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THE PRICE OF PROGRESS: Why the Government Should Fund Gene Therapy Treatments

Cheyn Shah • 2018 Issue


From The Editors:

Genetic diseases are unique because they aren't necessarily preventable, nor are they the results of someone's life choices. Unfortunately, the only way to cure a genetic disease is through gene therapy, a usually prohibitively expensive procedure. In "THE PRICE OF PROGRESS, Cheyn Shah explores the reasons why gene therapy is currently so expensive and thus unobtainable for most people. Shah offers a solution to this problem by proposing that the government create a fund to cover the costs of gene therapy for all patients. He discusses the approaches the government could take to make such a fund feasible, and how economic pitfalls might be avoided.


Seventeen year old Christian Guardino’s favorite thing to look at is the moon. They are recent acquaintances, because not very long ago, Guardino was blind.

Guardino owes his sight to Luxturna, the first FDA-approved gene therapy for an inherited illness [1]. Luxturna cures a type of blindness called Leber congenital amaurosis (LCA). LCA occurs when someone inherits defective genes that stop the photo-receptive cells in their eyes from producing proteins that convert light to electrical signals sent to the brain. There are currently eighteen different genes recognized as causing LCA [2]. Luxturna treats cases of LCA that are caused by one defective gene, RPE65, by replacing the defective copies of RPE65 in a patient’s eyes with healthy ones. Within a month, the retinal cells begin producing their proteins, and the patient’s vision improves.

Thus far Luxturna sounds miraculous, a testament to medicine’s power to treat those who, until yesterday, we considered beyond our power to help. There’s only one problem. A single injection of Luxturna costs $425,000 — more than the median home price in the US [3]. And unless a patient wants vision in only one eye, she will need two.

For those with minimal or no health insurance, breaking an ankle is an inconvenience in France and a disaster in America.

There is annual and predictable dismay in the US about the high cost of even commonplace medical care. For those with minimal or no health insurance, breaking an ankle is an inconvenience in France and a disaster in America. The existing anger, however, pales in comparison to the outcry we should expect to hear as gene therapies proliferate, both because of the astronomically high costs ($850,000 for Luxturna) and because gene therapies treat previously incurable and often devastating illnesses. Going bankrupt to fix a broken ankle is an absurdity; going bankrupt to restore one’s child’s vision is a tragedy. Yet, it need not be that way. The government could create a gene therapy fund that covers the cost of treatment. Before we get there, though, we first have to understand why prices are so high in the first place.

One reason drug manufacturers give is that most gene therapies are one-time treatments. Engineer a means to delivering a modified gene to a patient’s cells, administer it, monitor for improvements and complications, and it is done. A drug company that needs to recoup its investment on, say, a new form of chemotherapy, can charge lower prices because chemotherapy is typically administered several times. Yet many gene therapies, Luxturna among them, are one and done.

Secondly, the size of the market is small. Luxturna is to gene therapies what Tesla is to electric cars: a proof-of-concept. LCA was chosen as a candidate illness for gene therapy because it is caused by a single defective gene. Furthermore, the human eye is closed off from the immune system, which might otherwise attack the modified pathogens scientists use to alter a patient’s genes. However, only about 1 in 81,000 Americans has some kind of LCA, and only 8 percent of those are RPE65-caused, and thus, treatable by Luxturna. This means that Luxturna’s market grows by about four new cases a year in the US [4]. With such a small market, each patient has to make the drug company a great deal of money if it is to break even.

Whether this argument is reasonable or not depends on the number of people suffering from the genetic illness in question. For rare illnesses like LCA, the size of the market is a reasonable justification for a high price. For more prevalent ones, it is not. Sickle cell disease, for example, afflicts about 100,000 people in the US alone [5].

Finally, gene therapies are expensive and time-consuming to produce. This is certainly true of Luxturna, which cost $400 million to develop [6]. However, the cost of development today doesn’t necessarily tell us how things will go in the future. The research that led to Luxturna began in the nineties, and until recently, investors have been unwilling to fund gene therapies. The 1999 death of a young man, Jesse Gelsinger, in a gene therapy trial dried up funding in the field for years [7]. More importantly, the actual cost — in time and money — of creating gene therapies has been massively lowered by the advent of new technology. CRISPR, for instance, has changed the game.

For a gene therapy to work, scientists have to do several things. First, they have to locate the defective gene or genes causing the illness. Then, they have to engineer a way to get inside the patient’s cells and either deactivate that gene or replace it with a healthy copy. The means by which they get inside a patient’s cells is called a vector. The vector for Luxturna is a small, harmless pathogen called an adeno-associated virus (AAV) [1].

