Trump pro­pos­al ta­pers Medicare pro­tec­tion for cer­tain drugs if drug­mak­ers don't tem­per pric­ing

In its op­po­si­tion to the in­dus­try stan­dard of re­lent­less and of­ten ex­or­bi­tant drug price hikes, the Trump ad­min­is­tra­tion seems to be do­ing more than huff­ing and puff­ing. Af­ter threat­en­ing to switch to a sys­tem that pegs US prices against cheap­er rates abroad ahead of the mid-term elec­tions last month, HHS out­lined a pro­pos­al on Mon­day that could rule out cer­tain drugs from be­ing in­clud­ed as part of guar­an­teed Medicare cov­er­age, if their mak­ers con­tin­ue to hike prices un­de­terred.

Seema Ver­ma

Medicare part D — a vol­un­tary out­pa­tient pre­scrip­tion drug ben­e­fit for Medicare en­rollees, pro­vid­ed through pri­vate plans ap­proved by the fed­er­al gov­ern­ment — re­quires in­sur­ers to in­clude drugs from six pro­tect­ed class­es (an­ti­de­pres­sants, an­tipsy­chotics, an­ti­con­vul­sants, im­muno­sup­pres­sants for treat­ment of trans­plant re­jec­tion, an­ti­retro­vi­rals and an­ti­neo­plas­tics) as part of their for­mu­la­ries. So if a drug falls in­to any of those cat­e­gories, the in­sur­er is oblig­ed to car­ry it, giv­ing the man­u­fac­tur­er sig­nif­i­cant clout to charge what it likes for the treat­ment.

Al­though fed­er­al law pro­hibits the HHS from di­rect­ly in­ter­fer­ing in drug price ne­go­ti­a­tions be­tween Part D plan spon­sors and drug­mak­ers, the new pro­pos­al, which is open to the pub­lic for com­ment, of­fers the in­sur­er the abil­i­ty to claw some of that ne­go­ti­at­ing pow­er back.

“This move un­der­scores our view that the ad­min­is­tra­tion con­tin­ues to see in­sur­ers (and po­ten­tial­ly PBMs) as their part­ners in their fo­cus to low­er drug costs,” Cred­it Su­isse an­a­lysts wrote in a note.

The pro­pos­al sug­gests the in­sur­er be giv­en the op­por­tu­ni­ty to ex­clude a drug if its mak­er were to raise the price be­yond a cer­tain thresh­old over a spe­cif­ic pe­ri­od. It al­so em­pow­ers the in­sur­er to kick a treat­ment off its for­mu­la­ry if the drug rep­re­sents a new for­mu­la­tion of an ex­ist­ing sin­gle-source drug or bi­o­log­i­cal prod­uct, re­gard­less of whether the old­er for­mu­la­tion is on the mar­ket. In ad­di­tion, in­sur­ers could low­er costs by com­pelling pa­tients to un­der­go step ther­a­py, which in­volves try­ing a cheap­er drug on for size – if that treat­ment doesn’t con­fer ad­e­quate ben­e­fit, on­ly then is a more ex­pen­sive drug giv­en, sim­i­lar to the pol­i­cy al­lowed for Part B drugs in 2019.

In an in­ter­view with Bloomberg, CMS ad­min­is­tra­tor Seema Ver­ma said the pro­pos­al could save $692 mil­lion over a decade.

“We see this as some­what ex­pect­ed and priced in (and not worst case sce­nar­ios) and good pub­lic­i­ty for HHS Sec­re­tary Azar and the ad­min­is­tra­tion. While we ac­knowl­edge drugs that cost CMS the most are like­ly to be im­pact­ed in the long term, many of these changes are like­ly to un­der­go re­vi­sions and a com­ment pe­ri­od that may mod­er­ate and would not be im­ple­ment­ed un­til 2020+,” not­ed Jef­feries’ Michael Yee.

In 2014, the Oba­ma ad­min­is­tra­tion was forced to aban­don an at­tempt to lim­it the num­ber of pro­tect­ed class­es, af­ter the plan pro­voked a storm of crit­i­cism from pa­tient groups and Con­gress. Trump’s pro­pos­al, how­ev­er, has not at­tempt­ed to re­duce the num­ber of pro­tect­ed cat­e­gories or elim­i­nate the cov­et­ed pro­tect­ed class sta­tus, which is “a fear some in­vestors had ex­pressed could im­pact Gilead $GILD — re­al­iz­ing that HIV drugs aren’t even in the top 20 for Medicare ex­pen­di­ture,” added Yee.

The CMS pro­pos­al in­clud­ed a raft of oth­er changes, in­clud­ing pro­vid­ing in­for­ma­tion that could help en­rollees low­er their out-of-pock­et costs, by ne­ces­si­tat­ing the in­clu­sion of drug price in­for­ma­tion and low­er cost al­ter­na­tives in the “Ex­pla­na­tion of Ben­e­fits” that Part D plans send to mem­bers. An­oth­er pro­vi­sion im­ple­ments a statu­to­ry re­quire­ment that pro­hibits phar­ma­cy gag claus­es.

