Chuck Grassley (R-IA) (via AP Images)

Bi­par­ti­san trio of sen­a­tors ask FTC to look at PBMs and tac­tics to keep in­sulin prices high

Just this week, the Sen­ate vot­ed 51-50 along par­ty lines (with tie break­er from VP Ka­mala Har­ris) to make Pres­i­dent Biden ap­pointee Al­varo Bedoya the de­cid­ing vote on a split 2-2 Fed­er­al Trade Com­mis­sion. And now that it is no longer split, a group of sen­a­tors wants the com­mis­sion to ac­tu­al­ly move for­ward on in­ves­ti­gat­ing phar­ma­cy ben­e­fit man­agers.

Re­pub­li­can sen­a­tors Chuck Grass­ley (IA) and Mike Braun (IN), along­side De­mo­c­rat sen­a­tor Ron Wyden (OR), sub­mit­ted a let­ter to FTC chair Lina Khan ear­li­er this week, af­ter the com­mis­sion­ers re­mained dead­locked in a 2-2 vote in Feb­ru­ary to for­mal­ly look in­to an­ti-com­pet­i­tive prac­tices at the hands of PBMs.

At the time, Khan said, “We have a re­al moral im­per­a­tive to act, this in­quiry is long over­due.”

This is not Grass­ley’s first let­ter re­gard­ing in­ves­ti­gat­ing PBMs to Khan — he sent a let­ter to her just back in March af­ter high­light­ing how PBMs op­er­ate with “lit­tle to no trans­paren­cy.”

Now on­to the let­ter: The sen­a­tors not­ed that Grass­ley and Wyden re­leased an 88-page re­port on the cost of in­sulin ear­li­er this year af­ter a two-year in­ves­ti­ga­tion from the Sen­ate Fi­nance Com­mit­tee in­to the three largest in­sulin man­u­fac­tur­ers (Sanofi, No­vo Nordisk and Eli Lil­ly) and three largest PBMs (Op­tum­Rx, Ex­press Scripts, and CVS Care­mark, which have a com­bined mar­ket share of 75-80%).

What they found was, at least on the in­sulin front, PBMs uti­lized a num­ber of con­tract­ing tac­tics to se­cure “pre­ferred for­mu­la­ry place­ment.” But as the sen­a­tors added through PBMs’ sheer mar­ket share:

De­spite, or per­haps be­cause of, this lev­el of con­sol­i­da­tion, PBMs op­er­ate with lit­tle trans­paren­cy, mak­ing it dif­fi­cult, if not im­pos­si­ble to un­der­stand how PBMs in­flu­ence pre­scrip­tion drug pric­ing.

As of 2019, some 37 mil­lion Amer­i­cans are on in­sulin, and 7 mil­lion re­quire it dai­ly. The sen­a­tors al­so not­ed that for peo­ple on Medicare Part D, more than 1 in 4 spend more than $5,000 a year for their in­sulin.

Some of those tac­tics that the sen­a­tors briefly men­tioned were found in four PBM prac­tices: re­bates, for­mu­la­ry ex­clu­sion lists, ad­min­is­tra­tive fees and price pro­tec­tion claus­es. For re­bates, they’ve in­creased in lock step with list price since 2013, if not ear­li­er, the sen­a­tors not­ed. They al­so said, “We found that PBMs with a large vol­ume of clients are able to ex­tract high­er re­bates from man­u­fac­tur­ers when com­pared to small­er pay­ers, who of­ten lack lever­age and re­sources.”

On for­mu­la­ry ex­clu­sion lists — the lists that dic­tate whether or not a health­care plan will cov­er the price of a drug — the Sen­ate com­mit­tee’s in­ves­ti­ga­tion found that pay­ers and PBMs in­creased their own use of the lists to con­trol drug costs, as man­u­fac­tur­ers had in­creased their re­bate of­fers to PBMs “sig­nif­i­cant­ly fol­low­ing the threat of ex­clu­sion.” For man­u­fac­tur­ers, ex­clu­sion of their drugs can end up re­sult­ing in fi­nan­cial loss­es and re­duced mar­ket share.

