Trump's 'sweep­ing ac­tion' to low­er drug prices mocked by an­a­lysts as re­lieved in­vestors trig­ger ral­ly in Big Phar­ma stocks

Pres­i­dent Don­ald Trump took to the bul­ly pul­pit to­day to steer a pack­age of pro­pos­als in­to ex­is­tence that he claimed is “the most sweep­ing ac­tion in his­to­ry to low­er the price of pre­scrip­tion drugs for the Amer­i­can peo­ple.”

But if that was his aim, his shot hit so far from the mark that it trig­gered a spike in Big Phar­ma stock prices as an­a­lysts dis­missed the ef­fort as a “non-event” cen­tered on some mar­gin­al pro­mo­tion­al is­sues that would be a “small price to pay” for avoid­ing tak­ing a hit on their con­trol of drug pric­ing.

Trump’s short speech — play­ing out against a back­drop of rev­e­la­tions that No­var­tis had paid his per­son­al at­tor­ney $1.2 mil­lion — con­tin­ued his prac­tice of ex­co­ri­at­ing drug lob­by­ists and spe­cial in­ter­ests. But it was long on rhetoric and short on tough moves. 

The pres­i­dent said his pro­pos­als would re­sult in “elim­i­nat­ing the mid­dle men; the mid­dle men be­came very, very rich,” even though their stocks al­so surged in the wake of Trump’s roll­out. And he vowed to take on spe­cial in­ter­ests while pre­vent­ing man­u­fac­tur­ers from ex­ploit­ing the coun­try’s patent sys­tem to guard block­buster ther­a­peu­tic fran­chis­es.

As promised, Trump ac­cused oth­er coun­tries of en­gi­neer­ing ar­ti­fi­cial­ly low drug prices, forc­ing Amer­i­cans to shoul­der the weight of “the enor­mous cost of re­search and de­vel­op­ment.” Trump al­so weighed in against so-called gag laws that pre­vent phar­ma­cists from point­ing con­sumers to low­er priced al­ter­na­tives to pre­scribed drugs.

In a quick fol­low-up, HHS Sec­re­tary Alex Azar raised one spe­cif­ic pro­pos­al that aimed at sham­ing phar­ma com­pa­nies by forc­ing them to in­clude the price of the drugs they pro­mot­ed in ad­ver­tis­ing.

While lob­by­ists may have come in for a tongue lash­ing, the in­dus­try has to be pleased that the ad­min­is­tra­tion is mak­ing no move to re­quire Medicare to ne­go­ti­ate low­er prices, or al­low for reim­por­ta­tion of drugs from those oth­er coun­tries with cheap­er prices. What we heard about to­day amount­ed to some tai­lor­ing and planned slim­ming — the ba­sic out­fit re­mains the same. And that fact helped trig­ger a broad ral­ly in Big Phar­ma stocks af­ter the speech wrapped.

HHS pro­vid­ed more specifics in a blue­print for ac­tion that it dis­trib­uted just be­fore the speech­es. The ac­tions in­clude —

  • Adding val­ue-based drug con­tract­ing, which the in­dus­try has al­ready ea­ger­ly signed off on as a need­ed com­pro­mise.
  • Chang­ing the for­mu­la­ry struc­ture used by Medicare Part D plans to al­low for a min­i­mum of one drug per cat­e­go­ry or class, rather than 2, to height­en com­pe­ti­tion and al­low some lever­ag­ing.
  • En­cour­ag­ing states to try new de­mo projects us­ing best prac­tices from pri­vate in­dus­try to low­er drug costs.
  • End­ing the 180-day gener­ic drug ex­clu­siv­i­ty pro­vi­sion as a tem­po­rary mea­sure to hold back dis­count com­pe­ti­tion.
  • Go­ing af­ter low for­eign drug prices be­gin­ning with an analy­sis of prices in coun­tries be­long­ing to the Or­gan­i­sa­tion for Eco­nom­ic Co-op­er­a­tion and De­vel­op­ment.
  • In­clud­ing new rules aimed at low­er­ing out-of-pock­et ex­pens­es.
  • Of­fer­ing thoughts on in­creas­ing the num­ber and ac­cess to biosim­i­lars, elim­i­nat­ing a process where “man­u­fac­tur­ers may seek to use shared sys­tem REMS to de­lay or block com­pe­ti­tion from gener­ic prod­ucts en­ter­ing the mar­ket.”
  • Giv­ing Part D plans more flex­i­bil­i­ty on adding cheap­er gener­ics to their for­mu­la­ries.
  • And in ad­di­tion to see­ing if the rules can be changed to re­quire phar­mas to pub­li­cize pric­ing, the gov­ern­ment has a plan to spot­light drugs which have not seen reg­u­lar price hikes as part of an at­tempt to shine a light on the cost of in­di­vid­ual ther­a­pies.

