CBO: Con­gres­sion­al ac­tion on drug prices will make R&D spend­ing less at­trac­tive

The greed of phar­ma­ceu­ti­cal com­pa­nies has long been one of the rea­sons Con­gress has sought to reign in the in­dus­try’s high price tags for new drugs.

But a new re­port from the non­par­ti­san Con­gres­sion­al Bud­get Of­fice on Thurs­day pours cold wa­ter on the idea that large phar­ma com­pa­nies are pump­ing all their prof­its in­to share buy­backs, mar­ket­ing, and CEO salaries. In fact, the CBO notes that phar­ma spend­ing on drug R&D ramped up by near­ly 50% be­tween 2015 and 2019, and now out­paces what oth­er sim­i­lar in­dus­tries, like soft­ware and semi­con­duc­tor com­pa­nies, spend on R&D.

Small­er com­pa­nies are al­so shoul­der­ing some of that in­crease in R&D spend­ing in re­cent years. Com­pa­nies with an­nu­al rev­enues of less than $500 mil­lion now ac­count for more than 70% of the near­ly 3,000 drugs in Phase III clin­i­cal tri­als, the CBO says.

“The share of R&D fund­ed di­rect­ly by rev­enues has de­clined in re­cent years be­cause an in­creas­ing amount of R&D is now con­duct­ed by re­search-ori­ent­ed drug com­pa­nies with few or no prod­ucts on the mar­ket,” the re­port notes. “Over the past decade, small or emerg­ing drug com­pa­nies have de­vel­oped a ris­ing share of new drugs. Those com­pa­nies have rel­a­tive­ly lit­tle rev­enue (some have none at all), and most of them must seek out­side fi­nanc­ing, such as ven­ture cap­i­tal, and col­lab­o­ra­tive agree­ments with larg­er drug com­pa­nies.”

And that spike in R&D spend­ing has paid off, at least in terms of the num­bers of new drugs ap­proved in re­cent years, al­though the in­creased num­bers do not ex­plain if the drugs were in­no­v­a­tive or just in­cre­men­tal im­prove­ments.

“Be­tween 2010 and 2019, 38 new drugs were ap­proved each year, on av­er­age. That is about a 60 per­cent in­crease com­pared with the pre­vi­ous decade,” CBO re­ports.

Over­all, the re­port rais­es ques­tions on what cer­tain types of con­gres­sion­al ac­tion on drug prices might do for the con­tin­ued growth of bio­phar­ma R&D.

“If ex­pect­ed prof­itabil­i­ty of new drugs de­clined — be­cause of a change in fed­er­al pol­i­cy, a shift in de­mand or sup­ply, a re­vi­sion in the bal­ance of pow­er be­tween drug com­pa­nies and drug buy­ers, or for any oth­er rea­son — the ex­pect­ed re­turns on drug R&D would de­cline as well. Low­er ex­pect­ed re­turns would prob­a­bly mean few­er new drugs, be­cause there would be less in­cen­tive for com­pa­nies to spend on R&D,” the re­port says.

CBO pre­vi­ous­ly es­ti­mat­ed that un­der HR 3, a De­mo­c­rat-backed bill that passed in the House in late 2019 and would al­low drug price ne­go­ti­a­tions, ap­prox­i­mate­ly 8 few­er drugs would be in­tro­duced to the US mar­ket over the 2020-2029 pe­ri­od and about 30 few­er drugs over the sub­se­quent 10 years. But the CBO al­so ac­knowl­edged that those pro­jec­tions “were in the mid­dle of the dis­tri­b­u­tion of pos­si­ble out­comes.”

Biotech Half­time Re­port: Af­ter a bumpy year, is biotech ready to re­bound?

The biotech sector has come down firmly from the highs of February as negative sentiment takes hold. The sector had a major boost of optimism from the success of the COVID-19 vaccines, making investors keenly aware of the potential of biopharma R&D engines. But from early this year, clinical trial, regulatory and access setbacks have reminded investors of the sector’s inherent risks.

RBC Capital Markets recently surveyed investors to take the temperature of the market, a mix of specialists/generalists and long-only/ long-short investment strategies. Heading into the second half of the year, investors mostly see the sector as undervalued (49%), a large change from the first half of the year when only 20% rated it as undervalued. Around 41% of investors now believe that biotech will underperform the S&P500 in the second half of 2021. Despite that view, 54% plan to maintain their position in the market and 41% still plan to increase their holdings.

Covid-19 vac­cine boost­ers earn big thumbs up, but Mod­er­na draws ire over world sup­ply; What's next for Mer­ck’s Covid pill?; The C-suite view on biotech; 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.

