Stem cell ‘magical miracles’ possible — but at a hefty price

The folks in Orange Cove in California’s agriculturally rich Central Valley care about the cost of health care. It is part of their struggle each day as they try to live on $27,000 a year, the lowest median household income of any town in the Golden State. 

Over in Oakland at the headquarters of the $12 billion state stem cell agency, the folks there are also worried about the cost of health care, particularly cell and gene therapies that may well cost upwards of $2 million. 

Some of those treatments could be an “almost magical miracle” for seriously ill residents of Orange Cove as well others around the world. But only if they can afford them, a top official of the U.S. Food and Drug Administration (FDA) once said.

The proposition also ordered up a state effort tackling the affordability of those “magical”  therapies.  And it allocated $155 million to do the job

That was two years ago. Last December, Jonathan Thomas, chairman of the stem cell agency, told its directors that affordability stands as a “very critical issue” for patients and industry.  And it is not likely to go away soon. 

The whole problem — prices, profits and cures — comes together in the byzantine, 17,000-word Proposition 14, a ballot initiative that was approved last fall by California voters. The measure is best known for its $5.5 billion refinancing of the stem cell agency, officially known as the California Institute for Regenerative Medicine (CIRM). 

But the proposition also ordered up a state effort tackling the affordability of those “magical”  therapies.  And it allocated $155 million to do the job. 

In a message delivered last fall to the households of every voter in the state, Californians were told by Proposition 14 supporters that CIRM would “dramatically expand access to clinical trials and new therapies, make treatments and cures more affordable for Californians, and provide patients, their families, and caregivers with financial assistance.”

While CIRM is a California state department, its research has a global impact. More than one million people could be eligible over the next 15 years for the type of gene therapies that CIRM is helping to finance, according to the journal Nature Medicine. 

“Healthcare systems worldwide have to start preparing now to cope with the challenge of ensuring that all patients, not just a select few with financial means and privileged access to technology, can benefit from these innovative therapies,” Nature Medicine said last month in a call-to-action editorial.

But the work has not yet started despite a Proposition 14 requirement that CIRM appoint the members of the AAWG by last March 11.

In California, to fulfill its promise to voters, Proposition 14 created a new, 17-member affordability committee within CIRM itself. The committee is officially called the “Treatments and Cures Accessibility and Affordability Workinq Group,” which CIRM has dubbed AAWG.

It is supposed to lead the way in satisfying Proposition 14’s mandate that CIRM “establish and oversee” programs to help make its yet-to-be commercialized stem cell and gene therapies “available and affordable” for all Californians. 

But the work has not yet started despite a Proposition 14 requirement that CIRM appoint the members of the AAWG by last March 11. Only 13 members have been named so far. No meetings have been held. 

(CIRM has been preoccupied with other matters, trying to ramp up after several years on short financial rations that meant a loss of staff and other cutbacks. Not to mention that CIRM is also in the midst of devising a strategic plan for spending Proposition 14’s $5.5 billion while at the same time stepping up the agency’s current research grant efforts.)

The AAWG is nothing to sneeze at. Its charter and budget are large. Proposition 14 earmarked as much as $155 million to help deal with crushing affordability issues posed by CIRM-financed therapies.

The vice-chair of the CIRM governing board, Art Torres, is leading the affordability group. He is a salaried, part-time employee of the agency.

In addition to the 17 members of the AAWG and contracts with outside consultants, the agency’s affordability effort could be supported by as many as 15 additional CIRM employees. Importantly, those 15 do not fall under the 70-person, so-called “cap” on the size of the agency staff.  

The ballot measure allows up to $55 million for compensation of the 15 affordability staffers over the next decade or so. It also opens the door to private funding of compensation for additional staff beyond the 15.  

Beyond that, the affordability  program could tap into a potentially major stream of income from future royalties from inventions tied to CIRM funding — a new wrinkle from Proposition 14.

The vice-chair of the CIRM governing board, Art Torres, is leading the affordability group. He is a salaried, part-time employee of the agency. Torres is also a former state legislator, former head of the state Democratic Party and a current member of the University of California board of regents and the board of Covered California, which offers subsidized plans for the federal Affordable Care Act.

