Podcast Summary: "Is Business Broken?" Episode - "Life Science Innovation: Who Should Pay?"
Podcast Information:
- Title: Is Business Broken?
- Host/Author: Questrom School of Business
- Description: Conversations about the role of business in society, brought to you by the Ravi K. Mehrotra Institute for Business, Markets & Society at BU Questrom School of Business.
- Episode: Life Science Innovation: Who Should Pay?
- Release Date: September 26, 2024
Introduction
In the September 26, 2024 episode of "Is Business Broken?" hosted by Kurt Nickish from the Questrom School of Business, the discussion centers on the burgeoning field of gene and cell therapies—innovative treatments often referred to as "living drugs." These therapies hold the promise of curing rare genetic diseases by modifying a patient’s genes, targeting conditions such as cystic fibrosis, sickle cell disease, and rare cancers. However, their individualized and labor-intensive nature results in exorbitant costs, sometimes reaching millions of dollars per patient. This episode delves into the delicate balance between fostering continued innovation and ensuring accessible, life-saving treatments without overwhelming financial burdens.
Understanding Gene and Cell Therapies
Andrew Obershain, CEO at Bluebird Bio, provides a foundational overview of gene and cell therapies:
"Cell and gene therapies at their best and at their simplest are a one-time treatment that are a cure for what have historically been chronic genetic diseases." [01:54]
Obershain elaborates on the evolution of gene therapy, highlighting its journey from initial research struggles in the 1980s and 1990s to recent successes. Bluebird Bio has successfully brought three gene therapies to market in the U.S., targeting adrenal leukodystrophy and hemoglobinopathies like beta thalassemia and sickle cell disease. These therapies replace faulty genes, offering patients transfusion-free lives and reducing hospital visits significantly.
The High Cost of Innovation
The panelists address the staggering costs associated with these therapies. Andrew Obershain emphasizes the bespoke nature of their production:
"It's individually making an individual drug for an individual patient." [04:07]
The cost per therapy ranges between $2.8 to $3.1 million, raising concerns about financial sustainability. Michael Sherman, Venture Partner at RA Capital Management, discusses the investment landscape:
"There's a lot of risk I want, you know, I think we actually very, very appropriately we have the three sources of funding up here. All three are necessary for a healthy ecosystem." [06:34]
Sherman underscores the necessity of academia, venture capital, and government funding to sustain innovation despite the high risks and uncertainties involved in commercializing these therapies.
Insurance, Access, and Financial Models
A significant portion of the conversation revolves around insurance coverage and access to these expensive treatments. Congressman Jake Auchincloss highlights the societal versus individual cost implications:
"When it comes to cost, the question is cost to whom? Cost to society or cost to the patient?" [11:14]
He argues that society benefits more from investing in such therapies compared to bearing the costs associated with chronic disease management. Rena Conti, Associate Professor at BU Questrom School of Business, adds:
"These products have the promise of providing a life well lived... and our system does not work for them." [15:37]
Conti points out that despite the therapies being value-based, insurance systems, particularly for commercially insured populations, struggle to accommodate their high costs due to existing loopholes and underinsurance.
Michael Sherman introduces value-based agreements as a solution:
"We have the three sources of funding up here... and there are ways to de-risk it." [06:34]
These agreements entail payers paying only if the therapy works, thereby reducing financial risk and fostering trust between insurers and pharmaceutical companies.
Policy Recommendations and Challenges
Congressman Jake Auchincloss proposes stronger ERISA regulations to ensure better coverage and protect beneficiaries from inadequate insurance plans:
"We need stronger ERISA regulations for health plans and for both the self-insured and the third-party insured." [28:08]
He emphasizes the need for bipartisan support to increase national R&D funding, essential for maintaining the United States' leadership in biomedical innovation.
Rena Conti discusses the significant role of state Medicaid programs as insurers of last resort:
"State Medicaid programs... have to adjudicate patient treatment matches while paying for health insurance for other things." [22:13]
She highlights the financial strain on states and the necessity for comprehensive insurance reforms to manage the costs associated with gene and cell therapies.
International Perspectives and Market Implications
The panelists also touch on the global implications of high-priced therapies. Andrew Obershain shares a cautionary tale from Europe:
"We received a price from Germany that would not cover my costs and therefore had to withdraw the product from Europe." [38:26]
This withdrawal not only limits patient access but also affects the global investment landscape, making it harder to justify funding innovative treatments.
Michael Sherman echoes concerns about global market access, stressing the importance of fair compensation for biomedical innovations to sustain investor confidence.
Concluding Insights and Future Directions
As the conversation draws to a close, each panelist shares their vision for the future of gene and cell therapies. Andrew Obershain hopes to pave the way for other companies in the sector:
"We create the pathway for others to follow." [31:06]
Michael Sherman envisions specialized insurance coverage and federal funding models to ensure widespread access without burdening individual patients.
Congressman Jake Auchincloss emphasizes the importance of maintaining robust funding for basic research and advocating for regulatory reforms to support innovative healthcare solutions.
Finally, Rena Conti advocates for a healthcare system that fully values health, ensuring that groundbreaking therapies are accessible and sustainable within the broader economic framework.
Key Takeaways
- Gene and cell therapies represent transformative advancements in treating rare genetic diseases, offering potential cures rather than just management.
- High costs of these therapies pose significant challenges for both patients and the healthcare system, necessitating innovative financial models and insurance reforms.
- Value-based agreements and stronger regulatory frameworks are essential to balance innovation with accessibility.
- Societal investment in biomedical research and innovative treatment models can yield long-term economic and health benefits, outweighing the immediate costs.
- Global market disparities highlight the need for fair pricing and international cooperation to ensure widespread access to life-saving treatments.
Notable Quotes
- Andrew Obershain: "Cell and gene therapies at their best and at their simplest are a one-time treatment that are a cure for what have historically been chronic genetic diseases." [01:54]
- Michael Sherman: "We have to advocate... to make sure that their investors know that if they develop these that they can get paid." [09:47]
- Congressman Jake Auchincloss: "It should be zero... to expose the patient to any out of pocket cost. The wrong answer for who pays is the sick person because that person didn't choose for that outcome to happen." [14:17]
- Rena Conti: "These products have the promise of providing a life well lived... and our system does not work for them." [15:37]
This episode of "Is Business Broken?" offers a comprehensive exploration of the intricate balance between fostering groundbreaking life-saving therapies and ensuring their financial feasibility and accessibility within the healthcare system. The panelists provide nuanced perspectives, highlighting both the potential and challenges of integrating gene and cell therapies into mainstream medical practice.