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The Cystic Fibrosis Foundation raises about $130 million a year in its ongoing effort to help people who suffer with the deadly disease, but that amount seems small change in comparison with the $3.3 billion it just received related to an investment it made years ago in small drug development company. For a health-related nonprofit, $3.3 billion is a jaw dropping amount. It gives the foundation the means to explore all kinds of new ways to help patients and to look for a cure, but the projected per patient cost of this drug, $373,000 per year, raises concerns. Please join us to discuss new questions about venture philanthropy.
- Bob Coughlin president & CEO, Massachusetts Biotechnology Council
- Dr Christopher Austin director, National Center for Advancing Translational Sciences, National Institutes of Health
- Robert Beall chief executive, Cystic Fibrosis Foundation
- Margaret Anderson executive director, FasterCures
MS. DIANE REHMThanks for joining us. I'm Diane Rehm. It's a game changer. That's how many people have described the Cystic Fibrosis Foundation's $3.3 billion windfall, thanks to an investment made years ago in a small drug development company. Joining me to talk about new roles and new questions for health nonprofits, Robert Beall of the Cystic Fibrosis Foundation, Margaret Anderson of Faster Cures and Dr. Christopher Austin of The National Institutes of Health.
MS. DIANE REHMDo join us, questions, comments by phone at 800-433-8850. Email to email@example.com. Follow us on Facebook or send us a tweet. Welcome to all of you.
MR. ROBERT BEALLThank you for having us.
MS. MARGARET ANDERSONThank you. Good morning.
DR. CHRISTOPHER AUSTINThanks so much.
REHMGood to see you all. Robert Beall, give us a little background on the Cystic Fibrosis Foundation. When was it founded? What is your mission?
BEALLWell, the foundation was founded in 1955 and by a group of parents very frustrated at that point that their children only lived until about 5 years of age. Our mission has never really changed. It's to find a cure and control for cystic fibrosis. We've had great success. At that point, it was five and a half years as far as life expectancy.
BEALL1980, it was 18 and today, it's over 41 years of age and over half of our patients are living into adulthood so we've had great success.
REHMGive us the background on the $3.3 billion payment.
BEALLWell, obviously $3.3 billion to the Cystic Fibrosis Foundation was a transformational time for our patients and being able to accelerate our mission and to find an ultimate cure of this disease, it is a byproduct of an investment, you might say, or a model that we developed a number of years ago by which we wanted to attract organizations or companies from the bio pharmaceutical community to get engaged in CF drug development.
BEALLWe had a good hypothesis. We had our gene, but we weren't getting the companies to get engaged in cystic fibrosis. So we developed a so-called venture philanthropy. We were taking philanthropic dollars and we were going to establish alliances with bio pharmaceutical partners. And the product that we talked about or what we got yesterday was a byproduct of our first and largest.
BEALLIt was first with a company called Aurora Biosciences. Then, they were purchased by Vertex Pharmaceuticals. We invested $40 million to see if they could find one or two molecules that might be able to treat the basic defect in cystic fibrosis. Not just treating the symptoms like we'd used before, but because we had the gene, we wanted to treat the basic defect.
BEALLFirst drug was approved in 2012 for a small percentage of our patients. It's called Kalydeco and it's proved to be a game changer. But now we have, in our pipeline, other drugs that we think are gonna effect larger percentage of our patients. So as a byproduct on our investment, we take royalties, a small percentage of the income on the revenue and that's what we were able to sell so we can make additional investments today in other therapies and to assure that we get to a cure.
REHMTwo questions. First, did your contributors, your philanthropists, know that that's what was going to happen with their dollars?
BEALLWell, we have had the venture philanthropy model in place so most people clearly know since about 1994, the most widely used drug in cystic fibrosis today, antibiotic, Tobi was developed as a result of our venture philanthropy model. We monetized those dollars from that drug and were able to make the first investment with Aurora and Vertex. So it's a model that's worked for us.
REHMAnd what is the drug that was discovered? How many cystic fibrosis patients will it help?
