Fight! Trump kicks off a war of words with the drug lob­by, propos­ing to peg Medicare prices to over­seas rates

Pres­i­dent Don­ald Trump has just fired an­oth­er shot across the bow of the glob­al bio­phar­ma in­dus­try. And the in­dus­try quick­ly fired back in what promis­es to be a live­ly bat­tle over drug prices.

Bioreg­num Opin­ion Col­umn by John Car­roll

Trump’s HHS pro­posed Thurs­day af­ter­noon to drop the cur­rent way that Medicare cov­ers drugs un­der Part B — cal­cu­lat­ing the av­er­age sales price and adding 6% to the providers who man­age the drug sup­ply — and switch to a new sys­tem that pegs US prices against the much low­er rates that have been es­tab­lished by sin­gle-pay­er sys­tems abroad.

With just days to go ahead of the mid-term elec­tion, Trump pro­posed a pi­lot pro­gram cov­er­ing half of the Part B spend, with the gov­ern­ment mov­ing to an av­er­age bas­ket price cal­cu­lat­ed from sin­gle pay­ers abroad at a 20% dis­count per year over 5 years. 

Trump is out to kill a whole flock of birds with one stone. 

First, he’s ac­cused oth­er coun­tries of free­load­ing on the US, ne­go­ti­at­ing ar­ti­fi­cial­ly low­er drug prices cov­ered by a well-doc­u­ment­ed US pre­mi­um. If man­u­fac­tur­ers are held li­able for their for­eign pric­ing, of­ten set af­ter some hard bar­gain­ing that can in­clude a re­fusal to cov­er it at all, they’d be less like­ly to of­fer a deep dis­count abroad. That could pres­sure oth­er coun­tries to pay more.

Sec­ond, he’s promis­ing to sig­nif­i­cant­ly re­duce heavy Medicare spend­ing, lop­ping bil­lions of dol­lars off of drug costs.

And third he’s mov­ing to a new sys­tem that would be­gin to force com­pa­nies to cut prices af­ter re­peat­ed­ly ac­cus­ing them of “get­ting away with mur­der” on drug prices in the US.

In­stead of a con­tro­ver­sial at­tempt to al­low cheap­er drugs to be im­port­ed in­to the US, Trump is say­ing he wants to keep the drugs and im­port the price. In this in­dus­try, that’s rad­i­cal.

Iron­i­cal­ly, the pro­pos­al that Trump came up with fol­lows a sea change in the in­dus­try’s at­ti­tudes to­ward pric­ing in the US, which con­trols the fate of its prof­itabil­i­ty. Start­ing with Pfiz­er, Trump has forced the ma­jors to at least pause their steady march to high­er prices. For many, the prospect of leav­ing their port­fo­lio prices in place would put tremen­dous pres­sure on their promis­es to in­vestors who con­trol their stock prices. And that would leave many to do some­thing they have nev­er done: ef­fi­cient­ly de­vel­op new block­busters in their R&D groups.

You can al­so ex­pect plen­ty of kick­back from the provider side of the equa­tion, who won’t like the new ven­dor sys­tem that would in­sti­tute a new sys­tem with flat fees for man­ag­ing drug sup­plies. For years physi­cians and the groups who rep­re­sent them slap back at changes that could im­pact their in­come by vow­ing to quit Medicare and leave poor pa­tients on their own.

Faced with a pro­pos­al that could start to shift the US to a new ap­proach dic­tat­ed by the sin­gle-pay­er pric­ing sys­tem — the in­dus­try’s night­mare — PhRMA and BIO came out against the pro­pos­al with all guns blaz­ing.

From PhRMA:

The ad­min­is­tra­tion is im­pos­ing for­eign price con­trols from coun­tries with so­cial­ized health care sys­tems that de­ny their cit­i­zens ac­cess and dis­cour­age in­no­va­tion. These pro­pos­als are to the detri­ment of Amer­i­can pa­tients. The Unit­ed States has a com­pet­i­tive mar­ket­place that con­trols costs and pro­vides pa­tients with ac­cess to in­no­v­a­tive med­i­cines far ear­li­er than in coun­tries with price con­trols, and it’s why we lead the world in drug dis­cov­ery and de­vel­op­ment. Amer­i­cans have ac­cess to can­cer med­i­cines on av­er­age about two years ear­li­er than in de­vel­oped coun­tries like in the Unit­ed King­dom, Ger­many and France.

The pro­posed Medicare Part B mod­el would jeop­ar­dize ac­cess to med­i­cines for se­niors and pa­tients with dis­abil­i­ties liv­ing with dev­as­tat­ing con­di­tions such as can­cer, rheuma­toid arthri­tis and oth­er au­toim­mune dis­eases. The ad­min­is­tra­tion’s pro­pos­al will al­so hin­der pa­tient ac­cess by se­vere­ly al­ter­ing the mar­ket-based Medicare Part B pro­gram by re­duc­ing physi­cian re­im­burse­ment and in­sert­ing mid­dle­men be­tween pa­tients and their physi­cians.

