In land­mark hear­ing, drug­mak­ers and law­mak­ers agree that US pol­i­cy on drug pric­ing is ripe for change — but there's no con­sen­sus on much else

Sev­en big phar­ma ex­ec­u­tives faced a pla­toon of US sen­a­tors on Tues­day, ex­pect­ing a dress­ing down on the in­dus­try’s track record of re­lent­less price hikes that has sparked bi­par­ti­san furor — but were in­stead treat­ed to a con­sci­en­tious de­bate, high on con­cern and low on con­tention.

Mat­ters kicked off with Sen­a­tor Ron Wyden ad­mon­ish­ing every bio­phar­ma rep­re­sen­ta­tive for their com­pa­ny’s tac­tics, in­clud­ing Ab­b­Vie pro­tect­ing its $18-bil­lion-a-year Hu­mi­ra from gener­ics like “Gol­lum with his ring,” and Pfiz­er for mak­ing the “emp­ti­est pric­ing ges­ture” by press­ing pause on hikes un­der pres­sure from Pres­i­dent Don­ald Trump for a pe­ri­od on­ly to re­sume lat­er.

He gave way to pre­pared re­marks from the com­pa­ny rep­re­sen­ta­tives: Ab­b­Vie chief $AB­BV Richard Gon­za­lez; As­traZeneca $AZN chief Pas­cal So­ri­ot; Bris­tol-My­ers $BMY chief Gio­van­ni Caforio; J&J’s $JNJ Janssen head Jen­nifer Taubert; Mer­ck $MRK chief Ken Fra­zier; Pfiz­er’s $PFE chief Al­bert Bourla and Sanofi $SNY chief Olivi­er Brandi­court.

Un­sur­pris­ing­ly, each ex­ec­u­tive blamed high list prices on the mid­dle­men: PBMs and in­sur­ers, sug­gest­ing that while the mag­ni­tude of re­bates of­fered by them were in­creas­ing, those ben­e­fits were not be­ing ac­crued to the pa­tient in the form of co-pays.

Fra­zier — Mer­ck’s fire­brand chief and de-fac­to leader of the un­like­ly troop of pan­elists thanks to his le­gal ex­per­tise (Fra­zier served as Mer­ck’s chief coun­sel back when it was fight­ing a flood of Vioxx law­suits) — al­so un­der­scored the fact that the is­sue of pric­ing is sys­temic to the US health­care sys­tem, lament­ing that pa­tients are ex­pect­ed to pay on av­er­age 13% in drug co-pays, but on­ly 3% of hos­pi­tal costs. 

Ken­neth Fra­zier, Chair­man and Chief Ex­ec­u­tive Of­fi­cer at Mer­ck, tes­ti­fies be­fore the Sen­ate Fi­nance Com­mit­tee hear­ing on drug prices on Tues­day, Feb. 26, 2019 (AP Pho­to/Pablo Mar­tinez Mon­si­vais)

Click on the im­age to see the full-sized ver­sion


In gen­er­al, the drug­mak­ers voiced their sup­port for re­bate re­form. As­traZeneca’s So­ri­ot sug­gest­ed that on av­er­age, rough­ly 50% of his com­pa­ny’s list prices com­prise re­bates, and if they were to be dis­card­ed al­to­geth­er he would not be averse to cut­ting prices by the same mag­ni­tude. When asked point blank by more than one sen­a­tor about whether each ex­ec­u­tive would pledge to cut list prices if re­bates were elim­i­nat­ed, ex­ec­u­tives pro­posed cut­ting re­bates not just for Medicare but al­so on the com­mer­cial side to even the play­ing field for all drug man­u­fac­tur­ers, as suf­fi­cient in­cen­tive to low­er list prices.

An­oth­er so­lu­tion en­dorsed by the pan­el of drug­mak­ers was val­ue-based pric­ing.

Pfiz­er’s new­ly-mint­ed CEO Bourla told sen­a­tors he would pre­fer that the com­pa­ny be paid for “the heart at­tacks we pre­vent, and not the pills we sell.”  Al­though the con­cept is gain­ing trac­tion for new­er, high­er priced drugs, it has not uni­ver­sal­ly been adopt­ed. Mean­while, old­er drugs (in­clud­ing in­sulin that is sub­ject to fre­quent price hikes) are not in con­tention for such val­ue-based con­tracts.

Drug­mak­ers al­so ex­pressed en­thu­si­asm for shoring up biosim­i­lar and gener­ic com­pe­ti­tion in the Unit­ed States as a mech­a­nism to low­er drug prices.

