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According to a new report from PhRMA, the biopharmaceutical industry is the U.S.’ most research-intensive industry, dedicating 20.7% of domestic sales revenues to R&D investments in 2012.
That’s a higher percentage than the tax rate paid by President Obama!
For the year, the 31 PhRMA member companies invested an aggregate $48.5 billion in research and development. That total is down slightly from $48.6 billion in 2011 and a bit further from the record total of $50.7 billion tallied in 2010.
It is important to note that large bio/pharma companies such as Roche and Allergan are outside the scope of this report since they are not part of PhRMA so the R&D numbers would have been greater than what was reported.
“We must keep the promises we’ve already made.”
-- President Obama on Medicare
Like 12 years of data exclusivity for biologics?
The President’s budget has trotted out a deeply misguided healthcare idea. The President has his allies want to loosen "intellectual property" protection for an advanced class of pharmaceuticals called "biologics."
This is a mistake. Including this plan in any federal budget deal would inevitably undermine drug innovation, compromise care for millions of American patients, and -- ironically -- drive up long-term healthcare costs.
Unlike traditional chemical drugs, biologics are derived from living organisms. This makes them incredibly complex -- and uniquely effective. Biologics are one of the most promising modern healthcare technologies. Drug firms have already created breakthrough biologic treatments for some of the country's most prominent diseases, including HIV/AIDS, Alzheimer's and various forms of cancer.
A report from the research firm Credit Agricole predicts that six of the top twenty best-selling drugs next year will be biologics. Within five years, it's estimated biologics will comprise roughly half of the top 100 bestselling drugs in the country.
There are knock-off equivalents to biologics. They're called "biosimilars" or "follow-on biologics." However, unlike, say, that aspirin in your bathroom cabinet, a biologic can't be perfectly replicated. It's just too complex. A "follow-on" biologic will have some differences from the original.
It is possible to create a version of an innovator biologic that's close enough to the original to have basically the same therapeutic effects. Given this fact, traditional patent protections aren't sufficient to foster innovation.
This is why biologics need an additional layer of intellectual property protection. And that's where data exclusivity comes in. This statute prevents outside firms from accessing the research data behind a new biologic for a preset period of time. This way, the original inventor has a limited market monopoly, during which they can try to recoup their development costs in sales. The 12 years of exclusivity granted under the Affordable Care Act, while still less than the 14 allowed in Europe, is a good compromise.
Mounds of research shows that data exclusivity should be set at around 12 years to give the average biologic a chance to at least break even. The White House wants to scale back that period.
A recent deficit deal crafted by the administration included a provision that would scale back the period of data exclusivity granted to biologics from 12 to 7 years. The idea is that allowing lower priced biosimilars to flow into the market sooner will drive down costs for public insurance programs and generate major savings for the federal treasury.
While shortening biologic data exclusivity could generate some short-term financial gains, it will ultimately reduce the rate of medical innovation and deprive American patients of life-saving new treatments.
The brute reality is that if data exclusivity drops to seven years, many biologic innovators won't have enough time to make back their original investment before biosimilars flood the market and siphon away their profits.
After all, creating a biologic is an incredibly expensive, time-consuming, and risky endeavor. The average biologic costs well over a billion dollars to develop. For every 10,000 compounds tested in the lab, only one will wind up getting federal approval and making it to market. And simply making it to market is no guarantee of profit. Only about three out of every ten new pharmaceutical medicines will ever recoup back its development costs in sales.
If the government reduces the exclusivity window for biologics, many drug firms will actually end up losing money on that massive investment. That leaves less capital to pour into new drug research operations. And outside investors will be less willing to underwrite new research initiatives given that their chance of even breaking even on a new treatment has dropped significantly.
Ultimately, that means fewer new drugs for American patients.
The Obama administration and its allies need to drop this push to scale back data exclusivity protections for biologic drugs. These treatments have proven to be highly effective at improving patient health and saving lives. Diluting the intellectual property rights protecting biologics will slow down the rate of innovation and choke off the flow of new treatments.
"We should never be defensive; we should never temper our passion for the positive impact that we can create together for patients, for our economy and for our country. And we should take this optimistic vision of the future and our passion for innovation to policymakers in this country and around the world. "
When's the last time a drug or biotech trade group leader actually stood up for commercialization instead of apologizing for it or stated that commercialization of medical science is the source of most of the world's progress in the past half century? Hugin just didn't restate PhRMA's agenda, he made a case for pushing it without pride.
