Regenerative medicine - Science and Technology Committee Contents


Chapter 5: Commercialisation

Business models, venture capital and the funding gap

111.  Finance for regenerative medicine was one of the key themes in the evidence we received. Any start-up business requires initial funding, whether that be through a government scheme, bank finance or private equity. Regenerative medicine companies in the UK have been funded in various ways.

112.  The classic business model for the development of regenerative medicines has been for a company to develop, manufacture, market and sell their own products. Professor Chris Mason, UCL, noted that many such companies are small and only have one product, therefore one "hiccup" with a clinical trial or a delay for regulatory reasons can leave the company at risk of collapse. Successful business models for cell therapies are not yet established.[224] A number of regenerative medicine companies have tried to reduce their need for investment capital by providing commercial tools and services. For example, Intercytex Ltd has a service business, Cell2therapy, which provides contract translation services to other regenerative medicine businesses in order to offset Intercytex's capital requirements. The BIA suggested that this approach is not a truly viable business model in the long term.[225] Other companies had licensed products to large healthcare organisations such as Novartis, and Smith and Nephew, but the partnership did not work and some companies declared bankruptcy.[226] Still others, such as Azellon, operate as virtual businesses and so outsource the manufacture, management and conduct of clinical trials—an approach favoured by the Scottish Government and Scottish Enterprise.[227]

113.  Cell therapy companies have to compete with other sectors offering shorter timescales to return on investment and, often, less financial commitment and risk when seeking finance. The prevailing view was that venture capitalists were increasingly risk adverse because of the current economic climate and so reluctant to risk investing in regenerative medicine.[228] The UK's cell therapy sector has had generally poor results from listings on AIM principally due to poor liquidity and paucity of analysts with knowledge of the cell therapy sector, according to Professor Mason. However, some venture capital companies are now investing, as the science matures and therapies are reaching late stage trials.[229] For example, venture capital investment in regenerative medicine is increasing in North America.[230] There is significant potential return on investment in this field too. For example, investors in BioTime saw cash returns of between 13 and 15 times what they had put in.[231]

114.  Dr Kemp observed that the era of relying on large investments from venture capitalists had passed.[232] We heard similar statements when we visited CIRM, where witnesses argued that Government had to step in and meet the funding need.[233] At present, only five percent of the £70 million of the UK public sector investment is spent on mid to late stage clinical development and adoption.[234]

115.  Dr Kemp argued that Government can make a difference, not only by providing more funding, but also by reducing the need for funding in imaginative ways that do not compromise the commercialisation of safe and efficacious products. He suggested that a total rethink of private equity financing was required and the only way this could happen was through some form of progressive licensing and reimbursement.[235] Professor Mason added that any solutions that reduced the uncertainty for investors would put the UK at an advantage.[236] Pfizer similarly advocated a more active role for Government, arguing they should invest more significantly at TRLs 6-8 because of the relatively small UK company developer sector. It suggested that funding should be made available for smaller companies to develop phase II trial programmes, through matched funding similar to the scheme available from CIRM.[237] Professor Mason warned of the dangers of assuming that "big pharma" or biotech would pick up regenerative medicine.[238] Investment could be stimulated by reducing associated risk, either by de-risking products or spreading risk by investment in a wide portfolio of candidates.[239]

THE CELL THERAPY CATAPULT CENTRE

116.  The Cell Therapy Catapult Centre is tasked with offering a "new approach to bridging the investment 'valley of death',[240] by providing funding and support mechanisms to progress promising science through to a point where 'investable propositions' exist, which are then capable of attracting conventional commercial finance".[241] However, its current ability to fund the sector is limited by its budget. It was established in May 2012 as part of the TSB's programme of technology and innovation centres where the very best of the UK's businesses, scientists and engineers can work side by side on research and development—transforming ideas into new products and services to generate economic growth. The centres aim to help businesses to adopt, develop and exploit innovative products and technologies—the next stepping-stone on the journey to commercialisation. The seven centres, of which the Cell Therapy Catapult is one, concentrate on: high value manufacturing, offshore renewable energy, satellite applications, connected digital economy, future cities and transport systems. In October 2012, the Prime Minister announced an investment of £200 million in the Centres and said that they should leverage over £1 billion of public and private investment over an initial five year period.[242] The network of seven centres is based on the German Fraunhofer-Gesellschaft model of 66 institutes and research units undertaking applied research that support industry and technology transfer as part of a national innovation eco-system. The Fraunhofer-Gesellschaft attracts an annual research budget of approximately €1.9 billion.[243]

117.  Many witnesses welcomed the Cell Therapy Catapult.[244] The Alliance for Regenerative Medicine viewed the development of the Cell Therapy Catapult to promote the field of cell therapy and providing infrastructure support to companies to run clinical trials or manufacture cell therapies as a real strength of the UK.[245] Edinburgh BioQuarter agreed that the Cell Therapy Catapult "will undoubtedly add weight" to the UK's strength in regenerative medicine "as it becomes fully established".[246] Dr Paul Kemp, Chief Executive Officer of Intercytex, welcomed the Cell Therapy Catapult, although he expressed concern that it must not "just push treatments into the clinic in order to reach some governmental set milestone". He continued:

