Payment options forthe drug include spreading out the costs over time, refunds forpatients whose treatment fails and discounts for insurers thatprovide swift coverage. (Photo: Shutterstock)

A potential cure for a lethal childhood disorder — the first ofits kind in the U.S. — is hitting the market at a cost of $2.1million, paving the way for more therapies that bring dramaticbenefits for patients, along with challenges for health-caresystems.

The U.S. Food and Drug Administration on Friday approvedNovartis AG's Zolgensma, a gene therapy targeting children under two yearsold who have a severe illness called spinal muscular atrophy. TheSwiss drugmaker said it's offering novel payment options, includingspreading out the costs over time, refunds for patients whosetreatment fails and discounts for insurers that provide swiftcoverage.

Related: How much will gene therapy costemployers?

Zolgensma, the first drug in the U.S. to cross the $1 millionmark, is an important test for the field as a wave of genetherapies advances toward the market offering huge promise — fixinga disease's root cause with a treatment given just once. The FDApredicts as many as 20 cell and gene therapy approvals each year by2025.

“We are on a path where we hope one day we will be able to bringSMA almost to the point of elimination,” Novartis Chief ExecutiveOfficer Vas Narasimhan told reporters on a call. “Zolgensma shouldbe the foundational therapy for children under two.”

About 400 children in the U.S. are diagnosed with spinalmuscular atrophy each year, according to David Lennon, president ofthe Novartis unit that developed the therapy. The currentpopulation of patients eligible for Zolgensma is about 1,100, hesaid. UBS Group analysts have projected peak annual sales of about$1.8 billion.

Acute, serious liver injury can occur with Zolgensma, and liverfunction must be monitored for at least three months afterinfusion, Novartis said.

Alternative to Spinraza

Despite high initial costs, gene therapies are expected to savehealth-care systems money by eliminating the need for lifelongtreatment. While manufacturers propose spacing out bills over time,governments and insurers are still trying to figure out how to payfor the treatments and wrestling with uncertainty over theirbenefits and safety in the long run.

Novartis's treatment offers an alternative to Biogen Inc.'sSpinraza, which was launched about two years ago and must be givenat least every four months for a patient's lifetime. Zolgensma'sprice is about half of the 10-year cost of Spinraza, roughly $4.1million.

Biogen fell 2.1% in New York after Zolgensma's approval. In anemail, the company said that it welcomes additional options forpatients with the disease and that Spinraza continues to be theonly treatment available for a broad age range of patients withSMA.

Novartis had earlier estimated that Zolgensma could becost-effective at prices of as much as $4 million to $5million.

Novartis has a partnership with insurer Cigna Corp.'s Accredounit to provide a pay-over-time option, which may be a help to U.S.states, self-insured companies and other small payers that wouldotherwise struggle to cover such an expensive drug. Under theiragreement, Novartis will receive the full payment and Accredo willwork with the payer to get reimbursement, which could take as longas five years. Novartis tapped specialty pharmacy CuraScript todistribute the medicine.

Novartis's plan to offer refunds for patients who die or requirepermanent ventilation after getting Zolgensma may be complicated bya requirement that the U.S. Medicaid program always gets the lowestprice. The rule known as the best price available means refunds ordiscounts have to apply to all Medicaid patients, even those whobenefit from Zolgensma. The drugmaker has discussed with U.S.health officials ways to overcome the hurdle, said Lennon, theNovartis executive.

Flurry of deals

Research on gene therapies has been fast-moving in recent years.A scientific milestone was reached in late 2017 when the U.S. FDAapproved Spark Therapeutics Inc.'s treatment for an inherited form.The drug, Luxturna, helps stave off blindness in patients with aspecific genetic mutation and was priced at $850,000 for botheyes.

Advances in the lab sparked a series of deals. Novartis boughtAveXis Inc., the developer of Zolgensma, for $8.7 billion lastyear. Roche Holding AG followed with a deal to acquire Spark thisyear. Biogen agreed in March to buy gene therapy developerNightstar Therapeutics Plc for $877 million, and Pfizer Inc.acquired a stake in closely-held gene-therapy company VivetTherapeutics.

Absent gene

Spinal muscular atrophy occurs when babies are born with aflawed or absent gene needed to make a protein key to the nervecells' survival. Untreated babies suffer progressive weakness,paralysis and often death before the age of two, and the conditionis the leading genetic cause of infant mortality.

Zolgensma replaces that flawed or missing gene with a healthycopy. It represents the first gene therapy in the U.S. aimed atcuring a disease through a one-time treatment, according to theAlliance for Regenerative Medicine.

Novartis is encouraging screening of newborns for SMA, Lennonsaid. “Our belief is that every newborn who has SMA should gettreated with gene therapy.”

The gene therapy field got off to an inauspicious start. UniQureNV's Glybera, the first gene therapy approved for use in Europe,was withdrawn in 2017 because of limited use of the $1 milliontreatment for a dangerous blood-fat condition, and GlaxoSmithKlinePlc had few takers for Strimvelis, the second gene therapy for aninherited disease to gain approval.

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• Precision medicine: worth theexpense?
• Why you should know what 'pharmacogenetics'is
• The next hot voluntary benefit: Genetictesting?

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