The sky-high price of some drugs - and so-called price-gouging by drug firms - became an issue in the U.S. presidential election after Martin Shkreli, a United States hedge fund entrepreneur, bought the drug Daraprim, used in the treatment of Aids and cancer, and hiked its price from US$13.50 to US$750.
Luxturna was just approved by the Food and Drug Administration last month after a dramatic hearing where teenagers spoke of seeing the stars in the night sky for the first time in years and at which eye doctors with no links to the company or the drug pleaded for its approval.
Today, finally, is the beginning of another important chapter in the gene therapy story. Miller suggests many more innovations could be on the way to work out how we, as a society, will pay for these new and expensive treatments.
Spark's CEO Jeffrey Marrazzo said he is "encouraged" by the discussions with government payers so far.
The biotech said it has reached an agreement in principle with New England-based insurer Harvard Pilgrim that would base pricing on outcomes. Spark and others are targeting haemophilia while others are focused on other blood disorders. However, Novartis said this price will not be charged to patients who do not respond within a month of treatment.
Traditional models usually require the hospital or institution administering a specialty medication to purchase it upfront and then charge the payer.
How much of the $850,000 cost of Luxturna would be returned to insurers if patients don't benefit from treatment was not disclosed.
But even though Evercore ISI analyst Steve Breazzano said the price came in "generally within expectations", the company quickly ran into criticism from patient advocates. Current government price reporting requirements do not allow for payment models of this type, but Spark is hoping to change the paradigm. And knowing full well just how much today's closely-watched marketing plan will be reviewed by the healthcare system, Spark's pricing team has come up with a mix of rebates and proposed staggered payment models created to ease past barbed payer barriers that can cripple any drug launch.
"We are encouraged by CMS' willingness to engage with us in exploring a new model", Marrazzo said.
Spark will also offer patient assistance programs with the aim that all eligible patients have access to Luxturna.
The treatment is expensive because of the various unique reasons such as the therapy represents the medical discovery, and it can treat a small number of patients. The Post says it went with the lower figure in part because insurers indicated $500,000 per eye would shrink the pool of those who qualified, and the company is discussing rebate and payment plan options.
This restores the patient's ability to make the missing enzyme - dramatically improving their eyesight and restoring a large degree of independence, although not offering 20/20 vision.