    "I know there is a lot of hope in the whole Regenerative Medicine community that the Cell Therapy Catapult will have a positive impact but also a lot of nervousness that the Cell Therapy Catapult will either soak up all the future Government funding for this sector or at worst become 'state sponsored competition' to SMEs struggling to develop their own products or services".[247]

118.  Edinburgh BioQuarter pointed out that the level of funding for the Cell Therapy Catapult was "relatively modest by comparison with, for example, the $3 billion fund established by the Californian Institute for Regenerative Medicine (CIRM) or the NIH's $1.3 billion annual stem cell budget", although these models are all slightly different.[248] The Medical Technologies Innovation Knowledge Centre argued that "to fully realise the commercial and clinical potential of regenerative medicine, higher levels of funding are likely to be required to take technologies through to the market".[249] Regener8 took a similar view, in that "although recent public funding for the Biomedical Catalyst and Cell Therapy Catapult is extremely welcome, considerably greater funding will be needed to maintain and secure the UK's favourable position in the development of regenerative therapies".[250] ReNeuron agreed that "the sums available are relatively small (when the costs of taking a therapy from pre-clinical proof-of-concept to phase II are considered) and are likely to be distributed widely in the sector. It is unlikely therefore that these initiatives alone will be sufficient to address the continuing funding concerns of the regenerative medicine sector". It also compared the funding with the scale of funds made available by CIRM and recommended "consideration of further innovative and cost-effective funding vehicles, possibly based on the French Citizens' Innovation Funds (CIFs) model" (which are explored further in paragraph 126 below).[251]

119.  The NHSBTS took a different view, arguing that "the challenge is not the availability of money, especially with the recent creation of the BioMedical Catalyst, Cell Therapy Catapult and Regen Med Platform, but confusion as to which fund/scheme/organisation researchers should approach." Its proposed solution was "a road map that enables organisations to map their position in the development process against the most relevant funding resource".[252]

120.  The TSB commented that the Cell Therapy Catapult should meet the need established in consultation with the community for "focussed support" to enable companies to build the clinical evidence base necessary to "de-risk their value propositions and leverage the significant funding necessary to bring products to market". It acknowledged that more needs to be done, particularly as the later stages of the development of these therapies are expensive for companies.[253]

121.  The London Regenerative Medicine Network (LRMN) highlighted that "it is vital to continue to learn lessons from established centres around the world regarding project selection, focus and delivery to ensure we catch up in translating our research into products".[254] The NHSBTS similarly argued that the Cell Therapy Catapult needed to learn from German and Canadian examples.[255] The Cell Therapy Catapult Chief Executive Officer, Keith Thompson, confirmed that he was looking to international models and learning lessons from their leaders, such as Professor Alan Trounson, President of CIRM.[256]

122.  The Cell Therapy Catapult has an enormous range of activities planned including:

·  taking products into the clinic, derisking them for further investment;

·  providing clinical expertise and access to NHS clinical partners;

·  being a source of regulatory expertise;

·  providing technical expertise and infrastructure to ensure products can be made to GMP and delivered cost effectively;

·  generating national and global opportunities for collaboration; and

·  providing access through its network to business expertise, grants and investment finance so that commercially viable products are progressed and investable propositions generated.[257]

123.  These are all helpful goals and yet the Cell Therapy Catapult only has a budget of up to approximately £70 million over five years. Whilst it is right for the Cell Therapy Catapult to share its expertise, as it establishes itself, it must first focus on developing investable propositions and building connections (including with investors).

124.  The Cell Therapy Catapult was only set up in May 2012 and we recognise that there is significant potential in the venture. However, we are concerned that it is seeking to achieve too much, too quickly, given the level of funding. We recommend that the TSB and Cell Therapy Catapult prioritise its activities to enable the Cell Therapy Catapult to focus on taking high growth potential projects through clinical trial to be phase III trial ready and developing links with the regenerative medicine community.

125.  Furthermore, given the large number of potential funders, the TSB, research councils and NIHR should produce an online funding guide, regularly updated, to help researchers and SMEs know where they should apply at each stage of research and development in regenerative medicine.