CRISPR is technically not a vector, but a means of recognizing repeated sequences in DNA. Cas9 is a protein that can splice new genes into existing sequences. CRISPR-Cas9’s costs are so low because it is not, technically, a brand new technology. It is actually a repurposing of defense mechanisms already existing in nature. Some bacteria defend themselves against viral infection by stealing a bit of the virus’ RNA and storing it in order to recognize future attacks by the same pathogen. CRISPR basically hijacks this system, allowing scientists to cut-and-paste genes into a genome at precise locations with high accuracy. Importantly, scientists can also edit multiple areas in a genome simultaneously, which greatly reduces the cost and time required to produce new genetic treatments [8].

To these three reasons we can add a fourth, unstated one for the high price of gene therapies. Gene therapy, and healthcare in general, is expensive because it can be. Gene therapy is what economists call a price inelastic good. It is so desperately desired that people are willing to pay astronomical prices. The market for genetic therapies is nothing like the market for, say, juice, where a 50-cent increase in the price of orange makes thrifty shoppers switch their allegiance to apple or grape.

These economic realities mirror more philosophical ones. A good meal will not make your day by nearly as much as a minor toothache will break it. Bad things hurt our feelings more than good ones raise our spirits, and nowhere is this more true than when we consider our health. Even slight declines in health are devastating to one’s well-being. (The term “well-being” itself implies that happiness is largely the product of having a sound body.) However, despite the centrality of good health to a happy life, there are no laws in the U.S. limiting how much a pharmaceutical company may charge for a drug, and, in the absence of single-payer health care, there is no single insurer with enough clout to negotiate prices down for everyone.

That is grounds for pessimism regarding the future affordability of gene therapies. Let’s say a pharmaceutical company were to devise a gene therapy for a disease with many sufferers, like cystic fibrosis. Let’s also say that treatment was devised quickly and cheaply using innovative methods like CRISPR, and with funding from the deep-pocketed Cystic Fibrosis Foundation, which had an endowment of over $3 billion in 2014 [9]. While all those things would save the manufacturer money, there is no law mandating that those savings be passed on to patients, nor is it likely that competition from other manufacturers would force them to do so. In fact, doubts as to the pricing of Luxturna have already surfaced. The Institute for Clinical and Economic Review independently assessed Luxturna and found that it was not cost-effective at its current price point. The price could only be justified if the patients received the treatment as children and enjoyed a lifetime of improved sight. Not all patients will, of course, be children, and there is at this point no way to know whether Luxturna’s benefits will last a lifetime [10].

It is true that there are benefits to Luxturna that are not captured by the ICER report, like opening the U.S. to gene therapies and possibly improving their long-term efficacy. It is also true that attempting to measure the dollar value of something as essential as eyesight is a bit of an exercise in futility. The ability to see is, quite literally, priceless. What the report does show, however, is that Luxturna’s price cannot really be justified in terms of its value to patients. This is a recurring issue among gene therapies. The gene therapy Glybera, which treats a rare pancreatic condition and was released in Europe in 2012, remains the most expensive medicine in human history, at over $1 million for a single injection. Due to the high price and limited demand, by 2016 only one person had been treated with the drug, and it was withdrawn from the market in 2017 [11].

So what is to be done? As Glybera and Luxturna show, existing gene therapies are so expensive that they are a conundrum for everyone. They are unprofitable for manufacturers, unaffordable for patients, and unpalatable for insurers. No one knows how to price them, and insurers are loathe to cover them because of the enormous prices and high uncertainty. Beyond the high costs, small markets, and unknown efficacies, the fact that gene therapies are usually one-time treatments scares insurers, because in the U.S., people can switch their provider each year. Luxturna is considering an installment program, and this may help families who cannot produce $850,000 up front. Yet, an onerous debt paid over time is still onerous. Tuition isn’t due at age 18, but that doesn’t make college affordable [12].

But there is a solution. The U.S. government should create a gene therapy fund which pays for patients with a condition that has an FDA-approved treatment available. Such a fund would ensure that gene therapy is affordable for Americans, regardless of their wealth. There is plenty of precedent for these kinds of programs in the annals of American legislation. The Department of Education gives out billions annually to college-bound students. Medicaid and Medicare provide a measure of healthcare, however scant, to the indigent and the elderly, respectively. It is not enough for us to point to the existence of these programs to justify the creation of a new one, however. Policies short of a fund must be considered as well.

Recognizing that the government has a primary role to play does not obviate the need for caution in designing a gene therapy fund.

One alternative to a gene therapy fund is simply to cap the prices of gene therapies. While this may seem simpler and less expensive, it is not. In this case, the cost the government would bear is simply being passed on to drug companies. While CRISPR may lower the cost of research in the future, right now gene therapy trials are long, expensive, uncertain affairs, and a price cap might dry up research in the field altogether. Pharmaceutical companies are by no means poor, but one does not have to be cash-strapped to want to avoid imprudent investments. Furthermore, much of the pioneering gene therapy research is being done by small firms and start-ups who cannot use windfall profits from another drug to fund a cure for cystic fibrosis or sickle-cell disease. Luxturna, for example, is Spark Therapeutics’ only treatment for sale right now [13]. We are rightly skeptical, especially after the 2007 recession, of legislation that shifts risk and expense from companies to the government. Yet, the fact is that there are some situations in which it is prudent for the government to do so.

