CSL Behring

Stunning Breakthrough: Hemgenix

Last week we shared an essay by Paul Clement about the approval for gene therapy for hemophilia A, approved only in Europe, and asked, when for the US?

While that question is still valid for hemophilia A, the stunning news this week was that gene therapy–at long last—is approved, for hemophilia B!

The news straight from CSL Behring: “This historic approval provides a new treatment option that reduces the rate of annual bleeds, reduces or eliminates the need for prophylactic therapy and generates elevated and sustained factor IX levels for years after a one-time infusion.”

The news was so startling, it made front page on CNN.com. But I suspect not for the scientific reason but for the economic reason: it comes with a $3.5 million price tag, making it the most expensive drug on earth currently.

Hemophilia Economics 101

While high prices are nothing new in hemophilia—factor therapy has always been among the world’s most expensive drugs—the sticker price was shocking to many. So many people have asked me through the years when is the price of factor going to come down, as if it were a high-tech consumer item like camcorders, Walkmans or DVD players. Remember those? They get mass produced, offshored, and millions upon millions of consumers buy them, which eventually drives the price down. And don’t forget competition. Basic supply and demand.

Hemophilia drugs are nothing like that. There are many factors that determine price but here are three: the research and development (R&D) that was spent to create the drug; the finite marketplace; and whether insurance will cover the cost.

R&D for drugs such as Roctavian, the brand name of BioMarin Pharmaceutical’s gene therapy product approved in Europe for hemophilia A, and Hemgenix, the brand name of CSL Behring’s gene therapy product approved by the U.S. FDA for hemophilia B, can surge to the hundreds of millions, if not billions, of dollars. The money needs to be recouped, and reinvested in the company, and to investors.  

The smaller the target audience, the higher the price. How can you recoup the R&D with such a small consumer audience as hemophilia B? In the U.S., there are approximately 20,000 with hemophilia, of which about 15% have hemophilia B. Not everyone of these patients will want gene therapy; not everyone can afford it.

By afford it, I mean have insurance cover it, which is the final piece of the pricing puzzle. Who will pay the $3.5 million per patient? State Medicaid plans? Commercial insurance? What if a patient on Blue Cross Blue Shield is approved, gets the gene therapy, has it reimbursed, but the following year switches plans? How does this benefit the bottom line at BCBS? Will insurance companies say no to gene therapy based on these concerns?

Advocacy is Key

This is where our decades of strong advocacy in the hemophilia community will make a difference. In a way, we’ve been preparing for this moment our whole lives. While the new drugs are not being touted as a cure, those of us old enough remember the slogan “A Cure by 2000!” We have fought for compensation for those infected by HIV and hepatitis from unsafe blood products. We fought for the new recombinant drugs, when insurance denied us. We fought for longer half-life drugs, for prophy, for bi-specific antibody products. All of these came with higher price tags, and eventually we prevailed.

And now?

We will all need to be educated about this new gene therapy, and how to approach our insurance companies, if we want it. As we have been preaching since 2005, when everything changed in insurance for hemophilia, you need to learn to speak the insurance company’s language; debate with them in a way they are used to; work with your healthcare team; stand with your state hemophilia group.

There are so many excellent products available to treat hemophilia, will insurance companies use this to deny gene therapy? At this point, no one knows, but we do know we need to get prepared. Why?

BioMarin is actively working on getting Rotavian approved for hemophilia A in the US. And that will impact thousands more in our community. How the insurance reimbursement of Hemgenix plays out could be a harbinger of things to come.

Read CSL Behring’s press release here.

Do Not Pass Go; Do Not Collect $3.1 Billion

The game of “Monopoly” is over– at least that’s what the Federal Trade Commission would have called it. Worried that CSL Behring would become too big after acquiring Talecris, and concerned that there was some antitrust issues, the FTC slapped the wrists of these two billion dollar plus companies and announced it would oppose the merger through the US courts, if necessary. Talecris management decided to withdraw from the $3.1 billion takeover deal by CSL Behring.

The US FTC opposed the proposed merger by alleging that the US plasma market was a tightly-controlled oligopoly, and that the merger would violate antitrust laws. CSL Behring has rejected these claims. The merger would have left CSL Behring the biggest plasma manufacturer in the world.

I read that CSL, Talecris and market leader Baxter International of Illinois have 83% of the US market for blood-based drugs; hemophilia plasma-derived products are included in this.

Just a little history: Talecris is the company formed in 2005 when Bayer spun off its plasma division. Bayer produced a plasma-derived factor VIII product called Koate DVI. Talecris inherited it and still produces it. It’s a big company, with 2008 sales of over $1.4 billion. It’s not big in hemophilia in the US, but it is a major player in the immune deficit disorders community.

