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CEREDASE LOW-DOSE REGIMEN COULD REDUCE PATIENT COST TO $58,000 YEARLY

Executive Summary

CEREDASE LOW-DOSE REGIMEN COULD REDUCE PATIENT COST TO $58,000 YEARLY, based on the lowest dose regimen for which there is published data, the congressional Office of Technology Assessment calculates in a report issued Oct. 5. Entitled "Federal and Private Roles in the Development and Provision of Alglucerase Therapy for Gaucher Disease," the report reviews both the research and treatment costs for Genzyme's orphan drug product. Annual Ceredase costs for the lowest dose therapy for which there is published data (30 units/kg monthly administered three times weekly) would be $57,980 per patient, OTA estimates. OTA looked at four treatment regimen scenarios that are consistent with FDA labeling, ranging from the low-dose maintenance to higher-dose acute care and maintenance regimens. Annual costs for the drug ranged from $57,980 to $546,000 under OTA's projections. Total costs of care, including infusions, liver function tests and blood counts, ranged from $71,160 to $552,760. The calculations assume a Ceredase unit price of $3.50, which OTA said is the price being charged to privately insured patients. OTA prepared the Ceredase analysis as a "background paper" to a larger study on pharmaceutical R&D. The larger study was requested by the House Judiciary/Antitrust Subcommittee and House Energy & Commerce/Health Subcommittee. In an Oct. 5 statement reviewing the OTA report, Genzyme reiterated its projections that average annual costs for the drug will be $20,000 to $60,000 once dosages are reduced. Genzyme maintained that much of the report's financial analyses are based on a hypothetical dosage of 60 units/kg per week, but patients "typically receive dosages ranging from six to 60 units per two weeks, which is 1/20 to one-half of the dosages used in the report." OTA reports that "Genzyme advocates a maintenance dosing therapy of as little as 7.5 units/kg administered biweekly. An NIH researcher is using 10 units/kg biweekly as initial therapy in patients who are not severely ill. For these regimens, the annual cost of therapy for an average therapy would be between $34,125 and $45,500 (without ancillary costs). However," the OTA report continues, "there are no published reports of responses to therapy among moderately to severely ill patients treated with maintenance doses of less that 15 units/kg biweekly." OTA also suggests that the lower-dose regimens might be viewed more as "an approach to expanding treatment to a broader population, not as an approach to reducing costs of treating severely ill patients." A theme of the report is that the federal government may be paying "twice" for Ceredase: once through the National Institutes of Health contributions to research related to alglucerase and, secondly, through high costs to federal health insurance programs. OTA cites three "milestones" reached by NIH scientists -- discovering the enzyme defect that causes Gaucher's Disease, developing a method for harvesting the enzyme from human placentae and developing a chemical modification that "greatly improved" the enzyme, with alglucerase deriving from the modified form. OTA cites NIH's later contracts with Genzyme to supply the enzyme over an 11-year period. Those contracts totaled "nearly $9 mil., a figure that represents roughly 20% of alglucerase's measurable R&D costs." Due to NIH's contributions, OTA noted, Genzyme could not obtain a patent for alglucerase. The company does have exclusive marketing rights via the product's designation as an orphan drug. OTA estimates Genzyme's R&D costs for placental alglucerase at $29.4 mil. "Although Genzyme claims that it spent about $48.6 mil. in cash outlays, we include only actual expenditures for the work, materials and facilities needed for the conduct of research," OTA explains. For example, OTA excluded Genzyme's costs to buy back Ceredase rights from a limited investor partnership of which Genzyme had been the managing partner. The R&D costs for Ceredase appear difficult to pin down. In its Oct. 5 statement, Genzyme said "it risked investment of more than $70 mil. prior to FDA approval to develop the product." Sen. Metzenbaum's (D-Ohio) Antitrust Subcommittee report on orphan drugs suggested Ceredase's research costs were approximately $54 mil.; Genzyme indicated at the time of the subcommittee's January hearing that the subcommittee figure was not far off the mark ("The Pink Sheet" Jan. 27, p.9). Genzyme figures supplied to OTA show that there were 301 U.S. patients on Ceredase as of Dec. 31, 1991. Looking at patients' primary health care payer, 12.8% were on Medicare, 8% on Medicaid and 73.1% had private insurance. The remaining 5.9% include an unspecified number that might be participating in Genzyme's free drug program. OTA estimates that "somewhere between one-third and one-half of all alglucerase recipients face a significant risk of exhausting or critically reducing their available insurance benefits over time." While Genzyme has offered to supply the drug free to patients without other financial resources, this does not include ancillary services, OTA pointed out. In addition, describing Genzyme's pricing strategy as charging full price to those with insurance and nothing to those without, OTA characterizes the pricing as "similar in its consequences to a policy in which patients are offered a lifetime supply of alglucerase in exchange for the value of their remaining insurance coverage and associated copayments." Genzyme responded that a $1 mil. lifetime insurance cap will last a typical Ceredase patient 16 years, approximately 50% of Ceredase patients have unlimited lifetime maximums, and most states have high-risk insurance risk pools for individuals who have exhausted their private insurance. OTA noted that Genzyme participates in the Medicaid outpatient drug rebate program, but Medicaid is expected to grant an exemption for Ceredase. Like Ceredase, most drugs that are administered as part of a physician office visit are exempted from rebates.

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