Ron Wyden, AP Images

Af­ter ad­mon­ish­ing Ab­b­Vie for Hu­mi­ra patent and pric­ing, Sen Ron Wyden takes Richard Gon­za­lez to task on tax prac­tices

Lit­tle has changed since Sen­a­tor Ron Wyden (D-OR) ad­mon­ished Ab­b­Vie CEO Richard Gon­za­lez at a Sen­ate Fi­nance Com­mit­tee hear­ing for guard­ing the Hu­mi­ra fran­chise with a thick­et of patents like “Gol­lum with his ring” — and bag­ging hefty bonus­es along the way. In fact, ac­cord­ing to a re­cent re­port from the House Over­sight Com­mit­tee, the price of the drug is now 470% high­er than when it first en­tered the mar­ket.

Richard Gon­za­lez

Two years af­ter that pub­lic dress­ing down, Wyden is try­ing a new line of at­tack.

Wyden, who now chairs the Sen­ate Fi­nance Com­mit­tee, is launch­ing an in­ves­ti­ga­tion in­to Ab­b­Vie’s in­ter­na­tion­al tax prac­tices. In short, he wants to know: How did a US-based com­pa­ny that makes most of its sales in the US man­age to re­port net loss­es in the US, there­by pay­ing much low­er tax­es than it should?

Ab­b­Vie has been in the hot seat for the bil­lions of dol­lars it’s raked in from Hu­mi­ra, al­though that hasn’t stopped the 18-year-old TNF block­er to keep smash­ing the record as the high­est-gross­ing drug of all time.

“In­stead of us­ing the mas­sive tax cuts giv­en to Ab­b­Vie by the 2017 tax law to re­duce drug prices for Amer­i­can fam­i­lies, Ab­b­Vie has in­stead cho­sen to pro­vide a $10 bil­lion wind­fall to its in­vestors by sub­stan­tial­ly in­creas­ing the amount of mon­ey it spent buy­ing back its own stock,” he wrote.

The way his let­ter to Gon­za­lez is phrased, the probe is as much a hit on Ab­b­Vie as on the tax re­form plan passed by Re­pub­li­cans dur­ing the Trump ad­min­is­tra­tion.

Ac­cord­ing to com­pa­ny doc­u­ments, Ab­b­Vie’s ef­fec­tive tax rate fell to just 8.7 per­cent in 2018, the first year af­ter the pas­sage of the 2017 Re­pub­li­can tax law. Ab­b­Vie sub­se­quent­ly paid an ef­fec­tive tax rate of just 8.6 per­cent in 2019 and 11.2 per­cent in 2020, rates that are far low­er than the statu­to­ry cor­po­rate in­come tax rate of 21 per­cent in the Unit­ed States, and even far low­er than what Ab­b­Vie paid just a few years be­fore. Pri­or to the pas­sage of the 2017 tax law, Ab­b­Vie paid ef­fec­tive tax rates of 20 per­cent in 2016 and 19 per­cent in 2017.

De­spite gen­er­at­ing $34.9 bil­lion in net rev­enue in the US (ac­count­ing for 75% of glob­al sales) in 2020, he goes on, Ab­b­Vie “has con­sis­tent­ly re­port­ed net loss­es in the Unit­ed States while re­port­ing sub­stan­tial for­eign prof­its.” In 2020, the com­pa­ny re­port­ed a do­mes­tic pre­tax loss of $4.5 bil­lion and for­eign pre­tax prof­its of $7.9 bil­lion — sim­i­lar to $2.8 bil­lion in loss and $11.2 in prof­its re­port­ed for 2019.

Hu­mi­ra, he made sure to add, made up $16 bil­lion of that 2020 US sales while Im­bru­vi­ca sales added up to $4.3 bil­lion.

“It ap­pears that Ab­b­Vie shifts prof­its off­shore while re­port­ing a do­mes­tic loss in the Unit­ed States to avoid pay­ing U.S. cor­po­rate in­come tax­es, and that the cur­rent U.S. in­ter­na­tion­al tax sys­tem seems to en­cour­age that,” Wyden wrote.

He is now de­mand­ing an­swers on things like how they re­port­ed neg­a­tive prof­it mar­gins de­spite gen­er­at­ing bil­lions in rev­enue, what the coun­try-by-coun­try break­down of pre­tax earn­ings, prof­it mar­gins, em­ploy­ee head­count and tax is, and how the sales of Hu­mi­ra is ac­count­ed for.

If pre­vi­ous com­mit­tee in­ves­ti­ga­tions and pub­lic lash­ings are any in­di­ca­tion, they aren’t like­ly to do ac­tu­al dam­age to Ab­b­Vie’s bot­tom line or bring new Hu­mi­ra biosim­i­lar com­pe­ti­tion be­fore 2023 in the US. But it re­mains to be seen what the in­creased scruti­ny might un­cov­er.

Un­pack­ing the Aduhelm de­ci­sion, Ver­tex's half full glass, a $525M J&J breakup, and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

By now you have surely read about the FDA’s controversial approval of Biogen’s Alzheimer’s drug and all its reverberations. But I’d still recommend checking out the meaty recap below to make sure you didn’t miss all the angles that the Endpoints team has covered. If you’d rather look ahead, look no further than our three-day virtual panels next week at BIO, where we will discuss what the new normal means for every part of the industry.

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What does a clear ma­jor­i­ty of the bio­phar­ma in­dus­try think of the FDA ap­proval of ad­u­canum­ab? 'Hor­ri­fy­ing' 'Dan­ger­ous' 'Con­fus­ing' 'Dis­as­ter'

Over the years, we’ve become used to seeing a consensus emerge early in our industry polls at Endpoints News. And when we took the pulse of drug hunters on the heels of a controversial FDA approval for aducanumab this week, it became immediately apparent that the vast majority of our readers — heavily concentrated among biopharma staffers and execs — were incensed by what they had just witnessed.

