Breakthrough therapies are breaking patients' banks. Key changes could improve access, experts say.
CSL Behring’s new gene therapy for hemophilia, Hemgenix, costs $3.5 million for one treatment, but helps the body create substances that allow blood to clot. It appears to be a cure, eliminating the need for other treatments for many years at least.
Likewise, Novartis’s Kymriah mobilizes the body’s immune system to fight B-cell lymphoma, but at a cost $475,000. For patients who respond, it seems to offer years of life without the cancer progressing.
These single-treatment therapies are at the forefront of a new, bold era of medicine. Unfortunately, they also come with new, bold prices that leave insurers and patients wondering whether they can afford treatment and, if they can, whether the high costs are worthwhile.
“Most pharmaceutical leaders are there to improve and save people’s lives,” says Jeremy Levin, chairman and CEO of Ovid Therapeutics, and immediate past chairman of the Biotechnology Innovation Organization. If the therapeutics they develop are too expensive for payers to authorize, patients aren’t helped.
“The right to receive care and the right of pharmaceuticals developers to profit should never be at odds,” Levin stresses. And yet, sometimes they are.
Leigh Turner, executive director of the bioethics program, University of California, Irvine, notes this same tension between drug developers that are “seeking to maximize profits by charging as much as the market will bear for cell and gene therapy products and other medical interventions, and payers trying to control costs while also attempting to provide access to medical products with promising safety and efficacy profiles.”
Why Payers Balk
Health insurers can become skittish around extremely high prices, yet these therapies often accompany significant overall savings. For perspective, the estimated annual treatment cost for hemophilia exceeds $300,000. With Hemgenix, payers would break even after about 12 years.
But, in 12 years, will the patient still have that insurer? Therein lies the rub. U.S. payers, are used to a “pay-as-you-go” model, in which the lifetime costs of therapies typically are shared by multiple payers over many years, as patients change jobs. Single treatment therapeutics eliminate that cost-sharing ability.
"As long as formularies are based on profits to middlemen…Americans’ healthcare costs will continue to skyrocket,” says Patricia Goldsmith, the CEO of CancerCare.
“There is a phenomenally complex, bureaucratic reimbursement system that has grown, layer upon layer, during several decades,” Levin says. As medicine has innovated, payment systems haven’t kept up.
Therefore, biopharma companies begin working with insurance companies and their pharmacy benefit managers (PBMs), which act on an insurer’s behalf to decide which drugs to cover and by how much, early in the drug approval process. Their goal is to make sophisticated new drugs available while still earning a return on their investment.
New Payment Models
Pay-for-performance is one increasingly popular strategy, Turner says. “These models typically link payments to evidence generation and clinically significant outcomes.”
A biotech company called bluebird bio, for example, offers value-based pricing for Zynteglo, a $2.8 million possible cure for the rare blood disorder known as beta thalassaemia. It generally eliminates patients’ need for blood transfusions. The company is so sure it works that it will refund 80 percent of the cost of the therapy if patients need blood transfusions related to that condition within five years of being treated with Zynteglo.
In his February 2023 State of the Union speech, President Biden proposed three pilot programs to reduce drug costs. One of them, the Cell and Gene Therapy Access Model calls on the federal Centers for Medicare & Medicaid Services to establish outcomes-based agreements with manufacturers for certain cell and gene therapies.
A mortgage-style payment system is another, albeit rare, approach. Amortized payments spread the cost of treatments over decades, and let people change employers without losing their healthcare benefits.
Only about 14 percent of all drugs that enter clinical trials are approved by the FDA. Pharma companies, therefore, have an exigent need to earn a profit.
The new payment models that are being discussed aren’t solutions to high prices, says Bill Kramer, senior advisor for health policy at Purchaser Business Group on Health (PBGH), a nonprofit that seeks to lower health care costs. He points out that innovative pricing models, although well-intended, may distract from the real problem of high prices. They are attempts to “soften the blow. The best thing would be to charge a reasonable price to begin with,” he says.
Instead, he proposes making better use of research on cost and clinical effectiveness. The Institute for Clinical and Economic Review (ICER) conducts such research in the U.S., determining whether the benefits of specific drugs justify their proposed prices. ICER is an independent non-profit research institute. Its reports typically assess the degrees of improvement new therapies offer and suggest prices that would reflect that. “Publicizing that data is very important,” Kramer says. “Their results aren’t used to the extent they could and should be.” Pharmaceutical companies tend to price their therapies higher than ICER’s recommendations.
