Revolution and reimbursement in the cell therapy industry

Author: David Brindley, 11/13/14


With contributions from James Smith, a recent Oxford University graduate and current CASMI Translational Stem Cell Consortium Research Associate


Tea cupIn the early 1770s, Britain faced a significant financial dilemma. One of its most important commercial institutions, the East India Company, had come into considerable financial problems; a large quantity of tea was being produced in India and imported to Britain, where rising prices meant that it was simply not being bought.

A similar concern is facing the cell therapy industry. It is well-known that the cost of cell therapy will be high. How can we ensure that someone will buy it? The first day of the Stem Cells and Regenerative Medicine Congress 2014, in Boston, addressed this question and outlined what needs to be done to ensure that reimbursement is indeed achieved in the cell therapy industry.

In the clinic, as Anthony Bonagura from OptumHealth pointed out, the decision to use a particular treatment will ultimately depend upon whether it is covered by the insurer (at least in the U.S.). Coverage can vary widely between insurers and which treatments must be covered can vary widely, even between states. The critical consideration is, therefore, to know how insurers make the decision on whether or not to provide coverage for a particular treatment.

Two words pretty much say it all: medical necessity. This phrase encompasses safety, efficacy and, importantly, superiority to other treatments. Safety and efficacy must be demonstrated in published data, and FDA approval will be required before insurers will consider the treatment. Superiority, i.e. compared to treatments already available, is more complex because, typically, clinical trials do not compare between currently available products. This part then, is largely at the discretion of the assessment committee.

But it is here that cell therapy provides the greatest promise: cell therapies have the potential to cure, not simply alleviate symptoms. They might be a sustainable option to treat diseases. The possible benefits are huge; therefore, they are necessary.

Given the potential long-term benefits of cell therapy, or regenerative medicine in general, long-term cost-effectiveness is often raised as a consideration. However, as Stephen Crawford, from Cigna LifeSOURCE Transplant Network noted, if a treatment is truly necessary, it will be covered regardless of the cost. The coverage of Kalydeco, a drug for certain patients with cystic fibrosis, highlights this. It costs around $1,000 per pill, per day, and may be required for decades.

Though high cost can clearly be tolerated, cell therapy might not be expensive in the long-term. If it can be used as a one-time treatment, or at least infrequently, short-term costs might be offset by long-term savings from lack of dependence on future medical care. If not, efficacy should still suffice, provided the target indication is not already sufficiently treatable.

Having said this, during clinical development, it is critical that the developer considers the current market, in order to ensure that a new product is likely to surpass other treatment options in efficacy. Sven Kili from Genzyme made this point and stressed that assessing potential value from a patient-centric viewpoint must occur at an early stage. Doing so allows development of only those products that are valuable to the patient, which increases the likelihood of reimbursement.

Returning to the historical analogy, there was no market for the tea that the East India Company was producing. For example, tea smuggled into British North American colonies was available but at a lower price. Britain’s solution to this problem was to pass the tea act in 1773, which allowed prices to be cut significantly. However, just a few streets away from the location of this conference, the act was met with contempt and denial, directly leading to perhaps one of the most important events in American history: the Boston Tea Party and, ultimately, the American Revolution.

If we ensure that the cell therapy industry carefully considers the role of reimbursement throughout product development, an equivalently significant revolution, though this time in medicine, may follow. A prospect to ponder over a fine cup of tea!

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David Brindley
David is an international thought-leader in the translation of life-science innovations into commercially viable products and services. His expertise spans the ‘Valley of Death,’ encompassing regulation, basic science, process engineering and finance. This distinctive skill set positions David at the forefront of socially responsible investments – in particular initiatives that make impactful contributions to global health. David currently holds a joint appointment between the University of Oxford and the Harvard Stem Cell Institute and is an active Fellow of the Royal Institution of Great Britain and the Royal Society for the Advancement of Arts and Manufacturing. In addition to being an Editorial Board member of a range of international academic and industrial journals, David is also a founder of Translation Ventures, a boutique consultancy that is actively engaged in maximizing the financial and societal value realized from cutting edge scientific innovations. Disclosure: David A Brindley has no other relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in any postings apart from those disclosed. D.A.B. is subject to the CFA Institute’s Codes, Standards, and Guidelines, and as such, the author must stress that his contributions to this site are provided for academic interest only and must not be construed in any way as an investment recommendation.
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