Cell and Gene Therapies: Blockbuster Prices and Licensing Challenges

Current Trends In May 2019 AveXis, a subsidiary of pharmaceutical giant Novartis, announced that it had received approval from the US Food and Drug Administration to market its gene therapy Zolgensma for the treatment of pediatric patients with spinal muscular atrophy (SMA). The Institute for Clinical and Economic Review in the US has estimated that if gene therapies are developed to treat only one in ten American patients with a genetic condition-approximately 1% of the total population-the cumulative budget impact could rise to $3 trillion2. Alternative Pricing Models The pharmaceutical industry has sought to counter criticism over the high price tags for gene and cell therapies by coupling these revolutionary therapies with new and unconventional pricing and reimbursement mechanisms. If royalties are payable on net sales of the therapy on a regular basis (e.g., quarterly or annually) then unless the license includes a mechanism to take account of outcomes-based refunds made by the licensee to payers, the licensee could find itself out of pocket, unable to recover royalties paid to the licensor despite having had to refund the therapy price to the payer.