An Eye-Popping Price to Treat Blindness
Recently, a company called Spark Therapeutics announced its recently approved gene therapy ("Luxturna") for a rare form of hereditary blindness (biallelic RPE65 mutation-associated retinal dystrophy). The good news? It works. The bad news? The price: $425,000 per eye or $850,000 total.
Ethical issues aside, is this a good price for this product to optimize revenue for Spark?
The company CEO said he thought the pricing was "reflective of the value inherent in the therapy." In a classic marketing context, the CEO is referring to the economic value of the treatment in how they set the price. In other words, if you had access to $850K and were going blind, Spark thinks you would give up that amount of money to regain site. He's right. If I had access to $850K and was suffering from this form of blindness, I would fork it over in a heartbeat.
Problem....I don't have access to $850K. Most do not. And, unless this disease disproportionately affects the wealthy, it begs the question of what insurance companies will cover for the 1,000-2,000 people in the US who have this disorder. In an insurance system that routinely refuses to pay for lower-cost items such as weight-loss surgery, it's hard to imagine insurers will pony up for this. For frame of reference, the average cost of treating cancer is around $50,000.
In fact, this therapy will only incentivize insurance companies to do two things:
1. Push lower cost, alternative therapies such as drugs currently in trial for this same syndromes, and
2. Require genetic screening as a condition of coverage
When you consider the ability of consumers to pay for this treatment and the willingness of insurance companies to cover this cost, it seems the value of Luxturna is less about the drug itself and more about its ability to act as a foundation of future gene therapies.