Carticel: The Cost of This Alternative Therapy

The autologous cell therapy called Carticel manufactured by Genzyme Tissue Repair is now available to patients, and is currently being marketed in the United States and in Europe. Genzyme Tissue Repair employs a commercial process whereby a patient’s own chondrocyte cells are cultured for use in the repair of clinically significant, symptomatic, cartilage defects of the femoral condyle. The first part of the procedure consists of a biopsy of healthy cartilage, which is performed by a trained surgeon who collects a small amount of the patient’s cartilage to be sent to Genzyme Tissue Repair. Once at the Genzyme laboratory facility, the chondrocytes are isolated and cultured thus producing millions of new cells. These cells are then sent back to the patient’s surgeon who implants them back into the patient. The re-implanted cells continue to grow and integrate in the site where the cartilage is defective, thus creating new cartilage and effectively fixing the joint.


Carticel therapy is effective at treating symptomatic, cartilage defects of the femoral condyle (medial, lateral, or trochlear) caused by either acute or repetitive trauma. Unfortunately, this treatment is not intended as a viable therapy for those individuals suffering from arthritis. However, what makes this new treatment so beneficial is that it serves to recreate and replace the damaged cartilage with the patients own "lab grown" cartilage. Once damaged, joint cartilage does not normally regenerate in the body due to the avascular nature of cartilage tissue. Therefore, cartilage damage in the knee joint is a permanent condition often characterized by painful swelling of the knee joint and restricted mobility for the patient. Some people undergo arthroscopic surgery, which is a procedure to smooth over the surface of the damaged cartilage area, the cost of which is approximately $15,000 dollars. Other patients opt for surgical procedures like microfracturing, drilling, and abrasion therapies which may provide symptomatic relief at about the same cost as arthroscopic surgery, but the benefit usually lasts only a few years because the defective cartilage is not regenerated and healed, and as a result the defect and particulate debris returns. Furthermore, these procedures are performed with the intent of allowing bone marrow cells to infiltrate the defect, resulting in the formation of a fibrous cartilage tissue, which is less durable and resilient than normal articular cartilage. So in light of the huge cost, the benefits seem to fall dramatically short.


The real benefits of Carticel treatment lies in what it provides and costs as opposed to alternatives. For example, more severe and chronic forms of knee cartilage damage can lead to greater deterioration of the joint and may eventually lead to total knee replacement surgery. Approximately 200,000 total knee replacement operations are performed annually at a cost of about $25,.000 dollars per procedure. This amounts to $41 billion dollars that insurance companies and health management organizations pay annually for total knee replacement. Moreover, the artificial knee joint generally lasts only 10 to 15 years and is considered a poor option for patients under the age of 50. Carticel therapy is a much less invasive surgical procedure than total knee replacement and removes very little of the patient’s natural knee joint; effectively leaving the patient’s natural knee joint intact. The procedure cost ranges from $17,000 to $38,000 dollars, with an average cost of approximately $26,000 per procedure. This covers doctors fees, hospital stays, and of course the Genzyme Tissue Repair fee of $10,360 dollars for culturing, growing, and shipping the cells. Overall, the average cost of the procedure is $26,000, only $1,000 dollars more than the cost of a total knee replacement. This is a very competitve price when taking into account the problems associated with total knee replacement and the benefits of Carticel therapy. For one, Carticel therapy is proving that it is very effective at recreating a normal, healthy, functional knee joint in patients receiving this treatment, and also that it is less invasive and traumatic to the patient.


