Three con­sid­er­a­tions for the phar­ma in­dus­try as Pres­i­dent Trump fo­cus­es on drug pric­ing

by PwC Health Ad­vi­so­ry: Kar­la An­der­son, Rick Ed­munds, Phil Sclafani, Doug Strang and Will Su­vari


Kar­la An­der­son

As a pres­i­den­tial can­di­date, Pres­i­dent Don­ald Trump re­peat­ed­ly de­cried drug prices, sug­gest­ing that Amer­i­cans should be al­lowed to pur­chase the prod­ucts from abroad and that Medicare should be al­lowed to ne­go­ti­ate their prices. As pres­i­dent, he has con­tin­ued to talk about drug pric­ing. Ad­dress­ing Con­gress on Feb. 28, Trump said he would “work to bring down the ar­ti­fi­cial­ly high cost of drugs, and bring them down im­me­di­ate­ly.”

Pres­i­dent Trump and Re­pub­li­can law­mak­ers al­so have promised to re­peal and re­place the Af­ford­able Care Act (ACA), which in­clud­ed deep manda­to­ry Med­ic­aid drug re­bates and ex­pand­ed the num­ber of health­care or­ga­ni­za­tions that could par­tic­i­pate in the 340B dis­count drug pro­gram. On March 6, House Re­pub­li­cans in­tro­duced a bill, the Amer­i­can Health Care Act, or AH­CA, which rolls back the ACA’s Med­ic­aid ex­pan­sion af­ter 2019 but does not ad­dress the law’s drug re­bates or 340B pro­gram ex­pan­sion.

Al­low­ing Medicare to ne­go­ti­ate drug prices at the na­tion­al lev­el, or al­low­ing reim­por­ta­tion of prod­ucts from oth­er coun­tries, could push prices down. Ei­ther of these op­tions would face a dif­fi­cult leg­isla­tive path. Oth­er con­gres­sion­al ac­tions—such as chang­ing the FDA’s or­phan drug pro­gram to nar­row prod­uct el­i­gi­bil­i­ty or cap prices, or re­quir­ing com­pa­nies to jus­ti­fy price in­creas­es at pub­lic hear­ings—may lead to new pol­i­cy pro­pos­als, or new pres­sure on com­pa­nies to ex­plain the prices of spe­cif­ic prod­ucts (see fig­ure 1 for a list of pol­i­cy pro­pos­als).

Pres­i­dent Trump’s de­sire to bring pri­vate sec­tor tools to bear on pub­lic sec­tor pro­grams, such as cre­at­ing a more com­pet­i­tive en­vi­ron­ment for health­care prod­ucts and in­creas­ing cor­po­rate trans­paren­cy, dove­tails with state-lev­el trans­paren­cy pro­pos­als. In Mary­land, a pro­posed state law would re­quire a raft of new dis­clo­sures for drugs that cost more than $2,500 a year. Six­teen states are con­sid­er­ing sim­i­lar leg­is­la­tion to in­crease com­pa­nies’ dis­clo­sures.

These state-lev­el ef­forts can even­tu­al­ly lead to na­tion­al pol­i­cy. CMS’ Open Pay­ments law, al­so known as the “Sun­shine Act,” was born on the state lev­el be­fore it was adopt­ed as part of the ACA.

Three con­sid­er­a­tions for the in­dus­try

Make a plan. At least sev­en ma­jor drug com­pa­nies have tak­en steps to make drug prices more trans­par­ent, or have com­mit­ted to lim­it­ing an­nu­al price in­creas­es. It’s too ear­ly to eval­u­ate whether these ini­tia­tives go far enough to counter on­go­ing crit­i­cism of in­dus­try pric­ing prac­tices. Phar­ma­ceu­ti­cal and life sci­ences com­pa­nies are un­der pres­sure from all sides—in­clud­ing from in­vestors—to jus­ti­fy pric­ing de­ci­sions. Drug­mak­ers should plan for sce­nar­ios that may re­quire new R&D and oth­er fi­nan­cial dis­clo­sures re­lat­ed to spe­cif­ic drugs. Lim­it­ing sharp price in­creas­es, es­pe­cial­ly for sin­gle-source drugs treat­ing high-cost or so­cial­ly po­lar­iz­ing con­di­tions, can help drug­mak­ers avoid dam­ag­ing head­lines and in­ves­ti­ga­tions.

