Step­ping in­to the pric­ing de­bate, FDA chief Scott Got­tlieb pro­pos­es new re­im­burse­ment idea for an­tibi­otics

Scott Got­tlieb

In an at­tempt to make good on its promise to tack­le the su­per­bug prob­lem, the FDA trot­ted out a new idea to­day that it hopes will ad­dress the re­im­burse­ment catch-22 in­her­ent in the in­dus­try. Their idea? Treat drugs like soft­ware, hav­ing hos­pi­tals buy li­cens­es to an­tibi­otics in­stead of re­im­burs­ing on a per-use ba­sis.

Let’s set aside, for the mo­ment, that pric­ing is typ­i­cal­ly not a top­ic the FDA likes to weigh in on. Af­ter all, drug pric­ing is not un­der FDA’s di­rect purview and would re­quire some in­ter-agency col­lab­o­ra­tion with the likes of CMS. But wor­ries around the pace of in­no­va­tion in an­tibi­otics and oth­er an­timi­cro­bial drugs ap­pear to be dri­ving the FDA to ac­tion.

Brent Ahrens

In the agency’s state­ment Tues­day, FDA com­mis­sion­er Scott Got­tlieb ar­gued that the cur­rent drug re­im­burse­ment mod­el isn’t con­ducive to an­tibi­otics R&D. The more an­tibi­otics a physi­cian pre­scribes, the more mon­ey the drug­mak­er earns. But that’s a prob­lem con­sid­er­ing a grow­ing ef­fort to scale back the use of an­timi­cro­bials.

“When such drugs be­come avail­able, we try to use them spar­ing­ly, lest pathogens be­come over-ex­posed to a new mech­a­nism of at­tack and de­vel­op re­sis­tance to it,” Got­tlieb wrote. “So, providers have im­posed un­der­stand­able re­stric­tions on the use of such drugs. While this rep­re­sents re­spon­si­ble stew­ard­ship, it al­so means that a nov­el an­tibi­ot­ic may have a very lim­it­ed mar­ket. If prod­uct de­vel­op­ers know that they will not be able to re­coup their in­vest­ments, there may be re­duced in­cen­tive to in­vest the sig­nif­i­cant mon­ey need­ed to dis­cov­er and de­vel­op such a drug.”

Brent Ahrens, a Canaan part­ner with a long his­to­ry back­ing an­tibi­otics mak­ers like Iterum and Du­ra­ta, said so-called “ef­fec­tive stew­ard­ship” of these drugs is se­ri­ous­ly af­fect­ing ROI in this field.

“If one were to look at the launch­es of the last sev­er­al an­tibi­otics — or some of the ac­qui­si­tions done — very few have done well over the past 15 years,” Ahrens said. “All of that is re­lat­ed to stew­ard­ship and the price point. The in­cen­tive for us to do this just falls apart.”

Jeff Stein

Un­der the FDA’s new idea for re­im­burse­ment, hos­pi­tals and oth­er care fa­cil­i­ties could be re­im­bursed for li­cens­es to an­timi­cro­bials rather than a per-use ba­sis. With­in this mod­el, the hos­pi­tal sys­tems would pay a fixed li­cens­ing fee for ac­cess to the drug, which would of­fer them the right to use a cer­tain num­ber of an­nu­al dos­es.

“This is sim­i­lar to the way that soft­ware of­ten gets re­im­bursed, where in­sti­tu­tions pay a li­cens­ing fee for a fixed num­ber of in­stal­la­tions,” Got­tlieb’s state­ment reads. “We have been speak­ing with our coun­ter­parts at CMS as to whether such an ap­proach is fea­si­ble, whether it can be for­mu­lat­ed as a demon­stra­tion, and as a demon­stra­tion, whether it would have the in­tend­ed pub­lic health ben­e­fits.”