BEALLThe first drug works for about 4 percent of the patients, which is called Kalydeco. There is now an application in front of the Food and Drug Administration for the second drug. It's a combination drug, came out of the same alliance. It could work for 50 percent of our patients and we are looking for, hopefully, approval mid part of next year. And there are other clinical trials that are getting under way that could impact upon another 30 percent of our patients.
REHMThere's been a lot of concern raised about the price per patient for this drug, $373,000 per year. How do you justify that?
BEALLWe do not set the price.
REHMI understand that.
BEALLIn our relationship with Vertex, we do not set the price.
REHMI understand that.
BEALLAnd we believe that the price is too high and we're very concerned about the sustainability of these high-priced drugs in terms of the future. And so we have created programs to help our patients make sure that they access the co-pay programs of the industry, be able to maximize the insurance. And so, you know, it's been -- we are pretty successful so far in making sure that all patients can take advantages of the programs that are out there.
REHMOne last point. Will the Cystic Fibrosis Foundation with this $3.3 billion windfall, give back some of it to the patients so that they can meet that horrendous $373,000 per year cost?
BEALLThank you. That's obviously a question that we're asked all the time. But if we were to pay directly for care or for these drugs, that $3.3 billion would disappear very quickly. We believe that the best investment we can ultimately make is additional therapies, competitive molecules and move to a one-time cure for this disease and that's where our investments are going to be made.
REHMAll right. And turning to you, Margaret Anderson, how unusual is this model for the nonprofit health industry?
ANDERSONDiane, we have seen this model really grow in terms of the power and the impact. The Cystic Fibrosis Foundation really pioneered this model. Many others have followed in their footsteps. I would say that these organizations which Bob referred to as the venture philanthropy model, they all are different based on the type of disease that they're trying to fix, the circumstances by which they were founded.
ANDERSONSo not every group follows the exact same pathway, but they are all watching this model. And I will tell you that it is a game changing model. What we have seen in the last decade in terms of how patients and disease foundations, such as the Cystic Fibrosis Foundation have pioneered success, it is transformational and the entire biomedical ecosystem is watching.
REHMAnd who will oversee how these incredibly large funds are spent?
ANDERSONSo I have great faith in the organization model that Bob and others there have pioneered at Cystic Fibrosis Foundation. You know, these organizations have their eye on the prize and the prize is a cure, a sustainable treatment and so they have galvanized the patient community, the investment community, the pharmaceutical and the biotech companies, the academic scientists, you know, the government agencies.
ANDERSONEveryone gets to take a piece of this success. So when Vertex was approved, you had the commissioner of the Food and Drug Administration, Dr. Margaret Hamburg celebrating about the speed, the precision, the sort of transformational nature of the science and they were able to approve it in record time. So these models are ones that I can tell you with assurance, everyone is watching.
REHMAnd turning to you, Dr. Christopher Austin, I understand you are director of the National Center for Advancing Translational Sciences at the NIH. Tell me what that means.
AUSTINYes, and thank you for asking. I get that question a lot. So translation is the process by which an observation that a scientist makes in the lab, say, the gene for CF, or a doctor makes in the clinic or a public health worker makes in the community. Think about what's going on with Ebola now. And a light bulb goes off in their head and you say, well, gosh, you know, maybe this leads me to an intervention that could improve health.
AUSTINThe whole process between that original observation and where there's an idea that comes about to developing an intervention, a drug, a device, a diagnostic, to implementing it in patients and in communities, that's what we mean by translation. The whole process now is remarkably inefficient and it's not terribly well understood scientifically or organizationally and so NCATS was started as the most recent addition to the institutes at the NIH about three years ago to directly attack this problem on a systematic level.
AUSTINHow do we get more treatments to more patients more quickly? And we have, I would say, in common with the CF Foundation and with Faster Cures, we have -- our organization has sort of core principles which we share with them, which is that we're very focused on deliverables that will be useful to patients. Secondly, we believe very passionately the translation is a team sport and it has to be approached that way. And not all science is. Typically, it isn't.
AUSTINAnd thirdly, that the patient needs to be part of the research team from the very beginning. I challenged my colleagues at NCATS to have every project that we do have patients involved in the programs. And because of the fact that both the CF Foundation and Faster Cures are really leaders in this field, both Bob Beall and Margaret Anderson are on our advisor council, actually to help us generalize the kinds of things that Bob has done.