The proposed sale to CSL Behring is no surprise. I’ve heard from the get-go that management at Talecris would expand the company, and then sell it and reap the profits. Private equity companies Cerberus Capital Management and Ampersand Ventures together bought the plasma division of Bayer for more than $300 million. And now it’s up for $3.1 billion.

So what happens now?

Well, we still have seven licensed manufacturers of factor on the US: Baxter, Bayer, CSL Behring, Grifols, Novo Nordisk, Wyeth and of course, Talecris. I wouldn’t be surprised if more mergers are proposed down the road but the FTC ruling might make it impossible to accomplish. Our community, our industry, is small and carefully watched. And the Obama climate seems to be very antitust-conscious.

Neal R. Stoll and Shepard Goldfein, in the New York Law Journal (November 19, 2008) note, “In his September 2007 statement to the American Antitrust Institute (AAI), President-elect Obama noted that ‘[a]ntitrust is the American way to make capitalism work for consumers.’ President-elect Obama emphasized that, ‘the [Bush] administration has what may be the weakest record of antitrust enforcement of any administration in the last half century,’ and he specifically cited lax merger enforcement for the rising cost of health insurance.” The authors then go on to say that antitrust laws are not good tools to effect economic engineering.

Read more about plasma derived products–their role in hemophilia history and today, in the next issue of PEN.

Not a Match Made in Heaven


Big news from the corporate hemophilia world: CSL, maker of blood-plasma products, including Monoclate-P, Mononine, and Humate-P, has been foiled in its courtship of Talecris, also a maker of blood-plasma products, most notably Koate DVI. “The US Federal Trade Commission (FTC) recommended legal action to block the proposed $3.1 billion purchase of Talecris Bio- therapeutics Holdings,” writes Bloomberg news.

Why can’t CSL buy Talecris? What has lawmakers ruffled up about this? Gobbling up Talecris would place CSL at the top of the blood plasma food chain. This includes hemophilia, as well as autoimmune disorders and multiple sclerosis. Something about this screams violation of antitrust to Washington.

Antitrust law prohibits any activity that restricts free trade and competition between businesses, especially those that would lead a company to a dominant position–a monopoly. So the government is always sniffing out predatory pricing, price gouging, and mergers and acquisitions of large corporations. The FTC website says, “Courts have applied the antitrust laws to changing markets, from a time of horse and buggies to the present digital age. Yet for over 100 years, the antitrust laws have had the same basic objective: to protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up.”

And antitrust laws have been around longer than 100 years. Wikipedia says: “The history of competition law reaches back to the Roman Empire, with the Lex Julia de Annona, enacted during the Roman Republic around 50 BC. To protect the grain trade, heavy fines were imposed on anyone directly, deliberately and insidiously stopping supply ships.”

The term “antitrust” is American, and arose when large American corporations used trusts to conceal business arrangements. Big trusts meant big monopolies, and when you have a monopoly, you can easily control supply and demand, and prices. You have no competition. Have you played the game Monopoly and landed on your friend’s Park Place, the one with a red hotel? Ouch. Consumers have suffered at the hands of those with monopolies.

In America, monopoly is perceived even as a threat to democracy. The FTC website writes: “Free and open markets are the foundation of a vibrant economy. Aggressive competition among sellers in an open marketplace gives consumers — both individuals and businesses — the benefits of lower prices, higher quality products and services, more choices, and greater innovation. The FTC’s competition mission is to enforce the rules of the competitive marketplace — the antitrust laws. These laws promote vigorous competition and protect consumers from anticompetitive mergers and business practices.” http://www.ftc.gov/bc/antitrust/index.shtm

Perhaps the FTC thinks that a CSL acquisition of Talecris would make the company too big for its britches, too powerful? Talecris, owned by the private equity groups Cerberus Partners and Ampersand Ventures, had revenue of about $1.4 billion in 2008. CSL had $2.97 billion in revenue in the year ending June 2008. Together they would dominate the blood plasma field, surpassing Baxter, which is now top dog. Indeed, Talecris, Baxter and CSL already control 83% of the US market. Other producers include Grifols, which makes blood products, and Octapharma, which also makes blood products although its factor products are not yet registered in the US.

What’s next? After the FTC publishes its reasons for preventing the acquisition, CSL will then decide what to do. Wooing a prospective partner when the parents don’t approve is expensive. But not so bad as in Roman times: Under Diocletian in 301 AD businessmen faced the death penalty for violating a tariff system, for example by buying up, concealing or contriving the scarcity of everyday goods. Death penalty? Thankfully we don’t do things gladiator style anymore. If CSL cannot complete the deal, the company will be liable to pay a $75 million break fee to Talecris’s owners, Cerberus Partners and Tribeca Investment Partners, a company spokeswoman said. That should soften any break up. Stay tuned!

