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GENZYME CEREDASE SOURCE MATERIAL COST COULD INCREASE

Executive Summary

GENZYME CEREDASE SOURCE MATERIAL COST COULD INCREASE, the company cautioned Dec. 1. On the same day, the French Ministry of Health ordered Genzyme's supplier, Pasteur Merieux, to stop production of human albumin, which is extracted from placenta along with glucocerebrosidase (GCR), the source material for Ceredase. Because extraction costs are fixed, compensation sought for human albumin production may be shifted to the GCR market. Genzyme said the costs of GCR production could increase by up to $22 mil. per year at current production levels. "It is uncertain at this time whether and to what extent any of these costs will be borne by Genzyme, Pasteur Merieux, or may be reflected in the price of Ceredase." Ceredase, with an average annual cost per patient of about $130,000, has been the subject of congressional pricing scrutiny. Genzyme has defended the cost, recently telling the Senate Aging Committee that its gross margins on the product are only 30%, slim by drug industry standards ("The Pink Sheet" Nov. 15, T&G-2). If Pasteur Merieux passes on its increased costs, Genzyme would face substantial pressure on those margins. The company told the committee that it grosses about $30,000 per patient treated with Ceredase: the $22 mil. increase in production costs is equivalent to $22,000 for each of the 1,000 patients currently receiving treatment. GCR is extracted from 22,000 human placentas to provide a year's supply of Ceredase for each patient with Gaucher disease, an enzyme deficiency disorder. Genzyme noted that GCR production will continue at current levels; however, "the current volume of placenta being collected is insufficient to produce adequate quantities of Ceredase to meet the future demand of the Gaucher patient population." Genzyme filed an NDA for recombinant GCR last May ("The Pink Sheet" May 31, In Brief). Approval of the biosynthetic product will ultimately eliminate the need to harvest human placentas. Genzyme has indicated, however, that its production capacity for the recombinant product will not immediately be able to supply the full Gaucher market. "Full scale production of r-GCR should be achieved in the first half of 1995," the company said. Enzon has filed an IND for PEG-glucocerebrosidase for Gaucher disease. Enzon is working with the National Institute of Mental Health, which developed GCR, under a Cooperative Research and Development Agreement to produce a long-acting formulation of the enzyme, which may permit lower, less expensive dosing ("The Pink Sheet" Oct. 4, In Brief).

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