ALTERNATIVE FINANCING

126.  There is real merit in considering further innovative and cost-effective funding vehicles, for example, based on the French Citizens' Innovation Funds model, which is advocated by the BIA and ReNeuron.[258] This model offers a tax-advantaged investment product with an income tax break on up to £15, 000 of investment which is pooled and used to support innovative, research-intensive companies.[259] It is currently being evaluated by Her Majesty's Treasury.[260] Other popular models currently being discussed are "megafunds" of up to $30 billion, financed by securitised debt and equity, which spread investment across a diverse portfolio of medical innovations—possibly with some form of government guarantees to encourage investors.[261] The state of California issued $3 billion of general obligation bonds to fund stem cell research. Other possible forms of investment include option deals, one-product financings from venture capitalists, and pre-initial public offering royalty-based financing.[262]

127.  There is insufficient TRL 6-8 funding available to support this fast-developing field. It would be unrealistic to depend exclusively upon additional funding coming from venture capitalist or "big pharma" investment. A mechanism must be found to fill this gap. Therefore, we recommend that the ESRC and the TSB commission an evaluation of innovative funding models, which spread risk and most likely will contain a degree of government matched funding or be underpinned by government guarantees, and recommend how additional funding could be provided for late stage clinical development in this field. The Government have said that this field has enormous potential and that they will support it. They must "put their money where their mouth is"; BIS and Her Majesty's Treasury must adopt the policy recommendation of the ESRC and TSB study.

Intellectual Property

128.  Patents, which are registered as intellectual property (IP) rights granted by a country's government as a territorial right for a limited period, make it illegal for anyone except the owner or someone with the owner's permission to make, use, import or sell an invention in the country where the patent was granted. They have traditionally been a significant lever in attracting private investment in technology and development as they help to provide a return on investment by allowing the sale or licensing out of an invention.[263] Examples of regenerative medicine patents granted in the UK include: a peripheral nerve-growth scaffold; inducing human pluripotent stem cells; biocomposite skin substitutes for wound healing; collagen matrix for supporting cell growth; multipotent stem cells from human adipose tissue; and a method of decellularisation of a membranous sac or bladder, prior to transplant.[264]

129.  We heard mixed views on the importance of patenting to the commercial exploitation of regenerative medicine. A number of witnesses viewed patentability as critical. The Alliance for Regenerative Medicine argued that, given the high levels of both initial and continued investment needed to develop a regenerative medicine treatment, without IP protection potential funders such as venture capitalists would be reluctant to invest the amount of capital necessary.[265] Similarly, Professor John Haycock, Professor Stephen Rimmer and Professor Sheila MacNeil, University of Sheffield, argued that the absence of patenting was a limiting factor on the development of spin-out companies or partnerships from academic research propositions because a granted patent is viewed as a key asset to a start-up firm seeking to demonstrate potential for investment.[266] Concern was also raised by Miltenyi Biotec that in the absence of a patented 'product' there was no obvious business model beyond that of essentially offering an expert service, which they considered harder to commercialise.[267]

130.  Others argued that the importance of patenting in regenerative medicine may have been overstated. Professor Mason suggested that, given the multi-disciplinary nature, complex supply chains, specialist knowledge, and delivery challenges involved in developing a regenerative medicine treatment, patenting is potentially unnecessary as those innate barriers would work to protect value and investment.[268] Indeed, some witnesses, such as King's College London and King's Health Partners, argued that it was the technical knowledge, expertise and those processes used to develop regenerative medicine treatments, rather than the treatments themselves, from which key commercial benefits would be derived.[269] The Government pointed out that even if patents were an incentive to innovation, they offered no guarantee of feasibility, quality or commercial merit.[270]

131.  Pfizer argued that the importance of patenting varied depending on the type of regenerative medicine involved. For example, small molecule programmes were more likely to depend on composition of matter patents, but cell-based therapies would have more complex IP positioning—where data exclusivity and expertise ("know how") could indeed be as important as patenting. There may be a large number of patents involved in regenerative medicine.[271]

132.  Our expert panel of venture capitalists viewed patents as a "simpler" way of attracting investment, as the commercial potential was more easily seen, but recognised that there was commercial potential in enabling technologies and know-how. Dr Nigel Pitchford, Managing Director of Healthcare, Imperial Innovations, said: "we would consider know-how, particularly processing and manufacturing know-how, as being intellectual property within the context of a company. If it is held, is well researched and highly reproducible, we would consider that to be intellectual property, not within the classic sense of having a patent but within the sense of it being a valuable asset that the company owns and can gain leverage on".[272] To patent, for example, the technology developed to inject cells into patient's eyes is not to stifle the progress of research, but rather is a valuable mechanism to ensure return on investment in that development, and consequently to make future investment in regenerative medicine more likely.

133.  There is significant commercial potential in the enabling tools and technologies, and commercial know-how associated with regenerative medicine—the regenerative medicine community must ensure that investors are aware of this potential. UK Trade and Investment has a specific programme to attract inward investment in regenerative medicine and so we recommend that they support the field by informing investors about the economic potential of investment in the field.