The pro­pos­als to­day are very much a work in progress, with the ad­min­is­tra­tion promis­ing to look at in­ter­change­abil­i­ty of biosim­i­lars with brand­ed drugs, an is­sue that has raised the hack­les of some drug man­u­fac­tur­ers whose fran­chise drugs face a com­pet­i­tive threat.

But while com­pa­nies are like­ly to ob­ject to var­i­ous de­tails in the plan, with con­sid­er­able lob­by­ing to come on the specifics, there are no big changes out­lined here that will do what Trump has been promis­ing to do for more than a year: slash drug prices.

In­vestors clear­ly didn’t see any pain in the pro­pos­als. The $NBI surged, along with shares of the big phar­mas like Eli Lil­ly (up 2%), Mer­ck (up 3%) and J&J (up 2%). So did the PBMs — $ES­RX — that took a hit from the pres­i­dent. The win­dow dress­ing to this speech may have in­di­cat­ed a time of mourn­ing, but the lights were on and the par­ty was un­der­way in­side.

Jef­feries called it “be­nign,” and a “non-event.”

Leerink didn’t see much earth shak­ing about it.

Over­all we con­cur with the ob­vi­ous Street sen­ti­ment that the pro­pos­als are much less dra­con­ian than feared, and with no re-im­por­ta­tion, no manda­to­ry trans­paren­cy of con­tracts, no guar­an­teed flow-through of re­bates, no patent term ab­bre­vi­a­tion or risks, then the lim­it­ed im­pact of greater price trans­paren­cy, which the in­dus­try will op­pose, seems a small price to pay if in­deed those pro­pos­als are im­ple­ment­ed.

Trump, mean­while, is stick­ing with his vow to bring drug prices in­to line the world over.

This is “just the be­gin­ning,” Trump con­clud­ed, promis­ing new leg­is­la­tion and more ac­tions that re­quired help from Con­gress.

“We’re go­ing to see those prices come down,” he said. “It will be a beau­ti­ful thing.”


Im­ages: Pres­i­dent Don­ald Trump and Health and Hu­man Ser­vices Sec­re­tary Alex Azar. WHITE HOUSE via YOUTUBE

UP­DAT­ED: Chica­go biotech ar­gues blue­bird, Third Rock 'killed' its ri­val, pi­o­neer­ing tha­lassemia gene ther­a­py in law­suit

Blue­bird bio $BLUE chief Nick Leschly court­ed con­tro­ver­sy last week when he re­vealed the com­pa­ny’s be­ta tha­lassemia treat­ment will car­ry a jaw-drop­ping $1.8 mil­lion price tag over a 5-year pe­ri­od in Eu­rope — mak­ing it the plan­et’s sec­ond most ex­pen­sive ther­a­py be­hind No­var­tis’ $NVS fresh­ly ap­proved spinal mus­cu­lar at­ro­phy ther­a­py, Zol­gens­ma, at $2.1 mil­lion. A Chica­go biotech, mean­while, has been fum­ing at the side­lines. In a law­suit filed ear­li­er this month, Er­rant Gene Ther­a­peu­tics al­leged that blue­bird and ven­ture cap­i­tal group Third Rock un­law­ful­ly prised a vi­ral vec­tor, de­vel­oped in part­ner­ship with the Memo­r­i­al Sloan Ket­ter­ing Can­cer Cen­ter (MSK), from its grasp, and thwart­ed the de­vel­op­ment of its sem­i­nal gene ther­a­py.