REHMDr. Christopher Austin of the National Institutes of Health. Short break here. When we come back, we'll hear from a dad whose son suffers from cystic fibrosis.
REHMAnd welcome back as we talk about new efforts to raise money for drug development for all kinds of diseases. But specifically with the success that the Cystic Fibrosis Foundation has had with initially 130 million now turned to 3.3 billion with investment into the development of drugs in small companies.
REHMAnd joining us now from Boston, Mass., Bob Coughlin. He's president and CEO of the Massachusetts Biotechnology Council. Bob is also father of a son with cystic fibrosis. Good morning to you Bob. Thanks for joining us.
MR. BOB COUGHLINGood morning, Diane. Thanks for having me.
REHMTell us how you reacted to the news of the Cystic Fibrosis Foundation's windfall?
COUGHLINWell, quite frankly it was the best news that I've heard in the last 12 years since my son with cystic fibrosis, little Bobbie, has been on earth. It makes a huge difference to our family, a huge difference.
REHMTell me whether this drug will help your son.
COUGHLINWell, see, that's why it's so important to realize how important this money is for a great percentage of the cystic fibrosis community, Kalydeco. My son happens to have a copy of a mutation that Kalydeco and the next drug will not work for. And, you know, as parents and as a community we hear the clock ticking. There's kids and people affected by this disease that are dying every day. And quite frankly, you know, time is something that in order to get around that time we need money to be invested in other companies, different technologies, different approaches to cure the disease.
COUGHLINSo to the Kalydeco and the Vertex story was wonderful and it's amazing and it's a breakthrough drug that is positively affecting so many families with cystic fibrosis, but it's not getting to all of them quick enough. So in order to speed up the process and put the foot on the gas pedal, I couldn't be happier with Dr. Beall and the entire team at the Cystic Fibrosis Foundation. This is what we hope and pray for, and this just gives us so much more hope now that we can continue the journey to find a cure.
REHMSo how do you think the windfall of 3.3 billion can be used to better benefit a wider group of cystic fibrosis patients?
COUGHLINYou know, unfortunately you need to buy cures and that's why the cystic fibrosis community, we've worked with our walks, we've had bake sale, we have galas, we have more events than you could ever imagine to raise that money, to invest it into the CF Foundation so that they can do exactly what they have done. I never thought it would be done this well.
COUGHLINYou know, we had originally thought that, you know, raise $100 million and invest it into our own pipeline and good things will come. But the reality is the cost to invent a cure or a drug is so much money that, you know, the CF Foundation has really changed the way disease foundations do business, not only through a venture philanthropy but now by taking that investment and turning it into a huge return so that it can be invested in finding the next therapy that will affect more of the patients and ultimately a cure. The cure for this disease is what we need.
REHMAnd from your personal perspective, do you think most donors support this kind of investment?
COUGHLINI would say all of them. I mean, I've been getting emails, phone calls, congratulations from everybody that's participated in our walks over the years. My son's team's called Bobbie's Brigade and all the other teams that have raised money, I mean, this is -- you want to invest into an organization that's going to invest wisely and show meaningful results. What's better than this?
REHMBobbie, describe for us your son's daily life.
COUGHLINOh, it's a very difficult disease. Chest physical therapy, multiple nebulized meds a day, upwards of 60 to 100 pills a day just to digest food. There's a lot of digestive issues that come along with the lung issues. In my son's case he's got some problems with his liver as well. So when you have drugs that make those symptoms go away -- and this is another thing that irritates me, when people talk about drugs being too expensive, these breakthrough therapies actually reduce the cost of health care.
COUGHLINMy son isn't on a breakthrough drug yet for cystic fibrosis, and he's an expensive patient. So when you come up with these new drugs and ultimately a cure, think how much that's going to save the health care system.
REHMWould you be able to afford $373,000 a year if this Kalydeco were to be relevant to your son?
COUGHLINAbsolutely. I mean, I have private health insurance. And even when you look at -- and that's another thing that irritates me as well. People talk about patients not being able to afford the drug. Well, quite frankly, if you have private pay or public pay insurance, you have access to the drug. And the company and the foundation have actually worked very effectively to make sure there's patient-assistance programs out there. I don't know of one patient that is eligible to take Kalydeco that does not have access to it.