BIO’s Jim Green­wood had this to say:

Con­trary to the pres­i­dent’s re­peat­ed promis­es to end ‘for­eign free-load­ing,’ this pro­pos­al em­braces it and ex­ac­er­bates its harm­ful ef­fects. By adopt­ing for­eign price con­trols on the very small num­ber of in­no­v­a­tive med­i­cines that make it to mar­ket, this pro­pos­al will se­vere­ly chill in­vest­ment in new cures and ther­a­pies for Amer­i­ca’s se­niors.

To make mat­ters worse, the pro­pos­al con­tin­ues a trou­bling trend to­wards un­der­min­ing the Medicare Part B drug pro­gram. This pro­gram sup­ports the sick­est, most vul­ner­a­ble Medicare pa­tients and ac­counts for on­ly a small frac­tion of all Medicare spend­ing.  BIO will strong­ly op­pose short-sight­ed and harm­ful changes to a pro­gram that is so vi­tal to the health and well-be­ing of our se­niors.

In­ter­est­ing­ly, the Trump pro­pos­al isn’t be­ing ad­vanced as a rule-change, just a pro­pos­al for dis­cus­sion aimed at at­tract­ing at­ten­tion to an is­sue that plays well with his base of sup­port­ers. Re­pub­li­can law­mak­ers may not sup­port it, but with their fates in­ter­twined with the sen­si­tive pres­i­dent, crit­i­cism will be mut­ed. 

De­moc­rats on the oth­er hand may well leap at the chance to tack­le drug prices with the pres­i­dent.


Im­age: Pres­i­dent Don­ald Trump speaks at the De­part­ment of Health and Hu­man Ser­vices in Wash­ing­ton, DC, on Oc­to­ber 25, 2018 Nicholas Kamm  AFP

Part club, part guide, part land­lord: Arie Bellde­grun is blue­print­ing a string of be­spoke biotech com­plex­es in glob­al boom­towns — start­ing with Boston

The biotech industry is getting a landlord, unlike anything it’s ever known before.

Inspired by his recent experiences scrounging for space in Boston and the Bay Area, master biotech builder, investor, and global dealmaker Arie Belldegrun has organized a new venture to build a new, 250,000 square foot biopharma building in Boston’s Seaport district — home to Vertex and a number of up-and-coming biotech players.

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Novotech CRO Ex­pands Chi­na Team as Biotech De­mand for Clin­i­cal Tri­als In­creas­es up to 79%

An increase in demand of up to 79% for clinical trials in China has prompted Novotech the Asia-Pacific CRO to rapidly expand the China team, appointing expert local clinical executives to their Shanghai and Hong Kong offices. The company is planning to expand their team by 30% over the next quarter.

Novotech China has seen considerable demand recently which is borne out by research from GlobalData:
A global migration of clinical research is occurring from high-income countries to low and middle-income countries with emerging economies. Over the period 2017 to 2018, for example, the number of clinical trial sites opened by biotech companies in Asia-Pacific increased by 35% compared to 8% in the rest of the world, with growth as high as 79% in China.
Novotech CEO Dr John Moller said China offers the largest population in the world, rapid economic growth, and an increasing willingness by government to invest in research and development.
Novotech’s 23 years of experience working in the region means we are the ideal CRO partner for USA biotechs wanting to tap the research expertise and opportunities that China offers.
There are over 22,000 active investigators in Greater China, with about 5,000 investigators with experience on at least 3 studies (source GlobalData).

H1 analy­sis: The high-stakes ta­ble in the biotech deals casi­no is pay­ing out some record-set­ting win­nings

For years the big trend among dealmakers at the major players has been centered on ratcheting down upfront payments in favor of bigger milestones. Better known as biobucks for some. But with the top 15 companies competing for the kind of “transformative” pacts that can whip up some excitement on Wall Street, with some big biotechs like Regeneron now weighing in as well, cash is king at the high stakes table.

We asked Chris Dokomajilar, the head of DealForma, to crunch the numbers for us, looking over the top 20 deals for the past decade and breaking it all down into the top alliances already created in 2019. Gilead has clearly tipped the scales in terms of the coin of the bio-realm, with its record-setting $5 billion upfront to tie up to Galapagos’ entire pipeline.

Dokomajilar notes:

We’re going to need a ‘three comma club’ for the deals with over $1 billion in total upfront cash and equity. The $100 million-plus club is getting crowded at 164 deals in the last decade with new deals being added towards the top of the chart. 2019 already has 14 deals with at least $100 million in upfront cash and equity for a total year-to-date of over $9 billion. That beats last year’s $8 billion and sets a record.