Then the let­ter went on to ad­min fees — while in­for­ma­tion is not well known thanks to con­fi­den­tial re­bate agree­ments, what the com­mit­tee found sug­gest­ed that fees range be­tween 3% and 5% of the list price, which can be prob­lem­at­ic as the list price can be in­creased to of­fer PBMs con­ces­sions in ex­change for pre­ferred for­mu­la­ry place­ment.

The let­ter then cit­ed a law re­view ar­ti­cle pub­lished in the Har­vard Jour­nal on Leg­is­la­tion from le­gal re­searcher Robin Feld­man:

[T]hese pay­ments re­duce the drug com­pa­ny’s net in­come from sales of the drug and in­crease the PBM rev­enue re­lat­ed to a spe­cif­ic drug. Even when a drug com­pa­ny pays for ser­vices from a PBM, if the val­ue of the ser­vice is sub­stan­tial­ly less than the pay­ment made, the trans­ac­tion is sim­ply an in­di­rect price con­ces­sion. Once again, rais­ing list price can leave room for the drug com­pa­ny to of­fer these good­ies . . . [and, as a re­sult], many peo­ple be will be forced to pay high­er list prices.

Be­yond the re­bates, ex­clu­sion lists and ad­min fees, the fi­nal tac­tic men­tioned was price pro­tec­tion claus­es, ini­tial­ly de­signed to lim­it a drug mak­er from in­creas­ing the list price be­yond a pre-spec­i­fied amount — and if the mak­er goes above that amount, the PBM and health plan re­ceive an ad­di­tion­al re­bate, de­pend­ing on the con­tract. How­ev­er, the com­mit­tee’s in­ves­ti­ga­tion found that those claus­es don’t de­ter an­nu­al in­fla­tion of the list price — and PBMs ac­cept them as long as they get more con­ces­sions at the end of the day.

In clos­ing, the sen­a­tors wrote to the FTC:

We found that PBM con­tract­ing prac­tices do lit­tle to dis­cour­age high list prices, es­pe­cial­ly in the in­sulin ther­a­peu­tic class. In fact, this per­verse sys­tem ex­ac­er­bates the prob­lem by dis­cour­ag­ing man­u­fac­tur­ers from com­pet­ing to low­er list price and pre­vents com­peti­tors with low­er priced al­ter­na­tives from gain­ing a foothold. This pre­vents mean­ing­ful com­pe­ti­tion, harm­ing tax­pay­ers and the Fed­er­al gov­ern­ment in the process.

M&A: a crit­i­cal dri­ver for sus­tain­able top-line growth in health­care

2021 saw a record $600B in healthcare M&A activity. In 2022, there is an anticipated slowdown in activity, however, M&A prospects remain strong in the medium to long-term. What are future growth drivers for the healthcare sector? Where might we see innovations that drive M&A? RBC’s Andrew Callaway, Global Head, Healthcare Investment Banking discusses with Vito Sperduto, Global Co-Head, M&A.

15 LGBTQ lead­ers in bio­phar­ma; Paul Stof­fels’ Gala­pa­gos re­vamp; As­traZeneca catch­es up in AT­TR; 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.

A return to in-person conferences also marks a return to on-the-ground reporting. My colleagues Beth Synder Bulik and Nicole DeFeudis were on-site at Cannes Lions, bringing live coverage of pharma’s presence at the ad festival — accompanied by photos from Clara Bui, our virtual producer, that bring you right to the scene. You can find a recap (and links to all the stories) below.

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David Loew (Ipsen)

Ipsen snags an ap­proved can­cer drug in $247M M&A deal as an­oth­er bat­tered biotech sells cheap

You can add Paris-based Ipsen to the list of discount buyers patrolling the penny stock pack for a cheap M&A deal.