REHMAll right. And turning to you, Dr. Austin, tell me about the new drug development trends. How quickly is the government able to come up with new drugs?
AUSTINSo the first thing to say is that the government rarely ever comes up with a drug which gets approved through the Food and Drug Administration. Our role is to develop the starting points, the basic understanding of the disease. And then sometimes, and particularly in NCATS case this is true, of some early stage drugs that would then be attractive to companies to adopt. And so the government uses frequently not a venture philanthropy model, but a similar model of what's sometimes called de-risking where companies are frequently very interested in these diseases. But because of the low prevalence and the fact that they're not poorly understood, they don't want to invest in them. And that's their fiduciary responsibility.
AUSTINSo our role in this is to say, well, we're going to do some of the work to understand the disease to give you a starting point with sort of a early stage drug that can give you an indication that, yes, this disease actually is tractable. And I'll give you just an example. NCATS has been working on another rare disease, genetic disease, been around a long time, sickle cell anemia. Sickle cell disease was actually the first genetic disease to be defined back in 1949. But there is still no drug to this day, 65 years later, which addresses that fundamental molecular defect. It's quite extraordinary.
AUSTINAnd so NCATS teamed with a company, a very small company in Massachusetts called SRX to do some of the kind of work that Bob's foundation did. And got to the same point where we were able to de-risk this enough that then a large pharmaceutical company, in this case Baxter International, bought that asset and is completing the clinical development, Food and Drug Administration approval and then market.
REHMWhat about the drop in government funding for the NIH generally speaking? Margaret, do you want to speak to that?
ANDERSONAbsolutely, Diane. It is crucial that we have government support for science, crucial. So the NIH budget is providing the infrastructure to have scientific discovery across not just the United States but really the world. So if we can't provide adequate resources that are sustainable and reliable for academic researchers across the country, then we are cutting off the possibility of future innovation. So I can say it more easily perhaps than Chris can say it and Bob can say it as well.
ANDERSONThere's another agency that's really critical to this equation, the Food and Drug Administration. They're located also, you know, not far from Washington, D.C. And we used to be able to say that the Montgomery County, Md. superintendent of schools had a larger budget than the commissioner of the Food and Drug Administration. I think it teeters back and forth right now but we really need to make sure that they have adequate resources to be able to accept this discovery and be able to get the speedy approvals and reviews done.
REHMWhat about the notion of quote "nonprofit?" Does that whole model have to be re-designated, re-defined, Bob?
BEALLNo, it doesn't because we don't make a profit off of this. This is for the benefit of the patients.
REHMBut what about the salaries of the administrators? Won't those go up? Won't the expanded employment force go up, you know, expenses?
BEALLOur foundation may have to grow in terms of people but the process by which salaries are established, especially for their executives is done by best practices with an independent committee looking at standard practices, etcetera. So it may have to -- you know, we have to grow because we have a greater opportunity to expand our research.
AUSTINA point, Diane, that I want to make which I think most people probably don't realize is the scope of this problem. We've all probably heard of cystic fibrosis, Huntington's disease, juvenile diabetes, etcetera. But there are actually thousands of these diseases, rare diseases which according to the FDA diagnosis is less than 200,000 people in the United States. And of those thousands of diseases, probably between 4 and 5,000 diseases, there's only treatments for about 250 of them.
AUSTINAnd the heartbreaking part of the world that all of us live in now, Bob and Margaret and the other Bob and I, is that we now understand these diseases in ways that simply were not the case 20 years ago when I was in training, these diseases -- there was some level of closure with because we knew there was nothing we could do. Now, what is so frustrating is we do understand the disorders and we do have the ability to translate much more rapidly than we've been able to before.
REHMAll right. Now think about diseases like Alzheimer's affecting a growing number in the population as it ages. Think about Parkinson's disease. How can those diseases be affected by this kind of model?
