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What Bluebird Bio Gets Wrong In Pricing For Its $1.8 Million Drug | Forbes

Beta thalassemia is a blood disorder that reduces the production of hemoglobin, the key iron-containing protein essential for the transport of oxygen to cells throughout the body. The diminished flow of oxygen causes weakness, fatigue, slow growth, bone abnormalities, and other serious complications. Affected individuals with severe symptoms require frequent blood transfusions in order to maintain a reasonable quality of life.

There is now hope for these patients. Bluebird Bio recently received European regulatory approval for its beta thalassemia gene therapy, Zynteglo, for patients 12 and over. A first of its kind treatment, Zynteglo has been shown to allow patients to go up to 56 months without the need for a blood transfusion – terrific news for these individuals. Approval of Zynteglo by the FDA is anticipated.

However, the major attention that has been focused on Zynteglo has not been on the fact that it’s a medical breakthrough but rather on its price. Given that it’s a one-time treatment that might actually cure the disease, Bluebird Bio has set a price of $1.8 million making Zynteglo the second most costly treatment in history. Interestingly, despite this high price, Wall Street analysts expressed disappointment as they felt that Bluebird Bio could have justified a much higher price.

Here’s how Bluebird Bio rationalized Zynteglo’s price. It will be paid $355,000 when a beta thalassemia patient receives the infusion of the gene therapy. The remaining payments will be made to Bluebird Bio in four equal installments over the next four years as long as the patient is still free of getting blood transfusions, thus adding up to $1.8 million. Actually, Bluebird Bio feels that it is selling its gene therapy at a 15% discount in that it believes that Zynteglo has an “intrinsic” value of $2.1 million when one considers that it is delivering 22 quality-adjusted life years (QALYs) for the most successful treatment patients. In calculating the price of Zynteglo, the company specifically excluded the savings from the cost of treatment that Zynteglo replaces – which other companies have routinely included as part of the justification for such expensive therapies.

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What Bluebird Bio Gets Wrong In Pricing For Its $1.8 Million Drug.

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