Drug Development Costs Soar
Drug developers have long pointed to the onerous costs of drug development as a reason for high prices.
A 2020 study found the average cost to bring a drug to market exceeded $1.1 billion, while other studies have estimated overall costs as high as $2.6 billion. The development timeframe is about 10 years. That’s because modern therapeutics target precise mechanisms to create better outcomes, but also have high failure rates. Only about 14 percent of all drugs that enter clinical trials are approved by the FDA. Pharma companies, therefore, have an exigent need to earn a profit.
Skewed Incentives Increase Costs
Pricing isn’t solely at the discretion of pharma companies, though. “What patients end up paying has much more to do with their PBMs than the actual price of the drug,” Patricia Goldsmith, CEO, CancerCare, says. Transparency is vital.
PBMs control patients’ access to therapies at three levels, through price negotiations, pricing tiers and pharmacy management.
When negotiating with drug manufacturers, Goldsmith says, “PBMs exchange a preferred spot on a formulary (the insurer’s or healthcare provider’s list of acceptable drugs) for cash-base rebates.” Unfortunately, 25 percent of the time, those rebates are not passed to insurers, according to the PBGH report.
Then, PBMs use pricing tiers to steer patients and physicians to certain drugs. For example, Kramer says, “Sometimes PBMs put a high-cost brand name drug in a preferred tier and a lower-cost competitor in a less preferred, higher-cost tier.” As the PBGH report elaborates, “(PBMs) are incentivized to include the highest-priced drugs…since both manufacturing rebates, as well as the administrative fees they charge…are calculated as a percentage of the drug’s price.
Finally, by steering patients to certain pharmacies, PBMs coordinate patients’ access to treatments, control patients’ out-of-pocket costs and receive management fees from the pharmacies.
Therefore, Goldsmith says, “As long as formularies are based on profits to middlemen…Americans’ healthcare costs will continue to skyrocket.”
Transparency into drug pricing will help curb costs, as will new payment strategies. What will make the most impact, however, may well be the development of a new reimbursement system designed to handle dramatic, breakthrough drugs. As Kramer says, “We need a better system to identify drugs that offer dramatic improvements in clinical care.”
Your Future Smartphone May Detect Problems in Your Water
In 2014, the city of Flint, Michigan switched the residents' water supply to the Flint river, citing cheaper costs. However, due to improper filtering, lead contaminated this water, and according to the Associated Press, many of the city's residents soon reported health issues like hair loss and rashes. In 2015, a report found that children there had high levels of lead in their blood. The National Resource Defense Council recently discovered there could still be as many as twelve million lead pipes carrying water to homes across the U.S.
What if Flint residents and others in afflicted areas could simply flick water onto their phone screens and an app would tell them if they were about to drink contaminated water? This is what researchers at the University of Cambridge are working on to prevent catastrophes like what occurred in Flint, and to prepare for an uncertain future of scarcer resources.
Underneath the tough glass of our phone screen lies a transparent layer of electrodes. Because our bodies hold an electric charge, when our finger touches the screen, it disrupts the electric field created among the electrodes. This is how the screen can sense where a touch occurs. Cambridge scientists used this same idea to explore whether the screen could detect charges in water, too. Metals like arsenic and lead can appear in water in the form of ions, which are charged particles. When the ionic solution is placed on the screen's surface, the electrodes sense that charge like how they sense our finger.
Imagine a new generation of smartphones with a designated area of the screen responsible for detecting contamination—this is one of the possible futures the researchers propose.
The experiment measured charges in various electrolyte solutions on a touchscreen. The researchers found that a thin polymer layer between the electrodes and the sample solution helped pick up the charges.
"How can we get really close to the touch electrodes, and be better than a phone screen?" Horstmann, the lead scientist on the study, asked himself while designing the protective coating. "We found that when we put electrolytes directly on the electrodes, they were too close, even short-circuiting," he said. When they placed the polymer layer on top the electrodes, however, this short-circuiting did not occur. Horstmann speaks of the polymer layer as one of the key findings of the paper, as it allowed for optimum conductivity. The coating they designed was much thinner than what you'd see with a typical smartphone touchscreen, but because it's already so similar, he feels optimistic about the technology's practical applications in the real world.