ANDERSONSo I think this is where the collaborative approach comes in. And that is partly what we're, you know, sort of witnessing right now is a revolution in how the system is collaborating. It used to be that scientists were not incentivized to collaborate. But, you know, groups like the Cystic Fibrosis Foundation changed that game because they said, we're demanding that we see accountability. It's not acceptable to just, you know, sort of take results and horde them. We need everyone talking to each other.
ANDERSONAnd now there's a thirst for that, right. So these types of successes that Bob is here talking about today, the patient community is asking for and benefitting from. And so it's not the same world both in terms of the scientific discovery but I think in terms of patient power. You know, Bob can talk about the patient stories and the families who lost their families to cystic fibrosis -- to the disease. And I witnessed some of that last night looking at the Facebook page. Those people are still part of that community and they want to see this as much as anyone.
BEALLScience is not done in isolation today. What we've learned in our effort to have these new drugs for cystic fibrosis can benefit other diseases. Alzheimer's, as you mentioned, is a trafficking disorder. CF is a trafficking disorder. So no -- where we're trafficking proteins to the right position in the cells. So we've now got a proof of concept. You can take a pill, an oral drug and treat the basic defect in the genetic disease. First time that has ever happened. When we started this process, no one thought it could be done.
REHMAnd you're listening to "The Diane Rehm Show." Bob Coughlin, I know you wanted to jump in there.
COUGHLINYeah, Diane, thank you. And to follow up what Margaret and Bob were talking about, not only is this great for science but this model shows other parents and other families and other disease foundations how to do it with private money. And that is revolutionary the way drug discovery happens.
COUGHLINThere isn't a week that goes by that I don't meet with parents that have, or families that have loved one that have other diseases saying, geez, how is it done? How do you go raise money and then invest it in your own research? the government should tank disease foundations for behaving in this way because it's a new model. And clearly the old model didn't work quickly enough so this is quite...
REHMChris, are you, as a part of that government, thanking these organizations?
AUSTINOh, absolutely. And we partner with them every day. We have a collaboration with the Leukemia Lymphoma Society to develop new drugs for blood cancers, one for -- one with a number of (unintelligible) disease foundations, another -- an early degenerative disease foundations to develop a drug for NPC. We have about 14 different foundations that we collaborate with now sharing the science, sharing the cost and sharing the benefits if this comes to fruition.
REHMBut this is the first time that a foundation has taken its money, sold the royalties and gotten this windfall. Why did you decide to sell the royalties, Bob?
BEALLWe have so many scientific opportunities now we wanted to take advantage of them. If we had waited for the royalties to come in, it would've taken over years. By monetizing now and having the dollars today we can start to be able to think really big.
REHMAnd does what you've done also provide incentive to those companies to work harder faster together to find answers?
BEALLIt works -- they work together but the nice thing about our venture philanthropy model is that we've been able to go invest in other companies. Now we have Pfizer engaged in cystic fibrosis. We've created sort of a bubble over a team out there that's now working on CF. That didn't happen until we were able to incentivize them. So, you know, we leveraged them -- these dollars to be able to recruit other programs into it, other activities that are going to help find a cure for this disease.
ANDERSONSo, Diane, we have a network at FasterCures called our train network. And it is a group of likeminded no-for-profit venture philanthropies. And they want to share their best practices with each other, with the pharmaceutical sector in biotech's academic scientists government because they want the whole system to be sped up for everyone. This isn't about one disease at a time. This is about how do we fix the system. This is about how do all patients benefit in the way that CF patients are benefitting today from this discovery.
ANDERSONSo I think that they're all learning in real time. You know, it wasn't that long ago -- think back to the beginning of the HIV AIDS epidemic when we saw incredible activism by people who were affected by HIV. I happened to see a clip of the AIDS quilt and I thought, remember that used to be a graveyard. Well, look today. Now we have these phenomenal treatments for AIDS because of all of these sectors collaborating. And also because patients got smart. They figured out how to work in the system. And that's what we're seeing now in hyper motion.
REHMMargaret Anderson is executive director of FasterCures. We'll take a short break here. When we come back, your calls, your comments. Stay with us.
REHMWelcome back. We talked earlier about the costs of the drug that is coming onto the market, Kalydeco, and that is helping those patients with cystic fibrosis. A doctor in Chapel Hill, N.C., Robert, says, "We never hear much about cost to manufacture a drug after it's approved and introduced to the marketplace. By not knowing that we have no idea how much profit per dose is made.
