Profiles: Gene Editing
Transcript of BioCentury This Week TV Episode 201
Aaron Vandervelde, Director, Berkeley Research Group
Laurel Todd, Managing Director of Health Policy and Reimbursement, BIO
Dr. Jennifer Doudna, Howard Hughes Investigator and Professor of Biochemistry, Biophysics and Structural Biology, UC Berkeley
PRODUCTS, COMPANIES, INSTITUTIONS AND PEOPLE MENTIONED
Dr. Emmanuelle Charpentier, Head of Department Regulation in Infection Biology, Helmholtz Centre for Infection Research
Sen. Chuck Grassley (R-Iowa)
Osaka University, Osaka Japan
Safety Net Hospitals for Pharmaceutical Access (SNHPA), Washington, D.C.
Danisco, DuPont Nutrition & Health, E.I. DuPont de Nemours and Company (NYSE:DD)
Health Resources and Services Administration, HHS, Washington, D.C.
Erin McCallister, Senior Editor
ERIN MCCALLISTER: A program for the poor is pitting hospitals against drug companies and could stick patients with the bill. Are hospitals gaming the system? Or are drug companies changing the rules? And in our Profiles in Innovation, we'll look at how gene editing is transforming disease research. I'm Erin McCallister. Welcome to BioCentury This Week.
NARRATOR: Connecting patients, scientists, innovators, and policymakers to the future of medicine, BioCentury This Week.
ERIN MCCALLISTER: 340B is the federal program designed to provide revenues to hospitals that care for poor or indigent patients. Hospitals receive deep discounts on drugs and then distribute them to their patients, regardless of insurance or income status. Hospitals generate revenues by receiving full-price reimbursement from insured individuals and are expected but not required to use the 340B revenues to pay for the care of poor or uninsured patients.
340B has exploded in size in recent years, partly because the Affordable Care Act has expanded eligibility criteria for hospitals. But drug companies believe the program has gotten too large, and hospitals aren't using the 340B revenue for its intended purpose. Hospitals say the criticism is unwarranted and that drug companies want the program to disappear.
Later in the show, we'll hear from a group representing drug manufacturers about what can be done to improve the program. But first, I'm pleased to be joined by Aaron Vandervelde, a director at the Berkeley Research Group, which has done some analysis of the 340B program. Aaron, in your analysis, one of the things you looked at was cancer centers. Can you tell us a little bit more about what you found?
AARON VANDERVELDE: We recently published a study looking at the acquisitions of community oncology practices by 340B entities, and we observed a couple of things. First we observed that the trend in these acquisitions is increasing since 2005 through 2012.
And we also observed that the acquisitions are typically very large and result in a sizable increase in 340B chargebacks at the covered entities.
ERIN MCCALLISTER: And what's a chargeback real quick?
AARON VANDERVELDE: A chargeback effectively is savings that a 340B entity receives on the price of a drug. The 340B program allows covered entities to purchase drugs at significantly reduced prices, and that chargeback represents the difference between a manufacturer's list price and the price that a 340B entity receives.
ERIN MCCALLISTER: OK, and so they're buying these cancer centers in theory or in part maybe to increase the revenues they're generating from 340B. Did you find why they were increasing their acquisitions?
AARON VANDERVELDE: That certainly is one of the main factors. 340B entities have access to these low-cost drugs. However, their reimbursement for those drugs is not impacted. So if a covered entity purchases a drug and dispenses it at a lower cost, they receive an increased product margin because of those low-priced drugs.
ERIN MCCALLISTER: And then in terms of what you looked at and what you found, did you also look at or do you have any other thoughts on what else might be driving the increased acquisition of the cancer centers other than just the bottom line?
AARON VANDERVELDE: There absolutely are other factors. Community oncologists are under a lot of reimbursement pressure, and so community oncologists at times are looking for an acquisition partner. And in many instances, that's a 340B entity.
The hospitals also make the practice of oncology easier for community oncologists. A lot of the paperwork is taken out of the equation. Some of the financial risk is taken out of the equation. So there are other factors that play into this.
