More Plasma Products: Better Prices
- By Keith Berman, MPH, MBA
THIRTY-FIVE YEARS ago, a first-class postage stamp cost 10 cents. A movie ticket was less than $2. The average new car cost about $4,500. And the price of a bottle of 5% or 25% human serum albumin offered by a leading U.S. supplier was around $40.1
Decades of price inflation have pushed up that first-class stamp to 44 cents. A movie ticket today easily tops $7. An average new car will now set you back nearly $28,000. And the price of a unit of albumin today? It’s still well under $50 on most hospital group purchasing contracts — for the very same 5% (250 ml) and 25% (50 ml) albumin products that cost about $40 in 1974.
Had the price of albumin tracked with the Producer Price Index since the mid-1970s, we would expect to pay well over $120 per bottle today.2 But — notwithstanding a few painful spikes during past supply shortages — average prices for albumin have soldiered on in the same low range, seemingly oblivious to decades of price inflation.
The Shrinking Albumin Price Mystery
How can we explain what amounts to a healthy drop in real albumin prices over all these years? Have manufacturers somehow found some way to produce it more cheaply? On the contrary, costs of donor plasma procurement, testing and downstream purification have increased over the years.
The answer to this mystery lies in what makes production of human plasma products so unique and different from conventional drug manufacturing. And, it all starts with plasma. Through many purification steps that branch into different paths, this costly and precious raw material is “fractionated” into the various therapeutic proteins we know. Depending on the product and the length of its purification path, the manufacturing process can take as long as six to eight months. But back in 1974, few individual products were extracted from each liter of donor plasma. In fact, there was just a small handful of them: albumin and its close relative PPF3, intramuscular immune globulin (IMIG) and several clotting factors used mainly to treat hemophilia patients.
The cost of that plasma and those months of processing consume about 70 percent of all industry expenses. By contrast, conventional drug companies spend less than 20 percent of their annual budgets on chemicals and manufacturing; the rest is marketing and sales, research and development and other non-manufacturing costs.4
With just a few other products purified from each liter of plasma, each bottle of albumin in 1974 had to “carry” a big portion of that hefty plasma and shared manufacturing cost.
New Products Soak Up Costs
Since the mid-1970s, a wave of new products has arrived, all purified from that same liter of plasma (See Figure 1). The active proteins in intravenous immunoglobulin (IVIG), alpha-1 antiproteinase inhibitor, fibrin sealant, thrombin, antithrombin and subcutaneous immune globulin products now purchased and administered thousands of times each day once were discarded as “waste.” The latest product — human fibrinogen concentrate — was just launched this year.
More widely used products, like albumin and IVIG, clearly absorb a larger chunk of the plasma cost burden, while others that meet the needs of smaller patient populations account for less. But each does its part to soak up that big fixed cost.
A Special Innovation Bonus
Other potentially therapeutic proteins in human plasma await discovery. And, important new clinical uses for existing products will be found. When the next breakthrough comes along, you’ll now know that it also comes with a bonus: sales that will help keep down prices of other plasma products you purchase for years to come.