You may remember that at the beginning of this year, Endpoints News set a goal to go broader and deeper. We are still working towards that, and are excited to share that Beth Snyder Bulik will be joining us on Monday to cover all things pharma marketing. You can sign up for her weekly Endpoints MarketingRx newsletter in your reader profile.

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No­var­tis de­vel­op­ment chief John Tsai: 'We go deep in the new plat­form­s'

During our recent European Biopharma Summit, I talked with Novartis development chief John Tsai about his experiences over the 3-plus years he’s been at the pharma giant. You can read the transcript below or listen to the exchange in the link above.

John Carroll: I followed your career for quite some time. You’ve had more than 20 years in big pharma R&D and you’ve obviously seen quite a lot. I really was curious about what it was like for you three and a half years ago when you took over as R&D chief at Novartis. Obviously a big move, a lot of changes. You went to work for the former R&D chief of Novartis, Vas Narasimhan, who had his own track record there. So what was the biggest adjustment when you went into this position?

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Roche's Tecen­triq cross­es the fin­ish line first in ad­ju­vant lung can­cer, po­ten­tial­ly kick­ing off gold rush

While falling behind the biggest PD-(L)1 drugs in terms of sales, Roche has looked to carve out a space for its Tecentriq with a growing expertise in lung cancer. The drug will now take an early lead in the sought-after adjuvant setting — but competitors are on the way.

The FDA on Friday approved Tecentriq as an adjuvant therapy for patients with Stage II-IIIA non small cell lung cancer with PD-(L)1 scores greater than or equal to 1, making it the first drug of its kind approved in an early setting that covers around 40% of all NSCLC patients.

Amit Etkin, Alto Neuroscience CEO (Alto via Vimeo)

A star Stan­ford pro­fes­sor leaves his lab for a start­up out to re­make psy­chi­a­try

About five years ago, Amit Etkin had a breakthrough.

The Stanford neurologist, a soft-spoken demi-prodigy who became a professor while still a resident, had been obsessed for a decade with how to better define psychiatric disorders. Drugs for depression or bipolar disorder didn’t work for many patients with the conditions, and he suspected the reason was how traditional diagnoses didn’t actually get at the heart of what was going on in a patient’s brain.

Susan Galbraith, Executive VP, Oncology R&D, AstraZeneca

As­traZeneca on­col­o­gy R&D chief Su­san Gal­braith: 'Y­ou're go­ing to need or­thog­o­nal com­bi­na­tion­s'

 

Earlier in the week we broadcast our 4th annual European Biopharma Summit with a great lineup of top execs. One of the one-on-one conversations I set up was with Susan Galbraith, the oncology research chief at AstraZeneca. In a wide-ranging discussion, Galbraith reviewed the cancer drug pipeline and key trends influencing development work at the pharma giant. You can watch the video, above, or stick with the script below. — JC

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FDA ad­comm votes unan­i­mous­ly in sup­port of a J&J Covid-19 boost­er two months af­ter one-dose shot

The FDA’s Vaccines and Related Biological Products Advisory Committee (VRBPAC) on Friday voted 19-0 in favor of authorizing a second shot of J&J’s Covid-19 vaccine to follow at least two months after the initial dose.

Regulators don’t have to follow VRBPAC’s recommendation, but they almost always do. Considering that the CDC’s advisory committee has already been set to review the expanded EUA, VRBPAC’s recommendation is likely to be adopted.

In­cyte yanks EU ap­pli­ca­tion for PD-1 drug, cit­ing in­abil­i­ty to an­swer reg­u­la­tors' 'ma­jor con­cern­s'

Hoping to wedge its way into a crowded PD-(L)1 field, Incyte faced a huge setback when the FDA sent back its application for an initial indication earlier this year. Now, the drugmaker is giving up hope in Europe as well.

Incyte has withdrawn its EU application for PD-1 drug Zynyz, or retifanlimab, after saying it couldn’t adequately address the CHMP’s questions over survival data underpinning its market hopes in squamous cell carcinoma of the anal cavity, the EMA revealed.

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Tillman Gerngross, Adagio CEO

Q&A: Till­man Gern­gross ex­plains why his Covid mAb will have an edge over an al­ready crowd­ed field

If anyone knows about monoclonal antibodies, it’s serial entrepreneur, Adimab CEO, and Dartmouth professor of bioengineering Tillman Gerngross.

Even the name of Gerngross’ new antibody startup Adagio Therapeutics is meant to reflect his vision behind the development of his Covid-19 mAb: slowly, he said, explaining that “everyone else, whether it’s Regeneron, Lilly, or AstraZeneca, Vir, they all valued speed over everything.”

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