134.  We heard significant concerns about the impact of a recent European Court of Justice (ECJ) ruling which affected the patenting of human embryonic stem cells. In 2011, the ECJ upheld Greenpeace's challenge of a patent held by Professor Oliver Brüstle which protected a method of transforming human embryonic stem cells into neurons. In its judgment, the Court ruled that such procedures violated existing restrictions on the industrial or commercial use of human embryos.[273] As a result of the Court's ruling, regenerative medicine procedures or treatments which derive from the destruction of human embryonic stem cells cannot be patented in Europe. This decision cannot be appealed. The UK's Intellectual Property Office has issued revised guidance on the patentability of treatments involving human embryonic stem cells in the wake of the decision. That guidance states that where the implementation of an invention requires the use of cells that originate from a process which requires the destruction of a human embryo, the invention is not patentable, even if the claims of the patent do not refer to the use of human embryos.[274]

135.  There was much discussion around the implications of this ruling. Julian Hitchcock said there was such a serious misunderstanding about its implications that some researchers thought they should abandon work in this field in Europe.[275] Alex Denoon, Partner, Lawford Davies Denoon, described the concerns about it signalling "the end for European or British embryonic stem cell research" as "a fallacy".[276] GE Healthcare said there was a "lack of clarity" following the judgment and "additional uncertainty" for investors, a view which Research Councils UK shared.[277] Sean Dennehey, Chief Executive of the Intellectual Property Office (IPO), reminded us that "most areas of regenerative medicine are patentable": materials isolated from the human body, such as cells or isolated genes and their use in therapy, are patentable. Methods of tissue engineering, such as culture techniques, delivery methods or cell scaffolds, are also patentable.[278] There is significant scope for patenting within the field and much of the negative publicity around the Brüstle ruling seems to have overstated the implications.

136.  The final issue raised on IP was the cost of prosecuting patents. Azellon, NHSBTS and Professor John Haycock, Professor Stephen Rimmer and Professor Sheila MacNeil all highlighted the great expense of patenting beyond initial filings.[279] Professor Mason and Azellon also suggested that, in many cases, universities were ill-equipped to deal with the commercial aspects inherent within the patenting framework, and to support applications and patents over the timeframes required (and in multiple territories).[280] The IPO suggested that this could be overcome if universities were more selective about which countries they filed patents in.[281] This suggested a lack of shrewdness when it comes to patenting in universities. NHSBTS had an alternative suggestion: they recommended assistance in the form of grants or tax credits to remove the barrier to patenting and commercialisation. Professor Haycock, Professor Rimmer and Professor MacNeil argued that it was necessary to provide more support for academics in national and regional filing, potentially through a collective government sponsorship mechanism.[282] Julian Hitchcock raised the idea of a common national clearing house for regenerative medicine intellectual property.[283]

137.  Concern over the cost of patenting, the sufficiency of support available for innovators and questions about the ability of universities to recognise the potential in regenerative medicine patents lead us to conclude that the TSB should set-up a time-limited support fund for regenerative medicine patents. This fund should be open to university researchers who wish to pursue patents beyond the first stage, so that potential income from regenerative medicine products is not lost. Such a fund would help foster this fledgling industry and be a helpful tool until university patent offices are better placed to deal with the potential value of these products.

138.  Although patents are not essential to commercialisation they can be a valuable tool. The TSB Smart scheme (formerly known as the Grant for Research and Development) provides matched funding for small and medium sized businesses, including pre-start-ups and start-ups, which can be used to establish IP position and to protect IP.[284] Furthermore, the Government introduced a preferential regime for profits arising from patents, known as a Patent Box, in April 2013. It allows companies to apply a reduced 10% corporation tax rate to profits attributed to patents and certain other similar types of IP.[285] Tissue Regenix argued that this scheme would do little to help early-stage pre-revenue companies but acknowledged that it would be beneficial to companies at a later stage such as itself. It voiced concerns that the Patent Box will complicate how licences are drafted, as a result of the need to ensure distinction between patent box eligible and ineligible income streams.[286] Alex Denoon said that the scheme was attracting interest from companies not previously active in the UK.[287] We concluded that there is already considerable support available for SMEs seeking assistance with IP.

Evaluation and the pricing of treatments

139.  NICE is responsible for providing the NHS with advice on effective, good value healthcare. The two mechanisms it has for this, which can be used to assess regenerative medicines, are: the Interventional Procedures Pathway which reviews efficacy and safety; and Health Technology Appraisals which examine the cost effectiveness and cost consequences of a treatment.[288]

140.  In order to be commissioned for use on the NHS, a therapy has to be assessed by NICE and approved for use through normal commissioning routes, or go through individual approval processes within Primary Care Trusts (PCTs) and Clinical Commissioning Groups (CCGs) and be reimbursed through different payment mechanisms. NICE is often accused of giving too much consideration to cost effectiveness, at the expense of clinical-effectiveness.[289] It employs a method known as the QALY (quality adjusted life year) to compare different treatments and their clinical effectiveness. Put simply, the QALY gives an idea of how many extra months or years of life of a "reasonable quality" a person might gain as a result of treatment.[290]