Celgene's corporate campus is bracketed with banners that proclaim: "Discovered Here. Developed Here. Commercialized Here." It sounds like Hugin is carrying that message into his tenure as PhRMA chair.
Remember the game show Password? The program’s slogan was “It’s not what you say -- it's what you don't say.”
And so it is with the sequester at the FDA. It’s not what the agency is doing – it’s what they’re not doing.
According to an article in the April edition of Nature Biotechnology:
The budget sequester is “not the end of the world, but it’s not good for FDA,” says Peter Pitts, president of the Center for Medicine in the Public Interest in New York. For example, PDUFA dates may need recalibrating. US Department of Health and Human Services (HHS) secretary Kathleen Sebelius has warned that FDA cutbacks will heighten food safety risks from fewer inspections, but Pitts points to longer-term strategic effects arising from the sequester. “Anything having to do with policy development, such as dealing with biosimilar drugs, will grind to a halt,” he says. “The sequester will delay regulatory innovation by pushing things that are important but not life-threatening off the agenda.”
It’s the invisible hand of innovation postponed that is the most pernicious aspect of the White Oaks sequester.
The complete Nature Biotechnology article can be found here.
Here's the Federal Register notice announcing the 12 disease areas that have been selected by FDA for the PDUFA V patient-focused drug development meetings in FY2013-2015.
SUMMARY: The Food and Drug Administration (FDA) is announcing the selection of disease areas to be addressed during the first 3 years of Patient-Focused Drug Development. This 5-year initiative is being conducted to fulfill FDA’s performance commitments made as part of the fifth authorization of the Prescription Drug User Fee Act (PDUFA V). It provides a more systematic approach for the Agency to obtain patients’ input on specific disease areas, including their perspectives on their condition, its impact on daily life, and available therapies. FDA selected these disease areas based on a set of selection criteria, the perspectives of the reviewing divisions at FDA, and the public input received on a preliminary set of disease areas published in the Federal Register on September 24, 2012.
FDA has selected the following diseases to be addressed in FY 2013–2015:
* Alpha-1 antitrypsin deficiency;
* breast cancer;
* chronic Chagas disease;
* female sexual dysfunction;
* fibromyalgia;
* hemophilia A, hemophilia B, von Willebrand disease, and other heritable bleeding disorders;
* HIV;
* idiopathic pulmonary fibrosis;
* irritable bowel syndrome, gastroparesis, and gastroesophageal reflux disease with persistent regurgitation symptoms on protonpump inhibitors;
* lung cancer;
* myalgic encephalomyelitis/chronic fatigue syndrome;
* narcolepsy;
* neurological manifestations of inborn errors of metabolism;
* Parkinson’s disease and Huntington’s disease;
* pulmonary arterial hypertension;
* sickle cell disease
Discuss.
For Obama's head-less CMS, third time's the charm
Marilyn Tavenner told Senators if confirmed as director of the Centers for Medicare and Medicaid Services, she will “operate CMS like a business” and keep an open door policy to “listen to all the groups accountable” to the programs.
Tavenner, an ICU nurse-turned-hospital exec-turned-Virginia health secretary, is setting a very different tone from President Obama's last nominee for the post, Don Berwick, whose favorable comments about the UK's National Health Service raised industry hackles. She's before the Senate today, in hearings to make her job official at a pivotal time for the program.
While her confirmation has been on ice for more than two years, she comes to Capitol Hill with bipartisan support – Republican majority whip Eric Cantor, a fellow Virginian who has known Tavenner since her days running a hospital in her district, is a fan. She's received support from all the major industry stakeholders, which are impatient for the programs to have permanent leadership.
“At this stage in the healthcare reform conversation, it's important to have a CMS administrator who will ensure that patient care always comes first and that cost containment isn't wedded to failed foreign models of rationing,” said Peter Pitts of the Center for Medicine in the Public Interest. “Ms. Tavenner has demonstrated both the ability to focus on the job at hand and avoid doctrinaire political debate.”
“It's time for Congress to stop playing politics with major cabinet appointments,” said Coalition for Healthcare Communication executive director John Kamp. “The president won the election and should be given the respect to appoint his people.”
For political reasons, it's been a decade since CMS had a permanent head, and as the Washington Post notes, the senior President Bush's Medicare director Tom Scully has mused that “Mother Theresa or Gandhi couldn't even get confirmed,” so contentious have the politics of the programs become in the age of the Affordable Care Act. An earlier nomination of Tavenner went nowhere.