ERIN MCCALLISTER: And in terms of the effect on patients, one concern as you start to see this acquisition of these cancer centers that maybe patients don't have immediate access to the cancer centers in their neighborhood, or --
AARON VANDERVELDE: To the extent that a acquisition results in a practice moving from the community setting into the hospital, there absolutely could be a reduced access to care. In our study, one of the things we observed was that a majority of the acquisitions were practices that were located 10 or more miles from the hospital.
And so if those practices are moved into the hospital setting, that's an increased barrier to access just simply based on the proximity of the oncologists to the patients.
ERIN MCCALLISTER: And then one last thing before we finish up, cancer care provided within hospitals at times can be more expensive. Did you do any analysis of that, or have you looked into that at all?
AARON VANDERVELDE: We have looked at that, and other studies have looked at that as well. And you're absolutely right. Reimbursement is greater in the hospital outpatient setting than it is in the community setting. That's partially a function of reimbursement rates, and it's partially a function of utilization.
ERIN MCCALLISTER: Well great. Thanks. Next we'll talk with Laurel Todd from the Biotechnology Industry Organization. But first, here's a look at how much 340B revenue is going to help poor patients.
NARRATOR: You are watching BioCentury This Week.
ERIN MCCALLISTER: For the drug manufacturers' perspective, I'm joined by Laurel Todd, Managing Director of Reimbursement and Health Policy at the Biotechnology Industry Organization. Bio is a sponsor of BioCentury This Week. Our invitation to Safety Net Hospitals for Pharmaceutical Access, a group representing 340B hospitals, was declined. Laurel, thanks for joining us today.
LAUREL TODD: Thanks for having me.
ERIN MCCALLISTER: So we hear the amount of money spent on 340B drugs, it's only about 2% of total drug spending on pharmaceuticals. So what's the big deal? What's the concern of companies?
LAUREL TODD: So the program is billions and billions of dollars, and really, at the end of the day, we don't know how that revenue for the hospitals is being used to benefit patients. There's a lot of open questions that many studies, and research, and other sources have identified that raise questions about how the program is operating today versus what was considered in 1992 when the program was first formed.
ERIN MCCALLISTER: And when the law was passed, it didn't actually specifically require these entities to pay for charity. It didn't define what they were supposed to do with the money. It's just kind of the spirit of the law.
LAUREL TODD: So the program was intended to restore discounts that certain entities had been receiving before the implementation of the Medicaid drug rebate, and for the purposes of helping those entities serve indigent, low-income and otherwise uninsured patients. And over 20 years, we've seen the introduction of the Medicare drug benefits, and then the expansion of health insurance access through the Affordable Care Act.
And with those changes over 20 years, we haven't seen an equal amount of oversight and compliance to see if the program continues to meet those original goals. And I think the reality of the program today is probably a lot different than what we set out to address back in 1992.
ERIN MCCALLISTER: And in terms of oversight, HRSA, the group that's in charge of 340B -- the federal agency in charge of it -- they have started to increase their audits of both the entities and the drug companies. In turn, is that something that you want to see more of or --
LAUREL TODD: Absolutely. So HRSA received an additional appropriation last year to help for exactly this purpose, because Congress agreed that perhaps it was time for HRSA to have greater resources and ability to oversee the program. A number of federal watchdog groups have cited various challenges in the program.
And so these dollars for HRSA have allowed them to build new databases, and hire new staff to help with these program integrity challenges. But there are still a number of questions and areas that continue to need further investigation and oversight.
ERIN MCCALLISTER: And one of things you mentioned earlier was that there's a lot of research out there that suggests maybe this money isn't going to what the spirit of the law intended. But the hospitals, they provide a number of services. Some of them are the only ones that have a burn unit at that hospital in the area. And so how can you really quantify whether or not that money's actually going to charity care?
