In pricing our gene therapy, Bluebird weighed value, shared risk, and a lifetime cap

It is hard to not get emotional when you witness the unfair reality of terrible diseases and personal stories of struggle, triumph, perseverance, and loss.

So I cried — no surprise for anyone who knows me well — for joy not long ago when the company I work for, Bluebird Bio, received regulatory approval in Europe for Zynteglo, our first gene therapy. It marked a turning point not only for people with transfusion-dependent beta thalassemia, who could see potentially curative benefits, but also for the researchers who, against the odds, poured in blood, sweat, and tears to make hope a reality.

It crushes me when people who could benefit greatly from a cutting-edge therapy cannot get access to it. That’s why, just as we spent the past years cracking the code to make gene therapy work, we now need to work just as hard to make sure that gene therapy can be accepted, and paid for, by our health care system.

This is made even harder because trust in the pharma industry has eroded and, in my opinion, for good reason. There is a desperate need for the industry to rise above the short-term, quarter-to-quarter financial playbook that drives harmful and absurd profit-taking behavior that includes price setting and price increases, fighting biosimilars, or doing whatever possible to extend the exclusivity of patents. This behavior is not okay and needs to be addressed. But it should not cast a cloud over the many people working on powerful, high-impact innovations for patients in need that are very much worth paying for and supporting.

In the spirit of thinking globally, acting locally here is what bluebird is attempting. The biggest advantage of gene therapy might just be its biggest disadvantage: the treatment is designed to be given just once. By inserting a working gene into cells, we can potentially deliver a lifetime of benefit. This powerful science and medicine is being launched into health care systems that aren’t designed for one-time treatments. Instead, short-term incentives and annual health care system budgets fuel the status quo: a continuous cycle of get the drug and pay for the drug, resulting in the runaway train model of modern medicine: You board, you ride, and you pay forever. Meanwhile, patients who could have had access to one-time treatments are left to focus on managing a disease rather than living their lives as fully as possible.

This isn’t necessary, erodes trust in the innovator, and – frankly – over-rewards a certain kind of innovation focused on a chronic care delivery model.

A recent scientific triumph is enzyme-replacement therapy. It can yield amazing outcomes for people living with devastating diseases, like mucopolysaccharidosis and Gaucher disease. At the low end, one year of enzyme therapy can cost about $250,000. But boarding this train and riding it for years leads to very expensive lifetime treatment. For those who make it to middle age, for example, the cumulative cost can easily be millions of dollars.

Gene therapy, by its very nature as a one-time treatment, gives us a chance to step back and figure out a new approach that helps everyone involved. If we get it right, we can create a sustainable model so patients, health systems, and society can realize the potential life-long value of gene therapy. And innovation can be fairly rewarded to help ensure the discovery of the next generation of cures.

The Bluebird approach is simple and human:

Calculate a fair value. We offer a lifetime cost-effectiveness approach using well-accepted modeling methodologies that have been pressure tested with external advisors to determine a value based only on direct patient benefit. In the case of Zynteglo for beta thalassemia, this means living longer with a better quality of life than could be expected with existing treatments.

Share risk. After an initial payment, annual milestone payments are made only if the treatment works. That means the company has skin in the game, with up to 80% of the potential total lifetime cost at risk.

Cap the total lifetime cost per patient at five years. Gene therapy might deliver a lifetime of benefit, but we don’t deserve a lifetime of payment for it. We get paid for the first five years if it works and, after that, the savings from costs avoided accrue to the health care system and the patient.

While that’s a logical approach, it is hard to make it happen in our current system. We’ve decided to go for it anyway, as the stakes for patients, the health care system, and the industry are huge.

In Europe, we set a price for Zynteglo using this model. The benefits of Zynteglo are expected to be life long. At an annual price of 315,000 Euros for no more than five years, we’ve capped the amount the health care system will pay at about 1.5 million Euros, the equivalent today of about $1.75 million.

We acknowledge that, at face value, that’s a large number. But dig deeper and it represents a solid step forward since the total cost is paid only if the therapy works. That’s a big change from the current model of paying regardless of success and paying forever. The health care system gains greatly from costs avoided, which, in the case of transfusion-dependent beta thalassemia, can add up to millions of dollars over a patient’s lifetime. We believe this is the best way to establish fundamental, systemic change while keeping a highly innovative industry charged up to fight and cure disease.

Bluebird, and the other companies with gene therapy and other one-time treatments in the pipeline, cannot create a system of shared financial risk alone. We need willing partners. Our talks with payers of all types have been encouraging. We also need European and U.S. governments to be on board with new payment models tied to outcomes as it requires change

In the U.S., for example, Medicaid best-price rules would need to be updated to enable sensible risk sharing and to let states think beyond their annual budgets to make longer cost-effective investments for patients. We are encouraged by the provision included in the Senate Finance Committee’s Prescription Drug Pricing Reduction Act that would allow Medicaid to pay for gene therapies through new risk-sharing value-based agreements.

This is just the beginning. We can make the trade-offs necessary to ensure that the next wave of potential cures get to the people who need them in sustainable ways. So my hope, my ask, is that where appropriate we look beyond the bad actors and the misleading headlines or presumptions about drug pricing to make sure we all see clearly, as lives hang in the balance.

Nick Leschly is the chief bluebird of Bluebird Bio.