REHM"Then we have no idea when the company gets a positive return on its investment after the expenses of development and testing have been paid for." He finishes his email by saying, "My chemotherapy pills cost $10,000 per month." Bob?
MR. MR. ROBERT BEALLWell, obviously, we always have to look at what is the value of the therapies that we are talking about. We've actually had a conference with FasterCures to see what is the value of these therapies that are life-changing? I mean, we're talking about these drugs with cystic fibrosis -- they're not just extending lives one or two months or one or two years. We're talking about them having the potential to change the lives of these drugs and add decades of life. So how do you measure that?
REHMWhat does Kalydeco actually do to the patient with cystic fibrosis?
BEALLOne of the most serious consequences of these chronic lung infections is their lungs don't function, they don't breathe properly.
BEALLWell, one of the things we see is very dramatic improvement in lung function. They have less exacerbations. They don't have to go to the hospital as often. We've had patients that were on transplant lists, that have been able to get off of transplant lists. It's a game-changer in terms of that. But one of the most important thing is that with CF patients they lose a little bit of lung function every single year of their life. What we've seen is that with Kalydeco over four years there's been a significant reduction of that loss. That translates into extension of life.
REHMAre children born with CF, Margaret?
ANDERSONAbsolutely. I'm going to defer to Bob to talk a little bit more about the genetics of CF, but I do want to go back to the value and coverage conversation.
ANDERSONIt is a program that FasterCures is working on. We've worked with the Cystic Fibrosis Foundation. The entire health system, as we know, is under intense transformation today. And this innovation that we are speaking about is adding another layer of complexity to that system. So I think as an entire community, we're all trying to understand what is the value, how do you put a price on that, in terms of the benefit of someone coming off of a lung transplant list, of a child being able to go to college, hold down a job, be employed.
ANDERSONYou know, what about someone -- as you've talked about with Alzheimer's, who lives another decade disease free and has time with family? How do you put a price on this?
REHMHere's an email from Jeff, in St. Augustine, Fla., who says, "It seems to me this model does nothing but drive up health care costs. It's not possible in this world to cure all the ills. And driving up everyone's health care premiums is not the way to care for these rare types of diseases." How do you respond to that, Bob?
BEALLWell, I think it would be tough to persuade a person who is benefitting from these new therapies that the -- this is not a workable model. The fact is we do have drugs today that treating that basic defect in cystic fibrosis -- they would not be there were it not for this model. We've changed the lives of these people with cystic fibrosis because of these drugs. And they would not be there without venture philanthropy and this model.
REHMBut do you agree that health care costs will rise as a result?
ANDERSONThis -- I do not agree that that is necessarily going to become true. Because I think the system is really looking at how to reduce some of the costs in other ways. How do we deploy care more effectively? But I would like to go back to the comment by the other individual. How can we as a human race not reach for the stars and fix these problems? My good friend and neighbor is being discharged today from a hospital, having just had a radical mastectomy.
ANDERSONHow do you tell that individual that, no, I'm sorry, we're not going to try to fix that problem? I think this is powerfully exciting. Science is on fire. Research is on fire. This, you know, this is our time. And I think these models that Cystic Fibrosis Foundation and many other disease groups are putting forward, they're game-changers for multiple diseases.
REHMGo ahead, Dr. Austin.
AUSTINYeah, I would say that from our point of a view, from a research point of view, our feeling is that we have to learn from the experience that the CF Foundations and others have done and figure out how to do this whole process better, faster, cheaper. I don't think there's any doubt that -- and no one that likes the current cost and failure rate. Just so -- in case your listeners don't know.
AUSTINThe current time it takes to develop a drug is about 20 years. Costs, according to the Tufts Center for Drug Development -- just came out a couple of days ago. Current cost is about $2.5 billion. And fails 99.5 percent of the time. And so the cost of a drug, when it actually succeeds, is paying for all those hundreds or thousands of failures. And so we're never going to solve this problem in brute force. We're never going to be able to do what Bob and the CF Foundation have done for every patient with a rare disease. We have to take this as a proof of principle, that it can be done.
