New study re­veals the ex­tent to which drug­mak­ers use con­di­tion-spe­cif­ic char­i­ties to in­duce spend­ing on cost­ly drugs

It’s well known that phar­ma com­pa­nies are in­ter­est­ed in and of­ten help pa­tients pay for typ­i­cal­ly un­af­ford­able drugs, of­ten via drug­mak­er-fund­ed char­i­ties and of­ten at odds with the reg­u­la­tions.

But what a new study in Health Af­fairs un­cov­ers is just how per­va­sive this prac­tice has be­come, with the Har­vard-, North­west­ern- and USC-af­fil­i­at­ed au­thors not­ing the “sub­stan­tial and grow­ing” reach of pa­tient as­sis­tance char­i­ties from 2010 to 2017.

Fed­er­al reg­u­la­tions cur­rent­ly al­low bio­phar­ma com­pa­nies to make tax-de­ductible do­na­tions to pa­tient as­sis­tance char­i­ties, which can help Medicare en­rollees pay for their med­ica­tions.

But the study notes that these do­na­tions are not pub­licly re­port­ed, and the au­thors call for new reg­u­la­tions around such pro­grams.

“We find that the lead­ing man­u­fac­tur­ers in many con­di­tions would find it prof­itable to do­nate to these char­i­ties in spite of these re­stric­tions. Thus, cur­rent fed­er­al guid­ance is in­suf­fi­cient to en­sure that man­u­fac­tur­ers are not earn­ing kick­backs from their do­na­tions to pa­tient as­sis­tance foun­da­tions; this guid­ance should be re­scind­ed or sub­stan­tial­ly re­vised,” Leemore Dafny, pro­fes­sor at Har­vard Busi­ness School, Christo­pher Ody, mi­cro­econ­o­mist at North­west­ern Uni­ver­si­ty’s Kel­logg School of Man­age­ment, and USC’s Tere­sa Rokos write.

While the study did not ob­serve which pa­tients in the sam­ple ac­tu­al­ly re­ceived char­i­ta­ble as­sis­tance or which man­u­fac­tur­ers made do­na­tions, as the phar­ma-backed char­i­ties do not pub­licly dis­close their donors, the au­thors eval­u­at­ed man­u­fac­tur­ers’ fi­nan­cial in­cen­tives by cal­cu­lat­ing pa­tients’ cost shar­ing and man­u­fac­tur­ers’ rev­enues on claims like­ly to be el­i­gi­ble for as­sis­tance.

Among the 10 costli­est con­di­tions, the au­thors note, where the lead­ing man­u­fac­tur­er ac­count­ed for 67% of sales in 2010, ris­ing to 89% in 2017, on av­er­age, the top two man­u­fac­tur­ers com­bined ac­count­ed for 80% of spend­ing on av­er­age in 2010 and 95% in 2017, “in­di­cat­ing that man­u­fac­tur­ers could ef­fec­tive­ly as­sist in the pur­chase of their own med­ica­tions by con­tribut­ing to con­di­tion-spe­cif­ic char­i­ties.”

As an ex­am­ple of how a man­u­fac­tur­er could prof­it from do­nat­ing to a con­di­tion-spe­cif­ic pa­tient as­sis­tance fund, the au­thors point to short bow­el syn­drome.

The study cal­cu­lat­ed that 99.6% of all drug spend­ing in this area in 2017 was at­trib­ut­able to Take­da’s Gat­tex (tedug­lu­tide), ac­quired from Shire in 2018, and which launched at a price of near­ly $300,000 per year.

In 2010, a char­i­ty for short bow­el syn­drome did not ex­ist, but the au­thors note that with­in 10 days of Gat­tex’s ap­proval by the FDA in De­cem­ber 2012, a fund for short bow­el syn­drome ap­peared on the Pa­tient Ac­cess Net­work Foun­da­tion’s web­site.

So if char­i­ta­ble as­sis­tance in 2017 in­duced just 3% of spend­ing on the top man­u­fac­tur­er’s drugs, the me­di­an man­u­fac­tur­er “would have found it prof­itable to fi­nance all as­sis­tance for the rel­e­vant con­di­tion,” the study says, with the au­thors con­clud­ing that the cur­rent reg­u­la­to­ry land­scape per­mits do­na­tions “that vi­o­late the spir­it of Medicare’s An­ti-Kick­back Statute,” adding:

Our re­sults il­lus­trate the abil­i­ty and in­cen­tive for bio­phar­ma­ceu­ti­cal man­u­fac­tur­ers to skirt an­ti­kick­back laws by mak­ing do­na­tions to pa­tient as­sis­tance char­i­ties. To some de­gree, that do­na­tions in­duce uti­liza­tion is not sur­pris­ing: Cost shar­ing is known to re­duce uti­liza­tion, so de­fray­ing it should log­i­cal­ly in­duce some por­tion. What our analy­sis sug­gests is that giv­en the high prices of drugs treat­ing cov­ered con­di­tions, to­geth­er with rel­a­tive­ly low cost shar­ing, man­u­fac­tur­ers can prof­it from these do­na­tions un­der cur­rent reg­u­la­tions and en­force­ment, and this is es­pe­cial­ly true for the most ex­pen­sive con­di­tions.

Biotech in­vestors and CEOs see two paths to growth, but are they equal­ly vi­able?

The dynamic in the biotech market has been highly volatile in the last few years, from the high peaks immediately after the COVID vaccine in 2021, to the lowest downturns of the last 20 years in 2022. This uncertainty makes calling the exact timing of the market’s turn something of a fool’s errand, according to Dr. Chen Yu, Founder and Managing Partner of TCG Crossover (TCG X). He speaks with RBC’s Noël Brown, Head of US Biotechnology Investment Banking, about the market’s road ahead and two possible paths for growth.