PhRMA, a large lob­by­ing group rep­re­sent­ing the phar­ma­ceu­ti­cal in­dus­try, said they were still re­view­ing the CMS pro­pos­al in re­sponse to ques­tions from End­points News.

“But we al­ready have sig­nif­i­cant con­cerns about the im­pact of these pro­pos­als on ac­cess for the sick­est and most vul­ner­a­ble Medicare Part D ben­e­fi­cia­ries,” said Juli­et John­son, deputy vice pres­i­dent of pub­lic af­fairs. “Let­ting plans re­strict ac­cess to the med­i­cines that pa­tients re­ly on, par­tic­u­lar­ly for those with se­ri­ous and com­plex health con­di­tions like HIV/AIDS, can­cer and men­tal ill­ness, re­duces ad­her­ence to those med­i­cines, jeop­ar­diz­ing their health, in­creas­ing their need for in­pa­tient care and re­sult­ing in poor­er health out­comes for se­niors and high­er costs for tax­pay­ers.”

Ac­cord­ing to the Kaiser Fam­i­ly Foun­da­tion, rough­ly 43 mil­lion of the 60 mil­lion with Medicare are en­rolled in Part D plans in 2018. To­tal re­im­burse­ment for brand­ed drugs in Part D in­creased 77% from 2011 to 2015, de­spite a 17% drop in the num­ber of pre­scrip­tions, ac­cord­ing to HHS es­ti­mates re­leased ear­li­er this year, which al­so showed that Part D unit costs for brand­ed drugs rose near­ly 6 times faster than in­fla­tion over the same pe­ri­od.

CMS’ lat­est pro­pos­al, and Trump’s gen­er­al brava­do against the phar­ma in­dus­try, may not nec­es­sar­i­ly trans­late to ma­te­r­i­al change. In the first nine months of 2018, there were 96 price hikes for every price cut, ac­cord­ing to an analy­sis by the As­so­ci­at­ed Press pub­lished this Sep­tem­ber, and more re­cent­ly Pfiz­er $PFE said it planned to in­crease prices on 41 of its drugs in Jan­u­ary.

Mean­while, oth­er law­mak­ers are al­so work­ing on ways to quell the scourge of drug price hikes. Last week Sen­a­tor Bernie Sanders and Rep­re­sen­ta­tive Ro Khan­na re­vealed their in­tent to in­tro­duce a leg­is­la­tion called the Pre­scrip­tion Drug Price Re­lief Act. If signed in­to law, the bill would re­quire the HHS to en­sure Amer­i­cans don’t pay more than the me­di­an price in five ma­jor coun­tries: Cana­da, the Unit­ed King­dom, France, Ger­many and Japan for pre­scrip­tion drugs. It al­so in­cludes a pro­vi­sion that could shat­ter the cur­rent sys­tem of patent pro­tec­tion, by al­low­ing the gov­ern­ment to ap­prove gener­ic ver­sions of patent­ed brand­ed drugs if their mak­ers were to refuse to cur­tail their prices be­low that me­di­an lev­el.

Jude Samulski, Marianne De Backer

Bay­er buys a biotech ‘race horse’ with a $4B deal — $2B in cash — aimed at go­ing big in­to gene ther­a­py

In the latest sign that Big Pharma wants a leading place in the push to develop a new generation of cell and gene therapies, Bayer is stepping up today with a $2 billion cash deal to buy out one of the fast-moving pioneers in the field, while adding up to $2 billion more in milestones if the new pharma subsidiary can deliver the goods.

As part of a continuing series of deals engineered by Bayer BD chief Marianne De Backer, the pharma player has snapped up Asklepios, more commonly referred to in more casual fashion as AskBio. And they are paying top dollar for a Research Triangle Park-based company that raised $225 million a little more than a year ago to back the brainchild of Jude Samulski, the gene therapy pioneer out of the University of North Carolina Gene Therapy Center.

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Patrick Soon-Shiong at the JP Morgan Healthcare Conference, Jan. 13, 2020 (David Paul Morris/Bloomberg via Getty Images)

Af­ter falling be­hind the lead­ers, dissed by some ex­perts, biotech show­man Patrick Soon-Sh­iong fi­nal­ly gets his Covid-19 vac­cine ready for a tri­al. But can it live up to the hype?

In January, when dozens of scientists rushed to start making a vaccine for the then-novel coronavirus, they were joined by an unlikely compatriot: Patrick Soon-Shiong, the billionaire doctor most famous for making big, controversial promises on cancer research.

Soon-Shiong had spent the last 4 years on his “Cancer Moonshot,” but part of his project meant buying a small Seattle biotech that specialized in making common-cold vectors, called adenoviruses, to train the immune system. The billionaire had been using those vectors for oncology, but the company had also developed vaccine candidates for H1N1, Lassa fever and other viruses. When the outbreak began, he pivoted.