Interesting Book I Just Read
The Blue Sweater by Jacqueline Novogratz

Novogratz started her career as a young, starry-eyed do-gooder out to change the world, and got an eye-opener working in Africa in the 1980s for various nonprofits. She had valuable experiences about what works and what doesn’t in helping the poor. Eventually, she returned to the US and founded the Acumen Fund, which finances businesses in the developing world that give jobs to the poor, tackle issues of poverty and offer microloans. From a one-woman show to heading a huge NGO now, her story is very interesting. In many ways it’s an homage to the African women who struggled alongside her and taught her, and learned from her.

But it’s not without problems: the book seems to have been written by two people, or at least in two voices. The first half is all anecdotal, about Novogratz’s efforts in Africa to help local women start a baking business, in great amounts of detail, without stats about poverty, its root causes. I care less about what color dresses the women wore (this seems to come up a lot!) than about how her efforts compare to other NGOs at the time. Her story paints a very accurate picture of what you still can see in Africa and what the challenges are. I would have found it more interesting and useful had she interspersed history, poverty statistics and analysis in it. The second half shifts suddenly to the Acumen Fund and there is almost nothing but statistics, and all success stories. Sounds like a promotional piece. Gone is the author’s personal style, which was full of feeling and self-reflection. The Acumen Fund is portrayed as a little too perfect, which I suppose happens when you write about the nonprofit you head. I would like to have seen more objectivity. Some of the stories made me cringe, not due to the nature of them, but they seem a bit self-serving. For example, the author shares a story of being in rural Pakistan, and hearing gun shots. Is it the Taliban? Warlords? Momentum builds. You might think she may be kidnapped (a la Daniel Pearl) but turns out it’s only the townspeople warning a local thief to give himself up. Big yawn. Nothing to do with her. In trying to spice things up, Novogratz comes out looking a bit needy for attention.

What I loved best are her vivid and accurate portrayals about the lives the people lead in developing countries, the daily struggles they face, the hardships they bear and overcome. Death is a constant, woven into their fabric of daily living, she writes and I have often thought that too. Only people who visit or live in these places truly understand the needs of the poor. Norogratz has definitely walked the walk; she has lived as a poor person, in subhuman dwellings.

I do wonder about Acumen’s not-so-successful stories, which are not mentioned and must exist: loans gone bad? I mean, Acumen gives a $600,000 loan to a local businessperson with diamond rings and expensive watches… what happens when they skip town, pad their books? I’ve seen nonprofits report how everything is successful– I mean, everything– and it raises eyebrows. Having been to developing countries, knowing their complexities, and the corruption and temptation, I am sure that Acumen has had some bad moments.

It’s an interesting story for sure, but for seasoned humanitarians, the book offers little meat. I applaud her efforts and devotion but the book would have been better written by a more objective third party. For those new to humanitarian aid, you’ll enjoy this, but also please read Mountains Beyond Mountains, both much better written, and better at both analyzing roots of poverty and solutions, and at providing a political/historic perspective. Two and a half stars.

Exciting News From Wash DC!

Tremendously great news from our nation’s capital. Life is about to change for a lot of people–but it’s nothing to do with a new president. Finally, a product has been approved by the US FDA for those with factor I deficiency!

It’s called RiaSTAP (Fibrinogen Concentrate (Human)), and it’s indicated for the treatment of acute bleeding episodes in patients with congenital fibrinogen deficiency (factor I deficiency), including afibrinogenemia and hypofibrinogenemia. RiaSTAP is a heat-treated, lyophilized fibrinogen powder made from pooled human plasma.

From www.businessspectator.com.au: “The approval by the FDA requires further study after marketing to confirm the product provides meaningful benefits to patients. The safety of Riastap, derived from human blood plasma, ‘appears to be acceptable,’ FDA reviewers said. The drug is already sold in parts of Europe as Haemocomplettan P.”

For more info, check out this site:

http://www.fda.gov/cber/products/riastap.htm

From the NHF website:

“Factor I deficiency is actually a collective term for several rare inherited fibrinogen deficiencies. Fibrinogen may be absent from the blood altogether (afibrinogenemia), present in only very low levels in the blood (hypofibrinogenemia), or measurable in normal quantities but defective (dysfibrinogenemia).

“The incidence of Factor I deficiency is estimated at 1 to 2 per million. It is inherited in an autosomal recessive fashion, which means it affects men and women equally.

