Installment pricing model
 Share
The version of the browser you are using is no longer supported. Please upgrade to a supported browser.Dismiss

View only
 
ABCDEFGHIJKLMNOPQRSTUVWXYZ
1
2
3
RUNNING THE NUMBERS
4
5
Assuming that there are 500 children affected by spinal muscular atrophy each year, then if Zolgensma, the new $2.1 million curative treatment for SMA, were to be paid for up front, the annual cost is just over a billion dollars a year and stays level. If Zolgensma were paid for in installments over a five-year period and those payments were contingent upon it working, the annual costs climb and then flattens out because the drug is curative. The annual cost would stay lower than under upfront payment because the payments are contingent upon performance. For purposes of this model, we’ve assumed a hypothetical failure rate of 10%, and payments ceasing in the years after the drugs fail.
6
7
Spinraza, an SMA drug with a different mechanism of action, is not curative. Under the current pricing structure ($750,000 for the first year and $375,000 in the subsequent years), the cost would climb and eventually exceed the cost of Zolgensma if it were paid for on an upfront basis.
8
9
To explore and modify this spreadsheet, download to edit with Excel or make a copy to your Google Drive.
Both of these options are available under the File menu above.
10
11
12
Please send comments or questions to installments@managedcaremag.com
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
Zolgensma
42
Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10
43
44
Number of patients treated
500500500500500500500500500500
45
46
Total spending per year (installments)
47
Number of installments
5
48
49
Year 1 cohort$212,500,000.00$191,250,000.00$170,000,000.00$148,750,000.00$127,500,000.00$0.00$0.00$0.00$0.00$0.00
50
Year 2 cohort$212,500,000.00$191,250,000.00$170,000,000.00$148,750,000.00$127,500,000.00$0.00$0.00$0.00$0.00
51
Year 3 cohort$212,500,000.00$191,250,000.00$170,000,000.00$148,750,000.00$127,500,000.00$0.00$0.00$0.00
52
Year 4 cohort$212,500,000.00$191,250,000.00$170,000,000.00$148,750,000.00$127,500,000.00$0.00$0.00
53
Year 5 cohort$212,500,000.00$191,250,000.00$170,000,000.00$148,750,000.00$127,500,000.00$0.00
54
Year 6 cohort$212,500,000.00$191,250,000.00$170,000,000.00$148,750,000.00$127,500,000.00
55
Year 7 cohort$212,500,000.00$191,250,000.00$170,000,000.00$148,750,000.00
56
Year 8 cohort$212,500,000.00$191,250,000.00$170,000,000.00
57
Year 9 cohort$212,500,000.00$191,250,000.00
58
Year 10 cohort$212,500,000.00
59
60
61
Spending per year (Total)
$212,500,000.00$403,750,000.00$573,750,000.00$722,500,000.00$850,000,000.00$850,000,000.00$850,000,000.00$850,000,000.00$850,000,000.00$850,000,000.00
Zolgensma, paid in installments
$7,012,500,000.00
62
Zolgensma, paid upfront$10,625,000,000.00
63
Spinraza, ongoing payment
$9,131,250,000.00
64
65
Total spending per (full up front payment)
$1,062,500,000.00$1,062,500,000.00$1,062,500,000.00$1,062,500,000.00$1,062,500,000.00$1,062,500,000.00$1,062,500,000.00$1,062,500,000.00$1,062,500,000.00$1,062,500,000.00
66
Cost of medicine (full price)
$2,125,000.00
67
68
69
Treatment failure rate (%)
70
First year10%
71
Second year10%
72
Third year10%
73
Fourth year10%
74
Fifth year
75
Sixth year
76
Seventh year
77
Eighth year
78
Ninth year
79
Tenth year
80
81
Sum of annual failure rates must be ≤ 100%40%
82
83
84
85
Spinraza
86
$750,000 year 1
87
$375,000 per year, in following years
88
89
Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10
90
91
Number of patients treated
500500500500500500500500500500
92
93
Spending per year
94
95
96
Year 1 cohort$375,000,000.00$168,750,000.00$150,000,000.00$131,250,000.00$112,500,000.00$101,250,000.00$75,000,000.00$56,250,000.00$37,500,000.00$18,750,000.00
97
Year 2 cohort$375,000,000.00$168,750,000.00$150,000,000.00$131,250,000.00$112,500,000.00$101,250,000.00$75,000,000.00$56,250,000.00$37,500,000.00
98
Year 3 cohort$375,000,000.00$168,750,000.00$150,000,000.00$131,250,000.00$112,500,000.00$101,250,000.00$75,000,000.00$56,250,000.00
99
Year 4 cohort$375,000,000.00$168,750,000.00$150,000,000.00$131,250,000.00$112,500,000.00$101,250,000.00$75,000,000.00
100
Year 5 cohort$375,000,000.00$168,750,000.00$150,000,000.00$131,250,000.00$112,500,000.00$101,250,000.00
Loading...