141.  We heard significant reservations about the suitability of the economic models NICE uses when it came to assessing the cost-benefit of regenerative medicines. Regenerative medicines which are curative in nature can have high up-front costs but will make significant savings for the healthcare system, as well as wider societal and economic impacts such as releasing people back to work and reducing the benefits bill, which were not considered to be given appropriate consideration under current arrangements.[291] For example, one study suggested that savings in direct healthcare costs in the USA could be up to $250 billion per year from chronic diseases such as heart failure, stroke, late-stage Parkinson's disease, spinal cord injury, and insulin-dependent diabetes.[292] A recent Austrian trial of a regenerative treatment for diabetic ulcers demonstrated how a cure could provide savings in sterile dressings alone of £30, 000 per annum, per patient.[293] An estimated £14 billion is spent a year on the treatment of diabetes and its complications in the UK—a cure for this disease would represent a significant saving to the healthcare system.[294] OSCI went so far as to describe current pricing structures as "largely irrelevant" as regenerative medicine will, more often than not, be curative rather than an ongoing treatment for symptoms.[295] The NHSBTS argued that regenerative treatments were more akin to transplants than drugs, in that costs are realised immediately whilst savings are accrued over time (reduced chronic care etc), and so required alternative reimbursement models.[296] The Government acknowledged that current reimbursement models were inadequate and that "a much closer link between the price the NHS pays and the value that a new medicine delivers to patients and to society is needed".[297] Under the current evaluation mechanism, a cure would only be considered affordable if it cost no more than two years of conventional therapy[298]—this situation is clearly unacceptable.

142.  We consider the NICE model for evaluating innovative treatments and cures to be inappropriate. It must devise suitable models that give appropriate consideration to the long-term savings sometimes offered by high up-front cost treatments. Investors must see a clear path from the bench to the bedside if they are to invest, and a key component of this is reimbursement; a product must be bought at a suitable price by healthcare systems to generate an income.[299] This nascent industry will have higher costs for its first few treatments as efficiencies of scale are still being strived for, in the same way that many new technologies initially have a high price which quickly drops.[300] Whilst economies of scale must be sought in the long-term, there needs to be some recognition from NICE that costs will initially be higher as the field emerges, and that without appropriate reimbursement further medicines may not be developed, or certainly will not attract investment for swift development. This matters both in terms of patient care and for the potential benefit to UK plc. Other countries, such as France, Germany, Italy and Spain allow higher prices for new, innovative treatments.[301]

143.  The first few regenerative medicine products will invariably be more expensive than products further down the line. Other countries, such as France, have evaluation and reimbursement systems which provide for this. NICE must ensure that its evaluation process recognises the higher initial costs of innovative treatments, without compromising its goal of assessing value-for-money in healthcare. Part of its value-for-money consideration should be that early investment in this field could unlock other treatments with significant economic impact, both in terms of savings to the health system and increased potential work productivity.

144.  From 2014, NICE will take on the role of full value assessment in the new value-based pricing system. The new price threshold structure, according to the consultation papers, would have:

·  "higher thresholds for medicines that tackle diseases where there is greater "burden of illness": the more the medicine is focused on diseases with unmet need or which are particularly severe, the higher the threshold;

·  higher thresholds for medicines that can demonstrate greater therapeutic innovation and improvements compared with other products; and

·  higher thresholds for medicines that can demonstrate wider societal benefits."[302]

145.  This sounds promising to us and could address many of the concerns about reimbursement raised, but it is too soon to make an assessment of the proposed plans. It also remains unclear whether value-based pricing, which applies to "branded medicines", will extend to all forms of regenerative medicine.[303] The London Regenerative Medicine Network stated that, depending on its final form, value-based pricing seemed likely to work as beneficially for cell therapies and regenerative medicines as for other new medicines as it can take account of additional value gains and wider health benefits, which the traditional "QALY" approach may have missed. The Government are confident that it will "provide a broader assessment of a medicine's value, taking into account factors such as unmet need and wider societal benefits".[304] The MRC and the TSB cautioned that: "the challenging UK reimbursement environment may drive regenerative medicine product development outside the UK".[305] This reinforces that there is no room for error when it comes to reimbursement.

146.  Value-based pricing may resolve the difficulties which companies with high up-front cost treatments that provide long-term savings currently experience when seeking approval, but the devil will be in the detail of the system. We recommend that the Department of Health commit to an evaluation of value-based pricing after the first year of operation. We have no doubt that other Parliamentary committees, such as the House of Commons Health Committee, will keep a watching brief on this area—this is vital as appropriate reimbursement is of great importance to the health of both this emerging industry and the established pharmaceutical industry.