The FDA hopes that such a mod­el would pro­vide a pre­dictable re­turn on in­vest­ment and rev­enue stream for drug­mak­ers. It would al­so put the in­sti­tu­tions ful­ly in charge of stew­ard­ship of the meds.

Jeff Stein, the CEO and pres­i­dent of clin­i­cal-stage an­tibi­otics mak­er Cidara, tells me it’s en­cour­ag­ing to see the FDA tack­le the prob­lem, but he does won­der if the idea would work for hos­pi­tals.

“The ques­tion is — would hos­pi­tals em­brace it?” Stein said. “Will they be will­ing to pay for a drug up­front for a lim­it­ed num­ber of pa­tients?”

Ahrens said he’s al­so skep­ti­cal about how that would play out.

“Hos­pi­tals are re­luc­tant to pay for any­thing — un­der­stand­ably so — and it’s chal­leng­ing get­ting new prod­ucts in a hos­pi­tal,” Ahrens said. Pay­ing a larg­er sum up­front — when there are low-cost op­tions al­ready avail­able — may be a tough sell to acute care fa­cil­i­ties.

Still, both Ahrens and Stein are hap­py to see the FDA take on the re­im­burse­ment chal­lenge, as both con­sid­er it the biggest is­sue fac­ing the space. In­cen­tive pro­grams like QIDP and oth­ers stem­ming from the GAIN act have helped to fu­el in­no­va­tion in the in­dus­try over the past few years, but if com­pa­nies — and in­vestors — don’t get paid for their ef­forts, the space could slow its ef­forts, they said.

“I’d hate to see a cycli­cal ef­fect,” Ahrens said. “But with­out bet­ter re­im­burse­ment, there just won’t be a lot of new de­vel­op­ment.”

Biotech Half­time Re­port: Af­ter a bumpy year, is biotech ready to re­bound?

The biotech sector has come down firmly from the highs of February as negative sentiment takes hold. The sector had a major boost of optimism from the success of the COVID-19 vaccines, making investors keenly aware of the potential of biopharma R&D engines. But from early this year, clinical trial, regulatory and access setbacks have reminded investors of the sector’s inherent risks.

RBC Capital Markets recently surveyed investors to take the temperature of the market, a mix of specialists/generalists and long-only/ long-short investment strategies. Heading into the second half of the year, investors mostly see the sector as undervalued (49%), a large change from the first half of the year when only 20% rated it as undervalued. Around 41% of investors now believe that biotech will underperform the S&P500 in the second half of 2021. Despite that view, 54% plan to maintain their position in the market and 41% still plan to increase their holdings.

How to col­lect and sub­mit RWD to win ap­proval for a new drug in­di­ca­tion: FDA spells it out in a long-await­ed guid­ance

Real-world data is messy. There can be differences in the standards used to collect different types of data, differences in terminologies and curation strategies, and even in the way data is exchanged.

While acknowledging this somewhat controlled chaos, the FDA is now explaining how biopharma companies can submit study data derived from real-world data (RWD) sources in applicable regulatory submissions, including new drug indications.

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David Livingston (Credit: Michael Sazel for CeMM)

Renowned Dana-Far­ber sci­en­tist, men­tor and bio­phar­ma ad­vi­sor David Liv­ingston has died

David Livingston, the Dana-Farber/Harvard Med scientist who helped shine a light on some of the key molecular drivers of breast and ovarian cancer, died unexpectedly last Sunday.

One of the senior leaders at Dana-Farber during his nearly half century of work there, Livingston was credited with shedding light on the genes that regulate cell growth, with insights into inherited BRCA1 and BRCA2 mutations that helped lay the scientific foundation for targeted therapies and earlier detection that have transformed the field.

David Lockhart, ReCode Therapeutics CEO

Pfiz­er throws its weight be­hind LNP play­er eye­ing mR­NA treat­ments for CF, PCD

David Lockhart did not see the meteoric rise of messenger RNA and lipid nanoparticles coming.