Casey McPherson shows his daughters Rose (left) and Weston around Everlum Bio, a lab that he co-founded to spark a treatment for Rose and others with ultra-rare conditions. (Ilana Panich-Linsman)

Fa­ther starts lab af­ter in­tel­lec­tu­al prop­er­ty is­sues stymie rare dis­ease drug de­vel­op­ment

Under bright lab lights, Casey McPherson holds his 6-year-old daughter, Rose. His free hand directs Rose’s gaze toward a computer screen with potential clues in treating her one-of-a kind genetic condition.

Gray specks on the screen show her cells that scientists reprogrammed with the goal of zeroing in on a custom medicine. McPherson co-founded the lab, Everlum Bio, to spark a treatment for Rose — and others like her. A regarded singer-songwriter, McPherson never imagined going into drug development.

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Benjamine Liu, TrialSpark CEO

Paul Hud­son and Tri­alSpark's mu­tu­al de­sire to speed up de­vel­op­ment con­verges in three-year, six-drug goal

A unicorn startup that originally set out to hasten clinical studies for biopharma partners dug further into its revised path of internal drug development by linking arms with Sanofi in a pact that the biotech’s CEO said originated from the top.

TrialSpark and the Big Pharma on Tuesday committed to in-licensing and/or acquiring six Phase II/Phase III drugs within the next three years.

“I’ve known Paul Hudson for a while and we were discussing the opportunity to really re-imagine a lot of different parts of pharma,” TrialSpark CEO Benjamine Liu told Endpoints News, “and one of the things that we discussed was this opportunity to accelerate the development of new medicines in mutual areas of interest.”

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Take­da to pull key hy­poparathy­roidism drug from the mar­ket en­tire­ly by end of 2024 af­ter years of man­u­fac­tur­ing woes

Takeda on Tuesday morning made an announcement that almost 3,000 people with the rare disease known as hypoparathyroidism were fearing.

Due to unresolved supply issues and manufacturing woes, Takeda said it will cut its losses and discontinue its hypoparathyroidism drug, known as Natpara (parathyroid hormone), halting all manufacturing of the drug by the end of 2024.

The decision to not re-commercialize Natpara will be a blow to not only the 2,400 people who were awaiting supplies of their reliable injection since 2019, but also the additional nearly 400 people who were accessing the drugs via the company’s Special Use Program as Takeda sought to resolve these manufacturing issues over the past five years.

Astel­las, Pan­th­er­na add or­gan to mR­NA tie-up; Rock­et launch­es sale of six fig­ures worth of stock

Astellas and Pantherna have expanded their November 2021 pact surrounding the latter’s mRNA platform to include a new target organ, the duo announced Tuesday morning, though they did not specify what that target is.

German biotech Pantherna is home to two platform technologies — one that designs mRNAs for non-vaccine therapies and another that designs LNPs. Astellas and Pantherna’s deal appears to mainly revolve around the first platform, which Astellas said it is using to research direct reprogramming, or turning cells from one kind into another without an intermediate stem cell phase.

Marc Dunoyer, Alexion CEO (AstraZeneca via YouTube)

Up­dat­ed: As­traZeneca nabs a small rare dis­ease gene ther­a­py play­er for 667% pre­mi­um

AstraZeneca is kicking off the fourth quarter with a little M&A Monday for a gene editing player recently overcoming a second clinical hold to its only program in human studies.

The Big Pharma and its subsidiary Alexion are buying out little LogicBio for $2.07 per share. That’s good for a massive 667% premium over its Friday closing price, when it headed into the weekend at 27 cents and just weeks after Nasdaq said LogicBio would have to delist, which has been put on hold as the biotech requests a hearing. It’s one of two biotech deals to commence October, alongside the news of Incyte buying a vitiligo-focused biotech.

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Dave Marek, Myovant CEO

My­ovant board balks as ma­jor­i­ty own­er Sum­it­o­mo swoops in with a $2.5B deal to buy them out

Three years after Sumitomo scooped up Roivant’s 46% stake in the publicly traded Myovant $MYOV as part of a 5-company, $3 billion deal, they’re coming back for the whole thing.

But these other investors at Myovant want more than what the Japanese pharma company is currently offering to pay at this stage.

Sumitomo is bidding $22.75 a share for the outstanding stock, which now represents 48% of the company after Sumitomo bumped its ownership since the original deal with Roivant. Myovant, however, created a special committee on the board, and they’re shaking their heads over the offer.

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Albert Bourla, Pfizer CEO (Gian Ehrenzeller/Keystone via AP)

Can a smart­phone app de­tect Covid? Pfiz­er throws down $116M to find out

What can a cough say about a patient’s illness? Quite a bit, according to ResApp Health — and Pfizer’s listening.

The pharma giant is shelling out about $116 million ($179 million AUD) to scoop up the University of Queensland spinout and its smartphone technology that promises to diagnose Covid and other respiratory illnesses based on cough and breathing sounds, the university announced last week.

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Big Phar­ma heavy­weights seek tweaks to FDA's clin­i­cal out­come as­sess­ment guid­ance

Pfizer, GSK, Janssen, Regeneron, Boehringer Ingelheim and at least a half dozen other companies are calling on the FDA to provide significantly more clarity in its draft guidance from this summer on clinical outcome assessments, which are a type of patient experience.

The draft is the third in a series of four patient-focused drug development guidance documents that the FDA had to create as part of the 21st Century Cures Act, and they describe how stakeholders (patients, caregivers, researchers, medical product developers and others) can collect and submit patient experience data and other relevant information for medical product development and regulatory decision-making.

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