Trump ad­min­is­tra­tion pro­pos­es new rules that strip away many of the re­bate deals be­tween phar­ma and PBMs, push­ing dis­counts to con­sumers

Af­ter threat­en­ing for the past 2 years to do some­thing dra­mat­ic to change the steady up­ward tra­jec­to­ry of list drug prices and slash out-of-pock­et costs, the Trump ad­min­is­tra­tion has just fired a broad­side straight in­to one of the key dri­vers that has stoked pub­lic anger against the bio­phar­ma in­dus­try.

Alex Azar

HHS Sec­re­tary Alex Azar is­sued a re­lease Thurs­day evening say­ing that the gov­ern­ment will change the safe har­bor pro­vi­sions that al­low drug com­pa­nies to pay re­bates to the phar­ma­cy ben­e­fit man­agers that man­age their ther­a­peu­tics. That sys­tem of re­bates has con­tin­ued to shove up list prices while the rev­enue from drug port­fo­lios has flat­tened or in­creased at on­ly a frac­tion of what we’ve seen in pre­vi­ous years.

In­stead, the Trump ad­min­is­tra­tion is propos­ing that the safe har­bor pro­vi­sion will al­low drug com­pa­nies to hand dis­counts di­rect to con­sumers, so they get the di­rect ben­e­fit of the dis­counts that drug com­pa­nies had been pass­ing along to the PBMs like Ex­press Scripts. In place of the re­bates PBMs would earn a fixed price fee.

That should par­tic­u­lar­ly ad­van­tage se­niors on Medicare, said Azar. In fact, the an­ti-kick­back rules are aimed di­rect­ly at the pub­licly fund­ed health plans in the US, but the rules would like­ly spread in­to the pri­vate in­sur­ance mar­ket giv­en the mar­ket heft of Medicare and the Med­ic­aid plans that would be af­fect­ed. Al­so, if every­one knows what mem­bers of Medicare and Med­ic­aid are be­ing charged, then the whole opaque process around re­tail drug prices that’s ex­ist­ed for decades could pre­sum­ably be elim­i­nat­ed or ex­posed.

The dev­il, as al­ways in Wash­ing­ton DC, will be in the de­tails. Here’s the full de­scrip­tion of what the ad­min­is­tra­tion is propos­ing.

Re­bates have long been a thorn in the side of in­dus­try crit­ics, and in­creas­ing­ly the phar­ma com­pa­nies them­selves. These se­cret deals be­tween drug mak­ers and PBMs — which the gov­ern­ment says amount to 30% of drugs’ list price — are used to arrange fa­vor­able po­si­tions on the for­mu­la­ries used to steer mem­bers to par­tic­u­lar drugs. They al­so dic­tate the co-pays that are charged to mil­lions of mem­bers.

For the phar­ma in­dus­try, which has been the tar­get of grow­ing pub­lic anger, the move will be wel­comed as the at­ten­tion shifts to PBMs.

Stephen Ubl, PhRMA CEO

“We ap­plaud the Ad­min­is­tra­tion for tak­ing steps to re­form the re­bate sys­tem to low­er pa­tients’ out-of-pock­et costs,” not­ed PhRMA chief Stephen Ubl. “Our cur­rent health care sys­tem re­sults in pa­tients of­ten pay­ing cost-shar­ing based on the list price, re­gard­less of the dis­count their in­sur­er re­ceives. We need to en­sure that the $150 bil­lion in ne­go­ti­at­ed re­bates and dis­counts are used to low­er costs for pa­tients at the phar­ma­cy.”

“This pro­pos­al would al­so fix the mis­aligned in­cen­tives in the sys­tem that cur­rent­ly re­sult in in­sur­ers and phar­ma­cy ben­e­fit man­agers (PBMs) fa­vor­ing med­i­cines with high list prices.”

“This his­toric ac­tion, com­bined with oth­er ad­min­is­tra­tive and leg­isla­tive ef­forts on pre­scrip­tion drug pric­ing, is a ma­jor de­par­ture from a bro­ken sta­tus quo that serves spe­cial in­ter­ests and moves to­ward a new sys­tem that puts Amer­i­can pa­tients first,” Azar said in a state­ment. “De­moc­rats and Re­pub­li­cans look­ing to low­er pre­scrip­tion drug costs have crit­i­cized this opaque sys­tem for years, and they could pass our pro­pos­al in­to law im­me­di­ate­ly.”

Next up: Will both par­ties be able to set aside their dra­mat­ic dif­fer­ences and reach a bi­par­ti­san deal? How­ev­er this plays out, to­day’s pro­pos­al now takes cen­ter ring in the de­bate over drug prices.

There’s a lot more dis­cus­sion to come.

Im­age: Pres­i­dent Trump. Shut­ter­stock

UP­DAT­ED: Roche bags 'break­through' an­ti-fi­bro­sis drug in $1.4B biotech buy­out deal

Roche is snapping up a “breakthrough” anti-fibrotic drug in a $1.4 billion buyout.

The pharma giant announced Friday that it is acquiring Promedior, primarily to get its hands on PRM-151, a recombinant form of human pentraxin-2 (PTX-2) protein that has nailed down mid-stage clinical data on idiopathic pulmonary fibrosis and demonstrating its potential for a range of fibrotic conditions.