“Fibrinogen helps platelets to glue together to form the initial ‘plug’ in response to an injury. Therefore, people with factor I deficiency, have a combined bleeding disorder because both platelets and clotting are abnormal. The severity of the disorder is directly related to the amount of fibrinogen present.

“Afibrinogenemia and hypofibrogenemia are usually diagnosed in newborns who can present with head bleeds, bleeding after circumcision and from the site of the umbilical cord. Easy bruising, nose and mouth bleeds, and soft tissue bleeds are also common. Joint bleeding is relatively uncommon. Women with afibinogenemia have an increased risk of spontaneous abortion. Persons with dysfibrinogenemia may have a disposition to thrombosis.”

It’s great to know there is now something commercially available for patients. This is another great from CSL Behring.
Congratulations to all!

Shopping Spree: CSL Limited to Buy Talecris

The hemophilia world is buzzing with the latest acquisition announcement: CSL Limited will buy Talecris Biotherapeutics Holdings Corp., one of the world’s leading manufacturers of plasma-derived protein therapies. One of these therapies is Koate-DVI, a plasma-derived factor VIII clotting concentrate. The move will make CSL a stronger competitor in the $15 billion global plasma products market. Selling price? US $3.1 billion.

How will this affect the US market, with so many changes underfoot?

One concern is what will happen to Koate DVI. CSL Behring already has two plasma derived factor VIII concentrates, Monoclate® P and Humate® P. Will it need three? We may be jumping the gun in speculating. Talecris is reaching out to its customers to assure them that the acquisition will not affect production for the foreseeable future. Below is a letter from Talecris, which I am reprinting with permission. We’ll be watching developments closely, and will let you know more in the near future. And let me add: we’ve been predicting consolidations, both in home care and in pharma, for the past four years, and so they continue. We will monitor industry and as always, try to discern how consolidations and acquisitions, and product changes, will affect you, the consumer.

August 13, 2008

Dear Hemophilia friends, partners, and patients:

You may have heard Talecris Biotherapeutics and CSL have entered into a definitive agreement for CSL to purchase Talecris, pending the necessary regulatory approvals.

Please note that our commitment to provide high quality and effective products to our customers remains our paramount concern, and that has not changed — nor will a transaction affect any of our existing contracts to supply Koate-DVI Antihemophilic Factor (Human).

While the transaction moves through regulatory review, we will continue to serve our customers and the patients who rely on us by providing a reliable supply of safe and effective protein therapies. Additionally, we will continue to invest in improving our products, increasing the availability of our therapies, and developing innovations to enhance the lives of our patients. In short, you can rely on us now and in the future, however that future unfolds.

Talecris Biotherapeutics recognizes that the availability of Koate-DVI, is a paramount issue for the patients around the world. It is an issue of extreme importance to us, and one in which we have invested heavily to resolve for the patients we serve. In the past several years, we’ve invested over $150 million in the vertical integration of our plasma supply chain to enable long-term reliable supply, and tremendous progress has been made in taking the necessary steps to ultimately increase the supply of Koate-DVI.

* Talecris has invested significantly in our Clayton manufacturing facility, which operates nearly 24 hours a day, 365 days a year. In fact, we are completed an extended planned maintenance in order to significantly upgrade portions of our facility where Koate-DVI is produced. These upgrades will allow us to support increased worldwide demand and meet current commitments to supply Koate-DVI to our patients.

* Talecris Plasma Resources, Inc. (TPR), will further ensure a reliable, consistent supply of plasma for the long-term and we continue to invest significantly in improving the output of these centers and opening new centers.

* CSL, like Talecris, is a key global player in the plasma biotherapeutics industry dedicated to treating rare and serious diseases, and is passionate about improving the quality of life for patients throughout the world. We believe a combined entity would accelerate our ability to develop and deliver therapies that enhance the lives of patients who depend on us.

Book I Just Read: How Elizabeth Barrett Browning Saved My Life by Mameve Mamwed
I don’t usually read fiction, especially not romantic fiction, but this book was a gift, and personalized by the author at that, so I could not avoid reading it. And I am glad I did: a little charmer of a book, easy to read and very well done. The real story’s about love, wrapped up in a plot about how an antique chamber pot turns the life of a struggling, young, intelligent antiques dealer with poor self-esteem upside down. Abby thinks her life is about to get better when the pot is appraised at $75,000, as it was once owned by poet Elizabeth Barrett Browning. But it’s the beginning of a lot of trouble, and a lot of introspection as to the nature of relationships when relatives and friends come out of the woodwork to get a piece of Abby’s fortune. I loved all the literary references and as it takes place in Cambridge, Massachusetts, hearing about places well known to us Yanks. Three stars.

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