Biogen Inc. bought the rights to Spinraza, guided it through final clinical trials, and then took it to market at a stunning price.
But the Cambridge biotech giant didn’t invent it.
That creation story began in a lab at the University of Massachusetts Medical School in Worcester, where scientist Ravindra Singh was trying to crack a genetic puzzle. It was 2004 and his tiny lab team of four — he, his wife, a postdoctoral student, and another collaborator — had spent three years methodically isolating and analyzing molecules in search of a way to attack the source of spinal muscular atrophy.
Simply put — though there is really no way to put it simply — SMA occurs when the spinal cord has too little of a vital protein that controls muscle movement. Two genes — SMN1 and a nearly identical backup, SMN2 — make this protein in healthy people. But those with SMA have a mutation that deletes the first gene entirely. Their backup gene doesn’t produce enough protein to compensate. They eventually lose the ability to walk, eat, and, ultimately, breathe.
Singh’s focus was on isolating the exact sequence of genetic code that sets off this deadly cascade. He and his team screened about 200 potential drug targets before their eureka moment.
The culprit, they found, was a genetic sequence called ISS-N1 that prevents the backup gene from making more protein.
Other labs could now get to work finding therapeutic compounds to block the devastating sequence. Thanks to the UMass scientists, they knew where to aim.
Singh, who now operates a lab at Iowa State University, said he designed the experiment that identified the sequence ISS-N1, but had no idea that it would yield the desired result. “We were completely dumbfounded,” he said, with their findings in the lab one November night.
“We were so excited, so happy,” he said, recalling the euphoria he and his wife, Natalia, felt. At home later that night, “we drank some wine,” he said.
UMass licensed their discovery to a Carlsbad, Calif., biotech firm called Isis Pharmaceuticals. The deal gives UMass and Singh a total of 2 percent of net US sales of any resulting drug, according to Jennifer Berryman, a university spokeswoman. That’s potentially tens of millions of dollars. Of that sum, UMass will get a little over two-thirds, and Singh almost one-third.
Isis — now known as Ionis — then built on the UMass work by developing a compound, with help from the Cold Spring Harbor Laboratory in New York, that could bind to and block ISS-N1.
At last there was a potential treatment for SMA — if it would hold up through years of exhaustive clinical trials.
Biogen, working with Ionis, helped bankroll the experimental drug and shepherd it through the approval process. Last year the firm spent $75 million to buy exclusive worldwide rights to the drug, which won FDA approval a year ago this week, and gave it a new brand name: Spinraza.
It also fell to Biogen to put a price on this prized new product — $750,000 for each patient the first year and $375,000 every year after — and therein lies a tale that company executives are reluctant to discuss in detail.
The costs of developing a treatment like Spinraza are obviously huge, but how exactly those costs fit into the market decision on price is unclear.
Michel Vounatsos, who became chief executive in January after joining Biogen in April 2016 as a high-ranking executive, recently told the Globe that the company had invested “close to a billion” in developing the drug. But he declined to provide a breakdown.
The lack of detail provided by Biogen has led others to try to piece together the drug-pricing process.
Knowledge Ecology International, a Washington-based advocacy group that wants more openness in drug pricing, calculated the cost for Biogen and Ionis to run 10 clinical studies for Spinraza involving several hundred patients from 2011 to 2016. It concluded that the drug is wildly overpriced.
After factoring in federal tax credits that the drug makers received for developing an orphan disease drug — plus financial risks they took — KEI came up with a total of $35 million for the cost of clinical trials, according to its analysis.
That’s a fraction of the roughly $2.6 billion often cited by the pharmaceutical industry to develop a drug and take it through clinical trials to FDA approval.
“The price [of Spinraza] has absolutely no relationship to what it cost to develop,’’ said James Love, director of KEI. “People are getting ripped off on Spinraza big time.”
Vounatsos said he respects the work of KEI but its estimate of costs is “grossly” inaccurate. Furthermore, he said, Biogen based Spinraza’s price mostly on the fact that it was the first treatment to offer hope to desperately sick people with SMA, not how much it cost to develop.
Biotech executives say a variety of factors go into the price of a new drug, including the value it brings to the health care system — a somewhat hazy concept — the cost of research and development, the price of comparable medicines, and the likelihood that other experimental drugs in the company’s pipeline will go bust. That last one is a grim reality of the drug business; less than one in 10 drugs that enter clinical trials ultimately make it to market, according to a 2016 study by the Biotechnology Innovation Organization, a national trade group.
“There’s no industry that’s as capital-intensive, that has as much risk,” said John Maraganore, chief executive of Alnylam Pharmaceuticals Inc., a Cambridge biotech. Alnylam is working on therapies for orphan diseases ranging from hemophilia to acute hepatic porphyria, a rare metabolic disorder that some scholars theorized might have afflicted England’s King George III in the late 1700s.
To illustrate the costs and risks, Maraganore cites his own company. He says Alnylam has invested $2 billion in drug development since it was founded in 2002. It has amassed a market value of roughly $12 billion based on enthusiasm over its experimental gene-silencing drugs, which rely on a technique called RNA interference to shut down dysfunctional genes.
But in its 15 years of existence, the company has yet to sell a single commercial product, and Maraganore says profitability remains years away.
Critics counter that the breathtaking prices reflect the fact that the government lets pharmaceutical companies set whatever price they want and gives them years of exclusive rights when marketing drugs for rare diseases, effectively creating a monopoly. As a result, they say, leaders of some drug companies try to make as much money as quickly as possible, in the hopes of boosting stock prices — and their own pay packages.
“The industry is more and more just an arm of Wall Street,” said John Rother, head of the Campaign for Sustainable Rx Pricing, a nonpartisan coalition in Washington, D.C. “There’s nothing that restrains them from setting the price without regard to the impact on patients and the health care system in general.”
And the potential impact of stratospherically priced orphan drugs on the health care system is staggering.
The average price of a medicine for an orphan disease is nearly $119,000 a year, Dr. A. Gordon Smith, chief of neuromuscular medicine at the University of Utah School of Medicine, wrote in an April Harvard Business Review article on Spinraza.
If a single drug was approved for that much for just 10 percent of the 7,000 rare diseases for which there now are no treatments, Smith wrote, the total would exceed $350 billion annually. That’s far more than the cost of care for the millions of people with — to name just two common conditions — diabetes or dementia.