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Dispensed: A big week for digital health IPOs, what happens when a $2.1 million drug can’t get to the kids who need it, and what a top health-tech VC is looking to invest in

Dispensed: A big week for digital health IPOs, what happens when a $2.1 million drug can’t get to the kids who need it, and what a top health-tech VC is looking to invest in

Jackson Schultheis was born with the progressive muscle disease spinal muscular atrophy.

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Jackson Schultheis was born with the progressive muscle disease spinal muscular atrophy.
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Elissa Schultheis

Hello,

Welcome to Dispensed, Business Insider’s weekly newsletter bringing you all the stories that kept our healthcare team busy this week.

While Erin Brodwin’s been out celebrating her wedding, the rest of us have been staying busy holding down the fort! Congrats, Erin!!

Are you new to our newsletter? You can sign up for Dispensed here.

First up: Some really important reporting from Emma Court, who spoke with families who are having a hard time getting access to Zolgensma, the $2.1 million treatment for spinal muscular atrophy that was approved in May.

‘Like we were being forced to gamble with our son’s life’: Health insurers won’t pay for a $2.1 million drug for kids, and parents say they’re running out of time

  • A new type of therapy that treats a devastating inherited disease at the genetic level was recently approved in the US. Its $2.1 million price tag makes the drug, Zolgensma, the most expensive in the world.
  • Four parents of children born with the disease, called spinal muscular atrophy, told Business Insider they have been fighting health insurers like Aetna and Anthem to get access to Zolgensma. One decision, by UnitedHealth, has since been reversed.
  • Sarah Stanger, whose son lives with spinal muscular atrophy, called it “heartbreaking, because this one person is everything to us. And they’re acting like his life doesn’t really matter.”
  • These kinds of barriers could create “further inequities in the healthcare system for people with genetic diseases and disabling conditions,” Stanford ethicist Holly Tabor said.

Emma’s reporting highlights an important tension that’s playing out right now – between health plans who are setting up policies that constrain who might be considered for treatment and drug companies that set the $2.1 million price tag – that leave patients and their families caught in the middle. One of the plans in question that came up in Emma’s reporting said it doesn’t cover any gene therapies.

As more and more gene therapies get to approval, tensions are only going to get higher.

A wave of digital health IPOs

Livongo executives Glen Tullman, Zane Burke, and Jennifer Schneider on the day of the company's IPO.

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Livongo executives Glen Tullman, Zane Burke, and Jennifer Schneider on the day of the company’s IPO.
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Courtesy NASDAQ

Thursday was a big day for digital health companies.

Diabetes tech company Livongo started trading, closing up 36% after pricing Wednesday at $28. Health Catalyst, which helps hospitals sift through their data, also closed out the day 51% higher than its $26 a share price set the night before.

We were tracking the IPOs closely.

Elsewhere, Bright Health on Wednesday laid out where the health insurer will be offering plans starting in 2020. By then, it’ll be in 12 states, which we decided warranted a map (big thanks to Shayanne Gal for that!).

Bright Health 2020 expansion locations map

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Shayanne Gal/Business Insider

$950 million insurer Bright Health is plotting a massive expansion as startups look to reinvent how Americans get healthcare

  • The Minneapolis-based health-insurance startup Bright Health plans to double its geographic footprint in 2020.
  • By 2020, the company expects to be in 12 states, up from six in 2019.
  • Bright offers insurance to individuals under the Affordable Care Act and coverage to seniors in Medicare Advantage, partnering with one health system in each market to help set up its insurance plan.
  • The venture-backed health insurers Oscar Health and Devoted Health are also planning to expand in 2020.

With new data coming out on the future of HIV treatment, Emma reports that three companies in particular stand to be the biggest winners. That’s in part because of new treatments, as well as more use of existing, preventive treatments.

The future of HIV treatments will change dramatically in the next decade, Citi says. These 3 companies could be the biggest winners.

  • Since 2012, a preventive HIV medication has been available in the US, making it possible for those at risk to reduce their chances of contracting the disease.
  • Citi analysts predict the US market for these types of drugs will nearly triple by 2030 to about $5.5 billion, thanks to factors like President Donald Trump’s new plan to stop HIV.
  • New drugs from the US drug giant Merck, the HIV-focused drugmaker ViiV Healthcare, and the biopharma Gilead could dominate the preventive HIV market over the next decade, the Citi team said.

