Drug Prices Reach New High—in the Millions

The most recent one approved in the U.S. set a price record: $3.5 million for

CSL Ltd.

’s Hemgenix, a treatment for the blood disorder hemophilia B. 

The price tags mark a new high for medicines, which drugmakers were once reluctant to charge more than six figures for but whose prices have been heading upward. The companies say the cost reflects the drugs’ potential to help patients in a single dose, but paying for it could challenge patients and health insurers.

“It’s an innovation freight train headed toward an inflexible insurance wall,” said

Steven Pearson,

president of the Institute for Clinical and Economic Review, a nonprofit drug-pricing watchdog group. “The payers are not in a position to say no because there will be no other alternatives” for patients, he added.

Most of the multimillion-dollar treatments are gene therapies, a groundbreaking type of treatment that involves injecting a functional gene into a person to correct a faulty, disease-causing one.

Bluebird’s Skysona gene therapy for a rare neurological disease affecting children costs $3 million, while its Zynteglo for an inherited blood disorder is priced at $2.8 million.

Novartis AG’s

Zolgensma gene therapy treating a muscle-wasting condition costs $2.1 million. 

Drugmakers say gene therapies can make a difference to patients with rare genetic diseases, by either curing them or providing yearslong benefits through delivering a correct copy of a faulty gene, though there have been some safety concerns over the class.

Some of the new therapies could produce long-term savings, the companies say, by sparing patients from having to take older treatments repeatedly for the rest of their lives. Most of the gene therapies approved to date are for diseases with small patient populations, limiting their overall cost to health insurers’ budgets despite high per-patient prices.

Yet health insurers say they aren’t set up to handle such big payouts. They are accustomed to paying for older, chronic treatments on a recurring basis over time, rather than paying a high price for a single treatment that could have lasting benefits. 

The introduction of more high-price gene therapies could raise healthcare costs, especially once the drugs target bigger patient populations, health insurers say. That could lead to higher insurance premiums, before any long-term savings kick in.

McKinsey & Co. estimates that about 30 new gene therapies could be introduced in 2024 alone. 

“When you think about hundreds of gene therapies under development, if we’re fortunate enough that they all work, there’s a concern about the collective budget impact,” said

Michael Sherman,

chief medical officer of Point32Health, which administers health-insurance plans primarily in New England. “Each time we see a new gene therapy they are at a higher price point.”

One-time therapies are on the horizon for diseases with bigger patient populations, including a more common form of hemophilia, as well as another blood disorder known as sickle-cell disease.

Some insurers have launched special programs to manage the costs of gene therapies.

Cigna Corp.

started a program that adds monthly per-member fees to participating employers to ensure patients can get access to a gene therapy with no out-of-pocket costs. 

A Cigna spokeswoman said the program “is designed to protect patients from the ultrahigh costs of potentially life-changing gene therapies.” She said the program is covering four older approved gene therapies and is now reviewing Hemgenix. 

Because gene therapies are new, insurers are making these decisions without knowing for sure that the promised long-term benefit will hold up over time, Dr. Sherman said. Some gene-therapy recipients may still require additional costly treatments with other drugs. 

Hemophilia B is caused by a genetic mutation, which results in little to no production of a protein called Factor IX, usually in males. This protein promotes clotting to stop bleeding, and without enough of it hemophilia B patients are prone to dangerous bleeding episodes. 

The condition is rare, affecting only about 6,000 people in the U.S., of whom about 1,900 have severe enough cases to require frequent Factor IX replacement infusions aimed at preventing serious bleeds, according to CSL. These repeat treatments, which CSL also makes, can cost millions of dollars over a lifetime, according to CSL.

Australia-based CSL, through its CSL Behring unit, licensed the rights to Hemgenix from uniQure NV of the Netherlands in 2020, paying $450 million upfront and potential future payments. 

The therapy consists of viral material that is engineered to carry a gene that, given once by intravenous infusion lasting one to three hours, causes a patient to make Factor IX. 

A study found that a one-time Hemgenix treatment decreased subjects’ need for routine Factor IX replacement and reduced their bleeding episodes. Some 94% of the patients discontinued Factor IX prophylaxis. 