147.  Dr Schopen, Vice-President for Global Commercial Operations, Tigenix and others raised the issue of comparability.[306] NICE evaluate proposed reimbursement levels against a benchmark spelled out by the submitter: either the cost of another ATMP, or a treatment with similar outcomes. Where one or neither of these exist, it is difficult for companies to show comparability and so demonstrate value for money.[307] The VALUE project discussed difficulties identifying a suitable comparator when evaluating the cost-effectiveness of Apligraf. NICE, allegedly, failed to recognise the cost savings of healing a chronic wound quickly and effectively.[308]

148.  NICE must ensure that it gives guidance to companies developing novel treatments on how to demonstrate comparability. One mechanism for this may be the seminars, developed as part of the life science strategy, which aim to show innovators how to demonstrate value. NICE's processes must allow for difficulties demonstrating comparability for innovative treatments.

149.  Private health insurers may be quicker to adopt new therapies than the NHS because they have developed their own procedures for evaluating the cost-benefit of offering a certain treatment. For example, Bupa have developed an algorithm to do this. Bupa offers ChondroCelect to private patients in the UK whereas the public healthcare system is still evaluating it.[309] Belgium adopted this therapy in a very timely manner and agreed reimbursement rates with Tigenix (the company who produce it) within six months. We consider it desirable that NICE learn lessons from other countries and the private healthcare sector about how they evaluate regenerative treatments.

150.  Many witnesses were optimistic that adaptive licensing—an approach to enable earlier access to a medicine on a conditional approval basis, with further data on efficacy and safety collected following such an approval—would help the industry's specific issues.[310] Japan is already considering a revised system of fast-track approval for stem cell therapies.[311] Similarly, the President of the United States commissioned his Council for Advisers on Science and Technology to produce a report on supporting innovation in drug discovery, development and evaluation.[312] Reimbursement was described by Dr Paul Kemp as the "missing key" to regenerative medicine business models[313], and some witnesses argued that staggered reimbursement[314]—which could be one outcome of adaptive licensing, some form of dual track approval system or early access schemes—would encourage investors to invest earlier as it provided a clearer and more immediate potential return on investment. The UK Government must ensure that its pricing and reimbursement systems are fit for purpose otherwise companies will base themselves in other countries.

Risks of regenerative medicine tourism

151.  Unproven, poorly regulated treatments have the potential to cause serious harm to patients. Furthermore, they could cause serious harm to the regenerative medicine industry as high-profile cases could damage public and investor confidence in it.[315] Examples of serious accidents, which could have been prevented by more robust regulation, include one that occurred at the German XCell-Center; the Centre was closed following the death of a child who had received stem cells injected directly into the brain.[316] An Israeli boy underwent stem cell therapy in Russia to treat spinal cord injury and ended up with multiple tumours in his spine.[317] The Italian Government recently authorised the use of an unproven treatment using mesenchymal stem cells on a group of patients, a decision roundly condemned by prominent UK academics.[318] The Alliance for Regenerative Medicine points to multiple instances of businesses offering commercial stem cell therapies, for which they charge large sums of money, which have never been clinically validated and are unproven.[319] Where patients are suffering from incurable diseases, we can understand the attraction of "miracle cure" claims of treatments. But the UK has robust safety and efficacy standards for a reason: to protect patients. Edinburgh BioQuarter suggest that the UK is home to companies offering to collect and store adult stem cells, at a price, in the hope that one day they might be clinically useful to an individual, and that this service "overplays the current state of knowledge and preys upon the worried well".[320]

152.  In an era when access to information about these offerings, and ability to travel, is so great, the UK Government must take action to protect its citizens from rogue therapies at home and abroad. The primary tool to combat this is information. Patients must have access to information about the safety and efficacy of these types of treatments. The Government recommend that patients always consult their physicians about the possibility of travelling for treatment—this is, of course, correct. Furthermore, the NIHR has produced guidance for patients considering travelling abroad for treatment. We recommend that the Foreign and Commonwealth Office (FCO) partner with the Department of Health to develop a website, in the same model as FCO travel advice for countries, which, in the first instance, contains summary assessments of the strength of safety measures in place for innovative therapies abroad. In time, they might develop this further, in partnership with organisations such as the International Society for Stem Cell Research (who have begun work in this area), to identify unproven therapies and those who provide them.

Hospital exemption

153.  In Europe, medicinal products that are categorized as ATMPs are regulated under the EU ATMP Regulation. This Regulation requires ATMPs to be granted centralised European marketing authorisation by the European Commission following assessment by the European Medicines Agency (EMA). Under the ATMP Regulation there is an exemption for ATMPs which are prepared either on a non-routine basis and used within the same member state in accordance with a medical prescription for an individual patient ("the hospital exemption"), or to supply ATMPs as unlicensed medicines ("specials") to meet the special clinical needs of an individual patient under the direct responsibility of the clinician where an equivalent licensed product is not available.[321]

154.  The BIA, Chris Mason, NHSBTS, Tigenix and the UK Regenerative Medicine Community called for the harmonisation of the interpretation of the hospital exemption to bring innovative, effective and safe therapies to all European patients,[322] because inconsistent interpretation of the Hospital Exemption in member states and routine preparations of treatments under an exemption impedes development. There is less incentive for a company to go through the marketing approval process if their product can be used by this "back door", and this in turn limits the number of patients it is available to.[323] Considerable discontent was expressed about the hospital exemption, in its current form, in a European Commission public consultation on the relevant regulation. Concern was raised about the scope for varied interpretations of "preparations on a non-routine basis".[324]

155.  The current EU ATMP Regulation is unclear. Terminology used such as "preparation on a non-routine basis" leaves too much room for interpretation. There is also uncertainty about whether a hospital exemption is still permissible when a fully validated, centrally approved Advanced Therapy Medicinal Product (ATMP) is available. We recommend that the UK Government, during the review of the ATMP Regulations, make the case at the European Commission level for clarity on these two points in the revised Regulations.

