Heya Reg,
I have an understanding of it but not a mastery. Ryoncil's pricing blew past even my ambitious estimates.
I have more experience regarding reimbursement in the medical device field.
For drugs or drug-like technologies, reimbursement is evaluated based on cost savings. The relevant excerpt from the Ryoncil pricing is below:
"Based on health economic models for lifetime ultra rare disease and high-impact short-term therapies, including Quality of Life Years (QALYs) gained, total benefits of patient outcomes using Ryoncil® ranged from US$3.2 million to US$4.1 million (comprising long-term survival benefit, cost-offset, and cost savings)."
So, using the low end of that, a course of therapy for Ryoncil was given reimbursement of US$1.55 million (half of the lower end of Mesoblast's estimated economic benefits). Based on a 4-week course of 8 infusions, they were then able to get US$194k per vial. I am not sure if the reimbursement of a drug remains at its initial valuation when it is pivoted into a new indication, say Crohn's. Because maybe that sets the benchmark, and every use of a vial of Ryoncil in any indication is now benchmarked at US$194k, but I doubt it works this way and it will be reimbursed on a value by indication basis.
For heart failure, there are a few considerations:
- In the United States, 5.7 million adults have been diagnosed with HF, with estimated annual direct costs of $39.2 billion to $60 billion (US$68,771 - US$105,263 per patient) (ref)
- Costs are higher for patients with heart failure with reduced ejection fraction compared with patients with preserved ejection fraction (ref)
- Revascor reduced 2-point and 3-point MACE by 88% (p=0.005) and 52% (p=0.018) respectively, in patients with ischemic HFrEF and inflammation (n=158) compared to controls.
Doing this properly will literally be someone's whole job at Mesoblast, so I am not going to try that hard, as it would be gritty. But if we assume Revascor saves 10 years of direct annual costs and then all of the benefits of QALYs and removing them as a sickness beneficiary, then a single injection will comfortably generate US$500k to US$2m value.
So perhaps a single injection would then be reimbursed and priced at US$250k-US$1m per treatment if we apply the 50% value rule we saw with Ryoncil.
The thing with heart failure is that there are 1 million patients with inflammatory heart failure with reduced EF, which is about 1/6 of the total number of patients with heart failure in the US. There are 550k new (not repeat) hospital admissions for heart failure per year. Lets assume ~1/4 of them are inflammatory with reduced EF.
Then, at US$250k per therapy by 138k patients per year generates a potential revenue of US$35 billion p.a.
Upside/downside doesn't really matter when you're dealing with numbers that big - it just depends on how well you can scale manufacturing and sell the product.
Cheers,
Gang gang
(20min delay)