Novartis says it thinks its one-off gene therapy for spinal muscular atrophy (SMA) could deliver value for money even if its price was set upwards of $4 million – which would set a record for a pharmaceutical product.

AVXS-101 is Novartis’ lead gene therapy and the centrepiece of its $8.7 billion acquisition of US biotech AveXis earlier this year, and according to the company’s R&D update yesterday could be approved for marketing for type 1 SMA – the most severe form – in the US, Europe and Japan next year.

Clinical trials with AVXS-101 have raised massive expectations for the gene therapy, which could be transformative for children with SMA and their families. The disease causes debilitating muscle-wasting as a result of the death of neurons in the spine, and can be fatal in the most seriously affected patients within two years. Novartis’ therapy is a one-time treatment to restore production of the protein (SMN) missing in SMA.

Novartis’ price calculations for AVXS-101 no doubt derive in part from the high price of Biogen’s Spinraza (nusinersen), an antisense drug that is the first approved treatment for SMA and costs $750,000 in the first year, dropping to $375,000 thereafter, as well as other rare disease therapies. Of course, Spinraza needs to be delivered on an ongoing basis.

The company’s cost-effectiveness modelling for AVXS-101 is based on a 10-year cost set against quality-adjusted life years (QALY) gained, and at the $4 million mark represents a QALY of 13.3. That’s well in excess of the $100,000 to $150,000 per QALY typically used by health technology assessment (HTA) agencies but within the ballpark for lifelong medicines for rare diseases, including Spinraza, according to Novartis.

A final judgment on the cost-effectiveness of AVXS-101 would of course depend on how sustained the effects of the gene therapy were, in other words whether it might have to be re-dosed in future to maintain its effects. At the moment, there is data up to around two years after administration, with all 15 treated infants event free at that time point, compared with an event free survival rate of 8% in an historical cohort.

Arguably, a thornier issue will be whether it is possible to charge that kind of money for any therapy – regardless of its benefits – given the current political climate on medicine pricing. Novartis acknowledged during the update that it would have to get creative in developing a value and pricing argument for AVXS-101 in order to get insurers to cover screening and treatment programmes, and stressed that it hasn’t decided yet what it will charge if it is ultimately approved.

The US-based Institute for Clinical and Economic Review (ICER) acknowledged last year that gene therapy will heighten concerns about the affordability of emerging treatments “under existing paradigms of pricing and payment,” particularly when there is no guarantee of long-term safety or of the durability of clinical benefit.

“Estimates suggest that 10% of Americans have a rare condition related to a genetic defect,” said ICER. “Based on the initial pricing experience with gene therapy in Europe, should a growing number of gene therapies come into use at costs of $1-$2 million, the cumulative budget impact would be substantial, and perhaps unsustainable.” Even if gene therapies were developed for 1% of the population the cost could reach $3 trillion, it suggested.

There’s estimated to be roughly 1,300 patients with SMA type 1 in the US, so assuming a $4 million price tag, 100% penetration of the therapy would generate around $5 billion. Meanwhile, Novartis is trying to extend the use of its gene therapy into other forms of SMA (types 2 and 3), adding another 3,000-4,000 patients apiece according to some estimates.

Meanwhile, Novartis has a series of additional gene therapies in the pipeline, including CGF166 for hearing loss and CPK850 for retinitis pigmentosa in phase I clinical trials and candidates for Rett syndrome and amyotrophic lateral sclerosis (ALS) in preclinical development.