Un­der pres­sure, drug­mak­ers di­lute price hikes, but noth­ing is set in stone just yet — re­port

Bio­phar­ma­ceu­ti­cal price goug­ing has long en­raged politi­cians and pa­tients alike — mount­ing pres­sure on drug­mak­ers to not ap­pear like they put prof­it be­fore pa­tients — which has led to a slow­ing in size and fre­quen­cy of price hikes, a Leerink analy­sis has found.

The analy­sis echoes the find­ings of an As­so­ci­at­ed Press in­ves­ti­ga­tion — pub­lished this Sep­tem­ber — which in­di­cat­ed that al­though there were 96 price hikes for every price cut, the num­ber and size of hikes de­creased in the first sev­en months of 2018.

Ge­of­frey Porges

Leerink’s analy­sis in­clud­ed 17 large bio­phar­ma com­pa­nies — Ab­b­Vie $AB­BV, Alex­ion $ALXN, Am­gen $AMGN, Bio­gen $BI­IB, Cel­gene $CELG, Gilead $GILD, JNJ $JNJ, Re­gen­eron $REGN, As­traZeneca $AZN, Bris­tol-My­ers $BMY, GSK $GSK, Eli Lil­ly $LLY, Mer­ck $MRK, No­var­tis $NVS, Pfiz­er $PFE, Roche $RHB­BY, and Sanofi $SNY.

The most price-de­pen­dent growth com­pa­nies be­tween 2013 and 2017 were: Am­gen, As­traZeneca, GSK, and Pfiz­er; and the least price-de­pen­dent were: Alex­ion, JNJ, and Re­gen­eron. Over­all, the num­ber of price in­creas­es slowed this year by 31%, and the av­er­age size of the price in­creas­es fell by 40% — both mea­sures falling to their low­est lev­el in five years, the re­port found.

“The slow­ing of pos­i­tive price ef­fects means that in­dus­try growth is like­ly to be be­tween 200 and 400 bps slow­er go­ing for­ward than in the 2013-2017 pe­ri­od. This slow­er growth, and its as­so­ci­at­ed ef­fect on mar­gins, prof­itabil­i­ty, and cash flow, may not be ful­ly re­flect­ed in sec­tor stock prices and mul­ti­ples,” Leerink’s Ge­of­frey Porges said.

The an­a­lysts al­so found that price con­tri­bu­tions to sales in the Unit­ed States have steadi­ly de­clined from 11% in 2014 to 4% in 2017 and 2% YTD in 2018.

Sig­nif­i­cant­ly, “the de­cline in the net pos­i­tive price con­tri­bu­tion to in­dus­try growth has more or less matched the de­cline in rev­enue growth over the same pe­ri­od of time,” Porges not­ed.

How­ev­er, the im­pact of slow­ing price in­creas­es will be pow­er­ful go­ing for­ward — be­cause it will stim­u­late the un­tan­gling of the cu­mu­la­tive ef­fect of com­pound­ing from pri­or year price hikes.

“Price in­creas­es are ‘the gift that keeps on giv­ing’, since one year’s 10% price in­crease then in­creas­es the base of sales that then ben­e­fits from the next year’s price in­creas­es,” ex­plained Porges.

The Leerink team there­fore set about cal­cu­lat­ing the im­pact of trail­ing price in­creas­es over the five-year pe­ri­od be­tween 2013 and 2018. Cu­mu­la­tive pos­i­tive US price has con­tributed ~$27 bil­lion to glob­al phar­ma rev­enue in 2014, ~$45 bil­lion in 2015, ~$59 bil­lion in 2016, ~$68 bil­lion in 2017, and $71 bil­lion in 2018.

Re­port­ed glob­al phar­ma rev­enue in 2018 is rough­ly $320 bil­lion YTD, which with­out US price con­tri­bu­tions from the pri­or five years would have been 22% low­er, or rough­ly $250 bil­lion YTD, they found.