LAUREL TODD: Well, so what we do know about charity care is that a very small number of DSH hospitals in the program are actually providing most of that charity care. But the fact remains that we don't know how much is being generated by the program, or where it's going. Hospitals have to attest and certify to the government what level of charity care they're providing. And so that's one clue into how this is working.
But that's not required by the 340B program. There's an entire segment of the program that does have to report how they're using program funds to further advance patient-centered goals, but unfortunately, on the hospital side, it doesn't happen.
ERIN MCCALLISTER: OK, well, we'll pick up our conversation when we get back about 340B. But first, here's a look at what safety net hospitals say they are doing with the 340B revenues.
NARRATOR: Now back to BioCentury This Week.
ERIN MCCALLISTER: We're continuing our discussion about the 340B controversy with Laurel Todd at BIO, Laurel, one of the things that we were talking about before was the effects on patient care. Aaron had mentioned sort of the consolidation of cancer centers. What does all this really mean for patients at the end of the day?
LAUREL TODD: So, there's two components here. In the instance of oncology care, we know that receiving your care in a hospital-based setting in an outpatient setting is more expensive for the patient. And so when a patient -- there's a great story actually out of the Charlotte Observer the shows that a patient who's receiving their oncology care, suddenly in the middle of their care, their out-of-pocket costs jumped.
And that's because their physician practice had been acquired and became part of a hospital, and so now they were paying a greater portion of their costs of their care. But in many instances in 340B, the patient never knows that they're receiving a drug that has been purchased at a 340B rate, particularly in the instance of a contract pharmacy.
So for-profit pharmacies can contract with hospitals to provide these drugs. And the patient at the point of sale never knows for the most part that that was a 340B drug. And so they may actually be paying more out of pocket than it costs for the hospital or pharmacy to acquire the drug.
ERIN MCCALLISTER: One of the things that the 340B hospitals say that they are using the money for is to reduce some of those out-of-pocket expenses for patients and in cases where they're not getting the proper level of reimbursement help pay for that as well. What is your take on that?
LAUREL TODD: So, there are certain types of entities that participate in the program that do have to offer sliding scale discounts for patients, particularly in the grantee side, federally qualified health centers and community health centers. However, there's no similar requirements on the hospital side.
So if the hospital chooses to offer that to a patient, they may. But that's not always the case. Same thing in the pharmacy situation where the pharmacist may or may not know that that patient is a patient of a 340B entity.
ERIN MCCALLISTER: And so going forward, what would BIO like to see done to 340B?
LAUREL TODD: I think first of all, we need to see much more accountability and oversight in the program, particularly as it relates to eligibility criteria for the DSH hospitals. There's fairly rigorous criteria for the grantees in the program.
But on the DSH side, as we've discussed, there's very little requirement for how funds are generated and how they're used to meet patient needs. And I think that whether we're accurately capturing the true safety net population is an open question.
ERIN MCCALLISTER: So are we talking about a change to the law? Because the definition of what a DSH hospital is, that's written into the law.
LAUREL TODD: Yes, that particular component is something that might have to change in the law. But I think there are other areas of program integrity that could be strengthened through HRSA activity.
They've already started to cite that their audit findings have -- the term they use is sentinel -- has had a sentinel effect on the rest of the 340B population, which is great. But I think that an over reliance on just that sentinel effect still doesn't give the strong back bone and foundation that the program needs.
ERIN MCCALLISTER: OK, but at the end of the day, if we were to reduce the number of disproportionate share hospitals or have some stronger oversight, doesn't that mean patients might actually end up paying more for their drugs?
LAUREL TODD: Not necessarily, because hospitals, we don't know whether they're actually using the revenues generated under the program to reduce costs for patients. In many instances, sure, they are, particularly on the grantee side. But on the hospital side, we don't know. And it's one of those open questions that we talked about that we just need to explore further.
ERIN MCCALLISTER: And in terms of you mentioned legislation, are there any bills in Congress right now to deal with that?
LAUREL TODD: Not right now, not that I'm aware of.