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Amarin emerges from an ex­pert pan­el re­view with a clear en­dorse­ment for Vas­cepa and high odds of suc­cess when the FDA weighs in for­mal­ly

Several FDA experts who gathered Thursday to consider the landmark approval of Vascepa to reduce cardio events in an at-risk population voiced their unease about various aspects of the efficacy and safety data, or ultimately the population it should be used to treat. But the overwhelming belief that the data pointed to the drug’s benefit and clearly outweighed risks carried the day for Amarin.

The panel voted unanimously (16 to 0) to support the company’s positive data presentation — backing an OK for expanding the label to include reducing cardio risk. The vote points Amarin $AMRN down a short path to a formal decision by the FDA, with the odds heavily in its favor. Chances are the rest of the questions about the future of this drug will be hashed out in the label’s small print.

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No­var­tis spin­out’s first an­ti-ag­ing PhI­II is a flop, so now they’ll turn to Parkin­son’s chal­lenge as shares wilt

Novartis spinout resTORbio is grappling with the collapse of its lead clinical program this morning — an anti-aging R&D failure that will badly damage their rep in the field.

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No­var­tis scores its lat­est FDA OK — this time for a new sick­le cell dis­ease drug picked up in a $665M deal

Novartis’ decision to buy Oklahoma-based biotech Selexys 3 years ago for up to $665 million has paid off with an FDA approval today.

Blessed with the FDA’s breakthrough drug designation for a speedy review, the pharma giant has pinned down an approval for crizanlizumab, a new therapy designed to reduce the frequency of painful incidents of vaso-occlusive crises among sickle cell disease patients 16 or older.

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As­traZeneca gains EU nod for di­a­betes triple; Am­gen and Duke launch re­al-world PC­SK9 ob­ser­va­tion­al study

→ Weeks after winning EU approval to start marketing dapagliflozin as Forxiga, AstraZeneca has racked up another OK for a triplet combo involving the SGLT2 diabetes drug. Named Qtrilmet, the pill combines Forxiga with the DPP-4 inhibitor Onglyza (saxagliptin) and the bedrock drug metformin in a modified-release format. That 3-in-1 approach proved superior in reducing average blood glucose levels to a number of other dual combinations across 5 Phase III trials, including Forxiga plus metformin, Onglyza with metformin, or glimepiride with metformin.

Five drugs, in­clud­ing two No­var­tis ther­a­pies, win EMA en­dorse­ment

As is custom, an EMA panel on Friday issued its weekly recommendations on marketing applications submitted by drug developers. This week, the agency backed the use of five new therapies — including two Novartis drugs — but issued no negative reviews.

Novartis’ S1P drug for relapsing forms of multiple sclerosis (MS) drug, Mayzent (known chemically as siponimod), which was approved by the FDA in March — has been given the nod by the EMA. The Swiss drugmaker already sells its other MS drug, Gilenya, in both regions.

Atom­wise's X-37 spin­out gets $14.5 mil­lion to launch AI dis­cov­ery ef­forts

The folks behind Atomwise’s spinout X-37 like to think in cosmological metaphors, and you can think of their AI drug development model as probes sent into space from a central station. That station just got $14.5 million in Series A funding from DCVC Bio, Alpha Intelligence Capital and Hemi Ventures to back those missions.

X-37 uses Atomwise’s AI platform to identify drug targets and – unlike the parent company, which largely sticks to computers  – bring those into a wet lab and preclinical testing.  In addition to AI professionals, it’s led in by part by drug developers from Velocity Pharmaceutical Development.

Ab­bott Lab­o­ra­to­ries CEO Miles White pass­es ba­ton down to suc­ces­sor; Lon­za CEO Marc Funk hits the ex­it

→ Abbott Laboratories has named a successor to CEO Miles White after he announced that he was stepping down in March after 21 years of service. Robert Ford, the company’s COO and president, will take the helm. Ford is known for his work in the $25 billion merger between St. Jude Medical into Abbott in January 2017. White will remain with the company as executive chairman of the board. 

→ After snapping up Novartis’ Swiss facility, Novartis Center of Excellence, in July, Lonza has announced that their CEO, Marc Funk, is hitting the exit for “personal reasons.” Funk has been the CEO of the company for less than a year — brought onto the company back in March. In the meantime, chairman Albert Baehny will serve as interim CEO. 

UCB adds on more pos­i­tive PhI­II da­ta for IL-17A/17F in­hibitor bimek­izum­ab, clear­ing a path to the FDA

A month after posting positive top-line data from their first Phase III trial of the IL-17A/17F inhibitor bimekizumab, Belgium’s UCB says they’ve added more upbeat results from their second late-stage test in moderate-to-severe plaque psoriasis.

That leaves the company on track for regulatory submissions in the middle of next year, says CMO Iris Loew-Friedrich.
Their drug beat out a placebo on the co-primaries — a 90% improvement in PASI 90 (the Psoriasis Area and Severity Index) and Investigator Global Assessment (IGA) response of clear or almost clear (IGA 0/1) at week 16, compared to placebo. Investigators also boasted of hitting some key secondaries.
UCB is angling to enter an increasingly crowded market space.
In their first of 3 Phase III studies for bimekizumab, researchers touted top-line wins on statistically significant results on clearing plaque psoriasis, including a victory over J&J’s IL-23 contender Stelara on key endpoints. The drug targets both IL-17A and IL-17F, a modification on the IL-17A strategy laid out for Taltz (Eli Lilly) and Cosentyx (Novartis). And the new group also includes J&J’s Tremfya and AbbVie’s Skyrizi.

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