The French biotech, which has had plenty of its own problems to grapple with, has swooped in to buy Epizyme $EPZM for $247 million in cash and a CVR with milestones attached to it. Epizyme shareholders, who had to suffer through a painfully soft launch of their EZH2a inhibitor cancer drug Tazverik, will get $1.45 per share along with a $1 CVR tied to achieving $250 million in sales from the drug over four consecutive quarters as well as an OK for second-line follicular lymphoma by 1 Jan. 2028.

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AstraZeneca's new Evusheld direct to consumer campaign aims to reach more immunocompromised patients.

As­traZeneca de­buts first con­sumer cam­paign for its Covid-19 pro­phy­lac­tic Evusheld — and a first for EUA drugs

AstraZeneca’s first consumer ad for Evusheld is also a first for drugs that have been granted emergency use authorizations during the pandemic.

The first DTC ad for a medicine under emergency approval, the Evusheld campaign launching this week aims to raise awareness among immunocompromised patients — and spur more use.

Evusheld nabbed emergency authorization in December, however, despite millions of immunocompromised people looking for a solution and now more widespread availability of the drug.

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De­spite a slow start to the year for deals, PwC pre­dicts a flur­ry of ac­tiv­i­ty com­ing up

Despite whispers of a busy year for M&A, deal activity in the pharma space is actually down 30% on a semi-annualized basis, according to PwC’s latest report on deal activity. But don’t rule out larger deals in the second half of the year, the consultants said.

PwC pharmaceutical and life sciences consulting solutions leader Glenn Hunzinger expects to see Big Pharma companies picking up earlier stage companies to try and fill pipeline gaps ahead of a slew of big patent cliffs. Though a bear market continues to maul the biotech sector, Hunzinger said recent deals indicate that pharma companies are still paying above current trading prices.

Joe Wiley, Amryt Pharma CEO

Am­ryt Phar­ma sub­mits a for­mal dis­pute res­o­lu­tion to the FDA over re­ject­ed skin dis­ease drug

The story of Amryt Pharma’s candidate for the genetic skin condition epidermolysis bullosa, or EB, will soon enter another chapter.

After the Irish drugmaker’s candidate, dubbed Oleogel-S10 and marketed as Filsuvez, was handed a CRL earlier this year, the company announced in a press release that it plans to submit a formal dispute resolution request for the company’s NDA for Oleogel-S10.

Sen. Thom Tillis (R-NC) (J. Scott Applewhite/AP Images)

Phar­ma-friend­ly sen­a­tor calls on FDA for a third time to show patent pro­tec­tions should­n't be blamed for high drug prices

North Carolina Republican Sen. Thom Tillis made a name for himself in the 2020 election cycle as the darling of the pharma industry, accepting hundreds of thousands in campaign contributions, even from the likes of Pfizer CEO Albert Bourla.

Those contributions have led Tillis to attempt to re-write patent laws in pharma’s favor, a move which failed to gain steam in 2019, and request for a third time since January that the FDA should help stop “the false narrative that patent protections are to blame for high drug prices.”

EMA signs off on 3 drugs re­cent­ly re­ject­ed by FDA, in­clud­ing Bio­Mar­in's new he­mo­phil­ia gene ther­a­py

The EMA’s human medicines committee on Friday recommended three new drugs for approval or conditional approval, even as their US counterparts have rejected these three for various reasons.

In a major move, CHMP offered a thumbs-up to a conditional marketing authorization for the first gene therapy to treat severe hemophilia A, although the agency cautioned that it’s so far unknown how long the effects of infusion will last.

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Joe Papa (Ryan Remiorz/The Canadian Press via AP, File)

Joe Pa­pa re­signs as chair of Bausch Health as bil­lion­aire John Paul­son takes over

Joe Papa, chair of Bausch Health, officially resigned on Thursday and the board appointed billionaire hedge fund manager John Paulson as the new chair, effective immediately.

The specialty pharma company sought to make clear that Papa’s abrupt departure “was not due to any dispute or disagreement with the Company, its management or the Board on any matter relating to the Company’s operations, policies or practices.”

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