The ac­tion is in the states. Last year, Ver­mont be­came the first state to en­act drug-pric­ing trans­paren­cy re­quire­ments. New prod­uct-spe­cif­ic re­port­ing re­quire­ments in states like Mary­land or New York could in­flu­ence leg­is­la­tion in oth­er states, or at the fed­er­al lev­el. Con­duct­ing in­ter­nal analy­ses of pric­ing pat­terns across brands can help drug­mak­ers de­vel­op nar­ra­tives to de­fend pric­ing de­ci­sions and in­flu­ence new trans­paren­cy reg­u­la­tions.

Con­sid­er nov­el ap­proach­es. Val­ue-based con­tract­ing may help pro­tect pric­ing pre­mi­ums for prod­ucts that de­liv­er their in­tend­ed out­comes. Mi­cro­fi­nanc­ing op­tions may im­prove pa­tient ac­cess to high-cost spe­cial­ty and rare dis­ease drugs.  Over­all, shift­ing the fo­cus from in­di­vid­ual drug pric­ing to­wards phar­ma­coeco­nom­ic val­ue is in the best in­ter­est of all stake­hold­ers.

 

The Trump ad­min­is­tra­tion and new state-lev­el pro­pos­als could im­pact drug prices

Pro­pos­al Po­ten­tial im­pact Sta­tus
State-lev­el price caps, price in­crease lim­its, or price trans­paren­cy reg­u­la­tions Lim­it­ed abil­i­ty to dri­ve rev­enue growth through pric­ing will sharp­en the need for vol­ume and share growth, putting a pre­mi­um on in­no­va­tion. Trac­tion on the state lev­el could in­spire fed­er­al ef­forts. Pend­ing in 16 states—The phar­ma­ceu­ti­cal in­dus­try spent more than $100 mil­lion to de­feat a Cal­i­for­nia pro­pos­al in 2016 that would have capped drug prices paid by state in­sur­ance plans to the re­bate price paid by the De­part­ment of Vet­er­ans Af­fairs.
Re­peal ACA Med­ic­aid re­bates Re­peal of the Med­ic­aid drug re­bate would raise prices for prod­ucts used by Med­ic­aid ben­e­fi­cia­ries. No mo­men­tum—AH­CA does not re­peal Med­ic­aid drug re­bates, which knock an av­er­age of 23.1% off the av­er­age man­u­fac­tur­er price.
Re­peal ACA 340B pro­gram ex­pan­sion Rein­ing in the 340B ex­pan­sion would be a win for drug­mak­ers, but could lim­it ac­cess to heav­i­ly dis­count­ed 340B drugs. No mo­men­tum—AH­CA does not re­scind 340B ex­pan­sion. A pro­posed rule adding ad­di­tion­al 340B over­sight was with­drawn.
Al­low Medicare Part D to ne­go­ti­ate drug prices A Con­gres­sion­al Bud­get Of­fice (CBO) analy­sis de­ter­mined that Medicare ne­go­ti­a­tions wouldn’t bring down prices sub­stan­tial­ly. In dis­cus­sion—No spe­cif­ic pro­pos­al has emerged that would al­low Medicare to cen­tral­ly ne­go­ti­ate prices for all Part D plans.
Al­low reim­por­ta­tion of drug prod­ucts A 13-year-old CBO as­sess­ment pre­dicts on­ly a small re­duc­tion in prices from reim­por­ta­tion. In dis­cus­sion—No cur­rent leg­isla­tive path. A bill that would have al­lowed drug im­ports from Cana­da was vot­ed down by Sen­ate Re­pub­li­cans and De­moc­rats in Jan­u­ary.
Tweets and oth­er pub­lic sham­ing Pres­i­den­tial tweets and con­gres­sion­al fo­cus could im­pact stock prices, drug prices and prod­uct com­mer­cial­iza­tion plans. Ac­tion tak­en—Con­gres­sion­al hear­ings and Pres­i­den­tial tweets could con­tin­ue.

