Why price for cell/ gene therapy products is so high?

by Alexey Bersenev on September 6, 2016 · 0 comments

in business

The topic of pricing cell and gene therapies is very hot right now. The price tags for the most approved cell/gene therapy products are high and there is no one simple solution to address their reimbursement and adoption. The world’s most expensive drug is gene therapy drug Glybera, has captured a lot of attention in the media and facilitated pricing/ reimbursement discussions among professionals. Here I’ll try to highlight major reasons for high prices of cell/ gene therapy products as introduction for the further discussion on reimbursement and widespread clinical adoption. I was inspired by the recent analysis of Mohamed Abou-El-Enein, where he discusses challenges for commercialization of cell/ gene therapeutics in Europe.

First, let’s look at some price tags for the approved cell and gene therapy products on a market (all prices in USD):
cell products
ChondroCelect (Tigenix) in Europe ~ 24,000 (20,000 euros)
Provenge (Dendreon/ Valeant Pharma) in US = 93,000
Temcell (JCR Pharmaceutical) in Japan = 115,000-170,000
HeartSheet (Terumo) in Japan = 120,000
Cartistem (Medpost) in S. korea ~ 20,000-40,000
Hearticellgram (FCB-Pharmicell) in S. Korea = 19,000
Prochymal (Osiris Therapeutics/ Mesoblast) in Canada ~ 200,000 (20,000 per dose)

gene- and cell/gene products
Glybera (uniQure) in Europe ~ 1.1-1.4M
Strimvelis (GSK) in Europe = 665,000
Imlygic (Amgen) in US = 65,000

As you can see, compared to conventional drugs, prices for cell/gene therapy products are much higher. Some of them could be comparable to biotech drugs (monoclonal antibodies). However, such gene therapy drugs as Glybera and Strimvelis, will make to the Forbes top 10 world’s most expensive drugs list.

This list begs the question – Why cell/ gene therapy products are so expensive? I’d like to summarize the major reasons for high pricing of cell/ gene therapeutics. Most of these reasons were recently discussed in nice analysis by Mohamed Abou-El-Enein.

1. High cost of manufacturing
The cost of manufacturing of cell product is incomparable with small molecules (Pharma) or biomolecules (Biotech). It is much higher, but, mostly for autologous cell products. In general, manufacturing cost of auto- product is at least 10 times higher than allo-. For example, manufacturing of auto- T-cell product in academic facility could not cost less than $7-10k, with average numbers around $30-50k. In Pharma and Biotech, there is no such thing as medicine made of your own cells or biomolecules. Before cell therapy era, Biotech was unfamiliar with the concept of 1 batch = 1 product.

2. High cost of delivery
Cell products are extremely fragile biologics with very complex supply chain. For “fresh products” (Holoclar, Provenge), short shelf life is associated with high risk of potential product loss. For cryopreserved products, cold chain logistics and multi-site distribution is very costly and associate with their own risks. Overall, the cost of storage and shipment of cell therapy products is much higher than for conventional drugs. At the end, high cost of delivery added to manufacturing cost and embedded into price tag.

3. Lack of comparative studies as evidence for reimbursement scheme
Most approvals of cell and gene therapy products in US and Europe are relatively recent and were obtained in the last 7 years. After few years on the market, studies of cost-effectiveness, which can compare new approved product with predecessor or analog, are not available. Due to lack of these studies, payers do not know how to reimburse (and, in general, confused by high price tag), perform health technology assessment and negotiate pricing with manufacturer.

4. Lack of competition
Currently, only few dozens of cell/ gene products achieved regulatory approvals worldwide. Most of them are taking unique small market niches without competitors. As a consequence of absence of competition, manufacturers can set any price that market can bear. Obviously, with coming of new generation (means better) products, competition will drive prices down.

5. Small market size
The recent trend (at least in Europe) is approvals for rare (orphan) diseases (the best examples – Glybera and Strimvelis). Orphan disease means small market. Don’t expect blockbuster sales here. Abou-El-Enein absolutely correctly said that approvals for orphan diseases “place manufacturers into pricing predicament”.

6. Potential for cure (high utility therapies)
One of the strongest argument in justification of high pricing is delivering a cure or “potential cure”. Some cell/gene therapies can deliver a cure with 1 shot! Many people would say that cure can justify any cost (high price for high payoff). It is suppose to be true – we are expecting from cell/ gene therapy products something big, something that conventional drugs or biologics cannot deliver – very high therapeutic value in a form of cure. In reality, very long-term observational studies are required for precise valuation of cure. For example, CAR T-cell therapy is promoted by many developers as “curative” (so, high prices could be justified), however, more than 30% of patients with B-cell malignancies will relapse 1 year after receiving CD19-CAR T-cells. Six-years outcome data analysis made uniQure to change promotional language from “cure” to “long-term benefit” and “potentially curative”.

7. Hunger for ROI
After investing a lot of time (roughly 20 years for development of 1 cell therapy product), tons of money for development of manufacturing, regulatory compliance and clinical trials, developers are very very hungry for return on investment. They want to recap R&D expenses ASAP and go for profit. In my opinion, that’s one more and very important contributing factor for high prices. It is very different for Pharma and Biotech, where many new drugs developed internally (without painful tech transfer from academia) by big profitable corporations. As of today, vast majority of cell/ gene therapy developers are going through tech transfer processes, do not generate profit and almost entirely rely on money of investors.

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