Thanks to the worldwide fight against Covid-19, mRNA — the genetic code that can be engineered to turn the body into a mini protein factory — and LNPs, those tiny bubbles of fat carrying those instructions, have found their way into hundreds of millions of people. Within the biotech world, pioneers like Alnylam and Intellia have demonstrated just how versatile LNPs can be as a delivery vehicle for anything from siRNA to CRISPR/Cas9.

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Bris­tol My­ers pledges to sell its Ac­celeron shares as ac­tivist in­vestors cir­cle Mer­ck­'s $11.5B buy­out — re­port

Just as Avoro Capital’s campaign to derail Merck’s proposed $11.5 billion buyout of Acceleron gains steam, Bristol Myers Squibb is leaning in with some hefty counterweight.

The pharma giant is planning to tender its Acceleron shares, Bloomberg reported, which add up to a sizable 11.5% stake. Based on the offer price, the sale would net Bristol Myers around $1.3 billion.

To complete its deal, Merck needs a majority of shareholders to agree to sell their shares.

Leen Kawas (L) has resigned as CEO of Athira and will be replaced by COO Mark Litton

Ex­clu­sive: Athi­ra CEO Leen Kawas re­signs af­ter in­ves­ti­ga­tion finds she ma­nip­u­lat­ed da­ta

Leen Kawas, CEO and founder of the Alzheimer’s upstart Athira Pharma, has resigned after an internal investigation found she altered images in her doctoral thesis and four other papers that were foundational to establishing the company.

Mark Litton, the company’s COO since June 2019 and a longtime biotech executive, has been named full-time CEO. Kawas, meanwhile, will no longer have ties to the company except for owning a few hundred thousand shares.

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Some can­cer pa­tients now have to find oth­er op­tions as Bris­tol My­er­s' Abrax­ane falls in­to short­age from man­u­fac­tur­ing woes

When Beth Hogan, a metastatic pancreatic cancer patient, showed up for her infusion at Yale’s Smilow Cancer Hospital in New Haven, CT on Oct. 11, she said she was informed that day that she would not be receiving Bristol Myers Squibb’s Abraxane, part of her combo treatment, because of a shortage.

“I was told we don’t know when you can have it,” she told Endpoints News via email, adding that she doesn’t expect to receive any Abraxane this coming Monday at her treatment appointment either, and she doesn’t know when things will change.

Michel Vounatsos, Biogen CEO (Credit: World Economic Forum/Valeriano Di Domenico)

Up­dat­ed: Bio­gen sells just $300K worth of Aduhelm in Q3, as ques­tions on long-term vi­a­bil­i­ty re­main

Barely anyone is accessing Biogen’s controversial Alzheimer’s treatment, with the company reporting just $0.3 million in Aduhelm sales in the third quarter. Although investors will be looking to the longer term, when CMS may decide to cover the drug and open the floodgates for more reimbursement, use of the drug is currently stalled.

Since June, when the FDA first signed off on the drug under its accelerated pathway, Biogen said Wednesday that it’s sold a total of $2 million worth of Aduhelm. That’s a far cry from the peak Wall Street sales estimate of about $9 billion in annual sales, and even a ways away from the sell-side consensus of about $17 million in Q3 sales.

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Eli Lil­ly or­dered to pay roy­al­ties on block­buster di­a­betes drugs, though ex­act dam­ages are un­clear

A federal court found Eli Lilly in breach of a royalty agreement with an Arizona company, likely sending the case — which deals with Lilly’s blockbuster diabetes drugs — to a trial.

The Arizona District Court ordered Lilly to pay the royalties to Tucson, AZ-based Research Corporation Technologies, per an opinion delivered Tuesday, stemming from a 1990 agreement involving materials used in manufacturing Lilly’s insulin products. Lilly had agreed to pay a 2% royalty on worldwide sales, and the exact amount of damages will be determined in a trial, Judge Scott Rash wrote.