Carticel: A Track Record

Carticel was first launched as an unregulated device in early 1995, largely due to the fact that the Food and Drug Administration did not have a protocol to evaluate human autologous tissue and cell therapy products. Later when the FDA developed a protocol for such cellular products, Genzyme Tissue Repair submitted an application and worked closely with the FDA to set the quality standards for this field. As of August 1997, Carticel became the first such autologous cell therapy to be approved by the FDA. Approval by the FDA had a direct and very influential impact on Genzyme Tissue Repair’s ability to provide Carticel to potential patients. Many of the countries largest insurance companies began adopting protocols for covering Carticel treatments, thus substantially reducing the time required to obtain reimbursement for the patients, and effectively allowing the patients to elect such treatment. At the time of FDA approval, 15 million individuals in the United States belonged to insurance plans with protocols for Carticel therapy, and within three months of FDA approval, that number jumped to over 100 million. This large increase is due largely to the FDA approval of Carticel and to Genzyme Tissue Repair’s 1996 marketing campaign that was directed at educating healthcare management organizations and insurance firms about the new treatment. Since then, several insurance companies have established review protocols for selecting patients and determining which patients have cartilage defects that make them eligible for Carticel therapy. Since Carticel’s approval, more doctors are learning the procedure and making it more available to patients, more insurance companies cover the therapy, and more patients are opting to receive the treatment.



The product Carticel is doing quite well for a new biological therapy. As of December 31, 1998, exactly 2,946 surgeons had been trained in the procedure and a total of 2,117 patients had been treated with Carticel therapy since Genzyme Tissue Repair began marketing it in 1995. The number of people covered by insurance plans that pay for Carticel treatment under their policies is 136 million in the United States alone. Financially, Carticel is becoming a cornerstone product for Genzyme Tissue Repair; despite market fluctuations, Carticel brought in a total of $29 million dollars in sales by November 1997. Surgeons who are performing the procedure are very pleased with the outcome of the patients. Below is a graph of surgeons who have evaluated the patient before the operation and two years after; the results are very promising. 




These results are very promising considering the possibilities of Carticel therapy: less invasive, competitive price, more effective than total knee replacement, etc..



The above bar graph illustrates the dramatic decrease in pain and effusion that the Carticel therapy provides.




Likewise, the above pie-chart illustrates the large percentage of patients who benefit from the Carticel therapy. Approximately 86% showed improvement in their condition, while 12% remained the same and only 2% showed a decline in their condition.


Carticel: Finances

Genzyme Tissue Repair is doing quite well financially from its new Carticel product. The company reported on April 22, 1998 its first quarter sales for its Carticel autologous cultured chondrocytes treatment, which increased 33% from the fourth quarter of 1997. Carticel sales also increased 172% over the same period from 1996. This tremendous increase in sales directly reflects the growing acceptance of this new therapy as a viable treatment for articular cartilage damage of the knee. Carticel sales in the United States were $2.1 million in the first quarter of 1998, up from $0.8 million in the first quarter of 1997 and $1.6 million in the fourth quarter of 1997. The total Carticel revenues for the first quarter of 1998 were $2.5 million dollars, which is up from the $1.1 million dollars in total revenues from the first quarter of 1997. Tim Surgenor President of Genzyme Tissue Repair said that: "The first quarter jump represents the largest increase in the number of patients treated since the product was introduced in 1995. FDA approval, increasing payer acceptance, and outstanding long-term patient outcomes are all providing a solid foundation for building this business".

As of 1999, Genzyme Tissue Repair reported on April 21, 1999 that total revenues for the first quarter of 1999 were $4.0 million; representing an 11% increase from $3.6 million in total revenues reported in the first quarter of 1998. More specifically, worldwide sales of Carticel increased 18% to an astounding $2.9 million for the first quarter of 1999, up from $2.5 million in the first quarter of 1998. In the United States, sales of Carticel increased 12% to $2.3 million dollars. Overall, Genzyme Tissue Repair ended the quarter with $6.4 million dollars in cash and marketable securities, and also has access to a $50.0 million equity line of credit from its parent company Genzyme General, of which $45.0 million remains available. Genzyme Tissue Repair President Tim Surgenor commented that: "We are continuing to focus our sales and marketing of Carticel towards the insurance companies…because the use of Carticel continues to be more widely accepted, we saw over 50% more patients applying to their insurance companies for coverage of Carticel than we did during the first quarter last year". This type of growth is quickly establishing Carticel as a viable and effective alternative for treating articular cartilage damage.






Introduction/ How it Works / Data and Results / Issues and Concerns / Looking Toward the Future


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