Biotech proposes paying for pricey drugs by installment

Massachusetts biotech Bluebird Bio Inc. is developing plans to sell its first gene-replacement therapy (LentiGlobin) on a 5-year installment plan, with each annual payment conditional on the treatment's continued effectiveness.

Massachusetts biotech Bluebird Bio Inc. is developing plans to sell its first gene-replacement therapy (LentiGlobin) on a 5-year installment plan, with each annual payment conditional on the treatment's continued effectiveness. The company will not disclose how much it intends to charge for the therapy, which aims to treat a rare inherited blood disease called beta thalassemia. But the price will be below $2.1 million, which Bluebird estimates is the drug's "intrinsic value" to patients, including improvements in quality and length of life, Bluebird CEO Nick Leschly said in an interview. With Bluebird's pricing strategy, the company would receive as little as 20% of the product's total cost upfront and put the remaining 80% "at risk" of nonpayment. Each following year, the insurer would pay down another 20%, but only if the treatment meets certain criteria. A handful of drug makers and health insurers have been considering such an approach as a solution to the high prices of emerging treatments. Bluebird could be one of the first to put payment by installment into effect; but it faces challenges in implementing the payment model, Leschly says, such as ensuring it will get paid if patients switch jobs or insurance carriers.