Genomic medicines can cost $3m a dose. How to make them affordable

Twenty years ago most patients had little hope of a treatment. But exciting developments in genomic medicines are now promising to treat, and potentially cure, horrible and sometimes fatal genetic diseases. Gene-editing, for example, uses enzymes to snip a patient’s DNA precisely where needed and make a repair to harmful mutations.

The technologies are mind-bending, but their cost, sadly, is bank-breaking. At over $3m a time, several gene therapies count as the most expensive drugs ever approved. Even wealthy countries are struggling to absorb their costs. The Aspen Institute, a think-tank, reckons that by 2031 America may spend a combined $30bn a year on gene and cell therapies covering 550,000 people. That would be roughly ten times the average cost per patient of America’s current prescription-drug bill. If they are to realise their potential, these medical innovations may therefore demand financial innovation, too.

Pharma firms insist that the price is justified. They correctly point out that creating new medicines is colossally expensive and fraught with risk. Once invented and approved, these treatments are also unusually fiddly to make. Gene therapies have been compared to “snowflakes", because each batch is unique. Firms argue that treatments relieve great suffering and that, if their effects last, a single cure can spare the long-term expense of a chronic ailment which would otherwise be borne over a sufferer’s entire life.

Where governments pay for health care, the cost of gene therapies will be spread over the entire population. That makes it easier to design payment mechanisms—even if the money itself will be hard to find. But the situation in America is even more complex. Some insurance plans, sponsored by small employers, are ill-equipped to cope with the upfront cost of the new drugs. Firms have compared the sudden expense to a “lightning strike".

Insurers might have to pay for a treatment in instalments, rather than all at once. They might have to join forces with other insurers to handle specific treatments. Tens of thousands of people with sickle-cell anaemia are covered by Medicaid, a health-insurance plan for the poor, administered by state governments. To defray costs, the federal government is trying a pilot scheme to co-ordinate coverage across states.

Insurers are also learning from other industries. Some talk about a “Netflix" model, where lots of small insurers pay a subscription fee in return for whatever therapies a manufacturer brings on stream. To allay the uncertainty, some drugmakers could offer warranties that compensate insurers if treatments ultimately fail.

History shows that the cost of new medicines can fall over time with advances in technology. The cost of monoclonal antibodies declined almost 50-fold in the 20 years after 1998. Something similar should happen with genomic medicines. One hope is that they will become “platform technologies", allowing a single drug, after a few tweaks, to treat many diseases without requiring expensive clinical trials each time. Pharma firms themselves seem to be expecting prices to fall. Some are contemplating genomic therapies for more common conditions, such as heart disease, which will work only with much lower prices per patient.

The danger is that even if costs fall, pharma firms have too little incentive to lower prices by as much. Once a drug has been established as the “standard of care" for a certain condition, insurers can switch to cheaper providers only if they can meet the same standard. If no other providers exist, even governments will have surprisingly little bargaining power in price negotiations with manufacturers.

Governments can, however, use their clout in other ways. They can streamline regulatory systems to make it easier for other firms to enter the market. They can also offer financial incentives, such as tax credits, vouchers or prizes, for the invention of rival treatments. Drug development already benefits from substantial public support through research funding, tax incentives and patent protections. These medicines all ultimately derive from Nobel-prizewinning discoveries guided by curiosity, not profit. Thanks to public investment in breakthrough technologies, as well as private risk-taking, gene therapies can now perform wonders. Another wave of publicly funded research and initiative may now be needed to perform the same magic for less money.

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