AUSTINAnd then drive down the costs.
REHMLet's go to Mike, in Fort Wayne, Ind. Hi there, you're on the air.
MIKEHey, Mike here. Can you hear me all right?
MIKEOkay. First the comment. Dr. Bob and the Foundation, congratulations. Boy, you knocked this one out of the park. And I just want you to know that in no way are we letting our guard down. Just yesterday we scheduled a Branch and Dean country concert for the Foellinger Theater in Fort Wayne. And that's going to happen next September. And we want to raise $50,000 for you guys. So our guard is not let down.
BEALLWe have a great community. It's been with us since 1955. They are excited about it. But they know that what we want to achieve, in terms of getting from these daily therapies to a one-time cure, is a marathon not a sprint. So we're going to have the dollars from this monetization, we're going to have our community still doing the events, and we will be ultimately successful. Thanks for the call in.
REHMAll right. To Aaron, in Wheaton, Ill. Hi there.
AARONGood morning, Diane. Thanks for taking my call.
AARONMy question is slightly, I guess, like you might say inquisitive critical of the venture philanthropy model. And kind of -- well, I guess what I'm wondering is if it isn't true that this model really incentivizing investment into research that is most likely to have a payoff for investors, or incentivizes private investment into research that has sort of a goal that the private investors see as most worthwhile or to address a disease that the investors think is most important and not necessarily the doctors or public health officials think is the most important, and if we go this route you end up seeing, of course, you know, a great success in cystic fibrosis, which is wonderful.
AARONBut then you also see these kind of -- I don't know -- sort of publicity campaigns, like the dumping the water on your head for the…
AARON…yeah, the ALS. Which, in some sense, of course it's good that it incentivizes investment, but there's also something sort of morbid about saying, oh, here, here's what it feels like to be this tiny segment of the population. Please give a dollar.
REHMAll right. Margaret?
ANDERSONI think that things like the ALS ice bucket challenge, you know, all of the walkathons that we've talked about, lemonade stands, all of that is because people want to participate in solutions. And although they might seem odd at times and come out of nowhere, I think that as humans we want to solve problems and as Chris was defining, that this research system is complex. These challenges are difficult. It does take money to do that. I think to the listener's point about solving one disease at a time -- we want to solve all of the diseases. And I think these models offer up pathways to patients.
REHMDo you see new efforts from other nonprofits working in this same direction?
ANDERSONAbsolutely. And they are constantly innovating off of each other.
REHMGive me examples.
ANDERSONSo, you know, the Melanoma Research Alliance is another group that really came, you know, very rapidly on the scene and now they're the largest private funder of melanoma science. We're seeing breathtaking science in oncology, immunotherapy, Prostrate Cancer Foundation, Michael J. Fox Foundation. There's a long list of these groups. And they're starting every day.
ANDERSONWe just did a conference, Partnering For Cures. We had a couple that have -- the wife has a fatal disease. She will die of this disease in 20 years. And yet, she and her husband are basically sending themselves to medical school to create the scientific momentum to do what Bob is doing in cystic fibrosis.
REHMDo you want to add? Go ahead.
AUSTINAnd we've had parents come to us at NCATS multiple times with exactly this model and have been able to make headway quite rapidly when the patients and the scientists and the funders all get together. But I want to make a point about how we think about the Cystic Fibrosis Foundation's success. That I really think about this as not only a wonderful success for the patients and the community, which it certainly is, but it's also the first time this has been done.
AUSTINAnd the first time you do anything is always the most expensive. It's -- and then what you try to do is then increase productivity over time. So just give an example of the genome project that you -- we all remember. The sequencing part of the genome project, the first genome cost $400 million. Now, 10 years later, a genome cost $1,000. So the point was not to just take that $400,000 and try to replicate it across everything, is to try to work very closely on the technologies.
AUSTINAnd that's what NCATS is doing.
REHM…what is it that determines the price that a drug company will charge for a drug like Kalydeco? How do we know? I mean, are they simply going to charge whatever they can because they can and because this 4 percent of those who suffer from CF can pay for it? I mean, surely insurance is not going to cover $373,000 a year for every one of that 4 percent, Bob.