Biotech Voic­es is a con­tributed ar­ti­cle to End­points News. 

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Roche caused quite a stir at ASCO with its first look at some positive — but not so impressive — data for their combination of Tecentriq with their anti-TIGIT drug tiragolumab. But some analysts believe that Merck is positioned to make a bid — soon — for the lead in the race to a second-wave combo immuno-oncology approach with its own ambitious early-stage program tied to a dominant Keytruda.

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UP­DAT­ED: Leg­end fetch­es $424 mil­lion, emerges as biggest win­ner yet in pan­dem­ic IPO boom as shares soar

Amid a flurry of splashy pandemic IPOs, a J&J-partnered Chinese biotech has emerged with one of the largest public raises in biotech history.

Legend Biotech, the Nanjing-based CAR-T developer, has raised $424 million on NASDAQ. The biotech had originally filed for a still-hefty $350 million, based on a range of $18-$20, but managed to fetch $23 per share, allowing them to well-eclipse the massive raises from companies like Allogene, Juno, Galapagos, though they’ll still fall a few dollars short of Moderna’s record-setting $600 million raise from 2018.

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As it hap­pened: A bid­ding war for an an­tibi­ot­ic mak­er in a mar­ket that has rav­aged its peers

In a bewildering twist to the long-suffering market for antibiotics — there has actually been a bidding war for an antibiotic company: Tetraphase.

It all started back in March, when the maker of Xerava (an FDA approved therapy for complicated intra-abdominal infections) said it had received an offer from AcelRx for an all-stock deal valued at $14.4 million.

The offer was well-timed. Xerava was approved in 2018, four years after Tetraphase posted its first batch of pivotal trial data, and sales were nowhere near where they needed to be in order for the company to keep its head above water.

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Ruffieux, a member of the pharma leadership team at Roche, spent close to 5 years at the company. But like a small army of manufacturing execs, he gained much of his experience at the other Big Pharma in Basel, remaining at Novartis for 12 years before expanding his horizons.

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AbbVie has announced a collaboration with the Netherlands’ Utrecht University and Erasmus Medical Center and the Chinese-Dutch biotech Harbour Biomed to develop a neutralizing antibody that can treat Covid-19. The antibody, called 47D11, was discovered by AbbVie’s three partners, and AbbVie will support early preclinical work, while preparing for later preclinical and clinical development. Researchers described the antibody in Nature Communications last month.

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So let’s say you’re running a cutting-edge, clinical-stage biotech, probably public, but not necessarily so, which could see some big advantages teaming up with some marquee researchers, picking up say $50 million to $75 million dollars in a non-threatening minority equity investment that could take you to the next level.

Doug Giordano might have some thoughts on how that could work out.

The SVP of business development at the pharma giant has helped forge a new fund called the Pfizer Breakthrough Growth Initiative. And he has $500 million of Pfizer’s money to put behind 7 to 10 — or so — biotech stocks that fit that general description.

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Bris­tol My­ers is clean­ing up the post-Cel­gene merg­er pipeline, and they’re sweep­ing out an ex­per­i­men­tal check­point in the process

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Celgene, though, also added a $530 million deal — $50 million up front — to get the worldwide rights to JTX-8064, a drug that targets the LILRB2 receptor on macrophages.

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GSK presents case to ex­pand use of its lu­pus drug in pa­tients with kid­ney dis­ease, but the field is evolv­ing. How long will the mo­nop­oly last?

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