Some pan­elists al­so en­dorsed the Cre­at­ing and Restor­ing Equal Ac­cess to Equiv­a­lent Sam­ples (CRE­ATES) Act — a bill de­signed to cre­ate a faster and more po­tent le­gal process for gener­ic man­u­fac­tur­ers to chal­lenge brand­ed drug­mak­ers that they claim are with­hold­ing drug sam­ples in or­der to ob­struct gener­ic com­pe­ti­tion. When sen­a­tors in­quired whether any of the drug­mak­ers at the hear­ing had any his­to­ry of block­ing drug sam­ples when to thwart copy­cat drug de­vel­op­ment, each de­clined that their com­pa­nies had en­gaged in any such prac­tices. But a cur­so­ry look at the FDA’s web­site sug­gests oth­er­wise.

The mood at the hear­ing was a mix­ture of cau­tious ad­mi­ra­tion for the in­dus­try for hav­ing de­vel­oped a pletho­ra of sci­en­tif­ic break­throughs, but in­cred­u­lous­ness that the Unit­ed States ef­fec­tive­ly shoul­ders the cost of in­no­va­tion, con­sid­er­ing oth­er West­ern in­dus­tri­al­ized na­tions — on av­er­age — pay low­er drug prices.

“Why are we a price tak­er, when we are the largest pur­chas­er?,” Sen­a­tor Bill Cas­sidy asked in one ex­change. An­oth­er sen­a­tor cit­ed sup­port for the Trump ad­min­is­tra­tion pro­pos­al to im­port drug prices from over­seas, but was im­me­di­ate­ly re­buffed by the drug­mak­ers who ar­gued that a num­ber of these na­tions do not ac­cept new med­i­cines due to their pric­ing poli­cies, of­ten re­strict­ing ac­cess or de­clin­ing to adopt them al­to­geth­er.

Al­though drug­mak­ers were asked whether their tax breaks — en­gi­neered by the Trump ad­min­is­tra­tion — had been used to cut prices, the phar­ma­ceu­ti­cal com­pa­nies large­ly ac­knowl­edged that the sav­ings had large­ly not been used in that fash­ion.

The main vil­lain of the hear­ing was Ab­b­Vie chief Gon­za­lez, who was per­sis­tent­ly called out for his com­pa­ny’s patent-ag­gres­sive ap­proach to pro­tect­ing their biggest, most lu­cra­tive as­set Hu­mi­ra — the world’s largest sell­ing drug whose main US patent ran out in 2016. Gon­za­lez’s main talk­ing point was that that while some Eu­ro­pean na­tions have bagged an 80% dis­count on Hu­mi­ra, the US price (and sales) is what keeps the com­pa­ny’s R&D en­gine hot.

Per­sis­tent ques­tions by one sen­a­tor to adopt Cost­co-style pric­ing — get­ting sales via vol­ume ver­sus pric­ing — got a tepid re­sponse from pan­elists. But, one pro­pos­al did whet pan­elist ap­petites. Sen­a­tor Shel­don White­house called out the bad ac­tors and “non-in­no­va­tors” of the in­dus­try (re­mem­ber Shkre­li, the poster boy of bad, smug biotech?) that buy off-patent drugs used in con­di­tions with few or no treat­ment op­tions and jack up their prices cre­at­ing a mo­nop­oly and hang­ing pa­tients who use these decades-old treat­ments out to dry. When we try to crack down against these ac­tors, White­house said, your lob­by­ists push­back. “Help us at least solve that prob­lem…turn off your lawyers and your lob­by­ists!” he said to the nod­ding heads of in­dus­try reps. “We will,” Fra­zier re­spond­ed.

Ear­li­er on, Sen­a­tor Bob Menen­dez made a thin­ly veiled threat to the crop of pan­elists be­fore him, sug­gest­ing that if drug­mak­ers were un­will­ing to rein in prices, “pol­i­cy­mak­ers are go­ing to do it for you.”  At the end of the pro­ceed­ings, the pan­elists large­ly agreed. The “gov­ern­ment has to step up and change the rules,” So­ri­ot said. Now there’s just the small mat­ter of fig­ur­ing out how to do that.

Cell and Gene Con­tract Man­u­fac­tur­ers Must Em­brace Dig­i­ti­za­tion

The Cell and Gene Industry is growing at a staggering 30% CAGR and is estimated to reach $14B by 20251. A number of cell, gene and stem cell therapy sponsors currently have novel drug substances and products and many rely on Contract Development Manufacturing Organizations (CDMO) to produce them with adherence to stringent regulatory cGMP conditions. Cell and gene manufacturing for both autologous (one to one) and allogenic (one to many) treatments face difficult issues such as: a complex supply chain, variability on patient and cellular level, cell expansion count and a tight scheduling of lot disposition process. This complexity affects quality, compliance and accountability in the entire vein-to-vein process for critically ill patients.

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