With more than 3.0 million page views and more than 5,000 items, this blog provides news and commentary on public policy, business and economic issues related to the $3 billion California stem cell agency. David Jensen, a retired California newsman, has published this blog since January 2005. His email address is firstname.lastname@example.org.
Wednesday, September 23, 2015
A $6 Billion Question: Affordability of California's Stem Cell Therapies
Imagine this headline popping up on the Internet and in the
New York Times in about four years:
“$6 Billion for ‘Price Gouging' Stem Cell Therapy”
The possibility of such a news story is not all that
fanciful -- given the growing tension and anger over exorbitant drug prices being
set by a variety of Big Pharma firms. The likelihood of such a report and its
impact is a matter for careful consideration by the 29 directors of the $3
billion California stem cell agency.
They are presiding over an effort that will cost the Golden
State’s taxpayers roughly $6 billion by 2020. Nominally, the agency is giving out $3 billion in research
awards. However, the cost is approximately doubled because the state is
borrowing money to finance the research, a move approved by voters in 2004.
No therapies for widespread use have yet emerged from the
agency, formally known as the California Institute for Regenerative Medicine
(CIRM). But the agency is pushing hard. It could have a therapy on the market
within four years. The question is whether it will be something that is
perceived as affordable or something available only to the wealthy few.
CIRM is now expecting to be involved in 65 clinical trials
by 2020. One of those trials is currently in phase three, which puts the proposed treatment on the cusp of commercialization.
Not on the table, however, is what those therapies are
likely to cost consumers. The spending plan does not address the question of whether a
publicly financed agency should back development of therapies that could cost,
for example, $512,000. (See here and here.) Or whether it should focus on more affordable
The issue of high cost of drug therapies has roiled the
medical community and the public for some years. The matter has now moved to a higher level and is not likely to vanish during the next five years, as it
has in the past. It is tied to the income inequality debate and the upsurge in
patient advocacy. (See here and here.)
The issue surfaced this week in the presidential campaign.
Democratic aspirant Hillary Clinton used words like “gouging” and “outrageous,”
causing biotech stock prices to drop. Republican presidential candidates used
the problem to attack Obamacare. Folks in the scientific community said they
This afternoon, a Google search on the term “high drug
prices” turned up 33.7 million results. “Outrage,” “huge spike,” “4,000 percent”
and “insanely high” were some of the words in the headlines.
The affordability question is not new to the California stem
cell agency. It popped up in the ballot campaign that created the agency in
2004 but has largely died down in recent years. (See here, here and here.)
It could surface again in the California legislature and elsewhere as
lawmakers see a public desire to curb perceived greedy pharmaceutical companies that prey on the weak and afflicted.
It is not a prospect that would be pleasant for the
California stem cell agency. And it would put a major damper on efforts to continue funding of the
agency from both public and private sources.
As they consider their strategic direction, the CIRM directors
of the agency may be well advised to move earlier rather than later on the
question of high prices and affordability. As Ben Franklin’s medical homily goes,
ounce of prevention is worth a pound of cure."