The White House re­view of drug prices: Don't hate the play­er — hate the game

For­eign na­tions are spong­ing off Amer­i­can in­vest­ment in­to phar­ma­ceu­ti­cal R&D and tak­ing ad­van­tage of by US pa­tients by sys­tem­at­i­cal­ly un­der­pay­ing for drugs, a new study by the White House has con­clud­ed.

Surg­ing drug prices in the Unit­ed States are a thorny yet rare bi­par­ti­san is­sue as an­oth­er pres­i­den­tial elec­tion beck­ons. While Pres­i­dent Trump strug­gles to make good on his promise to low­er drug prices, the bio­phar­ma in­dus­try, which has long thrived in its lais­sez-faire ecosys­tem, has per­sis­tent­ly ar­gued that gov­ern­ment in­ter­ven­tion will sti­fle in­no­va­tion.

Mean­while, US law­mak­ers left, right and cen­ter have ar­gued drug prices in the Unit­ed States are too high — and the in­dus­try holds the crown for the least fa­vored sec­tor by Amer­i­cans, falling be­hind the fed­er­al gov­ern­ment it­self. In De­cem­ber, the HHS opened the door to a pol­i­cy that al­lows for the lim­it­ed im­por­ta­tion of drugs from Cana­da.

This new White House analy­sis, how­ev­er, sug­gests that US drug prices aren’t un­rea­son­able — its that for­eign gov­ern­ments aren’t pay­ing enough for Amer­i­can phar­ma­ceu­ti­cal break­throughs.

This new study — con­duct­ed by the Coun­cil of Eco­nom­ic Ad­vis­ers (a White House group tasked with of­fer­ing the US pres­i­dent ad­vice on eco­nom­ic pol­i­cy) — com­pared the prices of 200 top-sell­ing brand­ed drugs in the Unit­ed States against 15 de­vel­oped coun­tries. Eu­ro­pean coun­tries went from pay­ing about half (51%) of US prices for many best­selling drugs in 2003 to about a third (32%) by 2017, the re­port found, not­ing that gov­ern­ments abroad ne­go­ti­ate drug prices on be­half of their cit­i­zens and there­by ar­ti­fi­cial­ly de­press prices.

“These prac­tices abroad dis­pro­por­tion­ate­ly cost U.S. pa­tients and tax­pay­ers be­cause they pre­vent the Unit­ed States from un­der­tak­ing do­mes­tic poli­cies to low­er drug prices with­out slow­ing down the pace at which new and bet­ter prod­ucts en­ter the mar­ket,” the re­searchers wrote.

“We find that if free-rid­ing abroad was re­duced and for­eign rel­a­tive drug prices re­flect­ed rel­a­tive GDP per capi­ta, to­tal in­no­va­tor rev­enues from those coun­tries would have been $194 bil­lion high­er in 2017, rais­ing glob­al rev­enues by 42 per­cent. Re­duc­ing for­eign price con­trols would in­crease prof­its and in­no­va­tion, there­by lead­ing to greater com­pe­ti­tion and low­er prices for U.S. pa­tients.”

For in­stance, Cana­da paid 35% of US prices in 2017 — even though its GDP per capi­ta is 78% of the Unit­ed States. If Cana­da were to shoul­der a pro­por­tion­ate cost — it would have paid $27.2 bil­lion in­stead of the ac­tu­al $12.2 bil­lion it part­ed with that year, CEA re­searchers claimed.

In oth­er words, the White House is sug­gest­ing its im­po­tence in im­ple­ment­ing drug price con­trols is linked to for­eign gov­ern­ments not pay­ing their fair share for ben­e­fit­ting from Amer­i­can in­vest­ment in­to phar­ma­ceu­ti­cal R&D.

Crit­ics of that ar­gu­ment will be quick to note that drug prices in the Unit­ed States — a frac­tured sys­tem of health care that runs on pub­lic and pri­vate in­sur­ance, fur­ther com­pli­cat­ed by phar­ma­cy ben­e­fit man­agers — are un­rea­son­ably high and are not nec­es­sar­i­ly linked to the in­vest­ments in R&D. An­nu­al and some­times bian­nu­al hikes that of­ten ex­ceed the rate of in­fla­tion add an­oth­er lay­er of frus­tra­tion.

GoodRx, a com­pa­ny that tracks pre­scrip­tion drug prices in the Unit­ed States and of­fers dis­counts on med­ica­tions, has found that since 2014 (when it start­ed track­ing the da­ta) the pace of an­nu­al price hikes has in­creased, and the num­ber of drugs that are get­ting price up­grades has al­so be­come pro­nounced.

How­ev­er, as po­lit­i­cal scruti­ny in­to drug pric­ing in­ten­si­fied in re­cent years, a hand­ful of big drug­mak­ers pledged to keep their an­nu­al price hikes un­der 10% — and the gen­er­al spot­light on pric­ing has al­so be­gun to thaw the over­all mag­ni­tude of hikes.

This Jan­u­ary, over 100 drug­mak­ers raised the price for 619 brand­ed drugs by an av­er­age of 5.2%. In Jan­u­ary 2019, 486 brand­ed drugs saw in­creas­es by an av­er­age of 5.2%, while 580 brand­ed drugs in­creased by an av­er­age of 8% in Jan­u­ary 2018, ac­cord­ing to GoodRx da­ta. These num­bers should look dif­fer­ent when the to­tal num­ber of hikes over the rest of the year are ac­count­ed for.

Drug man­u­fac­tur­ers of­ten ar­gue that they raise list prices to ac­count for high­er re­bates that are ne­go­ti­at­ed by PBMs — and that net prices and what the pa­tient on av­er­age pays in cer­tain cas­es are in fact low­er.