Best reportage anywhere on the recent Plan B decision. Not surprisingly, it’s by Steve Usdin of BioCentury. The article is titled, “Plan B’s Fallout.”
Two selected paragraphs to share:
Peter Pitts, who was associate FDA commissioner during the Bush administration when the Plan B storm first broke, also bemoaned the interference with a science-based decision. “Unfortunately, it’s on the prickly topic of reproduction rights,” he told BioCentury This Week. “But at the end of the day, the Secretary overruling the FDA on a scientific issue brings to bear many negative, unintended consequences.”
Ironically, according to Pitts, Korman’s ruling actually could undermine FDA’s ability to make decisions based on its scientific judgments. Sebelius’ intervention raised the specter of companies appealing FDA decisions to the HHS secretary, and Korman’s ruling suggests they might seek to overturn regulatory decisions in the courts, he said. “The court told the FDA to make a certain regulatory decision and that sets a dangerous precedent,” according to Pitts. “I agree with the decision, but I would feel better if he’d said it was based on FDA’s decision that was overturned by the secretary.”
The entire article can be found here – and it’s worth a read.
On Saturday I was a panelist on the highly rated Indian public affairs television program, “The Big Fight.” The topic, the Indian Supreme Court’s ruling against Novartis and Gleevec.
My fellow panelists included an attorney from Ranbaxy, a representative from Novartis, an activist from Doctor’s Without Borders (MSF), a financial journalist, and a representative of the Indian pharmaceutical industry.
And it was, indeed, a big fight.
Expertly moderated by Vikram Chandra (one of India’s most respected journalists), the topics ranged from innovation to access to domestic industrial policy.
Mr. Chandra asked me if big multinational pharmaceutical companies made too much money. My response was that I didn’t know what “too much” meant – but that it was a good thing that most company profits are reinvested in R&D.
What I didn’t have time to say was that, as far as “excess profit” goes, that question is a lot more relevant to Indian drug manufacturers. Their profits last year were much higher than any innovator company. At Dr. Reddy’s net profits are up 88%. At Lupin profits are up 67%. And, at Sun Pharmaceuticals profit after taxes for the last year was 39%.
And while we’re in the pot calling the kettle black department, consider the claim by MSF India that access is the key issue. Really?
Less than 10% of India's CVD patients get even the most common medicines like diuretics and statins. Yet there are 10,500 licensed Indian drug manufacturers producing hundreds of generic anti-hypertensives and other CVD products on the market in India – very few of which reach India’s 45+ million diagnosed CVD patients.
The complete “Big Fight” can be found here.
Perhaps a better way to say that is that the court has upheld the FDA's decision that was countermanded by Secretary Sebelius.
No matter how you look at it, it's dangerous for outside bodies (be they in the Humphrey Buidling or judicial robes) to tell FDA how to handle decisions that must (must!) be based on sound science. And only sound science.
According to a report in BioCentury, Senator Chuck Grassley (R, IA) has asked HHS's Health Resources and Services Administration for information on the agency's oversight of the 340B discount program, which requires manufacturers to give deep discounts on outpatient drugs to hospitals and clinics that provide healthcare to low income and other special populations.
In a letter to Administrator Mary Wakefield, Grassley requested information about whether and what type of data HRSA collects on how much revenue hospitals receive by participating in 340B, as well as how hospitals reinvest this revenue. He noted that data from three North Carolina hospitals show the hospitals are "reaping sizeable 340B discounts on drugs and then turning around and upselling them to fully insured patients" covered by Medicare, Medicaid or private insurance, which he said is "contrary to the purpose of the 340B program." Grassley asked for a response from HRSA by April 22. HRSA said it will respond to Grassley's letter.
Grassley's request comes less than two months after patient and industry groups released a report calling for a Congressional examination of the 340B program, and several months after a group of Congressional Republicans that included Grassley asked for details on HRSA's audits of the eligibility of healthcare entities for the program.
In a response to Grassley's letter, the trade group Safety Net Hospitals for Pharmaceutical Access (SNHPA) said both HRSA and HHS "have specifically acknowledged that Congress intended for hospitals to charge above the 340B acquisition cost" for patients covered by Medicare or private insurance. The group also said federal reports "clearly demonstrate" that hospitals are using revenue from the 340B program to benefit "uninsured, underinsured or otherwise vulnerable" patients.
Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.