Then there are  “pay-for-performance,” “annuity-based payments” and a cryptocurrency called “healthcoin” — other possible mechanisms to overcome the sticker shock

Thomas, chair of the CIRM board and also a salaried employee of the agency, is a member of the AAWG by law. Five unsalaried board members have been named to the AAWG. Its additional 10 members will, by law, come from such areas as insurance, hospitals, patient advocacy and health care economics. Members of CIRM’s working groups are compensated $750 a day plus expenses for CIRM-related work. 

Four more are needed to start work and may be named by the end of the year.   (A full list of those named so far is at the end of this article.)

The new playing field for CIRM encompasses not only the critical area of costs for patients but also profits for companies. The issues are not new to CIRM or to the cell and gene therapy industry, which regularly discusses “innovative payment mechanisms” and “reimbursement,” an industry euphemism for how to make a profit. 

Then there are  “pay-for-performance,” “annuity-based payments” and a cryptocurrency called “healthcoin” — other possible mechanisms to overcome the sticker shock of some of the potential therapies.

“But this is no magic. Reality has to be paid for or the miracle disappears.” — Nature Biotechnology.

The scientific journal Nature Biotechnology editorialized two years ago about affordability. One example that it cited involved a genetic treatment, Zolgensma, for children under two who have spinal muscular atrophy. The treatment cost $2.1 million back then, making it the most expensive medicine in the world at the time.

“When first announced, the astronomical price of Zolgensma spurred outrage,” the journal wrote. “But as acting FDA Commissioner Ned Sharpless put it at the June (2019) conference of the Biotechnology Innovation Organization in Philadelphia, ‘This is a completely novel, almost magical, miracle that ends a devastating disease for lots of little kids … and the thing you care the most about is the price?’

“But this is no magic. Reality has to be paid for or the miracle disappears,” Nature Biotechnology said.

Proposition 14 requires CIRM to create and build support for financial models that could justify the cost of the theoretically one-time cures by demonstrating that they would actually save money — ending the need to treat patients in what currently seems to be an endless and expensive cycle. At the same time, Proposition 14 seeks to boost the participation of patients in clinical trials by helping to cover their often considerable expenses for travel to and lodging in the expensive urban centers where the care is provided.

Members of the committee, with the exception of CIRM board members, are also not required to disclose publicly their economic interests.

The stem cell agency’s working groups, supported by CIRM staff, do much of the heavy lifting at CIRM. They make recommendations to the full, 35-member board, which is charged with officially approving them.

While it goes almost without saying that California’s affordability effort involves major public policy, industry and research issues, there is another small matter — secrecy. 

CIRM’s affordability committee is permitted by Proposition 14 to operate behind closed doors as it considers the problems and weighs the solutions. If it does so, CIRM can expect angry protests from open government advocates and from groups who are left out. However, if the CIRM board so chooses, it could require all sessions to be open to the people of California who are funding the program and who have an enormous stake in the affordability game. 

Members of the committee, with the exception of CIRM board members, are also not required to disclose publicly their economic interests. The committee is additionally exempt from the state public records act except for material specifically submitted to the CIRM board, another feature of Proposition 14. Information gathered at public expense and discussed during the closed-door deliberations of the affordability committee thus could be withheld from the public. Again, the CIRM board could require that all such information be disclosed.

Two-million-dollar gene therapies are not a regular topic over breakfast tables like those in Orange Cove.

The ultimate impact of California’s affordability effort is not clear. Major industry groups have been at work on this topic for a number of years, conducting studies and lobbying national regulators and lawmakers. Scientific journals have opined. And the Congressional Black Caucus has weighed in. 

While CIRM’s legal reach primarily extends only to California, it does not exist as a scientific or financial island. Cell and gene therapy enterprises — both scientific and commercial — operate in a global arena. CIRM’s voice is just one of many. Within the United States itself, CIRM is also not likely to become an outlier when it comes to matters of therapy costs and business profits. 

Two-million-dollar gene therapies are not a regular topic over breakfast tables like those in Orange Cove.  But the outcome of CIRM’s slow-to-start affordability program could have a welcome, personal benefit for some of the folks in Orange Cove who are likely to be hoping for those much-heralded  “magical miracles.”
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Editor’s Note: David Jensen is a retired newsman who has followed the affairs of the $12 billion California stem cell agency since 2005 via his blog, the California Stem Cell Report