Affordability & Financing of High-Cost Curative Therapies

Session Focus

Pearson introduced himself as an internist trained at Brigham and Women’s who went on to found the Institute for Clinical and Economic Review, an independent technology assessment organization reviewing cost and clinical evidence for new treatments. That placed ICER in the position of both determining what a fair price was and how evidence should guide use of new technologies.

He anchored the session in May 2019, when the FDA approved Zolgensma for spinal muscular atrophy. It was not the first gene therapy, since CAR-T had preceded it, but it made people gasp. Spinal muscular atrophy in its worst form was universally fatal, with children dying before age two. In the first trials, conducted in roughly 15 patients, all were alive at year two and all were advancing motor milestones. Physicians and families were in awe.

His own experience of that day frames the affordability problem precisely. Several major payers called him asking how they could possibly afford $2.1 million, and saying that if this was the first of many they were doomed. They were not happy with ICER, which had concluded that $2.1 million did reflect the clinical value of a treatment saving the lives of two-year-olds and giving them a healthy life thereafter.

The session was structured across development costs, provider organizations bringing these therapies into service, and ultimately coverage and payment.

What Development Actually Costs, and Where

Angela Shen MD described a career spanning surgical training, roughly 20 years in industry across large pharma, biotech and small startups, and the past five years back in academia at Mass General Brigham. That range let her compare early development costs directly.

Her figures were stark. In an academic environment, bootstrapping and patchworking programs together, a novel CAR can in theory go from concept on a napkin to first-in-human trials for roughly $12 million. The same work costs logarithmically more in a larger biotech or pharma. She has worked in a very small bootstrapped biotech that managed it for $20 million.

The trade-offs are real and she was candid about them. Bootstrapping means survival mode: limited money, one shot at reaching clinical proof of concept, answering to whoever holds the purse strings, and not thinking about longer-term scalability or sustainability.

She admitted her own version of this. In discussions where CMC experts insisted manufacturing had to be optimized, her response was that she did not care about that right now, because without getting into clinic the program was dead in the water.

The cost of that efficiency arrives later, in more complicated problems scaling CMC and reaching larger manufacturing volumes.

She does see improvement. Academics and people in the smaller space have become more sophisticated through cross-pollination and experience. Potency assays are an example: previously deferred, now understood to need streamlining upfront because a filing may rest on phase one data.

Why Affordability Is Not in the Target Product Profile

Sanjay Srivastava PhD, who leads Accenture’s cell and gene therapy practice, agreed with Shen’s account and added a structural observation.

There is no formal approach to affordability in the target product profile today, regardless of whether a program sits in large biopharma or small biotech. The reason is incentives: whoever holds the purse is driving toward the clinic as fast as possible.

He also sees change, driven by available technology and by lessons from the early period. Manufacturing and CMC development are where technology helps most, through closed-loop systems enabled by robotics and automation alongside standardized platforms.

Adoption timing is the practical issue. Many vendors and platforms exist, but adoption has typically waited until phase two, with digital adoption before that amounting to kicking the can down the road. His consulting work now focuses on helping clients adopt those technologies earlier, both to digitize the data eventually needed for filing and to convince a potential acquirer willing to take on the asset.

Can Academic Centers Be the Manufacturer

Pearson raised a movement prominent in Europe to disintermediate the pharmaceutical industry, letting academic centers create and produce these treatments for use across the health system without pharma’s incentives or ROI expectations. He asked where that stands in the US, and whether academic centers see themselves as potential sole sources taking treatments through the FDA.

Shen’s answer began from a shared understanding rather than a grievance. Academics recognize the incentives are not aligned for rare and ultra-rare disease. Nobody expects investors to be philanthropists, or industry to forgo hundreds of millions developing a drug treating 47 patients worldwide.

What academics do feel, particularly clinicians who have spent entire careers with these patient populations, is that if they do not do it, nobody will.

Key Takeaways

1. Zolgensma’s approval crystallized the problem. Universal survival at year two in a previously fatal condition, at $2.1 million per patient.

2. ICER concluded the price reflected clinical value, which is why payers were unhappy with the assessment rather than reassured.

3. Academic development can reach first-in-human for roughly $12 million, against logarithmically higher costs in large pharma.

4. Bootstrapping defers cost to the back end. Manufacturing optimization skipped early becomes a scaling problem later.

5. Affordability has no formal place in the target product profile, in either large or small organizations.

6. Automation and closed-loop manufacturing help, but adoption typically waits until phase two.

7. Rare disease economics push academia toward manufacturing. Nobody expects industry to develop a therapy for 47 patients worldwide.