BEALLWell, clearly it's a problem. I mean…
BEALL…again, we would reduce our royalties or give up our royalties if we could get that price down to something reasonable, but our royalties is just a very small percentage. We're concerned. We think these drugs are too high. We don't know -- really, we are not at the table and we are not sure, you know, all the things that go up -- but we also have to understand it costs about -- $2.2 billion is the number that's used now -- to get a new drug.
BEALLNow, these drugs, because we've -- and about 14 years to do that. And there's many drugs that are developed by companies that don't get through this process. They fail. And so it is an expensive enterprise. And unless there is an opportunity for them to have funds for innovative strategies, it's not going to happen. So this is a fine balance that this country has to do learn to be able to deal with.
REHMRobert Beall is chief executive of the Cystic Fibrosis Foundation. You're listening to "The Diane Rehm Show." And let's go to Oklahoma City. Hi, Ken. You're on the air.
KENThank you, Diane, for taking my call.
KENI've got a couple things here. First off, my comment is I feel like it's just a travesty that a disease is a marketable commodity to a lot of these drug companies. And that secondly, the public -- with these foundations and everything that these people are doing to raise money for these different kinds of diseases, that they raise all this money, they get the ball started, they get everything going, then all of a sudden the company says, well, it looks like a good investment. We'll take a shot at it. And then they make profits that are off the charts, in the billions.
KENAnd your one person said that 95, 99 percent of the time they're failing. And the drug is -- the one drug that does succeed is paying for those failures, but yet the companies are still showing billions of dollars -- billions of dollars in profits. So where do we say, hey, they're charging too much for these drugs?
BEALLWell, this is sort of the part of venture philanthropy model that we just talked about. Because one of the things that we do in our model is we take some of the revenues from the sales and bring it back to the patients and make these investments. We've de-risked the company to obviously think about cystic fibrosis. If they're successful and they get a drug approved, we take some of those revenues, we're going to make sure that we monetize it and invest in the future of these patients.
REHMBut, you know, I think at the heart of our caller's question is with pharmaceutical companies making all these profits to begin with, why do they need your investment to make sure that they focus on that disease? That's the problem. If they did not have you, would they not bother?
BEALLWith Aurora Sciences, when we started this whole process, they did not have the kind of resources that were needed to even start the process. Somebody may ask us, why are we supporting Pfizer? Well, quite frankly, Pfizer's a big company. But we were able to engage them in cystic fibrosis. We are a small disease, but we were -- engaged them. We've created a bubble over a group of people that are protected. As you know in the biopharmaceutical community, you know, they have to go -- they have stockholders that they're responsible to.
BEALLThey have to have programs. But we've created a group of people with our commitment that are dedicated to cystic fibrosis and will make sure that they accomplish that for our disease.
ANDERSONSo risk is the enemy. And so for a company, having a lot of risk, in terms of this science is not going to be something that they're going to run towards. So what Bob is referring to is that de-risking process, where the venture philanthropy groups can do the science, they can bring the patients, they can bring the, you know, clinical trial networks, the patient power, if you will, so that companies then can have a -- perhaps a smoother pathway. But as Chris was articulating, this stuff is not easy. Science doesn't just happen magically the way you always want it to.
REHMDr. Austin, how many cystic fibrosis patients are there in this country?
AUSTINTwenty-five thousand to forty-thousand.
REHMTwenty-five thousand to forty-thousand. How many patients with Alzheimer's, Parkinson's are there in this…
AUSTINAbout 100 times that, yeah. And this is -- but this is the interesting thing. I think you are sitting with people who are very unsatisfied with the current state of the art. Right? I actually did a calculation a few years ago. If we had a drug for every patient with just rare diseases tomorrow -- and that's about 25 to 30 million people in the United States. And we priced them at $200,000 a year. That would cost the United States one-half of its GDP. So in other words, don't bother. This has to be done better, faster, cheaper. And that's what we're all trying to do.
REHMRobert Beall, Margaret Anderson, Dr. Christopher Austin, fascinating discussion. We'll see whether more develops. Thank you all.
REHMAnd thanks for listening. I'm Diane Rehm.
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