ERIN MCCALLISTER: All right, well on that legislation note, how much uptake do you think legislation could get in Congress? It seems like almost every congressman or senator would have one of these 340B hospitals in their district. So do they really want to do anything about it?
LAUREL TODD: We've seen some interest from various members, but the general education around the program is something that's still in development and something that BIO and other organizations are working to expand the understanding of how the 340B program really works.
ERIN MCCALLISTER: And what the hospitals, the 340B hospitals want to do is, because right now it's limited to drugs that are sold outside and distributed outside outpatient drugs. And some hospitals would actually like to see the 340B program expanded to include drugs that are delivered within the hospital. What are the implications of that?
LAUREL TODD: So, the inpatient expansion that you're referencing, certainly the legislative interest in supporting that I think has waned as the program integrity questions have increased over the last few years.
And I think really before we contemplate any sort of expansion to the program, either further on the outpatient side or on the inpatient side, we really have to answer these questions about what is the accountability and program integrity framework that we are building upon.
ERIN MCCALLISTER: And we know Senator Chuck Grassley is kind of championing some of the challenges to 340B, but who's on the other side?
LAUREL TODD: I'm not even sure exactly which members are on either side of the issue really. It's about understanding how this program is working and whether it's meeting its goals and giving HRSA the resources it needs to be able to carry out its audit activities and other program integrity activities.
ERIN MCCALLISTER: So while in terms of HRSA and giving HRSA the resources it needs to do these audits, they're not just auditing the hospitals. They're also auditing the drug companies.
LAUREL TODD: HRSA's indicated that they're currently working with the OIG to investigate one company, and they don't release the details of their audits either on the covered entities or on the manufacturer until those reports are final.
So we've learned a great deal from the reports that have been released about the covered entities, and it's raised a number of red flags. And hopefully we'll be able to continue to learn more about these audits as HRSA's process continues.
ERIN MCCALLISTER: And in terms of the audits, the results of the audits, then the identity, if the entity is found at fault, what happens versus and then if the drug company is found at fault?
LAUREL TODD: So, for the covered entities, they have to work with HRSA to develop a corrective action plan, which may include repayments to the manufacturer for discounts that they shouldn't have received otherwise. And then the format of that corrective action plan gets posted to the HRSA website.
ERIN MCCALLISTER: Thanks. Coming up in Profiles in Innovation, how gene editing could correct harmful mutations faster and cheaper than previous technologies.
NARRATOR: Now in its 22nd year, visit biocentury.com for the most in-depth biotech news and analysis. And visit biocenturytv.com for exclusive free content.
STEVE USDIN: CRISPR gene editing has already transformed the way disease is studied. Scientists around the world are now working on ways to use it to develop new kinds of treatments. The technology is so easy that undergraduates can learn it in a couple of weeks and so powerful that venture capitalists in industry have invested tens of millions to refine and apply it to the treatment of deadly diseases.
The story starts in 1987. Scientists at Osaka University reported a curious pattern in the DNA of bacteria. They found a repetitive pattern of nucleotides, the building blocks of DNA. The repeats were palindromes. They were the same forwards and backwards.
The discovery seemed to be little more than a scientific curiosity. In the 1990s, scientists found similar repeating patterns in other types of bacteria. Then in 2002, Dutch researchers reported that the pattern was a common feature in bacteria and that the patterns usually were separated by similar amounts of space in the genome.
They called the phenomenon Clustered Regularly Interspaced Short Palindromic Repeats -- or CRISPR -- and they identified genes CRISPR associated or Cas that were always associated with the pattern.
Interest started to heat up. Scientific teams around the world came to the same conclusion. These repeated nucleotide patterns and the gaps between them matched the genetic makeup of phages, a kind of virus. This suggested that bacteria were mounting adaptive immune responses to phages, a new and for biologists shocking discovery.
Researchers at Danisco, a dairy products company, found that they could employ a Cas gene to render bacteria used in making yogurt and cheese resistant to phages. They published the results in 2007.
