinical professor of surgery at Stanford University, and on the faculty of the Stanford Graduate School of Business. After an initial 4 injections, doses are taken chronically every four months. ETF and Mutual Fund data provided by Morningstar, Inc. Dow Jones Terms & Conditions: I’m passionate about transforming the American healthcare system and helping people understand the consequences of their medical decisions. All rights reserved. It's the world's most expensive drug. I previously served as CEO of The Permanente Medical Group, the largest medical group in the nation, and as president of the Mid-Atlantic Permanente Medical Group. In a word: rationing. But Zolgensma, with its $2 million per-dose price tag, is a harbinger of rationing to come. Pharmaceutical manufacturers receive due criticism for excessive drug pricing. As a nation, we similarly fail to identify and adequately treat those who’ve experienced adverse childhood events (ACEs), such as physical or sexual abuse, which affect an estimated 35 million U.S. children. Industry watchdogs are outraged. Pfizer and BioNTech's coronavirus vaccine works. In the case of Zolgensma, Novartis side-stepped R&D expenses by purchasing the drug’s developer, leaving the company with no doubt about the profitability of its investment. Recent research presented by Roche suggest the Swiss pharma could have a third in the experimental oral drug risdiplam, which analysts view as competitive to both Zolgensma and Spinraza. For the SMA patients for whom Zolgensma is approved, Novartis believes Zolgensma should be the preferred treatment option over Spinraza. “The drug industry will argue, as it always does, that unlimited and rapidly escalating prices are needed to recoup the costs of R&D,” Bach noted. In ethical controversies such as these, opposing sides rarely give ground. “You cannot put a price on your child’s life,” said Tina Anderson, whose son will soon celebrate his fourth birthday thanks to Novartis. Next, drug makers look for a captive audience. FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. "I was pretty shocked" by the price, Stanger told NBC News. Novartis spent $8.7 billion to acquire AveXis, the Illinois-based firm behind Zolgensma. For example, rising deductibles and co-payments have slowly forced many parents of children with diabetes to administer less insulin than their pediatricians recommend. According to a large-scale study over 10 years, people who experienced six or more ACEs were 54 percent more likely to die than those with none. Because this earnings-driven approach isn’t likely to change, we should expect many more multimillion-dollar medications to hit the marketplace in the future. "We believe Zolgensma will be a very strong option for patients who are already being treated by the currently approved therapy," said Novartis CEO Vas Narasimahn on a Friday conference call with reporters. If you have a severe bleeding event, you can absolutely see the cost per patient climb above $1 million for a patient in any given year. Quotes delayed at least 15 minutes. Powered and implemented by Interactive Data Managed Solutions. But the Swiss drug giant was really only after the firm’s technology, which transfers DNA into cells through viral vectors. The FDA is requiring Zolgensma's label to include a warning that acute serious liver injury can occur. Offers may be subject to change without notice. The United States doesn’t overtly ration medical care, unlike other nations. That’s about 2.5% of the nation’s current healthcare spending earmarked to address the second-leading cause of death among teenagers. Each year in the U.S., roughly 450 to 500 people are born with SMA, about 60% of whom are diagnosed a severe form of the condition known as Type 1. This groundbreaking process could lead to the development of more than 100 different gene-therapy treatments over the next two decades. 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As a consequence, far more children will die than will be saved by these new, high-priced medications. The FDA approved Zolgensma for pediatric patients under the age of two with bi-allelic mutations in the SMN1 gene. Subscribe to BioPharma Dive to get the must-read news & insights in your inbox. For diseases like SMA that are quickly diagnosed and potentially deadly, parents and advocacy groups will do anything to make sure the treatment is covered. This label includes both babies newly incident with the condition, as well as those previously diagnosed who are still younger than two. To their credit, the pharmaceutical and biotech industries spend more than $100 billion each year researching and developing new drugs, more than three times what the U.S. government invests in basic research. Natural history data cited by Novartis suggests less than 10% are alive and off ventilation support at two years. In these roles, I was responsible for 10,000 physicians, 38,000 staff and the medical care of 5 million Americans on both the west and east coasts. No one will convince Dr. Bach that drug companies should be allowed to charge millions for a medication that will turn huge profits in the near future. Beyond the longer-term data Novartis has from the first small study of Zolgensma, though, there's limited clinical proof of how long a one-time dose of Zolgensma could be effective. With Zolgensma's approval, families of infants born with SMA now have two disease-modifying treatment options when less than three years ago there were none. If we don’t put a stop to the unnecessary procedures, excessive prices and ineffective medical care, overt rationing will be inevitable. Will another $1,200 stimulus check ever come? These parents believe that $2.1 million is a fair price compared to the alternative: a lifetime of paying for at-home care, ventilators and repeat hospitalizations, “all of which can add up to far more than the cost of Zolgensma.”. Due to their high costs, gene therapies like Zolgensma and Spark Therapeutics' blindness treatment Luxturna before it could force changes in how drugs are paid for and reimbursed. Novartis justifies that unprecedented cost with Zolgensma's life-saving benefit. "It's a public health solution. The most common side-effects of Zolgensma are elevated liver enzymes and vomiting. The views I express here are my own and do not necessarily represent those of Kaiser Permanente. That puts the drug -- approved by the U.S. Food and Drug Administration in May -- out of reach for many parents of infants with spinal muscular atrophy. Recent deals for MyoKardia and The Medicines Co. may be hard to follow, since venture investors and big pharma acquirers have largely ignored cardiovascular drugs. Sarah Stanger's son Duke has the illness. That changed in December 2016, when Biogen won an OK from the FDA for Spinraza, which works by altering gene expression to help create a back-up version of the needed protein. Assuming Novartis and its competitors employ the same pricing strategy going forward, the mathematics could yield frightening consequences: Multiply a $2 million sticker price by 100 gene-therapy treatments by hundreds of thousands of potential drug recipients, and costs quickly reach into the trillions. Clinical studies show that childhood trauma not only reduces life expectancy for the victim, but also severely impacts the victim’s future children and additional generations. Opinions expressed by Forbes Contributors are their own. Finally, major drug makers look for solutions that require minimal upfront investment. In today’s $3.5 trillion healthcare industry, which accounts for close to 20% of the U.S. GDP, such a rapid escalation in spending would force medical providers to limit patient access. © 2020 Forbes Media LLC. In fact, when the cash-strapped state of Oregon tried to implement a data-driven and transparent process to “prioritize” Medicaid services in 1990, the public outcry was so deafening that lawmakers had no choice but to quickly ditch the plan. By one estimate, less than $90 billion a year goes to treat mental illness.