Withering criticism has recently targeted a number of American pharmaceutical companies for exploiting their monopolistic status and charging helpless patients enormous sums – often the only recourse left for terminally ill people. The firms have raised drug prices by hundreds, and even thousands of percent.
The most famous example of this phenomenon is that of Martin Shkreli, 35, a former hedge fund manager and biotech CEO, who is now serving a seven-year jail term after being convicted in March for securities fraud. Shkreli's Turing Pharmaceuticals has used a business strategy by which it has bought up the licenses for manufacturing out-of-patent drugs that had no competition in the generic market – and then ratcheting up their prices.
Now a tiny Israeli biotech company has come under similar criticism. BrainStorm Cell Therapeutics has been criticized for price gouging under the new U.S. “right-to-try" law, which allows dying patients access to experimental treatments.
According to a Bloomberg report, BrainStorm is planning to charge patients for a drug it's developing that is called NurOwn, based on stem cells, to be used to treat amyotrophic lateral sclerosis, popularly known as Lou Gehrig’s disease. The hope is that the drug will also be used in future for patients with other, highly debilitating neurodegenerative diseases such as multiple sclerosis and Parkinson’s.
BrainStorm reportedly plans to start charging terminally ill patients for using NurOwn, despite the "right-to-try" statute permitting such people to try therapies and medication that have not yet been approved by the U.S. Food and Drug Administration. Under the new legislation, dying patients who have tried all other options can use experimental treatments that have passed Phase I testing, but do not yet have full FDA approval.
On Tuesday, Brainstorm said that it will not provide ALS stem cell treatment under U.S. "right to try" act at this time.
Although BrainStorm CEO Chaim Lebovits didn’t cite a price for the new drug, he noted that bespoke cell therapies used to treat cancer can cost more than $300,000. For example, Novartis has set a $475,000 price tag on its genetically engineered CAR-T cancer therapy Kymriah drug.
“Companies cannot be NGOs,” Lebovits told Bloomberg, referring nongovernmental groups that help provide medical and other care to impoverished countries. “We have to have an incentive.”
While Lebovits did say BrainStorm will try to enlist charitable organizations to help fund treatment for some cash-strapped patients with its drug, critics note that the company’s total annual operating expenses for 2017 were only $5 million, including $1 million for research and development.
As part of a Phase III trial, BrainStorm is testing modified mesenchymal stem cells taken from the patient’s own bone marrow after being cleaned and purified, but since passage of the "right-to-try" law, it has received requests from people seeking to use the drug outside the official trial process, leading the company to consult with patients and investors alike as to how to proceed.
ALS patients have an average life expectancy of three to five years from the date they were diagnosed with the disease.
President Donald Trump signed off on the controversial new legislation on May 30, but a number of problems have arisen: It does not require pharmaceutical companies to provide the drugs to dying patients and does not limit what they may charge – even if it is still unclear whether the treatment works or whether it has any long-term effects. It also does not demand that insurance companies cover the costs of the treatments and medications.
BrainStorm shares have lost 9.8% of their value over the last two trading days last week on the Nasdaq and have fallen 23% since the beginning of June. The company’s market cap is now $81 million and the share price is $3.98.
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