The industry group is the Washington, D.C.,-based Alliance for Regenerative Medicine (ARM). It is tackling one of the major issues facing development of commercial stem cell therapies -- sticker shock at their expected prices, running upwards of a $1 million or more.
Without a willingness from health care insurers to cover the costs and provide a pathway to profit, it is unlikely that the biotech industry will embrace production of the therapies.
In a study released last Friday, the group said,
"Advances in molecular biology and genetics are leading to new treatments for rare diseases that require new ways of assessing value. CGTs (cell and gene therapies) are directed at the underlying cause of a condition and offer durable, potentially curative, or near-curative benefits. These transformative therapies create challenges for current reimbursement frameworks as they (the therapies) require significant upfront costs but are expected to provide a lifetime of benefits. The recurring treatment costs of chronically-managed patients can be greatly reduced and even eliminated with a one-time administration or short course of these novel therapies.
"As CGTs arrive on the market, payers need new models for assessing their value. These treatments could potentially end the patient’s burden of illness, resulting in cost offsets (eliminating or reducing the need for long-term treatment, hospitalizations, and other care) and productivity gains that span a lifetime. Manufacturers incur a high per-patient development cost for these therapies and payers who bear the cost of treatment may not realize the long-term financial benefits due to health plan switching."The ARM study predicted cost savings of as much as $33.6 billion over about a decade in connection with three afflictions: sickle cell disease (SCD), multiple myeloma (MM) and hemophilia A (Hem A).
California's stem cell agency was not mentioned in the study, but it has funded research in all three areas. The agency is a member of ARM.
The study, backed by ARM and performed by the Marwood Group, said,
"Access to CGTs for even a modest number of patients with MM, SCD, and Hem A each year can reduce overall disease costs by nearly 23% over a 10-year period. The savings from lowering healthcare costs and raising productivity are considerable, approaching $34 billion by 2029. Of the savings, $31 billion are from a reduction in healthcare costs and $3 billion are from productivity gains."The model used by ARM assumed CGT prices as high as $2 million. The study said,
"The model has tested more than 180 different prices across the three potential CGTs that ranged from a minimum test price of $150,000 and up to a maximum price test of $2,000,000. The prices entered into the model created 60 different cost savings curves for all three of drugs in this model. Prices were distributed with more than 50% of test prices in the $100,000-$600,000 price per administration range."The discussion of the costs of stem cell therapies has special resonance in the Golden State where voters are likely to be asked next fall to give $5.5 billion more to its stem cell agency, known formally as the California Institute for Regenerative Medicine (CIRM).
The agency, funded with $3 billion in 2004, is down to its last $27 million. A new, proposed ballot initiative is focusing hard on affordability of stem cell treatments. The initiative has no specific solutions but stipulates that a new version of CIRM -- if the ballot measure is approved -- should devise some ways to come up with answers for insurers who are not likely to warm easily to $1 million therapies.