From Airbag to Airpaq: College Kids Think Big, Save Tons of Auto Waste
Luckily, two college freshmen at the Rotterdam School of Management, Erasmus University, were naïve enough to take their bicycles to the scrapyard. In a previous stroke of fortune, the freshmen, Adrian Goosses and Michael Widmann, had been assigned as roommates and had quickly hit it off. Now they were looking for a cool recycling project for their first semester “strategic entrepreneurship” course—maybe they could turn old tires into comfortable lounge chairs, they thought.
“Everybody gets around by bike in Rotterdam,” says Goosses, now 32, from his home in Cologne, Germany. “The tires were way too heavy and cumbersome to transport by bike,” Widmann chimes in via Zoom from Bolzano, Italy, where he lives.
Sifting through the car trash for something handier led the two students to an idea that has since flourished: Could the airbag and seatbelts from a banged up compact car be salvaged and turned into a sustainable backpack? The size of the airbag was already a natural fit. The seatbelts made perfect shoulder straps. After returning from the scrapyard, “We stitched the prototype together by hand with a needle and yarn,” says Goosses. “Yet we didn’t even know how to sew!”
Much to their surprise, their classmates responded with so much enthusiasm to their “trash bag” concept that it convinced the two innovators to keep going. Every semester, they improved the prototype further. With the help of YouTube videos, they taught themselves how to sew. Because modern electric sewing machines had a difficult time breaking through the tough nylon of the airbags, Goosses and Widmann went to a second-hand shop and purchased an ancient Singer from 1880 for 10 Euros. They dyed the first airbags in a saucepan in the garden outside of the apartment they shared.
“By the time we graduated, we had a presentable prototype and a business plan,” Goosses says.
Despite their progress, Goosses and Widmann are up against a problem that’s immense: Cars are notoriously difficult to recycle because many parts are considered toxic waste.
It’s an example of “upcycling,” when you spot a potential new use in something that’s been trashed, shelved or otherwise retired. The approach has received increasing attention and support from the U.S. Environmental Protection Agency and others to boost sustainability in all kinds of areas, from fashion (where even luxury brands like Balenciaga or Coach repurpose vintage clothing and bags) to architecture, where reusing wood, steel and bricks significantly reduces a building’s carbon footprint.
In addition to helping the planet, those who do it well can make a living from it. These days, Goosses and Widmann own a flourishing company: Airpaq. A crowdfunding campaign in 2017 yielded 70,000 Euros to get them started. Since then, they have upcycled 80,000 airbags, 100,000 seatbelts and 28,000 belt buckles – the equivalent of 60 tons of car trash.
For the successful upcycling, they received the 2021 German Design Award and, earlier this year, the renowned German Sustainability Award. The jurors evaluating the product commented that the startup “convinced us not only because of their uncompromising quality and functionality but also because of their ecological and ethical values….How well the startup translates upcycling and green fashion into an urban lifestyle brand is impressive.”
Despite their progress, Goosses and Widmann are up against a problem that’s immense: Cars are notoriously difficult to recycle because many parts are considered toxic waste. Therefore, up to 25% of vehicle scraps get shredded every year in Germany alone, the equivalent of over 501,000 tons. Because airbags and seatbelts are nearly indestructible, they are costly to recycle and almost always end up in landfills. Given that airbags and seatbelts save lives, they are subject to stringent security regulations, and manufacturers have a sky-high reject rate. “If a tiny filament protrudes somewhere, the manufacturer will throw out the entire output,” Widmann explains.
The nearly indestructible qualities that make this material very difficult to recycle render it an excellent resource for backpacks. “The material is so durable, you almost cannot tear it,” Goosses adds and demonstrates with a hard tug that even when the material already has a hole, it won’t rip it further. The material is also water repellent and extremely light.
The antique Singer is still in their Cologne headquarters but only as decoration. Their company with 12 employees is producing 500 backpacks and fanny packs every week in Romania, where the parts are professionally cut by laser, dyed and sewed. Airpaq still procures the belt buckles at scrapyards but they get most of the airbags directly from the reject pile of a nearby airbag producer. “We process the materials where they are produced,” Goosses explains. Only about 15 miles lie between one of Europe’s biggest airbag manufacturers and the Airpaq seamsters in Romania.