In oth­er words, it looks like price growth alone has con­tributed on av­er­age 5%/year to in­dus­try growth over the last five years, and while to­tal rev­enue growth was on­ly 1% from 2017-2018, with­out the price ef­fect, the an­a­lysts found that rev­enue growth from 2017-2018 would have ac­tu­al­ly fall­en 6%.

Fol­low­ing the re­lease of Pres­i­dent Trump’s blue­print for low­er­ing drug prices in May, a pletho­ra of com­pa­nies pledged not to in­tro­duce their usu­al hikes in the mid­dle of the year — how­ev­er, whether this re­straint will con­tin­ue in the fu­ture re­mains to be seen. Since then the HHS has float­ed two pro­pos­als to thwart soar­ing prices for Medicare and its ben­e­fi­cia­ries.

Mean­while, Mer­ck raised the price of some of its ma­jor drugs in No­vem­ber, and Pfiz­er has an­nounced it will in­crease the price of 41 drugs next month.

“These com­pa­nies are like­ly to be fol­lowed by a flood of peers, and then by in­evitable re­spons­es and re­ac­tions from Wash­ing­ton. How this col­li­sion of in­ter­ests plays out is any­one’s guess, and the ad­min­is­tra­tion’s cre­ativ­i­ty and in­ven­tive­ness with re­spect to pric­ing pro­pos­als seem un­like­ly to be di­min­ished in 2019. Iron­i­cal­ly, the sub­ject of drug pric­ing is prob­a­bly one of the few gen­uine­ly bi­par­ti­san is­sues for both ma­jor par­ties, and fur­ther reg­u­la­tion or re­stric­tions on drug pric­ing and price in­creas­es seem like­ly in our view to set up a show­down be­tween Pres­i­dent Trump, Con­gress and the Bio­phar­ma in­dus­try rel­a­tive­ly ear­ly in the New Year,” con­clud­ed Porges.


Charts: LEERINK

Con­quer­ing a silent killer: HDV and Eiger Bio­Phar­ma­ceu­ti­cals

Hepatitis delta, also known as hepatitis D, is a liver infection caused by the hepatitis delta virus (HDV) that results in the most severe form of human viral hepatitis for which there is no approved therapy.

HDV is a single-stranded, circular RNA virus that requires the envelope protein (HBsAg) of the hepatitis B virus (HBV) for its own assembly. As a result, hepatitis delta virus (HDV) infection occurs only as a co-infection in individuals infected with HBV. However, HDV/HBV co-infections lead to more serious liver disease than HBV infection alone. HDV is associated with faster progression to liver fibrosis (progressing to cirrhosis in about 80% of individuals in 5-10 years), increased risk of liver cancer, and early decompensated cirrhosis and liver failure.
HDV is the most severe form of viral hepatitis with no approved treatment.
Approved nucleos(t)ide treatments for HBV only suppress HBV DNA, do not appreciably impact HBsAg and have no impact on HDV. Investigational agents in development for HBV target multiple new mechanisms. Aspirations are high, but a functional cure for HBV has not been achieved nor is one anticipated in the forseeable future. Without clearance of HBsAg, anti-HBV investigational treatments are not expected to impact the deadly course of HDV infection anytime soon.

Am­gen chops 172 more staffers in R&D, op­er­a­tions and sales amid neu­ro­science ex­it, rev­enue down­turn

Neuroscience wasn’t the only unit that’s being hit by a reorganization underway at Amgen. As well as axing 149 employees in its Cambridge office, the company has disclosed that 172 others nationwide, including some from its Thousand Oaks, CA headquarters, are being let go.

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Ahead of strate­gic up­date, new Sanofi CEO mulls op­tions for con­sumer health­care arm — re­ports

Big pharma has made moves to sharpen its focus on developing new medicines, while slow-growing consumer health divisions fall by the wayside. Looks like another large drugmaker is considering a similar move. On Thursday, reports citing sources indicated that Sanofi is reportedly mulling a joint venture, sale, or a public listing of its consumer health arm.

The French group is in discussions for options that could value the division at $30 billion, Bloomberg and Reuters reported, citing sources familiar with the matter.