This set hundreds of scientists around the world scrambling to learn more about the bacterial immune system. University of California Berkeley researcher Jennifer Doudna was one of them.
JENNIFER DOUDNA: Back in the mid-2000s, scientists were uncovering the existence of a bacterial immune system. In other words, a way that bacteria have of fighting the flu. The way they do it is they actually use a protein called Cas9 that is able to bind to small pieces of RNA that are where the sequence is acquired from viruses that infect these bacterial cells.
And then they use that piece of RNA to recognize by base pairing sites in DNA, in the viral DNA, that match these little RNA sequences. And when Cas9 binds to those viral DNA molecules, it generates a break in the DNA that leads eventually to degradation of that viral DNA.
And so what we did in 2012 with my collaborator, Emmanuelle Charpentier, was to uncover the mechanism of Cas9 and understand how it does this and how it works and importantly how we could reprogram Cas9 to recognize any site in DNA and generate a break.
And so what this does is it allows cells to repair those breaks by introducing a small change in the genetic code at the site of the break. And so it was a discovery that came about through a very basic science discovery process. But as soon as we understood how this protein works, we recognized right away that of course it could be a fantastic tool for genome engineering.
STEVE USDIN: Gene editing isn't new, but previous methods were cumbersome, inexact, and expensive.
JENNIFER DOUDNA: The CRISPR Cas9 technology is a strategy for changing the genetic code in a cell or organism at a specific site. This has been a goal for a long time in science, really for decades. And until now, it has been very difficult to do it. It wasn't impossible. We had other technologies.
But it was certainly tedious and not very efficient. And so what this technology does is it's basically a single protein called Cas9 that can be programmed just like you might program a computer with a short piece of RNA, which has a sequence in this RNA molecule that matches the sequence in DNA where a change is to be made.
And by doing that, the RNA will bind to the Cas9 protein and direct it to a sequence in DNA matching this piece of RNA and allow the Cas9 protein to make a double-stranded break in the DNA helix at that site.
STEVE USDIN: After Doudna and colleagues published their results, scientists around the world realized CRISPR could be the key to faster, cheaper, and more precise gene editing. It was like moving from cutting and pasting printed type on paper to word processing.
JENNIFER DOUDNA: I think that one of the things that we've seen over the last two years since our original discovery of how the Cas9 enzyme works is that laboratories around the world have been able to quickly employ this technique for making changes to the genetic code of cells and organisms in a way that hasn't been possible with previous technologies.
STEVE USDIN: Doudna and other scientists have started companies to develop medical applications. The commercial competition to patent CRISPR inventions has led to concerns that intellectual property conflicts could slow medical progress. She thinks the intellectual property issues will be worked out and the first commercial CRISPR therapies will target blood diseases.
JENNIFER DOUDNA: I think that one of the attractive targets will be to treat diseases that affect tissues like the blood where it's possible to remove blood cells from a patient, do the gene editing in those cells, make sure it's done correctly, and then put the cells back into the patient. So treating diseases like sickle cell anemia or thalassemias are I think attractive targets for those reasons.
And then going forward, there's already been academic work showing that in principle, it's possible to correct the mutation that occurs that causes cystic fibrosis. And ongoing research is actively aimed at correcting mutations in various neurological disorders such as Huntington's disease.
STEVE USDIN: CRISPR's already created powerful new research tools. It's too early to know for sure if it will be used to directly manipulate human cells to cure disease. Doudna thinks the technology will work and that treatments could be available in less than a decade.
JENNIFER DOUDNA: My feeling is that probably we will first see therapeutic applications in a system that's where the delivery problem is not as great, such as treating a blood disorder, for example. And it's very hard to put a timeline on these things, but I think we're looking at it's probably going to be five to 10 years. I hope it's less than 10.
STEVE USDIN: That's this week's show. Remember to share your thoughts about today's show on Twitter. Join the conversation by using the hashtag #BioCenturyTV. I'm Steve Usdin. Thanks for watching.