In the 1990s, manufacturers introduced a product that did not carry the disease risk of plasma-based drugs – made by cloning human clotting proteins in animal cells. Companies charged a premium for this ever-more-popular “recombinant factor.”
Recombinant factor is difficult and delicate to make, said Steve Garger, a development scientist at Bayer, which produces two popular factor products at its Berkeley, Calif., plant – including Landon Morris’ drug, Kogenate.
Inside a concrete building on the campus, kidney cells from baby hamsters are grown in stainless-steel vessels called bioreactors, and the clotting factor they produce is then purified in steel tanks kept in cold rooms. Working at full capacity, this factory produces less than a pound of clotting factor each year – but when diluted with other ingredients, it’s enough to treat thousands of patients in 80 countries.
The investment in manufacturing and marketing is only part of the reason for the high cost of the drugs, said Kevin O’Leary, vice president of pricing and contracting at Bayer. Bayer does not simply add up the costs, slap on a profit margin and come up with the price, Mr. O’Leary explained.
Instead, he said, the company begins by talking to insurers, doctors, and patients to get a sense of what value its products bring to the market, especially compared with drugs already available. Bayer then sets a price based on both its investment and the product’s perceived worth. In the end, he said, “we’re charging a price that’s competitive with the other factor products on the market.”
Bayer’s annual sales from its hemophilia drugs were 1.166 billion euros in 2016. That’s the equivalent of about $1.45 billion in the United States.