West Nile Sets Off Battle Over Blood Testing

West Nile virus has set off a new battle for market share between archrivals in the gene-based blood testing business.

As West Nile strikes in new parts of the country, U.S. blood banks are field-testing competing technologies that can detect the virus in donated blood, one from Swiss drug maker Roche Holdings and the other from Emeryville, Calif.-based Chiron Corp.

The stakes are huge, and not only financially for the two companies. The virus, first spotted in the U.S. in 1999, has killed more than 400 people nationwide, including an Orange County man in June. It wasn’t detected in California until last year, mostly in remote areas, and this summer has moved into urban Southern California.

Both Roche and Chiron say their systems -- rushed to blood banks and screening labs last summer at the urging of federal health officials -- have protected hundreds of people from receiving tainted blood, although at an escalating cost. Most people contract West Nile from the bite of an infected mosquito, but the virus also can be transmitted by blood transfusions.

Although most people infected with West Nile virus don’t get sick, it can be deadly. One in five people who contract it develops symptoms, such as fever and muscle aches. About 1 in 150 infected persons suffers the worst form of the disease, a life-threatening inflammation of the brain.

In the global gene-based blood testing market, Chiron has the upper hand in the U.S., while Roche dominates internationally.

Chiron claims that its tests are used to screen more than 80% of donated U.S. blood for the hepatitis C virus and the human immunodeficiency virus (HIV), which causes AIDS.

On the West Nile front, Chiron said its test, developed by partner Gen-Probe Inc. of San Diego, found 20 tainted donations in Arizona, California, Louisiana and New Mexico through July 16. Included in the count are three from Southern California, two from Los Angeles County and one from San Bernardino County.

Roche said its test had detected the West Nile virus in two donations thus far.

The companies took different approaches in rolling out the new tests.

Chiron designed its test to work on equipment its customers were already using to screen blood for hepatitis C and HIV. By contrast, Roche created an automated system for its test, so its customers must use new equipment to look for West Nile virus and the old system for hepatitis C and HIV.

Chiron said it had snagged Roche customers who prefer the simplicity of Chiron’s system. “We’ve picked up share,” said Andrew Heaton, chief medical officer of Chiron’s blood-testing unit. “There isn’t a whole lot of Roche left.”

Roche counters that Chiron owes its dominance to a contract with the American Red Cross, which processes half of all blood donations in the U.S.

Richard Thayer, vice president of Roche Diagnostics of Pleasanton, Calif., said blood banks had told him they liked his company’s new system, called Taq. “I think there has been some customer swapping,” he said.

Last year, the West Nile tests detected virus in 818 donations, according to the national Centers for Disease Control and Prevention. The CDC said more than 1,000 people were spared the risk of disease through transfusions. Chiron claims that its test has prevented infection in as many as 60 people so far this summer.

For years, all donated blood in the U.S. has been screened for the presence of bacteria and viruses. An initial round of tests uses a technology that costs about $1 per donation and is capable of detecting virus particles or antibodies produced against them.

Then blood is screened with the more expensive gene-based tests, which spot the genetic signature of a virus. Introduced in 2002, gene-based tests can find small amounts of virus before antibodies are formed. They are suited to West Nile virus, which replicates slowly and can’t be detected using older methods.

Until the Food and Drug Administration approves the experimental West Nile tests, which it might do in 2005, Roche and Chiron may charge only an amount that covers their costs. Neither company would discuss its costs or the price it would charge after FDA approval.

West Nile tests now cost $7 and $8 per blood donation, said Louis Katz, president of America’s Blood Centers, a network of 76 blood banks. If they are approved by the FDA, Katz said, the price will probably double. The hepatitis C and HIV tests together cost $10 to $15 per donation, he said.

Thanks to the newer tests, the risk of hepatitis C infection has dropped to 1 in 1.6 million from 1 in 230,000 and the chance of contracting HIV has fallen to 1 in 1.9 million from 1 in 1.3 million, according to a published study. That compares with the odds of being killed by a lightning strike: 1 in 84,000.

All screening tests combined account for $35 of the $150 to $200 price for a unit of blood, the Sanford C. Bernstein & Co. investment firm said in a recent research report. A slew of newer tests in development at Chiron and Roche could add to the cost. In addition to West Nile virus, Chiron is developing tests for hepatitis A and the parvo B19 virus, which can cause spontaneous abortions in pregnant women. The two companies are developing tests for hepatitis B.

“You can have all the safety you want if there is no limit on what you will pay,” Katz said.

Chiron’s Heaton said tests “are not a huge percentage” of the total cost of blood. “Safety costs money,” he said.

The price of safety could rise as blood banks begin to screen each donation separately. Typically, blood banks pool samples from multiple donors to check for pathogens, including HIV and hepatitis C. If the pool is positive, the blood banks go back and test each sample to isolate the tainted donation.

This summer, however, blood banks aren’t pooling donations in regions where the risk of West Nile virus is high. They are taking the added precaution because six patients became infected with West Nile virus last year after they received tainted blood.

Susan Stramer, executive scientific officer for the American Red Cross National Testing and Reference Laboratories, said that West Nile was hastening a shift toward individual testing in general. Also driving the change are gene-based tests in development for hepatitis B, which, unlike hepatitis C and HIV, is difficult to detect in pooled samples, she said.

Today, blood banks and blood screening labs don’t have the manpower and equipment to test every blood sample individually, Stramer said. “From a trend point of view, as automation improves and we add hepatitis B to the equation, the industry will move to single-unit sample sizes,” she said.

Chiron and its partner Gen-Probe this summer are rushing to key customers an automated system called Tigris that can rapidly process large numbers of individual donations. Tigris, which is considered experimental, should be operational before the end of this year’s West Nile virus season, Chiron said. West Nile “enhances the selling proposition” of the automated system, Heaton said.

Sanford C. Bernstein & Co. said that once Tigris was approved by the FDA, each machine would cost $300,000 to $500,000 and large blood screening labs would need 10 to 40 of them.

Tigris also will screen for hepatitis C, HIV and hepatitis B, if that test is approved. The added cost of individual donation testing on Tigris could raise the price of a unit of blood by 9%, or $18, according to Bernstein.

“They are definitely trying to take advantage of the West Nile epidemic to accelerate Tigris,” said Michael Busch, chief medical officer for Blood Systems Research Institute, a San Francisco affiliate of America’s Blood Centers.