Optimizing Cost of Goods for Cell Therapy Manufacturing
Brian Hampson, Vice President, Global Manufacturing Sciences and Technology, Hitachi Chemical Advanced Therapeutics Solutions | January 3, 2018
The cost of goods (COGs) to manufacture a cell therapy can have an enormous impact on the long-term viability and sustainability of the therapy as a commercialized product. If the cost of goods to manufacture the commercial product is too high, then it may be difficult, if not impossible, to establish pricing for the therapy that it is not prohibitively expensive but still high enough to provide sufficient gross margin to sustain a profitable commercial business. The final outcome could be a therapy that is not accessible to many of the patients that would benefit or the need to abandon the therapy altogether.
The Primary Elements of a Cell Therapy Product’s Cost of Goods
In cell therapy, there are multiple factors in assessing the cost of goods, including:
Direct Costs. These include the labor, materials, and third party services (e.g. outplant testing, transport of cells or test samples) directly used by each batch of cell therapy produced including production, testing, and QA.
Indirect Costs. These costs include ongoing overhead costs such as facility operating costs, supervision & management, central quality systems, as well as other incidental costs like deviations and sustaining technical support.
Amortization of Non Recurring Investments. Includes all of the one-time costs required to establish the targeted GMP manufacturing capacity which are then allocated over the life of the cell therapy product. These can include, for example, process and analytical development/optimization costs, capital expenditures for facilities and equipment, as well as nonrecurring facility design and validation services.
Cost of Failed Lots. This includes all of the costs above that are incurred for failed lots that must be absorbed by successful lots.
The weight of each of these cost factors on the total COGs for a cell therapy product can vary depending on whether the product is an off-the-shelf or a patient-specific one.
With off-the-shelf products where cells from a single allogeneic donor (“universal donor”) can produce therapies for many patients in a single batch that are then cryopreserved and inventoried for off-the-shelf supply, the cost of goods can be reduced through conventional economies of scale where a larger batch directly reduces the cost per patient dose. A second key focus is on optimizing the yield from the process.
For example, if a given process could be optimized using advanced bioreactor technology to double cell production without substantially changing labor and material costs, then the cost of goods would be cut in half.
With patient-specific products, however, each patient treatment must be separately produced from the patient being treated or a matched donor. Because cell therapies are produced on a 1:1 basis, a larger batch won’t treat more patients and the opportunities for economies of scale are limited. So, the strategies for optimizing the cost of goods for a patient-specific cell therapy product are different from optimizing the yield (i.e. number of patient treatments) from each batch.
In an off-the-shelf therapy manufacturing process, the impact of reducing labor is often minimal—shaving an hour off of the total prep time of a cell therapy batch when one batch serves hundreds of patients doesn’t provide a significant per-treatment cost reduction. If, for argument’s sake, the fully burdened cost for an hour of labor is $250, and a single batch treats 100 patients, then each treatment only sees a $2.50 reduction. Across 1,000 patients, that’s $2,500 saved.
However, for a patient-specific cell therapy product, where the ratio between cell batches and treatments provided is 1:1, saving an hour of labor on preparing a batch is much more impactful. At the same cost of $250 as the above example, the labor expenses saved across 1,000 treatments would be $250,000.
Manufacturing deviations are an often-forgotten source of increased COGs for many cell therapy products. Each one can take 8 hours or more of labor to investigate, document, and close out.
If labor costs $250/hour, then that means each deviation costs at least $2,000, plus whatever other costs are incurred as a result, up to the full cost of a failed lot in the worst case. Finding ways to reduce deviations can be an important way to reduce the cost of goods for each treatment.
One of the leading causes of manufacturing deviations and quality issues is human error. These, in turn, drive up the cost of goods for a cell therapy product as discussed above.
One highly useful—and often underestimated—form of automation is electronic batch records. While the rate of batch record entry errors per run can vary based on the complexity and duration of a process, let’s say there is an average of 1.0 deviations per patient-specific batch. And, for argument’s sake, say the use of electronic batch record entry systems can reduce the deviations per batch to 0.5, a 50% reduction.
Over the course of 1,000 batches, this difference could prevent 500 deviations, saving $1,250,000 in labor (based on $250/hr. full burdened labor cost and 8 hours of labor on average required to handle each deviation).
A second cost reduction opportunity enabled by an electronic batch record is the ability to perform product release by exception. In this instance, once the electronic batch record system is fully validated, it is relied upon to perform all of the batch record checks previously performed manually by QA. If the system indicates there have been no exceptions to required processing and results, release is directly authorized, often saving many hours of QA review time per batch.
Managing Idle Capacity
Another often-forgotten cost for the manufacture of any product is the issue of idle capacity. Often, the demand for the cell therapy will be uneven—some times of the year might see high demand, while other months may see less demand for the treatment. Additionally, ensuring there is sufficient capacity to meet growth in projected demand over time often results in excess capacity for a substantial period of time which can be further compounded by delays in clinical and/or commercialization timelines.
During this idle time, the cost of maintaining all of the staff and facilities required to produce a cell therapy would go to waste—driving up the cost of goods for the therapy.
Finding ways to manage the problem of idle capacity can be crucial for controlling the cost of goods for cell therapy products. One strategy for reducing the impact of idle capacity is to partner with a third party to handle the actual manufacturing for a cell therapy product.
When a Third-Party Cell Therapy Manufacturing Partner Makes Sense
Reducing Your Capital Outlay. By partnering with a third party manufacturer, you can reduce or eliminate the need to purchase, validate, and maintain specialized facilities and equipment for your cell therapy.
Managing Labor Costs. In a cell therapy manufacturing partnership, the cell therapy manufacturer will leverage the labor efficiencies that result from its dedicated focus on manufacturing and will manage the labor pool, including recruitment, training, and right-sizing as product demand changes with time.
Eliminating Idle Capacity Concerns. Third party manufacturers often work with many cell therapy products at once. This helps them manage the issue of idle capacity by allowing them to switch production from one product to another based on the demand for each—reducing the concern regarding idle capacity. This helps to keep the cost of goods down for each cell therapy.
PCT has helped cell therapy products advance towards commercialization by minimizing the cost of goods, providing FDA-compliant manufacturing facilities, and providing consultative strategies for meeting phase-appropriate quality requirements throughout the development process.
With decades of experience in cell therapy development, PCT is here to help you make your cell therapy commercially viable and sustainable!
Brian Hampson, Vice President, Global Manufacturing Sciences and Technology, Hitachi Chemical Advanced Therapeutics SolutionsBrian Hampson is Vice President, Global Manufacturing Sciences and Technology, tasked with leading Hitachi Chemical Advanced Therapeutics Solutions ("HCATS") Center for Innovation and Engineering (I&E).
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