Co-founders Adrian Goosses and Michael Widmann demonstrate their company's equation: airbag plus seatbelt equals a backpack that's durable and eco-friendly.
Airpaq
The founders are aware that with price tags ranging from 100 to 160 Euro - a cost that reflects their intensive production process - Airpaq’s bags are hardly competitive. After all, anybody can buy a discount backpack for a fraction of the cost. So they recently added fanny packs for 30 Euro to their product line. Goosses and Widmann know they will need to lower their prices in the long run if they want to expand. Among other things, they didn’t pay themselves salaries during the first two years after founding the company.
Money-making isn’t their only objective. “Of course, it would be cheaper if we did what almost all textile producers do and move production to Asia,” Goosses says. That wasn’t an option for him. “Ship trash to Vietnam and let seamsters sew it together for cheap? No way, that would be anything but sustainable,” he says.
Michael Widmann’s family was already operating a textile production in Romania, mainly producing thin, elastic sports fashion. The family allowed Widmann and Goosses to produce their first professional prototypes there, but then the two youngsters had to buy their own machines, acquire the necessary knowhow, and hire their staff. They both moved to Romania for six months “to get to know the people behind the machines.” The founders emphasize that they pay fair wages, use eco-certified dyes and clean their own wastewater. “Normal production uses five to six liters of water per kilo material,” Widmann explains. “We only need a fraction because we massage the dye into the material by hand: 100 ml water for washing and dying per kilo.”
However, every time they return to the scrapyard, the abundance of trash sparks new ideas. “When you see how much material ends up there…” Widmann says, shaking his head without finishing the sentence. Goosses picks up the train of thought: “We want to make upcycling the new standard. You just have to be creative to get upcycling into the mainstream.”
And maybe they’ll return to their roots and finally find an idea for the tires after all. “One could turn the rubber into soles for comfortable shoes,” Widmann thinks out loud.
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.”
Each afternoon, kids walk through my neighborhood, on their way back home from school, and almost all of them are walking alone, staring down at their phones. It's a troubling site. This daily parade of the zombie children just can’t bode well for the future.
That’s one reason I felt like Gaia Bernstein’s new book was talking directly to me. A law professor at Seton Hall, Gaia makes a strong argument that people are so addicted to tech at this point, we need some big, system level changes to social media platforms and other addictive technologies, instead of just blaming the individual and expecting them to fix these issues.
Gaia’s book is called Unwired: Gaining Control Over Addictive Technologies. It’s fascinating and I had a chance to talk with her about it for today’s podcast. At its heart, our conversation is really about how and whether we can maintain control over our thoughts and actions, even when some powerful forces are pushing in the other direction.
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We discuss the idea that, in certain situations, maybe it's not reasonable to expect that we’ll be able to enjoy personal freedom and autonomy. We also talk about how to be a good parent when it sometimes seems like our kids prefer to be raised by their iPads; so-called educational video games that actually don’t have anything to do with education; the root causes of tech addictions for people of all ages; and what kinds of changes we should be supporting.
Gaia is Seton’s Hall’s Technology, Privacy and Policy Professor of Law, as well as Co-Director of the Institute for Privacy Protection, and Co-Director of the Gibbons Institute of Law Science and Technology. She’s the founding director of the Institute for Privacy Protection. She created and spearheaded the Institute’s nationally recognized Outreach Program, which educated parents and students about technology overuse and privacy.
Professor Bernstein's scholarship has been published in leading law reviews including the law reviews of Vanderbilt, Boston College, Boston University, and U.C. Davis. Her work has been selected to the Stanford-Yale Junior Faculty Forum and received extensive media coverage. Gaia joined Seton Hall's faculty in 2004. Before that, she was a fellow at the Engelberg Center of Innovation Law & Policy and at the Information Law Institute of the New York University School of Law. She holds a J.S.D. from the New York University School of Law, an LL.M. from Harvard Law School, and a J.D. from Boston University.
Gaia’s work on this topic is groundbreaking I hope you’ll listen to the conversation and then consider pre-ordering her new book. It comes out on March 28.