This week in conversation with the healthcare team

That’s all from us this week. We’ll be back in August with some more big projects ahead you won’t want to miss.

In the mean time, tips? Plans to file your S-1 for your upcoming IPO (I really do want to know!)? Find me at lramsey@businessinsider or the whole team at healthcare@businessinsider.com.

– Lydia

A new kind of one-time treatment is revolutionizing the way we treat diseases like cancer and blindness, but not a lot of patients are using it

A new kind of one-time treatment is revolutionizing the way we treat diseases like cancer and blindness, but not a lot of patients are using it

Human genetic material is stored at a laboratory in Munich May 23, 2011.

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Human genetic material is stored at a laboratory in Munich May 23, 2011.
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Michael Dalder/Reuters
  • Since 2010, at least three gene and cell therapies have been developed and approved by the FDA for use, yet barely any patients are using them.
  • The treatments, priced as high as $1 million, target rare diseases, and only have to be taken on time by patients.
  • A report by IQVIA and The Arm Foundation highlights the need for new payment and reimbursement models for these therapies in order to get more patients to use them.
  • Some pharmaceutical companies are already testing out different pricing models.

A revolutionary new way to treat rare disease in the Western world came out in 2016 – yet few people are using it.

The drug, a form of gene therapy – in which a virus is programmed to either replace, add or snip out a certain gene – has been attracting attention because of its potential to tackle a range of diseases.

Cell therapies like CAR-T cell treatment for cancer take a patient’s own immune cell and alter it to specifically target cancer cells. Many of these treatments only need to be administered once, and if they work, could have lifetime effectiveness. Current gene therapies have mainly been developed to treat inherited and rare diseases.

The cutting-edge treatments, however, have been a hard sell. Although these advanced therapies helped usher in a new era of using therapeutics to specifically target an individual’s DNA, one gene therapy, Glybera, has only been used once since its approval in the European Union in 2012. Its maker, UniQure, decided to ultimately pull it from the market due to a lack of demand.

In 2017, the same thing happened. GlaxoSmithKline’s Strimvelis, used to treat an ultra-rare immune deficiency, has a price tag of $648,000. It was used on a child patient in Europe who became the second person to receive a commercially available gene therapy. Since then, GSK decided to offer the treatment only in Italy at the Ospedale San Raffaele in Milan.

Why is this happening? A recent analysis published by IQVIA Institute for Human Data Science and The Arm Foundation for Cell and Gene Medicine noted that gene and cell therapies are expensive for patients, who often have to shell out large copays for the treatment. This raises the barrier for access to these treatments, plus, they’re only offered at a small number of accredited centers, according to the research report.

Drugmakers face challenges as well. Since the therapies cater to those with rare diseases, it sets a small target patient population which makes it hard to demonstrate clinically that it is the best treatment option. Drugmakers also have to account for the experiments, research, and development going into the product, which can be expensive.

It’s also to know how long these treatments last for, so insurers may be hesitant to dish out over $100,000 up-front for the drugs.

The challenge of getting these drugs used has big pharmaceutical companies scrambling to justify and come up with fair pricing.

After Luxturna launched, Spark came out with three different payment schemes, such as paying for the treatment based on how well it works and allowing for it to be paid for over time, in order to attract more patients to use it.

Novartis in May said it plans to use indication-based pricing, in which the price of its cancer drug Kymriah will vary depending on the type of cancer it’s being used to treat. Instead of charging all patients the same price, Novartis priced the drug higher for the disease with a smaller patient population and lower for the disease with a larger patient population.

Drugmakers are also looking to outcomes-based agreements, which means that companies are looking into new and more innovative payment contracts in order to gain access to more patients.

But these strategies might not work in non-single payer systems such as the US healthcare system. With single-payer systems, government can help flesh out a payment schedule for the drug. But for a healthcare system with multiple private insurers and people switching insurance all the time, long-term payment becomes trickier for treatments that are more costly.

“Fragmented US system makes it challenging for stakeholders to accept one-time or financed payments for a lifetime benefit,” the report stated. “US health system infrastructure will need to be modified as the current 12-month financial cycle does not capture long-term value of [cell and gene therapies].”

Challenges aside, new cell therapies and gene therapies are still entering the market. In 2017, the FDA approved Spark Therapeutics’ gene therapy for a hereditary form of blindness called Leber congenital amaurosis.

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