Recognizing that the government has a primary role to play does not obviate the need for caution in designing a gene therapy fund. A poorly-conceived fund might be worse than no fund at all, and similar funds have suffered in the past because legislators did not predict the perverse incentives their policies created. An excellent example is the price of college. In 1987, Secretary of Education William Bennett published an op-ed in the New York Times arguing that federal grants and loans were behind the two-decade rise in college tuition costs [14]. (Costs continued to rise for another three decades and show no signs of slowing down.) The government’s efforts to help students, Bennett argued, were actually putting college out of reach for them. The “Bennett hypothesis,” as it became known, stated that colleges were deliberately charging more year after year because they knew the federal government would foot much of the bill. The hypothesis was predictably controversial; progressives thought it was flimsy pretext to gut aid to poor students, while conservatives considered it further proof of the unintended consequences of Washington bureaucracy. The most recent and robust evidence, published by the New York Federal Reserve, confirms a limited version of the Bennett hypothesis. Every additional dollar in federal money raised tuition by sixty cents [15].

None of this is to say that Pell grants, GI funding, and all the rest are ineffectual. Quite the opposite — research shows they provide a small but consistent bump in attendance and graduation rates among our nation’s poorest students [16]. It is merely to suggest that in designing a gene therapy fund, we ought to steer clear of the perverse incentives that have marred similar efforts in the past.

First, we need to be careful about a “Bennett effect” for gene therapies, where the availability of government money encourages manufacturers not only to never lower their prices, but perhaps even to raise them. This would be nightmarish for nearly everyone. Taxpayers would have to pay far more than they otherwise would. So would anyone whose income was too high for them to be 100 percent covered. The only victors in this situation would be the drug manufacturers. First, they would raise the price of the therapy. Next, they would wait for the government to increase funding in response. Finally, they would raise the price again. This cycle could continue indefinitely. Believers in the Bennett effect for college education contend that it has been happening in an unabated manner for five decades.

To stop that from happening to the gene therapy fund, we need better laws regarding patenting and imports. Congress and the FDA should set clear rules mandating that a patent can only be extended if the manufacturer can prove changes to the drug make it substantially better. Otherwise, drug companies may simply “evergreen” the gene therapy; in other words, make a superficial change to the drug that allows them to extend the patent, perhaps simply by choosing a different vector. We also should legalize drug imports if they meet FDA approval. CRISPR in particular has democratized gene therapy research by making it more affordable, and there is a corresponding rise in the number of gene therapy trials occurring abroad [17]. These changes would be great, not just for patients in need of gene therapy, but for healthcare in general. While the legalization of drug imports would face intense opposition from the pharmaceutical lobby, these changes are more politically feasible than single-payer healthcare or the imposition of price ceilings for drugs.

Guardino’s singing is all his own, but he owes the ability to see the fruits of his talent to two injections given to him for free as part of Luxturna’s trial.

There could not be a more classic example of a market failure than a life-changing drug that no one can afford or insure. Indeed, with the rise of medicine tailored to people’s genes, the number of treatments with high costs and few patients will only increase, nor could there be a more pressing cause than the eradication of genetic illnesses. Genetic illnesses were the last class of malady for which no cure was promised. Their victims are blameless; one’s lifestyle choices do not affect the genes one has. They often strike in childhood. Some, like cystic fibrosis, amount to expensive and slow death sentences. That is slowly starting to change, but progress will stall unless our laws keep pace with our science. A thoughtfully designed gene therapy fund would ensure that no one with a curable genetic illness is punished for the content of their genes.

Christian Guardino has been singing all his life. After he started to see he decided, on a whim, to try out for America’s Got Talent, the TV show. He chose to cover Jackson 5, belting the whole song, hitting improbable high notes, and advancing to the semifinals [18]. But what’s most remarkable about Guardino’s performance isn’t the singing. It’s that he walked out by himself. That he made eye contact with the judges and crowd. That when they showered golden confetti on the stage, he instinctively looked up, with a huge grin, to watch it wash over him. Guardino’s singing is all his own, but he owes the ability to see the fruits of his talent to two injections given to him for free as part of Luxturna’s trial [19]. Will we deny others the same?


Murilo Dorion, Yale University

Cheyn Shah

Based in New York


Mary Lou Bailey, Yale University

Mary Lou Bailey

Developmental Editor

Graduate Student, Applied Physics, GSAS

Paul Fanto

Developmental Editor

Graduate Student, Applied Physics, GSAS

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