Harmonisation

156.  Regenerative medicine is a global market and, to attract investment and ensure the rapid development of the field, there is a need for greater harmonisation of regulatory standards and requirements across the world. For example, currently cell:device combinations are regulated as ATMPs in the EU but as medical devices in the US, which means each requires different data from clinical trials.[325] There are already initiatives to harmonise regulatory requirements including the International Conference on Harmonisation (ICH), and a European Medicines Agency-Food and Drug Administration (EMA-FDA) joint committee.[326] The Cell Therapy Catapult gave examples of areas where there is not yet harmony: the requirements for non-clinical models and quality requirements (control of starting materials, acceptability of cell lines derived in the UK due to historical concern over BSE/TSE risk, need for full GMP, sterility tests, environmental monitoring in GMP suites and qualified person release).[327] To realise the full potential of this global industry, and to ensure that the UK is an attractive location for regenerative medicine companies to invest in and to undertake their clinical trials in, the UK Government must take the lead in promoting harmonisation of regulatory requirements.

157.  One area where the UK is already leading the world is the development of standards. A standard is an agreed way of doing something and British Standards Institution (BSI) standards are the distilled wisdom of people with expertise in their subject matter and who know the needs of the organizations they represent. The BSI has published three cell therapy and regenerative medicine publicly available specifications (PAS) which provide guidance to companies operating in this domain.[328] LGC chairs the BSI RGM/1 standards committee, which is a national committee that acts as a forum for stakeholders to identify overlapping and common standardisation interests, with a view to agreeing priority work items for regenerative medicine standards in the UK.[329] The National Institute for Biological Standards and Control plans to launch a new initiative to develop standards and reference materials for cell-based medicines in 2013 which will bring regulators, industry and clinical academics together to discuss the key issues in safe and reproducible delivery of cell-based medicines, with the intention of holding a series of focused meetings to make practical progress in this area.[330] These discussions about standards are promising and the more standards are established and agreed, the more barriers to translation and commercialisation are removed.

Co-ordination and final conclusion

158.  Having surveyed this field extensively, and compared UK activities to work in other countries, our overriding concern is that there is currently a lack of co-ordination in the field. There are many piecemeal activities but no single person or organisation is leading and co-ordinating the development of a joined-up approach to regenerative medicine. The closing of the Stem Cell Networks will not help.[331] There is great hope that the Cell Therapy Catapult will provide this co-ordination and yet the Cell Therapy Catapult must focus its activities to develop phase III investable propositions, by supporting promising clinical research.

159.  Regenerative medicine has the potential to save lives and to help support the UK economy. The UK has a great potential resource in the NHS which could make it an attractive place for investment. But the UK is currently underprepared to realise the full potential of regenerative medicine. The many words which have been spoken about regenerative medicine must translate to action, and quickly. We must not miss out on this opportunity to lead the world in this work.

  1. Accordingly, we recommend that the Government also appoint the chair of the independent regenerative medicine delivery expert working group as the UK's regenerative medicine champion. This person would foster links between the many stakeholders (including, but not limited to, investors, basic scientists, clinicians, manufacturing experts, delivery networks, regulators), drive forward the regenerative medicine agenda and represent the UK's interests on the global stage. This champion should have a budget and support from a Government office.



224   Professor Chris Mason, Scottish Enterprise. Back

225   BIA. Back

226   Dr Paul Kemp. Back

227   Azellon, Scottish Enterprise, Scottish Government. Back

228   ABPI, GE Healthcare, Professor Rimmer, UKRMC. Back

229   Professor Chris Mason. Back

230   Edinburgh BioQuarter. Back

231   Wall Street Journal: A rare win for venture investors in regenerative medicine, 2011. Back

232   Dr Paul Kemp. Back

233   Appendix 5. Back

234   Pfizer. Back

235   Dr Kemp. Back

236   Professor Chris Mason. Back

237   Pfizer. Back

238   Professor Chris Mason. Back

239   ABPI, LGC, Appendix 5. Back

240   The point where a business has a working prototype for a product or service that has not yet been developed enough to earn money through commercial sales. The company needs to find sufficient money to develop the prototype until it can generate sufficient cash, through sales to customers, that would allow it to be self sufficient and grow. Back