While the Cambridge scientists were using touchscreens to measure water contamination, Dr. Baojun Wang, a synthetic biologist at the University of Edinburgh, along with his team, created a way to measure arsenic contamination in Bangladesh groundwater samples using what is called a cell-based biosensor. These biosensors use cornerstones of cellular activity like transcription and promoter sequences to detect the presence of metal ions in water. A promoter can be thought of as a "flag" that tells certain molecules where to begin copying genetic code. By hijacking this aspect of the cell's machinery and increasing the cell's sensing and signal processing ability, they were able to amplify the signal to detect tiny amounts of arsenic in the groundwater samples. All this was conducted in a 384-well plate, each well smaller than a pencil eraser.
They placed arsenic sensors with different sensitivities across part of the plate so it resembled a volume bar of increasing levels of arsenic, similar to diagnostics on a Fitbit or glucose monitor. The whole device is about the size of an iPhone, and can be scaled down to a much smaller size.
Dr. Wang says cell-based biosensors are bringing sensing technology closer to field applications, because their machinery uses inherent cellular activity. This makes them ideal for low-resource communities, and he expects his device to be affordable, portable, and easily stored for widespread use in households.
"It hasn't worked on actual phones yet, but I don't see any reason why it can't be an app," says Horstmann of their technology. Imagine a new generation of smartphones with a designated area of the screen responsible for detecting contamination—this is one of the possible futures the researchers propose. But industry collaborations will be crucial to making their advancements practical. The scientists anticipate that without collaborative efforts from the business sector, the public might have to wait ten years until this becomes something all our smartphones are capable of—but with the right partners, "it could go really quickly," says Dr. Elizabeth Hall, one of the authors on the touchscreen water contamination study.
"That's where the science ends and the business begins," Dr. Hall says. "There is a lot of interest coming through as a result of this paper. I think the people who make the investments and decisions are seeing that there might be something useful here."
As for Flint, according to The Detroit News, the city has entered the final stages in removing lead pipe infrastructure. It's difficult to imagine how many residents might fare better today if they'd had the technology that scientists are now creating.
Of all its tragedy, COVID-19 has increased demand for at-home testing methods, which has carried over to non-COVID-19-related devices. Various testing efforts are now in the public eye.
"I like that the public is watching these directions," says Horstmann. "I think there's a long way to go still, but it's exciting."
Fungus is the ‘New Black’ in Eco-Friendly Fashion
A natural material that looks and feels like real leather is taking the fashion world by storm. Scientists view mycelium—the vegetative part of a mushroom-producing fungus—as a planet-friendly alternative to animal hides and plastics.
Products crafted from this vegan leather are emerging, with others poised to hit the market soon. Among them are the Hermès Victoria bag, Lululemon's yoga accessories, Adidas' Stan Smith Mylo sneaker, and a Stella McCartney apparel collection.
The Adidas' Stan Smith Mylo concept sneaker, made in partnership with Bolt Threads, uses an alternative leather grown from mycelium; a commercial version is expected in the near future.
Adidas
Hermès has held presales on the new bag, says Philip Ross, co-founder and chief technology officer of MycoWorks, a San Francisco Bay area firm whose materials constituted the design. By year-end, Ross expects several more clients to debut mycelium-based merchandise. With "comparable qualities to luxury leather," mycelium can be molded to engineer "all the different verticals within fashion," he says, particularly footwear and accessories.
More than a half-dozen trailblazers are fine-tuning mycelium to create next-generation leather materials, according to the Material Innovation Initiative, a nonprofit advocating for animal-free materials in the fashion, automotive, and home-goods industries. These high-performance products can supersede items derived from leather, silk, down, fur, wool, and exotic skins, says A. Sydney Gladman, the institute's chief scientific officer.
That's only the beginning of mycelium's untapped prowess. "We expect to see an uptick in commercial leather alternative applications for mycelium-based materials as companies refine their R&D [research and development] and scale up," Gladman says, adding that "technological innovation and untapped natural materials have the potential to transform the materials industry and solve the enormous environmental challenges it faces."
In fewer than 10 days in indoor agricultural farms, "we grow large slabs of mycelium that are many feet wide and long. We are not confined to the shape or geometry of an animal."
