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January 24, 2012

2012 is the time for Gene Therapy to Start to get Disruptive

The time for commercial development of gene therapy has come according to James Wilson, MD, PhD, Editor-in-Chief of Human Gene Therapy.

Until recently, gene therapy has been reserved for severe diseases with few treatment options. But the recent report of its successful use to treat hemophilia B, which would offer patients a therapeutic alternative that could replace the need for regular, lifelong protein replacement infusions, has brought gene therapy to the forefront as a technology capable of competing with and disrupting traditional forms of treatment. Although gene therapy for hemophilia B is still in early-stage clinical testing, a similar approach is in development to treat hemophilia A, and together these life-threatening diseases represent a $6.5 billion market for current protein replacement therapies.

The hemophilia B study was a phase 1 trial; more clinical data are needed before commercial sales and distribution can be considered. For this to happen, however, we need the participation of the biopharmaceutical industry. Christensen's research suggests there may be impediments to this happening, based on what he calls the “Innovator's Dilemma,” which is best described by the following question: “How [can] executives…simultaneously do what is right for the near-term health of their established businesses, while focusing adequate resources on the disruptive technologies that ultimately could lead to their downfall?”



Christensen describes the rationale for favoring investment in sustaining technologies, which improve the performance of established products leading to increased market share and higher margins, as opposed to investing in disruptive technologies, which lack virtually any relevant market research but have a huge upside if successful.

Virtually all current pharmaceutical research in hemophilia can be classified as sustaining technologies. These include attempts to modify the protein used in standard hemophilia replacement products, such as to increase its half-life and/or increase its activity. In contrast, the development of the disruptive technology of gene therapy for hemophilia has had little, if any, commercial funding, with virtually all support coming from foundations and the public sector. Uncertainty regarding the business model of gene therapy for a disease such as hemophilia is a deterrent to commercial investment and development. Insurance companies currently reimburse for each service/infusion using existing protein replacement products, which in the aggregate cost up to $300,000/patient/year for prophylactic dosing.

An obvious question concerns how to charge for gene therapy in which one injection of vector confers stable expression for an extended period of time, which, for purposes of argument, I will say is 10 years. I have heard this kind of therapy referred to as “one and done” with the very legitimate question asked: “How do you price a cure?” It is unlikely that reimbursement for the one-time injection of vector will be equivalent to the costs of treating a hemophiliac with 10 years of protein (i.e., 10×$300,000=$3 million). Unfortunately, there are no data available to answer these pricing questions with any certainty.

The critical path to the development of gene therapy for diseases like hemophilia may reside in the creation of new business models that reimburse for the long-term efficacy afforded by a single gene therapy injection/treatment. One approach is to charge the insurance company an annual fee for gene therapy as long as it continues to work. This may be difficult to implement in countries in which health care is covered by private insurance companies and patients frequently change their health insurance affiliations. For example, it is unlikely that insurance company A will continue to pay the annual fee if the patient moves to insurance company B, which, in the United States, occurs quite frequently. This leaves one to conclude that reimbursement for a gene therapy product may be substantially less than that provided under current protein replacement therapies, leaving companies with traditional franchises in these diseases little incentive to invest in gene therapy.

Translation of the IBM/personal computer model to gene therapy could be the creation of biotechnology companies that are spun out of, or substantively partnered with, the pharmaceutical industry. The early participation of venture capital may occur with gene therapy platform technologies that have shown success in the clinic and in candidate diseases that can be evaluated in small trials using easily measured end points.

In conclusion, lessons learned from the rollout of disruptive technologies provide important context for the commercial development of gene therapy.

My prediction is that 2012 will usher in an era of commercial development of gene therapy that, although likely to begin slowly, will quickly gather momentum.

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