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Bristol-Myers makes a decisive move to fix its R&D problem; Let’s not underestimate Trump now

Endpoints assesses the big biopharma stories of the week, with a little added commentary on what they mean for the industry.


thumb Bristol-Myers steps up to fix a derailed R&D organization. But questions linger

No big biopharma has suffered a bigger setback than Bristol-Myers Squibb’s backward march on Opdivo. Overreaching in lung cancer, they have forfeited their lead role on one of the biggest new drug franchises in the industry. In a business where not screwing up is half the game, they blew it. And this is a company that has had one of the most innovative and productive R&D operations of the past decade.

Company execs have been keeping a stiff upper lip about it all, but heads had to roll, and chief scientist Francis Cuss was a natural choice for the chopping block. In his place, the company turned to a very distinguished gentleman on the board, Tom Lynch, a Mass General veteran.

Lynch has had an extraordinary career, but turning to a board member with such a long resume has to raise questions about just how long he plans to stay and what he hopes to accomplish. Bristol-Myers now has to fight back at a time the R&D group — a top-15 group that consumes $5 billion a year – is undergoing a revamp.

Wrestling with Bristol-Myers’ R&D challenges is a mighty task. The stakes are enormous. Let’s hope Lynch is up to the task.

thumb down This is not the time to stop taking Trump seriously

Bloomberg’s Max Nisen today writes that “Trump’s tweets are still dangerous, but it appears increasingly likely he’s just crying wolf.” And he follows up with the latest, more muted response by investors to Trump’s latest war cry for drug price reform.

It’s too early, though, to pooh-pooh what Trump has in mind. Rep. Elijah Cummings came out of his meeting with Trump this week clearly pumped that the president had cheered his bill for a federal formulary for Medicare. And Trump apparently suggested that he was fine with dissing many Republicans in the process, looking to satisfy the base with an openly populist position.

These next few months are going to be absolutely critical for biopharma. I was chatting with a biotech CEO a few weeks ago who was clearly steamed at the idea that the full force of the federal government could be brought to bear on drug prices. A formulary, threatening to leave out drugs in order to leverage lower prices, was unacceptable to him.

At the time, I discounted the notion that Medicare price negotiations would be draconian, especially with a Republican in the White House. But Trump is pushing hard to deliver on a frequently repeated promise now. And draconian is exactly how he sounds. Combined with a promise to deregulate drug development, whatever that means, Trump does not inspire confidence or clarity in what’s in store for the industry.

It’s time to tread carefully on these issues. Writing Trump off now as a blowhard would be a terrible miscalculation. In Washington DC, the devil is always in the details of new legislation. Let’s pay careful attention to what lawmakers are hammering out.

thumb A new review comparing R&D budgets to US premium pricing stokes an unending argument

Sometimes, you know early on when you’ve hit a nerve with a story. And so it was with my piece on a new study about the disconnect between R&D budgets and the premium prices that Americans pay for drugs.

Analysts at Memorial Sloan-Kettering took a look at just how big US premiums are compared to the rest of the developed world and determined that they more than paid for the top companies’ total R&D budgets. Then they called the industry out for its pious protests about needing high prices to pay for innovation.

Quite a few of the people in the Twitterverse objected, for the obvious reason that these companies are in business to make a profit, not cover costs. And then both sides were off and running, sniping back and forth about what drug companies are about.

The debate — a healthy one, I think — simply underscores the inherent conflict within Big Pharma. These companies constantly insist to the public that their chief mission is to help patients. And then they turn around and cheer big profits to Wall Street.

As one analyst pointed out to me in an email exchange, Apple has a much bigger profit margin than Big Pharmas. Apple sells a product, though, which consumers want but don’t have to have, so no one challenges what they charge or its relation to the R&D budget. The better the drug, the more it’s absolutely required, and the more it costs.

At some point the biopharma business may figure out how to resolve the conflict, but I doubt it.


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