Novartis wins approval for world’s most expensive drug

The US Food and Drug Administration on Friday approved what will be the most expensive drug in the world, a gene therapy from Novartis that treats spinal muscular atrophy at a cost of $2.1m.

The price of Zolgensma, announced by Novartis right after the FDA decision, is more than twice that of the world’s second most expensive drug, Luxterna, an $850,000 treatment for blindness made by Spark Therapeutics, and recently acquired by Roche.

Zolgensma is a revolutionary treatment for a devastating inherited neuromuscular disease that causes loss of muscle function and can lead to children dying in infancy. It works by repairing the genes so that a missing protein can be produced.

Vas Narasimhan, chief executive of Novartis, said the drug is a “historic advance” and a “landmark one-time gene therapy”, and it had been priced at what he said was half the cost of existing treatments for patients with spinal muscular atrophy. These can include extensive interventions such as breathing support. Novartis said the cost of chronic therapy can often exceed $4m in the first 10 years of a child’s life.

“We believe by taking this responsible approach, we will help patients benefit from this transformative medical innovation and generate significant cost savings for the system over time,” he said.

The new therapy will compete with a treatment from Biogen, which sells its drug Spinraza at $750,000 for the first year. Biogen stock was down 1 per cent to $226.73 in mid-afternoon in New York. Shares in Novartis, which have increased by 30 per cent in the last year, were up 4.3 per cent to $88.07.

Analysts at Jefferies predict peak worldwide sales for the drug of $2.6bn a year, assuming it will be priced slightly lower outside the US, at an average of about $1.5m.

Zolgensma enters the market as pharmaceutical companies are facing intense political pressure over high drug prices from both sides of the aisle in the US. Much of the criticism has been levied because of triple digit price increases by small generics makers, but there are concerns that the healthcare system will struggle to absorb the high price tags of new advanced therapies like gene-editing.

To try to quell these concerns, Novartis has been experimenting with new drug pricing models: it will allow insurers to spread the cost of Zolgensma over five years and has signed some “outcomes-based agreements” where insurers only pay if the therapy works.

Patients in the clinical trial of Zolgensma were all under two when it started. After two years, all of the patients on a high dose were alive and not on permanent ventilation. Three quarters were able to sit without support for at least 30 seconds and two were able to stand and walk without assistance.

Ned Sharpless, acting FDA commissioner, said the approval marks “another milestone in the transformational power of gene and cell therapies to treat a wide range of diseases”. He added, “With each new approval, we see this exciting area of science continue to move beyond the concept phase into reality.”

Dave Lennon, president of AveXis, the maker of Zolgensma, which Novartis acquired last year for $8.7bn, said the company was working to get speedy decisions from governments and insurers on whether to cover the drug.

Novartis expects to receive approval for the therapy in the European Union and Japan later this year.