Endpoints assesses the big biopharma stories of the week, with a little added commentary on what they mean for the industry.
The latest wacky compensation deals underscore just how important this issue is
Valeant may be one of the most dysfunctional companies in biopharma, but why should that get in the way of a big payday for the CEO? We learned this week that Joseph Papa will get $62.7 million in pay for last year — a year in which Valeant’s business model ceased functioning.
This is proxy season, so we’ll be getting quite a few updates on who’s making what in this industry. Here at Endpoints News, that included Alnylam CEO John Maraganore’s haircut in compensation, compared to a big year in 2015 for the entire executive team. You can see here how rewards and cuts are shared throughout the team. Coincidentally, we also learned that the executive team at Cerulean will get bonuses after wrapping up the failed biotech and handing the shell over to a new company.
The only way extinction bonuses work is when you reward everyone who sticks it out to the bitter end. Singling out a few top execs for staying on to conduct a fire sale of assets is the kind of payoff that gives the entire industry a bad name.
Getting compensation right is a big deal. Kudos to Alnylam for doing the right thing. Thumbs down to Valeant and Cerulean. Boards should know better.
Put away the flamethrower Mr President. We come in peace and prosperity.
Another week goes by and we mark its passing with the latest blasts that President Trump has for biopharma. While repeating a now somewhat tired promise to bring drug prices way, way, way, way down (you can’t have too many ways in this brand of populism) the president added that the administration is at work on new legislation to accomplish that. And then he went and jumped the shark, vowing to make US drug prices the lowest in the world.
Undercutting, say, prices in India or Egypt would be a great formula for destroying biopharma entirely. But that’s clearly not Trump’s goal. Discipline on sticking with key talking points is not the president’s strength. But it would be appreciated if he steered clear of the kind of talk that 19th-century fringe radicals would have employed.
Ironically, pharma companies have been taking relatively moderate increases in drug prices this year. But it’s still a ripe plum for a populist president. Let’s avoid the over-the-top crazy talk, Mr. President. There’s a sensible path to follow on drug prices and we get that things have to change. You don’t reform an industry by toasting it with a flamethrower every day.
The GAO steps in for a long-needed probe of the orphan drug program
News this week that the GAO is investigating the FDA’s orphan drug program will come as no great surprise to anyone. After Marathon gamed the orphan system to come away with some big benefits for its old, cheap steroid deflazacort for Duchenne MD, it doesn’t take a rocket scientist to understand how federal rules can be manipulated.
So we’re glad that there will be a sober review of the facts at the GAO. FDA rules reforming the orphan system can play an important role in moderating drug prices responsibly. But we don’t want to throw the baby out with the bath water. New rules are needed and lawmakers will need to step in — probably before the GAO finishes its work.
Right now there’s a big question of whether PTC will continue to try and work the orphan program for deflazacort, now that it acquired the drug from Marathon. A couple of days ago, Bernie Sanders and Elijah Cummings fired a preemptive blast against PTC, asking for pricing info and urging that the biotech keep prices at the same level that parents currently pay for overseas supplies. PTC has put itself in an impossible situation now. Given its history, though, it’s unlikely that the company really cares about doing the right thing.
Lets keep the orphan drug program in play. But the gamers have got to be shown the door.
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