“Re­bates are kind of hard to no­tice be­cause they’re kind of very hush-hush,” Tori Marsh, a GoodRx health in­sights an­a­lyst, not­ed in an in­ter­view with End­points News.

When list prices in­crease, that hike is passed on to in­sured pa­tients through co-pay­ments and pre­mi­ums, she said. “And so in­evitably, lat­er on down the line, they’re like­ly go­ing to be pay­ing more be­cause drug prices are just in­creas­ing — so they might not ex­pe­ri­ence it im­me­di­ate­ly at the phar­ma­cy but it will trick­le down.”

Jean-Paul Clozel, Idorsia CEO (Patrick Straub/Keystone via AP Images)

Idor­si­a's brain bleed drug flunks PhI­II tri­al, a decade af­ter pre­vi­ous flop

Idorsia’s long journey with clazosentan came to an abrupt “unexpected result” Monday morning with a Phase III flop.

The Swiss biopharma said the drug did not meet the main goal of the late-stage REACT study, conducted in the US, Canada and Europe since early 2019.

The 409-patient trial tested the intravenous drug’s ability to prevent complications due to delayed cerebral ischemia following aneurysmal subarachnoid hemorrhage (aSAH), in which blood vessels in the brain narrow and blood accumulates around the brain’s surface, which then dials up the pressure on the brain.

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Kenji Yasukawa, Astellas Pharma CEO (Photographer: Akio Kon/Bloomberg via Getty Images)

Astel­las taps chief strat­e­gy of­fi­cer as next CEO to 'go on the ag­gres­sive'

Five years into its big R&D revamp, Astellas says it’s time for a changing of the guard.

Kenji Yasukawa, who took over as president and CEO in 2018, will step down to become chairman of the board in April, making room for Naoki Okamura to take over. Okamura joined the company in 1986 and has served in a variety of finance, business and strategy roles, including most recently as chief strategy officer.

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Clin­i­cal tri­al di­ver­si­ty da­ta show mis­match be­tween en­roll­ment and dis­ease preva­lence, GSK says

A lack of diversity in clinical trials has persisted despite decades of initiatives to try to turn the tide.

In a recent review of 17 years of clinical trials, drugmaker GSK found that there were some mismatches between the demographics of its US-based trials and how prevalent diseases were in those populations.

The results, the company says, will help GSK and others design studies that better represent epidemiological rates within races and ethnicities.

The Big Phar­ma dis­card pile; Lay­offs all around while some biotechs bid farewell; New Roche CEO as­sem­bles top team; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

With earnings seasons in full swing, we’ve listened in on all the calls so you don’t have to. But news is popping up from all corners, so make sure you check out our other updates, too.

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Ma­gen­ta halts stem cell work and may sell it­self fol­low­ing pa­tient death, clin­i­cal hold

Magenta Therapeutics said it is halting work on its stem cell transplant drug pipeline and may sell itself, a week after the company reported the death of a patient in an early stage trial of its antibody-drug conjugate.

The Cambridge, MA-based company said it will conduct a “review of strategic alternatives,” and that could include an “acquisition, merger, business combination, or other transaction.”

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How to use ex­ter­nal con­trols: FDA spells out think­ing in new draft guid­ance

The use of real-world evidence to inform the FDA’s decision-making continues apace, with the agency releasing new draft guidance yesterday on how sponsors can compare outcomes of trial participants receiving a test treatment with outcomes in a group of people external to the trial.

The practice of externally controlled trials is common, particularly in oncology or other difficult areas where it’s not ethical or feasible to use internal controls.

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The Big Phar­ma axe: Mer­ck cuts chikun­gun­ya vax, Bris­tol My­ers drops Cy­tomX-part­nered pro­gram, and more

As fourth quarter earnings come in, Big Pharmas are disclosing changes to their pipelines during their investor calls, and sometimes more quietly in presentation appendices.

Merck dropped its chikungunya vaccine candidate, which completed a Phase II study. Merck acquired the vaccine through its purchase of Themis Bioscience in 2020. In developing a vaccine for chikungunya, a mosquito-borne virus, Valneva is the frontrunner, as it submitted its vaccine to the FDA at the end of December.

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Goldfinch Bio CEO Tony Johnson (L) and Karuna Therapeutics CEO Bill Meury

Karuna li­cens­es Goldfinch as­sets to com­pete with Boehringer In­gel­heim in neu­ro­science

Karuna Therapeutics is looking to compete with Boehringer Ingelheim on depression and anxiety with a new license to Goldfinch Bio’s assets, starting with $15 million to the shuttered biotech.

Karuna steps into an arena already being tested by Boehringer in multiple Phase II studies — the two are targeting transient receptor potential canonical 4 and 5, or TRPC4/5, which is thought to have a role in neuroscience indications. Goldfinch’s asset went through a Phase II in kidney diseases, but Karuna’s sights are set on mood and anxiety disorders for now.

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Roche's headquarters in Basel, Switzerland (Kyle LaHucik for Endpoints News)

Roche ditch­es fi­nal PhI­II for can­cer hope­ful, re­ports set­back for key drug in $1.4B buy­out

Over the past few years, Roche has released news about its AKT inhibitor ipatasertib in drips — most of them negative. The drug yielded mixed data in a key prostate cancer trial, Phase III flops in triple-negative breast cancer forced the pharma giant to pull the plug there, and in mid-2022 Roche trimmed two more early-stage indications in prostate cancer after completing the trials.

Now, the last piece of the program is gone.

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