As Trump fin­gers phar­ma on drug prices, ex­ecs step up with the lat­est vows of self dis­ci­pline

Ab­b­Vie’s Richard Gon­za­lez

Just as Don­ald Trump was rip­ping the lid off a can of whup-ass and pour­ing it all over the bio­phar­ma in­dus­try, Ab­b­Vie’s chief was step­ping up to fol­low Al­ler­gan CEO Brent Saun­ders’ lead on cap­ping an­nu­al drug price in­creas­es.

In a talk at the J.P. Mor­gan con­fer­ence, Ab­b­Vie CEO Richard Gon­za­lez pledged to keep the com­pa­ny’s an­nu­al price hikes on its drug port­fo­lio to sin­gle dig­its, in line with Saun­ders promise to keep Al­ler­gan’s in­creas­es to sin­gle dig­its. And No­vo Nordisk has al­ready fol­lowed up with its com­mit­ment to do the same, mark­ing a ma­jor shift in the way the in­dus­try han­dles drug prices af­ter years of swift spikes.

“There’s a strong de­bate go­ing on right now about pric­ing,” Gon­za­lez told in­vestors, ac­cord­ing to a re­port in Reuters. “We need to make sure we are op­er­at­ing in an ap­pro­pri­ate way … and demon­strat­ing the val­ue of the prod­ucts that we have.”

What Gon­za­lez ev­i­dent­ly wasn’t aware of was that Trump veered in­to the drug pric­ing is­sue dur­ing his press con­fer­ence on Wednes­day, vow­ing to ham­mer drug prices down through a fed­er­al bid­ding process af­ter the in­dus­try had been  “get­ting away with mur­der.”

Joaquin Du­a­to (Pho­to: End­points News)

Drug prices, and what the in­dus­try is go­ing to do about the grow­ing pres­sure to con­trol costs, was at the cen­ter of a dis­cus­sion End­points News host­ed Tues­day morn­ing at J.P. Mor­gan in San Fran­cis­co. We start­ed with J&J’s Joaquin Du­a­to, who promised to re­veal an­nu­al price in­creas­es to help demon­strate the com­pa­ny’s dis­ci­pline.

But the glob­al phar­ma gi­ant is not go­ing to break down the price hikes on a drug-by-drug ba­sis, he added in re­sponse to a ques­tion, so they can main­tain a com­pet­i­tive edge.

“It’s go­ing to be done on an ag­gre­gate lev­el,” Du­a­to told the crowd. Spe­cif­ic prices are “some­thing that we do not want to dis­close be­cause of the com­pet­i­tive im­pli­ca­tions. The same way that we are talk­ing about dis­counts and re­bates, we are go­ing to dis­close them at an ag­gre­gate lev­el, be­cause dis­clos­ing dis­counts and re­bates by chan­nel does have a com­pet­i­tive im­pli­ca­tion too.”

Richard Pops, Brent Saun­ders (Pho­to: End­points News)

Whether or not that will be enough to dis­pel a grow­ing na­tion­al con­tro­ver­sy won’t be known for some time. But Trump’s re­marks un­der­scored that it’s a new day in bio­phar­ma when it comes to drug prices. And Richard Pops, the CEO of Alk­er­mes, not­ed that change is com­ing af­ter Big Phar­ma got hooked on the crack co­caine of ex­ten­sive price hikes for years.

For me it’s so in­ter­est­ing be­cause un­bur­dened with any ex­pe­ri­ence of hav­ing run a phar­ma­ceu­ti­cal com­pa­ny I come to it al­most like a Mar­t­ian from Mars com­ing to say, “How does this whole thing work?” It’s so bizarre be­cause, I must ad­mit, I don’t think any of us re­al­ized how fre­quent­ly phar­ma­ceu­ti­cal com­pa­nies were in­deed rais­ing prices over the last decade or so. How ex­ten­sive the price in­creas­es were, and in the set­ting of an in­vestor con­fer­ence, you re­al­ize just what crack co­caine that is when you cou­ple unit growth of a launch­ing med­i­cine with se­mi-an­nu­al price in­creas­es. You just get ex­plo­sive earn­ings growth, which is ex­act­ly what the mar­ket wants.

For Saun­ders, the in­dus­try is head­ed in the right di­rec­tion, but peo­ple should pay more at­ten­tion to net rather than gross price hikes.

Ten days in­to the year, you’re right, a lot of com­pa­nies are fig­ur­ing out that they need to be more thought­ful and cau­tious about price in­creas­es, which is a good thing….The re­al num­ber is the net. I mean, we could talk about the gross all day, and we’re hap­py to de­bate that, but the net…is prob­a­bly some­where be­tween one and 4%, de­pend­ing on what their re­bate and dis­count lev­els are. You know, I think com­pa­nies are act­ing more re­spon­si­bly than ever, and I think that’s a good thing.