The top 10 block­buster drugs in the late-stage pipeline — Eval­u­ate adds 6 new ther­a­pies to heavy-hit­ter list

Vertex comes in for a substantial amount of criticism for its no-holds-barred tactical approach toward wresting the price it wants for its commercial drugs in Europe. But the flip side of that coin is a highly admired R&D and commercial operation that regularly wins kudos from analysts for their ability to engineer greater cash flow from the breakthrough drugs they create.

Both aspects needed for success in this business are on display in the program backing Vertex’s triple for cystic fibrosis. VX-659/VX-445 + Tezacaftor + Ivacaftor — it’s been whittled down to 445 now — was singled out by Evaluate Pharma as the late-stage therapy most likely to win the crown for drug sales in 5 years, with a projected peak revenue forecast of $4.3 billion.

The latest annual list, which you can see here in their latest world preview, includes a roster of some of the most closely watched development programs in biopharma. And Evaluate has added 6 must-watch experimental drugs to the top 10 as drugs fail or go on to a first approval. With apologies to the list maker, I revamped this to rank the top 10 by projected 2024 sales, instead of Evaluate's net present value rankings.

It's how we roll at Endpoints News.

Here is a quick summary of the rest of the top 10:

Endpoints News

Basic subscription required

Unlock this story instantly and join 53,000+ biopharma pros reading Endpoints daily — and it's free.

John Chiminski, Catalent CEO - File Photo

'It's a growth play': Catal­ent ac­quires Bris­tol-My­er­s' Eu­ro­pean launch pad, ex­pand­ing glob­al CD­MO ops

Catalent is staying on the growth track.

Just two months after committing $1.2 billion to pick up Paragon and take a deep dive into the sizzling hot gene therapy manufacturing sector, the CDMO is bouncing right back with a deal to buy out Bristol-Myers’ central launchpad for new therapies in Europe, acquiring a complex in Anagni, Italy, southwest of Rome, that will significantly expand its capacity on the continent.

There are no terms being offered, but this is no small deal. The Anagni campus employs some 700 staffers, and Catalent is planning to go right in — once the deal closes late this year — with a blueprint to build up the operations further as they expand on oral solid, biologics, and sterile product manufacturing and packaging.

This is an uncommon deal, Catalent CEO John Chiminski tells me. But it offers a shortcut for rapid growth that cuts years out of developing a green fields project. That’s time Catalent doesn’t have as the industry undergoes unprecedented expansion around the world.

Endpoints News

Basic subscription required

Unlock this story instantly and join 53,000+ biopharma pros reading Endpoints daily — and it's free.

Arc­turus ex­pands col­lab­o­ra­tion, adding $30M cash; Ku­ra shoots for $100M raise

→  Rare dis­ease play­er Ul­tragenyx $RARE is ex­pand­ing its al­liance with Arc­turus $ARCT, pay­ing $24 mil­lion for eq­ui­ty and an­oth­er $6 mil­lion in an up­front as the two part­ners ex­pand their col­lab­o­ra­tion to in­clude up to 12 tar­gets. “This ex­pand­ed col­lab­o­ra­tion fur­ther so­lid­i­fies our mR­NA plat­form by adding ad­di­tion­al tar­gets and ex­pand­ing our abil­i­ty to po­ten­tial­ly treat more dis­eases,” said Emil Kakkis, the CEO at Ul­tragenyx. “We are pleased with the progress of our on­go­ing col­lab­o­ra­tion. Our most ad­vanced mR­NA pro­gram, UX053 for the treat­ment of Glyco­gen Stor­age Dis­ease Type III, is ex­pect­ed to move in­to the clin­ic next year, and we look for­ward to fur­ther build­ing up­on the ini­tial suc­cess of this part­ner­ship.”

