How Much Is a Miracle Worth?

Issue 04-10-17   |   Reviewer:   Michael S. Raisinghani, Ph.D.


The Strimvelis gene therapy (only available in Europe since 2016) by GlaxoSmithKline costs $634,000 for a single-shot treatment, equivalent to two years of the enzyme replacement therapy that patients previously had to take for a lifetime. In order to justify a company's pricing strategy to allow patients to gain access to the best treatment, it is important that the compensation to the company that develops transformative medicines be redesigned to reward one-time treatments over chronic treatments.

Payback contracts, or "value-based pricing" in pharma industry parlance, are already used in Europe. When designing payment models, the size of the patient population makes a difference. The larger the potential impact, the more the system will strain to deal with the huge cost of one-time cures. Financing models are being explored for upcoming drugs, and are drawing from examples in the housing market and activist hedge funds. More radical payment plans, such as having the U.S. government buy an entire company instead of paying for its drugs, are also being considered.

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