Stem cell therapies are likely to be quite costly because of high development expenses and potentially high usage, according to a new report from the University of California at Berkeley, which said that new “financial risk-sharing mechanisms” could be needed.

“The cost impact of the therapy is likely to be high, because of a therapy’s high cost per patient, and the potentially large number of individuals who might benefit from the therapy. This expense would put additional stress on the Medicare and Medicaid budgets, cause private insurance health premiums to increase, and create an incentive for private plans to avoid covering individuals eligible for a therapy,” the report said.

Entitled “Coverage, Cost-Control Mechanisms, and Financial Risk-Sharing Alternatives of High-Cost Health Care Technologies,” the October 2009 study was prepared for the California stem cell agency at a cost of $15,000 by Richard Scheffler, director of the Petris Center on Health Care at UC Berkeley, Brent Fulton, also of the center, and three other persons. The agency said it did not endorse the report's conclusions.

California lawmakers are currently considering legislation (SB1064) by Sen. Elaine KoutaminasAlquist, D-San Jose, aimed at ensuring the affordability of state-financed stem cell therapies and requiring more openness and transparency at CIRM.

Concerning coverage by private insurance, the report, said,

“Because private plans experience approximately 20 percent annual enrollee turnover, this gives them an incentive to avoid covering an individual eligible for a therapy, not only because of the high cost of the therapy, but also because future healthcare savings might benefit a different insurer. Risk adjustment and reinsurance programs, which compensate an insurer for covering an individual with above-average risk or high health care expenses, or both, could be used to mitigate this incentive.”

The study said,

“The development of new stem cell-based therapies could significantly improve and extend the lives of people with currently incurable medical conditions, such as diabetes, macular degeneration, osteoarthritis, and spinal cord injuries. However, there is concern that these therapies may not be affordable and accessible because of the high research and development costs, coupled with the uncertainty as to whether health plans will cover these therapies. This may result in these therapies not being developed at a rate that corresponds to their economic benefit.”

The final paragraph of the study said,

“To improve the likelihood that new stem cell-based therapies will be covered by health plans, financial risk-sharing mechanisms may need to be formulated. These may include stem-cell firms bearing some financial risk, particularly regarding the uncertainty as to whether the therapies will result in future health care cost savings because of potential to cure diseases and disabilities. Risk-adjustment and reinsurance programs, which compensate an insurer for covering an individual with above-average risk or high expenses, or both, could be used to reduce private insurers’ incentive to avoid covering individuals who might benefit from an expensive therapy. In turn, this will increase the new therapies’ affordability and access, and will help ensure that investors who fund therapy development will be compensated, resulting in a development rate that more closely corresponds to the therapies’ benefits.”

The California Stem Cell Report asked CIRM for a copy of the document, which is a public record. Don Gibbons, communications chief for the agency, said,

“Please note that CIRM commissioned the attached report to provide a background survey regarding reimbursement for medical therapies.  We are providing the report to you for information purposes only.  The report and its recommendations do not reflect the views of CIRM's management or the Board’s leadership. We had intended to post this report at the same time that we post the full economic impact study that is underway, which will be later this spring.”

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U of T researchers recently identified a new protein responsible for regulating development in mouse embryonic stem cells.

In an article published in Cell Stem Cell, PhD candidate Emily Walker found that the polycomb-like 2 (PCL2) protein modulates embryonic stem cell fate. This is the first time that the PCL2 protein has been studied in mammalian cells. In the absence of PCL2, embryonic stem cells undergo continual self-renewal and lose their ability to differentiate. Embryonic stem cell differentiation is essential to produce the many cell types that form our organs and tissues.

To understand the importance of PCL2 in stem cell development, Professor William L. Stanford, Canada Research Chair in stem cell bioengineering and functional genomics, along with his group identified the genes responsible for regulating PCL2 production, in particular, a gene target called Tbx3, which has been implicated in embryonic stem cell self-renewal.

In PCL2-deficient cells, self-renewal is impaired and looks very similar to cancer cell growth. Cancer cells not only divide continuously, but they also lose the ability to differentiate into appropriate cells and instead develop into a tumour.

Stanford’s group will consider the role of PCL2 in cancer cells, determining whether they express less PCL2 than normal cells and eventually search for drug treatments that rebalance PCL2 levels.

Another interesting application relates to induced pluripotent stem (iPS) cells, which are generated by taking a cell (such as a skin cell) and reactivating genes that are critical for embryonic stem cells. “Embryonic stem cells and iPS cells are unique and powerful because they have the potential to become any cell type in the adult body. This property allows for many applications in regenerative medicine as you could potentially use those cells to rebuild or augment any type of tissue,” explains Walker.

Researchers have succeeded in making iPS cells, but methods to improve efficiency are still being studied. Since removing PCL2 protein prevents embryonic stem cells from differentiating, researchers are now interested in the effect of PCL2 removal on a differentiated cell.

The advancement of stem cell research offers a myriad of medical uses, and people are already banking in on the potential opportunities. At birth, a baby’s umbilical cord is full of cord blood and is a rich source of stem cells. Organizations like the Cord Blood Bank of Canada offer parents the opportunity to preserve stem cells in the umbilical cord blood for potential use in the child’s future.

In addition, the Ontario Human iPS Cell Facility, co-directed by Stanford, focuses on creating iPS cells from patients with a variety of genetic diseases. These cells can then be used as a tool to study these diseases in the lab.

The identification of PCL2 as an important regulator of embryonic stem cells opens up a new chapter for scientific study. To better understand and characterize the nature of stem cells, more studies on PCL2, its effects on cancer cells and iPS cells need to be conducted.