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Cedric Francois, Apellis CEO (Optum via YouTube)

UP­DAT­ED: So­bi bets $250M cash, about $1B in mile­stones for rights to a C3 ther­a­py be­ing pushed through 5 piv­otal tri­als

A couple years after licensing Novimmune’s emapalumab and turning around a quick FDA OK, Stockholm-based Sobi is betting up to $1.2 billion for rights to another rare disease drug.

The company is shelling out $250 million upfront and adding up to $915 million in milestones for rights to develop and commercialize Apellis Pharmaceuticals’ drug pegcetacoplan outside the US. Together, the companies will see the systemic C3 therapy through five registrational trials in hematology, nephrology and neurology.

Christian Rommel (via Roche)

Bay­er fol­lows R&D deal spree by raid­ing Roche's can­cer group for its new re­search chief

The day after Bayer signed off on a $4 billion deal designed to put the company among the leaders in gene therapy development, the pharma giant has recruited a new chief for its R&D division. And they opted for an expert in the cancer field.

Christian Rommel, Roche’s head of discovery and early-stage oncology development, has been tapped to take over the job. Joerg Moeller, who got the top research post after early and late-stage development roles were combined 2 years ago, is hitting the exit “to pursue other career opportunities.”

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Once re­ject­ed, Kala's dry eye drug now gains en­try to a field where No­var­tis is groom­ing its own block­buster

When the FDA slapped a rejection on Kala Pharma’s dry eye drug last August, the biotech’s execs promised investors that a third Phase III study — they had already started at that point — would reverse their fortune.

Today they made good on that promise, clinching an approval for Eysuvis, an ocular corticosteroid being positioned as a first-line, short term treatment of dry eye disease.

Boasting a technology invented by Bob Langer out of MIT, Eysuvis is a corticosteroid, loteprednol etabonate, delivered by mucus-penetrating particles. It promises to enhance penetration into target tissue on the ocular surface, achieving an effect quicker than systemic corticosteroids and stronger than over-the-counter eye drops.

Albert Bourla, AP

UP­DAT­ED: Where's the Pfiz­er ef­fi­ca­cy read­out? CEO Bourla says 'soon,' but you're go­ing to have to wait for it

Pfizer CEO Albert Bourla had promised repeatedly that the pharma giant would know if its leading Covid-19 vaccine is effective by the end of this month — now just a few days away.

Instead, the company reported early Tuesday that it has yet to conduct any interim efficacy analyses. And it won’t now until sometime next month.

The news was included in a slide for their Q3 report.

In the morning Q3 call with analysts, Bourla says that they expect efficacy data “soon,” but noted that they wouldn’t be able to say anything until all the administrative work was done on the interim, which would take about a week. And he added that Pfizer isn’t going to say anything else about that hot topic until they have the data in hand.

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Charles Baum, Mirati CEO

UP­DAT­ED: Mi­rati plots a march to the FDA for its KRAS G12C drug, breath­ing down Am­gen’s neck with bet­ter da­ta

Mirati Therapeutics $MRTX took another closely-watched step toward a now clearly defined goal to file for an approval for its KRAS G12C cancer drug adagrasib (MRTX849), scoring a higher response rate than the last readout from the class-leading rival at Amgen but still leaving open a raft of important questions about its future.

Following a snapshot of the first handful of responses, where the drug scored a tumor response in 3 of 5 patients with non-small cell lung cancer, the response rate has now slid to 45% among a pooled group of 51 early-stage and Phase II patients, 43% — 6 of 14 — when looking solely at the Phase I/Ib. Those 14 patients had a median treatment duration of 8.2 months, with half still on therapy and 5 of 6 responders still in response.

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Yung Chyung, Scholar Rock CMO (Business Wire)

A dark horse en­trant in­to the spinal mus­cu­lar at­ro­phy field dou­bles its val­ue on some PhII da­ta

The last four years have seen a sudden explosion in treatments for spinal muscular atrophy, a neurodegenerative condition that once led patients — often young ones — with a grim prognosis and no options. The prognosis still isn’t rosy, but now there are three FDA-approved options, enough to make the choice of one difficult.

Now a fourth potential option has entered the mix. Today, Scholar Rock announced the results from a proof-of-concept testing their SMA drug by itself and in combination with Ionis’ Spinraza, showing that all patient cohorts improved on standard scales used for measuring motor function in people with SMA.

UP­DAT­ED: Re­searchers shut­ter 2 Covid-19 stud­ies as mon­i­tors flag Eli Lil­ly an­ti­bod­ies as a flop for pneu­mo­nia, hos­pi­tal­ized pa­tients — but EUA hunt con­tin­ues

Two weeks after the safety data monitoring group advised researchers to hit the hold button on a clinical trial of Eli Lilly’s antibody bamlanivimab (LYCoV55) for patients hospitalized with Covid-19, the trial overseers are back with fresh directions to shutter the study after losing faith that the drug could help this group of patients.

The monitors concluded, however, that there were no safety issues involved, which will likely encourage continued belief that Lilly can still nail down an emergency marketing application for less-sick patients.