241   Cell Therapy Catapult. Back

242   Cell Therapy Catapult, Government, TSB. Back

243   TSB. Back

244   BIA, GE Healthcare, Paul Kemp, London Regenerative Medicine Network, Pfizer and Regener8. Back

245   Alliance for Regenerative Medicine. Back

246   Edinburgh BioQuarter. Back

247   Dr Paul Kemp. Back

248   Edinburgh BioQuarter. Back

249   Medical Technologies Innovation Knowledge Centre. Back

250   Regener8. Back

251   ReNeuron. Back

252   NHSBTS. Back

253   TSB. Back

254   LRMN. Back

255   NHSBTS. Back

256   Q 288. Back

257   Cell Therapy Catapult: Growing a UK cell therapy industry that delivers health and wealth, 2012. Back

258   ReNeuron, BIA. Back

259   BIA: Citizens' Innovation Funds; engaging the public with UK innovation, 2012. Back

260   HL Deb, 11 Mar 2013, column WA41. Back

261   The Economist: Financing medical research, 2013. Back

262   See http://bostonbiotechwatch.com/tag/venture-capital/. Back

263   UK Intellectual Property Office (IPO): patents, revised 2013. Back

264   Supplementary evidence from the IPO. Back

265   Alliance for Regenerative Medicine. Back

266   Professor John Haycock, Professor Stephen Rimmer and Professor Sheila MacNeil, University of Sheffield. Back

267   Miltenyi Biotec. Back

268   Professor Chris Mason. Back

269   King's College London and King's Health Partners. Back

270   Government. Back

271   Pfizer. Back

272   Q 181. Back

273   Greenpeace v BrüstleBack

274   IPO: Inventions involving human embryonic stem cells, 2012. Back

275   Julian Hitchcock. Back

276   Q 213. Back

277   GE Healthcare, RCUK. Back

278   Q 198. Back

279   Azellon, NHSBTS and Professor John Haycock, Professor Stephen Rimmer and Professor Sheila MacNeil, University of Sheffield. Back

280   Professor Chris Mason, Azellon. Back

281   Q 203. Back

282   Professor John Haycock, Professor Stephen Rimmer and Professor Sheila MacNeil. Back

283   Julian Hitchcock. Back

284   Government. Back

285   TSB. Back

286   Tissue Regenix. Back

287   Q 208. Back

288   NICE. Back

289   Health Committee, National Institute for Health and Clinical Excellence, (8th Report, Session 2012-13, HC 782). Back

290   Government. Back

291   Azellon, Cell Therapy Catapult, Health Knowledge Transfer Network, Parkinson's UK, RCUK, Tigenix, OSCI, UKRMC, UK Stem Cell Foundation. Back

292   Royal Society of Chemistry. Back

293   UCL applied regenerative science group. Back

294   Kanavos, P., van den Aardweg, S., Schurer, W.: Diabetes expenditure, burden of disease and management in 5 EU countries, 2012. Back

295   OSCI. Back

296   NHSBTS. Back

297   Government. Back

298   Cell Therapy Catapult. Back

299   ABPI, Alliance for Regenerative Medicine, GE Healthcare, Miltenyi Biotec. Back

300   Regener8, Professor Rimmer, Professor MacNeil, Professor Haycock. Back

301   UCB Pharma. Back

302   DH: A new value-based approach to the pricing of branded medicines, 2010. Back

303   Ibid. Back

304   Government. Back

305   Op. cit. Strategy for Regenerative Medicine. Back

306   Q 216. Back

307   Cell Therapy Catapult. Back

308   TSB: VALUE project final report, 2012. Back

309   Bupa, Q 219. Back

310   ARMC, Oxford-UCL Centre for the Advancement Sustainable Medical Innovation, Q 75, Q 79, QQ 87-88, RCUK. Back

311   Cyranoski, D: 'Japan to offer fast-track approval path for stem cell therapies' Nature Medicine, 2013. Back

312   Appendix 5. Back

313   Q 87. Back

314   Q 82, QQ 87-88. Back

315   Edinburgh BioQuarter, GE Healthcare, OSCI, Pfizer. Back

316   Edinburgh BioQuarter. Back

317   Parkinson's UK. Back

318   EuroStemCell: Scientists raise alarm as Italian Government rules on unproven stem cell therapy, 2013. Back

319   Alliance for Regenerative Medicine. Back

320   Edinburgh BioQuarter. Back

321   Regulation (EC) No 1394/2007: ATMP RegulationsBack

322   BIA, Chris Mason, UK Regenerative Medicine Community, Tigenix. Back

323   Alliance for Advanced Therapies, NHSBTS, Tigenix. Back

324   European Commission: Summary of the responses to the public consultation on Regulation (EC) No. 1394/2007 on ATMPs, 2013. Back

325   UKRMC. Back

326   HPA. Back

327   Cell Therapy Catapult. Back

328   Government. Back

329   LGC. Back

330   HPA. Back

331   Regener8, Scottish Government. Back


 
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