Reducing our carbon footprint becomes possible because mycelium can flourish in indoor farms, using agricultural waste as feedstock and emitting inherently low greenhouse gas emissions. Carbon dioxide is the primary greenhouse gas. "We often think that when plant tissues like wood rot, that they go from something to nothing," says Jonathan Schilling, professor of plant and microbial biology at the University of Minnesota and a member of MycoWorks' Scientific Advisory Board.
But that assumption doesn't hold true for all carbon in plant tissues. When the fungi dominating the decomposition of plants fulfill their function, they transform a large portion of carbon into fungal biomass, Schilling says. That, in turn, ends up in the soil, with mycelium forming a network underneath that traps the carbon.
Unlike the large amounts of fossil fuels needed to produce styrofoam, leather and plastic, less fuel-intensive processing is involved in creating similar materials with a fungal organism. While some fungi consist of a single cell, others are multicellular and develop as very fine threadlike structures. A mass of them collectively forms a "mycelium" that can be either loose and low density or tightly packed and high density. "When these fungi grow at extremely high density," Schilling explains, "they can take on the feel of a solid material such as styrofoam, leather or even plastic."
Tunable and supple in the cultivation process, mycelium is also reliably sturdy in composition. "We believe that mycelium has some unique attributes that differentiate it from plastic-based and animal-derived products," says Gavin McIntyre, who co-founded Ecovative Design, an upstate New York-based biomaterials company, in 2007 with the goal of displacing some environmentally burdensome materials and making "a meaningful impact on our planet."
After inventing a type of mushroom-based packaging for all sorts of goods, in 2013 the firm ventured into manufacturing mycelium that can be adapted for textiles, he says, because mushrooms are "nature's recycling system."
The company aims for its material—which is "so tough and tenacious" that it doesn't require any plastic add-on as reinforcement—to be generally accessible from a pricing standpoint and not confined to a luxury space. The cost, McIntyre says, would approach that of bovine leather, not the more upscale varieties of lamb and goat skins.
Already, production has taken off by leaps and bounds. In fewer than 10 days in indoor agricultural farms, "we grow large slabs of mycelium that are many feet wide and long," he says. "We are not confined to the shape or geometry of an animal," so there's a much lower scrap rate.
Decreasing the scrap rate is a major selling point. "Our customers can order the pieces to the way that they want them, and there is almost no waste in the processing," explains Ross of MycoWorks. "We can make ours thinner or thicker," depending on a client's specific needs. Growing materials locally also results in a reduction in transportation, shipping, and other supply chain costs, he says.
Yet another advantage to making things out of mycelium is its biodegradability at the end of an item's lifecycle. When a pair of old sneakers lands in a compost pile or landfill, it decomposes thanks to microbial processes that, once again, involve fungi. "It is cool to think that the same organism used to create a product can also be what recycles it, perhaps building something else useful in the same act," says biologist Schilling. That amounts to "more than a nice business model—it is a window into how sustainability works in nature."
A product can be called "sustainable" if it's biodegradable, leaves a minimal carbon footprint during production, and is also profitable, says Preeti Arya, an assistant professor at the Fashion Institute of Technology in New York City and faculty adviser to a student club of the American Association of Textile Chemists and Colorists.
On the opposite end of the spectrum, products composed of petroleum-based polymers don't biodegrade—they break down into smaller pieces or even particles. These remnants pollute landfills, oceans, and rivers, contaminating edible fish and eventually contributing to the growth of benign and cancerous tumors in humans, Arya says.
Commending the steps a few designers have taken toward bringing more environmentally conscious merchandise to consumers, she says, "I'm glad that they took the initiative because others also will try to be part of this competition toward sustainability." And consumers will take notice. "The more people become aware, the more these brands will start acting on it."
A further shift toward mycelium-based products has the capability to reap tremendous environmental dividends, says Drew Endy, associate chair of bioengineering at Stanford University and president of the BioBricks Foundation, which focuses on biotechnology in the public interest.
The continued development of "leather surrogates on a scaled and sustainable basis will provide the greatest benefit to the greatest number of people, in perpetuity," Endy says. "Transitioning the production of leather goods from a process that involves the industrial-scale slaughter of vertebrate mammals to a process that instead uses renewable fungal-based manufacturing will be more just."