Bluebird Pushes For Zynteglo Pricing Of Five €315K Annual Installments

CEO Nick Leschly talked to Scrip about the European payment strategy for the one-time gene therapy, which will cost €1.575m over five years if treatment is successful.

bluebird bio Inc. is resolute in its determination to negotiate a five-year €315,000 ($356,000) annual payment model for its new gene therapy Zynteglo in Europe. The company laid out the price of the one-time gene therapy on 14 June in a strategy meant to manage some of the sticker shock associated with a seven-figure drug price by balancing the cost with a risk-based model annuitized over five years.

The price of Zynteglo is set at €1.575m ($1.78m) over the five years, if the treatment is successful, based on a reduction in the number of blood transfusions. Zynteglo (autologous CD34+ cells encoding βA-T87Q-globin gene) was granted European marketing authorization on 3 June after a positive recommendation by the Committee for Medicinal Products for Human Use (CHMP) in March. (Also see "Bluebird Bio's Zynteglo Flies Through Its CHMP Review " - Scrip, 29 Mar, 2019.) 

It is approved for an ultra-rare indication in patients 12 and older with transfusion-dependent beta-thalassemia (TDT), a genetic disorder that results in absent or reduced hemoglobin, resulting in chronic blood transfusions every two to four weeks, organ failure and a potentially shortened life span.

CEO Nick Leschly floated a price ceiling of $2.1m for the product in January at the J.P. Morgan Healthcare Conference, setting the tone for discussions with payers and patients, but the company had not yet revealed the price. (Also see "J.P. Morgan Notebook Day 2: Biogen, GSK, Bluebird, Roche, Amgen, Biohaven, Lilly And FDA's Gottlieb" - Scrip, 9 Jan, 2019.)

Leschly talked to Scrip in an interview about the Zynteglo pricing model and the company's commitment to paving the way for a new payment model for expensive gene therapies. Other early gene therapy developers, namely Spark Therapeutics Inc. and Novartis AG, also are offering flexible payment options in addition to a one-time up-front payment, but bluebird says the five-year payment plan is the only option for its product.

"This is the model. We are not offering up any other model," Leschly said. "In order to get access to Zynteglo, this is the approach that we think makes sense, not only for this product, but for subsequent ones."

Europe Versus US

Still, Leschly acknowledged there will be some level of negotiation with payers. "Are there going to be puts and takes? I think so. But we certainly are not planning on going to a level that would fundamentally change this, going back to a one-time payment model or something that is dramatically different."

In contrast, Novartis CEO Vasant Narasimhan has talked about how the company expects limited early uptake of an option of five $425,000 annual payments for its recently approved Zolgensma, partly due to US regulations that restrict those kinds of agreements, particularly around Medicaid best price.
(Also see "It's Official: Novartis SMA Gene Therapy Zolgensma Is World's Most Expensive Drug" - Scrip, 24 May, 2019.) He indicated the alternative payment plan might be more attractive to small regional payers.

A big difference for bluebird is that Zynteglo is launching first in Europe with a US regulatory filing expected later this year. (Also see "Bluebird Lays Some New Eggs, But They'll Take Time To Hatch" - Scrip, 16 May, 2019.) Negotiating with single-payer governments in Europe presents some unique challenges and some advantages. The company expects to launch Zynteglo first in Germany, the UK, France and Italy.

"In the US, to have performance-based [contracts], you have to deal with things like best price and price reporting," Leschly said. But, bluebird hopes to implement a similar model for Zynteglo in the US when it launches there likely in 2020 with the hope that some of the current regulatory burdens may be alleviated by then. "And we maybe also have a stronger will to get to this model," he added. 

Bluebird is conscious of how a seven-figure drug price sounds to stakeholders and believes that five €315,000 annual payments for five years certainly may be easier for some to digest.

"From a system point of view, we think it is a very wise investment, but at the same time, it is a big number. We recognize that," he said. "The flip side of that is how do we make sure that it is palatable and adopted by the system."

Determining Value

To determine a value-based price for Zynteglo, bluebird focused on quality of life and life extension benefits and used standard health outcomes metrics to quantify the savings, resulting in a value of $2.1m. Adding other benefits like health care cost offsets  from current treatments and societal value would have increased the value to $4m, according to the company.

"We focused on life extension, we focused on quality of life, because those are very real direct patient-oriented costs," Leschly said. Bluebird opted not to include cost offsets from current treatments in the calculus, because they represent inefficiencies in the current treatment system that management felt would be unfair to include. After landing on a value of $2.1m, the company further discounted the price by 15%, landing on €1.575m ($1.78m) over five years of successful treatment.

The extra discount was applied to show good faith with payers in negotiations, the company said. "There are a number of things we think about. One is just in terms of showing up and giving something back to the payers that we are sitting across the table from," Chief Commercial Officer Alison Finger added.

The tactic, however, is tried and tested for managing sticker shock when it comes to the launch playbook for pricey gene therapies. (Also see "Price ‘Anchoring’? Zolgensma And The Art Of Managing Gene Therapy Sticker Shock " - Scrip, 19 Mar, 2019.) For example, Novartis talked about a $4m-$5m value for Zolgensma (onasemnogene abeparvovec) before launching at a price of $2.1m. Spark talked about the value of Luxturna (voretigene neparvovec) for inherited blindness as being over $1m before launching at a price of $850,000.

Million-dollar price tags are an easy target for negative publicity, but Leschly fought back against the image. "What I can say for sure is, whether it is this medicine or even the Novartis medicine, it is not even close to the most expensive medicine that is out there. It is apples and oranges," he said.

For example, many drugs for rare diseases, including enzyme replacement therapies, or drugs like Spinraza (nusinersen) or Soliris (eculizumab) cost several hundreds of thousands of dollars a year and are taken chronically.

"We are forced into a price that takes all the entire lifetime costs to the patient into one fell swoop," he added. "That's a little lost on people, and I understand that. Yet, at the end of the day, that's where we feel really strongly about saying we're doing the best we can to figure out how you get all of this lifetime value upfront but are reasonable with the system."