Hu­malog's list price may have gone up, but Lil­ly says it got paid less per sale in 2018 ver­sus 2014

As scruti­ny in­to in­sulin pric­ing in the Unit­ed States in­ten­si­fies, Lil­ly is lay­ing out the ground­work for its de­fense ahead of a third Con­gres­sion­al hear­ing on soar­ing drug prices next month in which the mid­dle­men — phar­ma­cy ben­e­fit man­agers — will do their ut­most to ex­on­er­ate them­selves in the role they play in pre­scrip­tion drug pric­ing.

Drug pric­ing is a con­tentious is­sue that has pro­voked wide­spread furor and elicit­ed bi­par­ti­san sup­port. While pa­tients and law­mak­ers de­cry out­ra­geous prices, drug­mak­ers and PBMs are point­ing fin­gers at each oth­er: The drug­mak­ers say list prices are ris­ing to com­bat the big­ger re­bates/dis­counts the all-pow­er­ful mid­dle­men ne­go­ti­ate, while PBMs ar­gue that ul­ti­mate­ly the pow­er to set list prices lies with the drug­mak­ers. The losers are the fi­nal end-users — the pa­tients whose out-of-pock­et costs are close­ly in­ter­twined with list prices.

The first drug pric­ing hear­ing held in Jan­u­ary fo­cused on the sky­rock­et­ing price of in­sulin, with par­ents tes­ti­fy­ing that their chil­dren had died af­ter un­suc­cess­ful­ly ra­tioning their in­sulin. Such anec­do­tal re­ports of di­a­bet­ics ra­tioning and for­go­ing in­sulin have be­come com­mon­place. The Unit­ed States is home to more than 30 mil­lion di­a­bet­ics, and the av­er­age price of in­sulin near­ly tripled be­tween 2002 and 2013, ac­cord­ing to Amer­i­can Di­a­betes As­so­ci­a­tion (ADA) es­ti­mates.

On Sun­day, the US drug­mak­er — one of the trio of big glob­al in­sulin mak­ers: Sanofi and No­vo Nordisk that serves the Unit­ed States — is­sued a re­port break­ing down what it gets paid, on av­er­age, ver­sus the list price of its in­sulin treat­ments.

Be­tween 2014 and 2018, the list price for Hu­ma­log — Lil­ly’s most pop­u­lar in­sulin — in­creased 51.9% while the av­er­age amount that Lil­ly re­ceived — the net price — de­clined by 8.1%, as the com­pa­ny in­creas­es (and in some cas­es is forced to hike) the mag­ni­tude of re­bates and dis­counts it of­fers.

Source: Lil­ly

Click on the im­age to see the full-sized ver­sion

Lil­ly’s dis­clo­sure can be viewed as a step to­ward trans­paren­cy, as much as it is a dig at the role of PBMs and oth­er mid­dle­men in in­sulin pric­ing — giv­en it has be­come in­creas­ing­ly clear that the big­ger re­bates are not trick­ling down to the pa­tient. The com­pli­cat­ed drug sup­ply chain has con­found­ed law­mak­ers and re­searchers alike. In a re­cent analy­sis con­duct­ed by an ADA work­ing group — which held dis­cus­sions with more than 20 stake­hold­ers in the in­sulin sup­ply chain — it is un­clear pre­cise­ly how the dol­lars flow and how much each in­ter­me­di­ary prof­its.

Lil­ly’s re­port comes af­ter the drug­mak­er pledged to launch a half-price gener­ic of Hu­ma­log — which gen­er­at­ed near­ly $3 bil­lion in 2018 sales — ear­li­er this month. Ex­press Scripts $ES­RX — a large PBM— came out in sup­port of the move. “We of­ten have asked drug com­pa­nies to sim­ply low­er their prices. In­stead, drug com­pa­nies have elect­ed to in­crease prices and in­crease re­bates. This is the op­tion drug mak­ers have cho­sen for them­selves and for the mar­ket­place,” the com­pa­ny ear­li­er said in a state­ment. “We are in dis­cus­sions with Eli Lil­ly about Hu­ma­log au­tho­rized al­ter­na­tive, and if the net cost is low­est for plans, we will add it to our Flex For­mu­la­ry.”

Al­though in­sulin was dis­cov­ered in 1921, ad­vances in ge­net­ic en­gi­neer­ing cat­a­pult­ed hu­man in­sulin for­mu­la­tions to pa­tients with di­a­betes in the 1980s. Rapid-act­ing and long-act­ing hu­man in­sulin analogs were in­tro­duced in the 1990s, and since then oth­er up­grades have been in­tro­duced, how­ev­er the patents for many for­mu­la­tions in cur­rent clin­i­cal use have ex­pired.