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The triple crown in biotech: An all-or-noth­ing bet on an FDA ap­proval of 3 drugs over 16 months starts to­day

Bristol-Myers Squibb’s $74 billion Celgene deal closed as expected Wednesday evening. And now a new clock has begun to tick down for Celgene shareholders who came away from the deal with CVRs — contingent value rights — worth $9 or nothing. Those CVRs start trading today as $BMYRT.

The new deadline they have is the end of March 2021, a little more than 16 months from now, when Bristol-Myers will need to gain approvals on 3 late-stage drugs it’s picking up in the buyout: Ozanimod and liso-cel (JCAR017) are due up at the end of 2020, with bb2121 deadlined at the end of Q1 in 2021.

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Genap­sys fi­nal­ly un­veils vaunt­ed se­quencer, but can it dent Il­lu­mi­na?

Hesaam Esfandyarpour holds what looks like a mini-cooler up to the computer screen in his California office.

Esfandyarpour is in his late-30s, with crows feet creeping up against a youthful face. He wears a gray polo and the device in his hand — with its hard plastic-looking shell, blue-and-white pattern, and a white plastic paddle resembling a handle jutting out the front — might contain diced strawberries and peanut-butter sandwiches to meet mom and the kids at a SoCal park. Instead, Esfandyarpour tells me it’s going to change medicine and biopharma research.

Brii Bio backs in­fec­tious dis­ease start­up while ink­ing deal for its lead TB drug, dou­bling down on an­tibi­otics

Almost two years after leaving GSK to launch Brii Bio with a whopping $260 million in funding, Zhi Hong is seeing the trans-Pacific infectious disease specialist he set out to build take shape.

“Our pipeline is coming together,” he told Endpoints News, with 12 partnered assets plus some internal programs.

As its latest partner, AN2 Therapeutics, comes into the limelight for the first time with a $12 million seed round, so is Brii’s plans in the antibiotics space. Brii has obtained China rights to AN2’s antibacterial targeting mycobacterium tuberculosis for multi-drug resistant TB, which it says is in the clinical stage.

UP­DAT­ED: Make that 2 ap­proved RNAi drugs at Al­ny­lam af­ter the FDA of­fers a speedy OK on ul­tra-rare dis­ease drug

Seventeen years into the game, Alnylam’s pivot into commercial operations is picking up speed.
The bellwether biotech $ALNY has nabbed their second FDA OK for an RNAi drug, this time for givosiran, the only therapy now approved for acute hepatic porphyria. This second approval came months ahead of the February deadline — even after winning priority review following their ‘breakthrough’ title earlier.
AHP is an extremely rare disease, with some 3,000 patients in Europe and the US, not all diagnosed, and analysts have projected peak revenue of $600 million to $700 million a year. The drug will be sold as Givlaari.

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David Ricks. Eli Lilly

Eli Lil­ly touts $400M man­u­fac­tur­ing ex­pan­sion, 100 new jobs to much fan­fare in In­di­anapo­lis — even though it's been chop­ping staff

Eli Lilly is pouring in $400 million to beef up manufacturing facilities at its home base of Indianapolis. The investment, which was lauded by the city’s mayor, is expected to create 100 new jobs.

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No­var­tis, Bay­er, Long­wood back ge­nomics start­up to speed search for im­munother­a­py tar­gets

Nearly a century passed between the first proto-immunotherapy attempts in cancer — crude and obscure but nonetheless with some scientific basis — and Jim Allison’s first T cell paper. Thirty-plus years flipped between the discovery of CTLA-4 as an off-switch and the approval of Yervoy. Twenty-two rolled between PD-1’s isolation and Opdiva and Keytruda. 

Longwood co-founder Lea Hachigian is betting she can hasten that. It’s a bet on newly established single-cell genomic analysis tech and the ability to crunch endless troves of data at a rate few others can, and investors including Leaps by Bayer and Novartis Venture Fund just put $39 million behind it. They call it Immunitas.