We’ll have the full pan­el dis­cus­sion for you next week here at End­points.

Brent Saunders [Getty Photos]

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Brent Saunders has found his way out of the current fix he’s in at Allergan $AGN. He’s selling the company to AbbVie for $63 billion in the latest example of the hot M&A market in biopharma.

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An­a­lysts have been watch­ing this race for awhile now, as Sanofi/Re­gen­eron won a snap pri­or­i­ty re­view for what is now their third dis­ease in­di­ca­tion for this treat­ment. And they’re not near­ly done, build­ing up hopes for a ma­jor fran­chise.

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Back in 2014, Stephanie Tagliatela opted to take an early exit out of her PhD program after working in Mark Bear’s lab at MIT, where she specialized in the synaptic connections between neuronal cells in the brain. She never finished that PhD, but she and fellow MIT student Kartik Ramamoorthi — who was on the founding team at Voyager — came away with some ideas for a gene therapy startup.

Today, fully 5 years later, she and Ramamoorthi are taking the wraps off of a $104 million mega-round designed to take the cumulative work of their preclinical formative stage for Encoded Therapeutics into human studies. They’ve now raised $158 million since starting out in Illumina’s incubator in the Bay Area, and they believe they are firmly on track to do something unique in gene therapy.

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Novotech CEO Dr. John Moller

Novotech CRO Award­ed Frost & Sul­li­van Best Biotech CRO Asia-Pa­cif­ic 2019

Known in the in­dus­try as the Asia-Pa­cif­ic CRO, Novotech is now lead CRO ser­vices provider for the grow­ing num­ber of in­ter­na­tion­al biotechs se­lect­ing the re­gion for their stud­ies.

Re­flect­ing this Asia-Pa­cif­ic growth, Novotech staff num­bers are up 20% since De­cem­ber 2018 to 600 in-house clin­i­cal re­search peo­ple across a full range of ser­vices, across the re­gion.

Novotech’s ca­pa­bil­i­ties have been rec­og­nized by an­a­lysts like Frost & Sul­li­van, most re­cent­ly with the pres­ti­gious Asia-Pa­cif­ic CRO Biotech of the year award for best prac­tices in clin­i­cal re­search for biotechs for the fifth year. See oth­er awards here.

Richard Gonzalez testifying in front of Senate Finance Committee, February 2019 [AP Images]

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Ini­tial­ly pen­ciled in at a uni­corn-sized $225 mil­lion, the KKR-backed biotech has spiked that to the neigh­bor­hood of $300 mil­lion, look­ing to sell 20 mil­lion shares at $14 to $16 each. That’s an added 5 mil­lion shares, re­ports Re­nais­sance Cap­i­tal, which fig­ures the pro­posed mar­ket val­u­a­tion for Neil Ku­mar’s com­pa­ny at $1.8 bil­lion.

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Judge Leonard P. Stark is­sued a tem­po­rary in­junc­tion ear­li­er this week, forc­ing My­lan, Dr. Red­dy’s Lab­o­ra­to­ries and Au­robindo Phar­ma to shelve their launch plans to al­low the patent fight to pro­ceed. He ruled that al­low­ing the gener­ics in­to the mar­ket now would per­ma­nent­ly slash the price for No­var­tis, even if it pre­vails. 

Top an­a­lyst finds a sil­ver lin­ing in Ab­b­Vie’s $63B Al­ler­gan buy­out — but there’s a catch

Af­ter get­ting beat up on all sides from mar­ket ob­servers who don’t much care for the lat­est mega-deal to ar­rive in bio­phar­ma, at least one promi­nent an­a­lyst now is start­ing to like what he sees in the num­bers for Ab­b­Vie/Al­ler­gan.

But it’s go­ing to take some en­cour­age­ment if Ab­b­Vie ex­ecs want it to last.

Ab­b­Vie’s mar­ket cap de­clined $20 bil­lion on Tues­day as the stock took a 17% hit dur­ing the day. And SVB Leerink’s Ge­of­frey Porges can see a dis­tinct out­line of an up­side af­ter re­view­ing the fun­da­men­tals of the deal.

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While Ako­rn works to re­vive its for­tunes, the FDA hits it with an­oth­er warn­ing let­ter

Ako­rn just can’t dig it­self out of its hole.

The spe­cial­ty gener­ic drug­mak­er has re­ceived yet an­oth­er warn­ing let­ter from the FDA this year. With­out dis­clos­ing any specifics, the Lake For­est, Illi­nois-based drug­mak­er on Wednes­day said the US reg­u­la­tor had is­sued the let­ter, cit­ing an in­spec­tion of its Som­er­set, New Jer­sey man­u­fac­tur­ing fa­cil­i­ty in Ju­ly and Au­gust of 2018. The com­pa­ny’s shares $AKRX dipped about 1.7% to $4.65 be­fore the bell.