When setting the $3.5 million price for Hemgenix, CSL considered its benefit to patients, potentially sparing them from repeat dosing of Factor IX replacement, said Robert Lojewski, senior vice president and general manager at CSL Behring. The company also considered how much Hemgenix could save the healthcare system because it can cost millions of dollars per patient for the lifetime cost of hemophilia B care, he said.

“Yes, this is not an inexpensive treatment,” Mr. Lojewski said. It is important, however, to consider “does it work? Is it safe? And if it works for a number of years, how much savings it actually brings at that price tag,” he said. 

CSL is offering health insurers value-based agreements, in which the company would pay rebates for patients who don’t benefit from Hemgenix. He declined to release specific terms, and whether insurers have agreed to these arrangements.

CSL also will offer assistance on out-of-pocket costs for certain patients who are having trouble affording it, Mr. Lojewski said.

Dr. Sherman of Point32Health said Hemgenix “appears to be fairly priced in the context of what it has the promise to deliver.” He said the insurer is in discussions for a value-based agreement with CSL but hasn’t completed it.

The $3.5 million price tag for Hemgenix is higher than what a drug-price watchdog group ICER concluded would be a fair price. ICER said in a November report that a price of about $2.9 million for Hemgenix would be cost-effective.

ICER noted that the reduction in routine prophylaxis treatment was a major benefit to patients, and that the lifetime savings to the healthcare system could be substantial. ICER provides its research to help insurers negotiate reimbursement with drugmakers.

ICER’s Dr. Pearson said an even higher price for Hemgenix—about $9.9 million—would still produce savings to the system. He said ICER arrived at a lower recommended figure, however, to limit how much of the projected savings should accrue to drug manufacturers. 

Some drug manufacturers have heeded ICER’s recommendations previously. Novartis priced its gene therapy for an infant muscle-wasting disease, Zolgensma, at ICER’s recommended $2.1 million in 2019.

Novartis said Zolgensma’s pricing reflects the therapy’s benefit to patients and the long-term value it provides. The company gives some insurers the option of paying over time, and receiving refunds if the therapy doesn’t deliver the expected benefits for a patient. 

Bluebird said the pricing of its gene therapies reflects their benefit to patients, quality-of-life improvements and cost savings to the healthcare system.

Write to Peter Loftus at Peter.Loftus@wsj.com

The most recent one approved in the U.S. set a price record: $3.5 million for

CSL Ltd.

’s Hemgenix, a treatment for the blood disorder hemophilia B. 

The price tags mark a new high for medicines, which drugmakers were once reluctant to charge more than six figures for but whose prices have been heading upward. The companies say the cost reflects the drugs’ potential to help patients in a single dose, but paying for it could challenge patients and health insurers.

“It’s an innovation freight train headed toward an inflexible insurance wall,” said

Steven Pearson,

president of the Institute for Clinical and Economic Review, a nonprofit drug-pricing watchdog group. “The payers are not in a position to say no because there will be no other alternatives” for patients, he added.

Most of the multimillion-dollar treatments are gene therapies, a groundbreaking type of treatment that involves injecting a functional gene into a person to correct a faulty, disease-causing one.

Bluebird’s Skysona gene therapy for a rare neurological disease affecting children costs $3 million, while its Zynteglo for an inherited blood disorder is priced at $2.8 million.

Novartis AG’s

Zolgensma gene therapy treating a muscle-wasting condition costs $2.1 million. 

Drugmakers say gene therapies can make a difference to patients with rare genetic diseases, by either curing them or providing yearslong benefits through delivering a correct copy of a faulty gene, though there have been some safety concerns over the class.

Some of the new therapies could produce long-term savings, the companies say, by sparing patients from having to take older treatments repeatedly for the rest of their lives. Most of the gene therapies approved to date are for diseases with small patient populations, limiting their overall cost to health insurers’ budgets despite high per-patient prices.

Yet health insurers say they aren’t set up to handle such big payouts. They are accustomed to paying for older, chronic treatments on a recurring basis over time, rather than paying a high price for a single treatment that could have lasting benefits. 

The introduction of more high-price gene therapies could raise healthcare costs, especially once the drugs target bigger patient populations, health insurers say. That could lead to higher insurance premiums, before any long-term savings kick in.

McKinsey & Co. estimates that about 30 new gene therapies could be introduced in 2024 alone. 