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David Knopman (Mayo Clinic via YouTube)

A sec­ond ad­comm mem­ber aban­dons his post in af­ter­math of con­tro­ver­sial ad­u­canum­ab de­ci­sion

As the fallout from the FDA’s approval of Alzheimer’s med aducanumab grows, a second member of the adcomm overseeing that drug’s review has walked away. But even with two experts now having resigned from that committee in protest, is there enough broad-level outrage to prevent another aducanumab from getting approved?

The FDA on Wednesday lost another member of its Peripheral and Central Nervous System Drugs Advisory Committee as Mayo Clinic neurologist David Knopman hit the exit over the agency’s decision to approve Biogen’s Alzheimer’s drug Aduhelm despite the committee’s near-unanimous vote against it.

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Aaron Kesselheim (Scott Eisen/AP Images for AIDS Healthcare Foundation)

Har­vard’s Aaron Kessel­heim re­signs from ex­pert pan­el in wake of ad­u­canum­ab OK, blast­ing FDA for ‘worst drug ap­proval de­ci­sion in re­cent U.S. his­to­ry'

A third member of the FDA’s Peripheral and Central Nervous System Drugs Advisory Committee has resigned in the wake of Biogen’s controversial Aduhelm approval, slamming the agency as he left and further deepening the controversy surrounding the decision.

Harvard University professor Aaron Kesselheim quit in protest Thursday afternoon, calling the Aduhelm OK “probably the worst drug approval decision in recent U.S. history.” Kesselheim follows both Joel Perlmutter, a neurologist from Washington University in St. Louis, and David Knopman, a neurologist from the Mayo Clinic, out the door.

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Janet Woodcock, acting FDA commissioner, at Thursday's Senate Appropriations hearing (Bill Clark/CQ Roll Call via AP Images)

Sen­a­tors lam­bast new Alzheimer’s drug’s price but give Janet Wood­cock a free pass on the ap­proval de­ci­sion

Senate Finance Democrats took aim at Biogen’s pricey new Alzheimer’s drug on Thursday, but members on both sides of the aisle at a separate appropriations hearing didn’t question acting FDA commissioner Janet Woodcock on the approval.

“I was appalled that Biogen priced their Alzheimer’s drug approved by the FDA at $56,000 per year — I’m not going to debate whether this is effective or not, but it’s double the household median income for Michiganders over the age of 65,” Sen. Debbie Stabenow (D-MI) said at the finance hearing.

FDA au­tho­rizes about 10M J&J vac­cine dos­es, trash­es 60M more from trou­bled Emer­gent plant

The FDA on Friday released about 10 million doses of J&J’s vaccine for use, and disposed of another 60 million doses that were manufactured at the now-shuttered Emergent BioSolutions facility in Baltimore where cross-contamination occurred.

The agency said it’s not yet ready to allow the Emergent plant to be included in the J&J EUA, but that may occur soon. FDA came to the decision to authorize some of the doses after reviewing facility records and quality testing results.

Paul Hudson, Sanofi CEO (Eric Piermont/AFP via Getty Images)

Months af­ter FDA re­jec­tion, Sanofi touts piv­otal win for rare dis­ease drug su­tim­limab as it preps to re­file

One of the pillar drugs of Sanofi’s $11.6 billion pickup of Bioverativ hit a big setback late last year when the FDA sent its application for approval back. Now, as Sanofi gears up to resubmit the drug for review, the drugmaker is touting pivotal data it hopes will help take it over the finish line.

Sanofi’s sutimlimab nailed all three of its primary endpoints in its Phase III CADENZA study for patients with cold agglutinin disease, a rare disorder that can cause severe anemia, without a recent history of blood transfusion, the French drugmaker said Friday. The topline results will be presented at this weekend’s virtual EHA meeting.

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Reshma Kewalramani, Vertex CEO (BIO via YouTube)

UP­DAT­ED: Ver­tex strikes out on its lat­est big shot at a rare ge­net­ic dis­ease. But they're go­ing to keep on swing­ing

It’s been several months since Vertex culled one of its small molecules for alpha-1 antitrypsin deficiency (AATD), taking a big hit after evidence of liver damage surfaced in a key Phase II trial. Now we learned that the company has whiffed on its second shot, and there’s nothing left in the clinic to treat the rare genetic disease — but that won’t stop it from trying.

Despite avoiding the safety issues that plagued the last candidate, Vertex $VRTX is taking the axe to VX-864 after Phase II results revealed the magnitude of the drug’s response is “unlikely to translate into substantial clinical benefit.” As a result of the news, the company’s stock fell 12.5% after hours.

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Bris­tol My­er­s' CAR-T Breyanzi busts out a win in ear­li­er-line lym­phoma, po­ten­tial­ly crack­ing open an ex­pand­ed mar­ket

Despite being third to the field in B cell lymphoma, Bristol Myers Squibb has repeatedly argued its CAR-T Breyanzi could have the juice to overtake its older competitors. Going into earlier lines of therapy may be the golden ticket on that front, and now Breyanzi has a late-stage win to back up that effort.

Bristol Myers’s Breyanzi beat out physicians’-choice salvage therapy followed by high-dose chemo and a stem cell transplant — what the drugmaker called a “gold standard treatment” — in second-line patients with relapsed or refractory large B cell lymphoma, according to topline data from the Phase III TRANSFORM study released Thursday.