Con­ven­tion­al eco­nom­ic the­o­ry as­serts new prod­ucts en­ter­ing the mar­ket will spark pric­ing com­pe­ti­tion and ren­der lega­cy prod­ucts ob­so­lete, but in the US phar­ma­ceu­ti­cal mar­ket prices of old­er drugs are of­ten ad­just­ed to re­flect the high­er prices of nov­el ther­a­pies be­ing in­tro­duced. This phe­nom­e­non, called “shad­ow pric­ing,” of­fers mon­u­men­tal in­cen­tives for both the drug­mak­ers and pay­ers in a “co­or­di­nat­ed mo­nop­oly,” while pa­tients (both in­sured and unin­sured) of­ten bear the bur­den of these costs, a re­cent­ly pub­lished study in Na­ture sug­gests.

The prices of Lan­tus (Sanofi) and Lev­emir (No­vo) have risen in lock­step with each oth­er on 13 oc­ca­sions since 2009. In fact, the prices reg­is­tered an in­crease of 30% with­in one year alone. When the more pop­u­lar Lan­tus ini­ti­ates the price in­crease, Lev­emir of­ten fol­lows suit with­in a span of days. In the fast-act­ing in­sulin mar­ket, dom­i­nat­ed by Eli Lil­ly’s Hu­ma­log and No­vo Nordisk’s No­volog, we see that prices for the two moved in lock­step in 17 in­stances for a decade, for a fi­nal price three times high­er. In fact, a vial of Hu­ma­log that cost just $21 when it was re­leased in 1996 to­day costs $275…Iron­i­cal­ly, al­though the in­dus­try us­es shad­ow pric­ing as a tac­tic to counter an­tic­i­pat­ed loss­es in rev­enue as­so­ci­at­ed with a drug falling off the ‘patent cliff’, this prac­tice could ul­ti­mate­ly back­fire if it ends up bank­rupt­ing US health­care eco­nom­ics.

This stag­ger­ing, and some­what in­ex­plic­a­ble, jump in lega­cy in­sulin prod­ucts has gar­nered the at­ten­tion of law­mak­ers. Last month, Sen­a­tors Chuck Grass­ley and Ron Wyden sent let­ters to lead­ing in­sulin man­u­fac­tur­ers: Lil­ly, No­vo Nordisk and Sanofi seek­ing in­for­ma­tion re­gard­ing re­cent price in­creas­es of up to 500% or more for in­sulin. Mean­while, out­go­ing FDA com­mis­sion­er Scott Got­tlieb has un­der­scored the sig­nif­i­cance of carv­ing out a biosim­i­lar path­way and nur­tur­ing biosim­i­lar com­pe­ti­tion for in­sulin to sub­due high prices.

Fangliang Zhang, AP Images

UP­DAT­ED: Leg­end fetch­es $424 mil­lion, emerges as biggest win­ner yet in pan­dem­ic IPO boom as shares soar

Amid a flurry of splashy pandemic IPOs, a J&J-partnered Chinese biotech has emerged with one of the largest public raises in biotech history.

Legend Biotech, the Nanjing-based CAR-T developer, has raised $424 million on NASDAQ. The biotech had originally filed for a still-hefty $350 million, based on a range of $18-$20, but managed to fetch $23 per share, allowing them to well-eclipse the massive raises from companies like Allogene, Juno, Galapagos, though they’ll still fall a few dollars short of Moderna’s record-setting $600 million raise from 2018.

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As it hap­pened: A bid­ding war for an an­tibi­ot­ic mak­er in a mar­ket that has rav­aged its peers

In a bewildering twist to the long-suffering market for antibiotics — there has actually been a bidding war for an antibiotic company: Tetraphase.

It all started back in March, when the maker of Xerava (an FDA approved therapy for complicated intra-abdominal infections) said it had received an offer from AcelRx for an all-stock deal valued at $14.4 million.

The offer was well-timed. Xerava was approved in 2018, four years after Tetraphase posted its first batch of pivotal trial data, and sales were nowhere near where they needed to be in order for the company to keep its head above water.

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In 2011, GlaxoSmithKline’s Benlysta became the first biologic to win approval for lupus patients. Nine years on, the British drugmaker has unveiled detailed positive results from a study testing the drug in lupus patients with associated kidney disease — a post-marketing requirement from the initial FDA approval.