Neil Woodford. Woodford Investment Management via YouTube

Wood­ford braces po­lit­i­cal storm as UK fi­nan­cial reg­u­la­tors scru­ti­nize fund sus­pen­sion

The shock of Neil Wood­ford’s de­ci­sion to block with­drawals for his flag­ship fund is still rip­pling through the rest of his port­fo­lio — and be­yond. Un­der po­lit­i­cal pres­sure, UK fi­nan­cial reg­u­la­tors are now tak­ing a hard look while in­vestors con­tin­ue to flee.

In a re­sponse let­ter to an MP, the Fi­nan­cial Con­duct Au­thor­i­ty re­vealed that it’s opened an in­ves­ti­ga­tion in­to the sus­pen­sion fol­low­ing months of en­gage­ment with Link Fund So­lu­tions, which tech­ni­cal­ly del­e­gat­ed Wood­ford’s firm to man­age its funds.

Gilead baits new al­liance with $45M up­front, div­ing in­to the busy pro­tein degra­da­tion field

Gilead is jump­ing on board the pro­tein degra­da­tion band­wag­on. And they’re turn­ing to a low-pro­file Third Rock start­up for the ex­per­tise. But if you were look­ing for a trans­for­ma­tion­al deal to kick up fresh en­thu­si­asm for Gilead, you’ll have to re­main pa­tient.

This one will have a long way to go be­fore they get in­to the clin­ic.

The big biotech said Wednes­day morn­ing that it is pay­ing $45 mil­lion up­front and re­serv­ing a whop­ping $2.3 bil­lion in biotech bucks if San Fran­cis­co-based Nurix can point the way to new can­cer ther­a­pies, as well as drugs for oth­er, un­spec­i­fied dis­eases.

A new num­ber 1 drug? Keytru­da tapped to top the 10 biggest block­busters on the world stage by 2024

Analysts may be fretting about Keytruda’s longterm prospects as a host of rival therapies elbow their way to the market. But the folks at Evaluate Pharma are confident that last year’s $7 billion earner is headed for glory, tapping it to beat out the current #1 therapy Humira as AbbVie watches that franchise swoon over the next 5 years.

Endpoints News

Basic subscription required

Unlock this story instantly and join 53,000+ biopharma pros reading Endpoints daily — and it's free.

In­vestor day prep at Mer­ck in­cludes a new strat­e­gy to pick up the pace on M&A — re­port

Mer­ck’s re­cent deals to buy up two bolt-on biotechs — Ti­los and Pelo­ton — weren’t an aber­ra­tion. In­stead, both ac­qui­si­tions mark a new strat­e­gy to beef up its dom­i­nant can­cer drug op­er­a­tions cen­tered on Keytru­da while look­ing to ad­dress grow­ing con­cerns that too many of its eggs are in the one I/O bas­ket for their PD-1 pro­gram. And Mer­ck is go­ing af­ter more small- and mid-sized buy­outs to calm those fears.

Dave Barrett, Brian Chee, Amir Nashat, Amy Schulman. Polaris

Bob Langer's first port of call — Po­laris Part­ners — maps $400M for ninth fund

Health and tech ven­ture group Po­laris Part­ners, which counts Alec­tor, Al­ny­lam and Ed­i­tas Med­i­cine as part of its port­fo­lio, is set­ting up its ninth fund, rough­ly two years af­ter it closed Po­laris VI­II with $435 mil­lion in the bank, sur­pass­ing its tar­get by $35 mil­lion.

The Boston-based firm, in an SEC fil­ing, said it in­tends to raise $400 mil­lion for the fund. Po­laris — which rou­tine­ly backs com­pa­nies mold­ed out of the work done in the lab of pro­lif­ic sci­en­tist Bob Langer of MIT  — typ­i­cal­ly in­vests ear­ly, and sticks around till com­pa­nies are in the green. Like its peers at Flag­ship and Third Rock, Po­laris is all about cham­pi­oning the lo­cal biotech scene with a steady flow of start­up cash.