Add upfronts and equity payments and you get $11.5 billion for the year, just shy of last year’s record-setting $11.8 billion.

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UP­DAT­ED: With loom­ing ‘apoc­a­lypse of drug re­sis­tance,’ Mer­ck’s com­bi­na­tion an­tibi­ot­ic scores FDA ap­proval on two fronts

Merck — one of the last large biopharmaceuticals companies in the beleaguered field of antibiotic drug development — on Wednesday said the FDA had sanctioned the approval of its combination antibacterial for the treatment of complicated urinary tract and intra-abdominal infections.

To curb the rise of drug-resistant bacteria and maintain the efficacy of the therapy, Recarbrio (and other antibacterials) — the drug must be used to treat or prevent infections that are proven or strongly suspected to be caused by susceptible gram-negative bacteria, Merck $MRK said.

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John McHutchison in 2012. Getty Images

The $1.1M good­bye: Gilead CSO John McHutchi­son is out as Daniel O’Day shakes up the se­nior team

Just a little more than a year after John McHutchison grabbed a promotion to become CSO at Gilead in the wake of Norbert Bischofberger’s exit, he’s out amid a shakeup of the senior team that is also triggering the departure of two other top execs.

Gilead stated that McHutchison “has decided to step down” from the job as of August 2nd. And their SEC filing notes that he’ll be getting a $1.1 million check to settle up on his contract.

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Thomas Gajewski, David Steinberg. (CRI, Pyxis)

Bay­er, Long­wood back star re­searcher's deep dive in­to the tu­mor mi­croen­vi­ron­ment for new I/O tar­gets

From PD-1 targeting to the RAS pathway to the STING complex, Thomas Gajewski has spent the past two decades of his career decoding the various ways the immune system can be unleashed to defend against cancer. So when the University of Chicago professor comes around to putting all his findings into a new platform for finding new targets, VCs and pharma groups alike pay attention.

“He’s been studying T cells for 20 years, plus he’s one of the world’s leaders if not the world leader in the space,” David Steinberg, partner at Longwood Fund, said. “Furthermore, let me add he did a lot of the foundational research and also some of the seminal clinical trials in the existing set of I/O agents. He understands the space really well, he understands the current strengths, and I think he understood really well what was missing, so he knew where to look.”

Kamala Harris speaking yesterday at the Des Moines Register Iowa Presidential Candidate Forum [via Getty]

Who’s the tough­est on drug prices? A game of po­lit­i­cal one-up­man­ship is dri­ving the pol­i­cy de­bate in Wash­ing­ton

Earlier this week we got a look at Senator Kamala Harris’ position on drug prices. She’s proposing that HHS take an average price from single-payer systems like the UK, Germany and Canada — which leverage market access for lower prices — and use that to set the US price. Anything drug companies collect above that would be taxed at a rate of 100%.

And the rhetoric is scathing:
While families struggle to make it to the end of the month, pharmaceutical companies are turning record profits. They’re spending nearly as much on advertising as R&D. They’re manipulating their market power to hike prices on lifesaving generic drugs. They’re making twice the profit of the average industry in America and still increased drug prices by 10.5% over the past six months alone. Meanwhile, they are charging dramatically higher prices to American consumers.
That’s an escalation on Joe Biden’s plan, which includes drug importation from those cheaper markets as well as allowing Medicare to negotiate prices — something that virtually all Dems agree on now.

SJ Lee [File photo]

Go­ing in­side cells, Sung Joo Lee has sketched some big goals for his small — but glob­al — team of drug hunters

For a small biotech based in South Korea with a research arm in Cambridge, MA, Orum Therapeutics has sketched out some big goals aimed at developing antibodies for intracellular targets. And now they have a new $30 million round to push the work forward, aiming at a slate of currently undruggable quests.

Orum has been working on a platform tech out of Ajou University that relies on endocytosis to smuggle antibodies and their cargo inside a cell. They’ve published work in Nature that illustrates its preclinical potential in RAS mutations, and KRAS is on their list of targets. 

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Astel­las buys in­to Fre­quen­cy's re­gen­er­a­tive med strat­e­gy with a $625M al­liance on hear­ing loss

The executive team at Frequency Therapeutics never oversold the results of their maiden Phase I/II study for a new drug to rectify hearing loss. It was, they said back in April, primarily about safety and tolerability, where their drug FX-322 performed as they had hoped. 

That early glimpse of efficacy everyone searches for in their first try on humans? 

(I)mprovements in hearing function, including audiometry and word scores, were observed in multiple FX-322 treated patients.

We don’t know exactly what that means. But whatever the details, Astellas found enough in the data to jump in with a sizable collaboration deal.

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