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.

RWE chal­lenges for to­day's bio­phar­ma

The rapid development of technology — and the resulting avalanche of data — are catalysts for significant change in the biopharmaceutical industry. This translates into urgent pressures for today’s biopharma, including a need to quickly and affordably develop products with proven therapeutic efficacy and value. This urgency is expedited by the growth of value-based contracting, where access to reimbursement and profit depends on these abilities.

UP­DAT­ED: In a stun­ning turn­around, Bio­gen says that ad­u­canum­ab does work for Alzheimer's — but da­ta min­ing in­cites con­tro­ver­sy and ques­tions

Biogen has confounded the biotech world one more time.

In a stunning about-face, the company and its partners at Eisai say that a new analysis of a larger dataset on aducanumab has restored its faith in the drug as a game-changer for Alzheimer’s and, after talking it over with the FDA, they’ll now be filing for an approval of a drug that had been given up for dead.

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As shares suf­fer from a lin­ger­ing slump, a bruised Alk­er­mes slash­es 160 jobs in R&D re­struc­tur­ing

With its share price in a deep slump after suffering through a regulatory debacle over their depression drug ALKS 5461, Alkermes CEO Richard Pops is taking the ax to its R&D organization in a restructuring aimed at cutting costs ahead of its next attempt at a rollout in a tough field.

Richard Pops, Endpoints via Youtube

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Acor­da's Ron Co­hen brings the ax back out as new drug sales on­ly trick­le in while cash cow is led to the slaugh­ter

With its new drug earning meager sums and its one-time cash cow reduced to a bony shadow of its former self, Acorda Therapeutics today is rolling out a new restructuring aimed at slashing the staff and cutting costs to get through the hard times ahead.

The biotech is chopping a quarter of its staff today, carving back R&D as well as SG&A expenses. And CEO Ron Cohen is cutting deep.

Under the new austerity budget, Acorda’s R&D expenses for the full year 2019 are expected to be $55 – $60 million, reduced from $70 – $80 million. SG&A expenses for the full year 2019 are expected to be $185 – $190 million, reduced from $200 – $210 million. R&D expenses for the full year 2020 are expected to be $20 – $25 million and SG&A
expenses for the full year 2020 are expected to be $160 – $165 million.

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RAPT Ther­a­peu­tics re­turns to Wall Street to re­vive IPO bid

On May 24, FLX Bio, a small cancer and inflammation biotech with backing from GV, changed its name to RAPT Therapeutics and filed confidentially for an IPO. On July 5th, they filed to raise up to $86 million. On July 22, they announced the IPO with a $75 million goal.  And on August 1, they abruptly and without explanation called it all off.

Now, without explanation, they’re reviving the bid, filing again for a $75 million IPO, this time with a new bookrunner and a new drug candidate in the clinic. The terms will be the same: 5 million shares at $14-$16 per share. It would give them a diluted market value of $351 million.

EY vet set to re­place re­tir­ing Am­gen CFO Meline

Ahead of its third-quarter results next week, Amgen on Tuesday disclosed the planned retirement of David Meline, who has served as the company’s chief financial officer since 2014.

Meline will be replaced by Ernst & Young vet, Peter Griffith, as CFO come January 1, 2020 — but until then Griffith will serve as executive vice president, finance.

“Over the last 5 years at Amgen, Meline instituted many major changes that led to operational efficiencies and margin expansion while successfully returning cash to shareholders. Now that Amgen is on solid footing, it was a good time to step away,” Cowen’s Yaron Werber wrote in a note. “We do not anticipate any major changes to strategy or operations immediately due to this transition as Amgen is on solid footing.”

Eli Lil­ly’s USA, di­a­betes chief En­rique Con­ter­no is head­ing out af­ter 27 years, and he’s be­ing re­placed by a com­pa­ny in­sid­er

Close to 3 years after Eli Lilly CEO Dave Ricks added the title of president of the US operations to Enrique Conterno’s resume, which included his helmsmanship of the diabetes franchise, the Peruvian born exec is set to retire after a 27-year run at the pharma giant.

Lilly put out the news just as it was posting Q3 results, with a mix of upbeat and downbeat results in the latest set of numbers from Lilly.
Conterno — a grizzled, deeply experienced and sometimes gruff veteran of the pharma world — was a high-profile figure at Lilly, stepping up to expanded duties as the company was forced to deal with intense pricing pressure on the diabetes side of the business. He had replaced outgoing US president Alex Azar, who later popped up as head of Health and Human Services in the Trump administration.
As head of the diabetes unit, Conterno had to deal with an extraordinarily competitive field as payers demanded bigger discounts. Trulicity’s success helped generate new revenue for the company, but Q3’s miss on revenue had a lot to do with the need for discounting the drug ahead of Novo Nordisk’s rival therapy, Rybelsus, which was priced on the wholesale level at an almost identical rate.

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No­var­tis hands off $80M in cash to part­ner up with a top biotech play­er in the fi­bro­sis sec­tor

Never underestimate the power of a good showing at a scientific conference.
In a presentation late last year, the researchers at Pliant Therapeutics launched a series of discussions about the preclinical data they were pulling together around their work on their small-molecule integrin inhibitor aimed at transforming growth factor beta, or TGF-β, a key pathway involved in fibrosis.
And they got some serious attention for the work.
“We got interest from pharma partners and at the end Novartis basically made it,” says Pliant CEO Bernard Coulie.

Is there a recipe for M&A suc­cess? The best and worst buy­out deals in the past decade of­fer some keys to suc­cess — and fail­ure

It’s not easy achieving a solid win in M&A in this industry. But if you follow a few simple guidelines, you may be able to increase your odds of success.
Geoffrey Porges and the team at SVB Leerink went about the “notoriously difficult” task of scoring the biopharma buyout of 2009 to 2019. Sizing up current and expected revenue from the products that were gained, they came up with the 5 winners:
Merck/Schering Plough
Bristol/Medarex
Gilead/Pharmasset
Sanofi/Genzyme
AstraZeneca/Acerta
It says a lot about the field that it’s much easier sorting out the 5 worst deals, though there’s also a lot more competition for that title, notes Porges. As picked by the analysts:
J&J/Actelion
Merck/Cubist
Alexion/Synageva
AbbVie/Stemcentrx
Gilead/Kite

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