“When you think about hundreds of gene therapies under development, if we’re fortunate enough that they all work, there’s a concern about the collective budget impact,” said

Michael Sherman,

chief medical officer of Point32Health, which administers health-insurance plans primarily in New England. “Each time we see a new gene therapy they are at a higher price point.”

One-time therapies are on the horizon for diseases with bigger patient populations, including a more common form of hemophilia, as well as another blood disorder known as sickle-cell disease.

Some insurers have launched special programs to manage the costs of gene therapies.

Cigna Corp.

started a program that adds monthly per-member fees to participating employers to ensure patients can get access to a gene therapy with no out-of-pocket costs. 

A Cigna spokeswoman said the program “is designed to protect patients from the ultrahigh costs of potentially life-changing gene therapies.” She said the program is covering four older approved gene therapies and is now reviewing Hemgenix. 

Because gene therapies are new, insurers are making these decisions without knowing for sure that the promised long-term benefit will hold up over time, Dr. Sherman said. Some gene-therapy recipients may still require additional costly treatments with other drugs. 

Hemophilia B is caused by a genetic mutation, which results in little to no production of a protein called Factor IX, usually in males. This protein promotes clotting to stop bleeding, and without enough of it hemophilia B patients are prone to dangerous bleeding episodes. 

The condition is rare, affecting only about 6,000 people in the U.S., of whom about 1,900 have severe enough cases to require frequent Factor IX replacement infusions aimed at preventing serious bleeds, according to CSL. These repeat treatments, which CSL also makes, can cost millions of dollars over a lifetime, according to CSL.

Australia-based CSL, through its CSL Behring unit, licensed the rights to Hemgenix from uniQure NV of the Netherlands in 2020, paying $450 million upfront and potential future payments. 

The therapy consists of viral material that is engineered to carry a gene that, given once by intravenous infusion lasting one to three hours, causes a patient to make Factor IX. 

A study found that a one-time Hemgenix treatment decreased subjects’ need for routine Factor IX replacement and reduced their bleeding episodes. Some 94% of the patients discontinued Factor IX prophylaxis. 

When setting the $3.5 million price for Hemgenix, CSL considered its benefit to patients, potentially sparing them from repeat dosing of Factor IX replacement, said Robert Lojewski, senior vice president and general manager at CSL Behring. The company also considered how much Hemgenix could save the healthcare system because it can cost millions of dollars per patient for the lifetime cost of hemophilia B care, he said.

“Yes, this is not an inexpensive treatment,” Mr. Lojewski said. It is important, however, to consider “does it work? Is it safe? And if it works for a number of years, how much savings it actually brings at that price tag,” he said. 

CSL is offering health insurers value-based agreements, in which the company would pay rebates for patients who don’t benefit from Hemgenix. He declined to release specific terms, and whether insurers have agreed to these arrangements.

CSL also will offer assistance on out-of-pocket costs for certain patients who are having trouble affording it, Mr. Lojewski said.

Dr. Sherman of Point32Health said Hemgenix “appears to be fairly priced in the context of what it has the promise to deliver.” He said the insurer is in discussions for a value-based agreement with CSL but hasn’t completed it.

The $3.5 million price tag for Hemgenix is higher than what a drug-price watchdog group ICER concluded would be a fair price. ICER said in a November report that a price of about $2.9 million for Hemgenix would be cost-effective.

ICER noted that the reduction in routine prophylaxis treatment was a major benefit to patients, and that the lifetime savings to the healthcare system could be substantial. ICER provides its research to help insurers negotiate reimbursement with drugmakers.

ICER’s Dr. Pearson said an even higher price for Hemgenix—about $9.9 million—would still produce savings to the system. He said ICER arrived at a lower recommended figure, however, to limit how much of the projected savings should accrue to drug manufacturers. 

Some drug manufacturers have heeded ICER’s recommendations previously. Novartis priced its gene therapy for an infant muscle-wasting disease, Zolgensma, at ICER’s recommended $2.1 million in 2019.

Novartis said Zolgensma’s pricing reflects the therapy’s benefit to patients and the long-term value it provides. The company gives some insurers the option of paying over time, and receiving refunds if the therapy doesn’t deliver the expected benefits for a patient. 

Bluebird said the pricing of its gene therapies reflects their benefit to patients, quality-of-life improvements and cost savings to the healthcare system.

Write to Peter Loftus at Peter.Loftus@wsj.com