Lupus is a drug developer’s nightmare. In the last six decades, there has been just one FDA approval (Benlysta), with the field resembling a graveyard in recent years with a string of failures including UCB and Biogen’s late-stage flop, as well as defeats in Xencor and Sanofi’s programs. One of the main reasons the success has eluded researchers is because lupus, akin to cancer, is not just one disease — it really is a disease of many diseases, noted Al Roy, executive director of Lupus Clinical Investigators Network, an initiative of New York-based Lupus Research Alliance that claims it is the world’s leading private funder of lupus research, in an interview.

Drug man­u­fac­tur­ing gi­ant Lon­za taps Roche/phar­ma ‘rein­ven­tion’ vet as its new CEO

Lonza chairman Albert Baehny took his time headhunting a new CEO for the company, making it absolutely clear he wanted a Big Pharma or biotech CEO with a good long track record in the business for the top spot. In the end, he went with the gold standard, turning to Roche’s ranks to recruit Pierre-Alain Ruffieux for the job.

Ruffieux, a member of the pharma leadership team at Roche, spent close to 5 years at the company. But like a small army of manufacturing execs, he gained much of his experience at the other Big Pharma in Basel, remaining at Novartis for 12 years before expanding his horizons.

Covid-19 roundup: Ab­b­Vie jumps in­to Covid-19 an­ti­body hunt; As­traZeneca shoots for 2B dos­es of Ox­ford vac­cine — with $750M from CEPI, Gavi

Another Big Pharma is entering the Covid-19 antibody hunt.

AbbVie has announced a collaboration with the Netherlands’ Utrecht University and Erasmus Medical Center and the Chinese-Dutch biotech Harbour Biomed to develop a neutralizing antibody that can treat Covid-19. The antibody, called 47D11, was discovered by AbbVie’s three partners, and AbbVie will support early preclinical work, while preparing for later preclinical and clinical development. Researchers described the antibody in Nature Communications last month.

President Donald Trump (left) and Moncef Slaoui, head of Operation Warp Speed (Alex Brandon, AP Images)

UP­DAT­ED: White House names fi­nal­ists for Op­er­a­tion Warp Speed — with 5 ex­pect­ed names and one no­table omis­sion

A month after word first broke of the Trump Administration’s plan to rapidly accelerate the development and production of a Covid-19 vaccine, the White House has selected the five vaccine candidates they consider most likely to succeed, The New York Times reported.

Most of the names in the plan, known as Operation Warp Speed, will come as little surprise to those who have watched the last four months of vaccine developments: Moderna, which was the first vaccine to reach humans and is now the furthest along of any US effort; J&J, which has not gone into trials but received around $500 million in funding from BARDA earlier this year; the joint AstraZeneca-Oxford venture which was granted $1.2 billion from BARDA two weeks ago; Pfizer, which has been working with the mRNA biotech BioNTech; and Merck, which just entered the race and expects to put their two vaccine candidates into humans later this year.

Is a pow­er­house Mer­ck team prepar­ing to leap past Roche — and leave Gilead and Bris­tol My­ers be­hind — in the race to TIG­IT dom­i­na­tion?

Roche caused quite a stir at ASCO with its first look at some positive — but not so impressive — data for their combination of Tecentriq with their anti-TIGIT drug tiragolumab. But some analysts believe that Merck is positioned to make a bid — soon — for the lead in the race to a second-wave combo immuno-oncology approach with its own ambitious early-stage program tied to a dominant Keytruda.

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Pfiz­er’s Doug Gior­dano has $500M — and some ad­vice — to of­fer a cer­tain breed of 'break­through' biotech

So let’s say you’re running a cutting-edge, clinical-stage biotech, probably public, but not necessarily so, which could see some big advantages teaming up with some marquee researchers, picking up say $50 million to $75 million dollars in a non-threatening minority equity investment that could take you to the next level.

Doug Giordano might have some thoughts on how that could work out.

The SVP of business development at the pharma giant has helped forge a new fund called the Pfizer Breakthrough Growth Initiative. And he has $500 million of Pfizer’s money to put behind 7 to 10 — or so — biotech stocks that fit that general description.

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Mer­ck wins a third FDA nod for an­tibi­ot­ic; Mereo tack­les TIG­IT with $70M raise in hand

Merck — one of the last big pharma bastions in the beleaguered field of antibiotic drug development — on Friday said the FDA had signed off on using its combination drug, Recarbrio, with hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia. The drug could come handy for use in hospitalized patients who are afflicted with Covid-19, who carry a higher risk of contracting secondary bacterial infections. Once SARS-CoV-2, the virus behind Covid-19, infects the airways, it engages the immune system, giving other pathogens free rein to pillage and plunder as they please — the issue is particularly pertinent in patients on ventilators, which in any case are breeding grounds for infectious bacteria.