Industry gets the edge: Medicare drug price negotiations will only cost biopharma 10 drugs over the next 30 years

The Con­gres­sion­al Bud­get Of­fice on Thurs­day evening made abun­dant­ly clear that Pres­i­dent Biden’s push to al­low Medicare to ne­go­ti­ate pre­scrip­tion drug prices for a lim­it­ed num­ber of sin­gle source drugs will on­ly make a mi­nor dent in the pock­et­book of the bio­phar­ma in­dus­try, and like­ly cost in­dus­try just 10 new drugs over the next 30 years.

The pro­vi­sions are part of a huge, $1.8 tril­lion spend­ing pack­age that the De­moc­rats and Biden have been push­ing for all sum­mer. The bill is ex­pect­ed to pass this morn­ing in the House.

CBO said that al­low­ing Medicare to ne­go­ti­ate drug prices — the plan is to start with ne­go­ti­a­tions on 10 of the most ex­pen­sive drugs in 2025 and work up to 20 drugs by 2028 — will save the gov­ern­ment (and cost in­dus­try) about $76 bil­lion over 10 years, and about $85 bil­lion in in­fla­tion re­bate penal­ties if drug prices rise above cer­tain lev­els.

But that’s a far cry from House Speak­er Nan­cy Pelosi’s for­mer drug price ne­go­ti­a­tions bill, known as HR3, which the CBO scored in Au­gust as $456 bil­lion in sav­ings over 10 years. The lat­est bill and CBO score show the ex­tent to which the phar­ma in­dus­try’s lob­by­ists wa­tered down the Build Back Bet­ter Act.

Loren Adler, as­so­ciate di­rec­tor of the USC-Brook­ings Scha­ef­fer Ini­tia­tive for Health Pol­i­cy and a drug pric­ing ex­pert, told End­points News, ‘Def­i­nite­ly in­ter­est­ing to see that even the scaled-back ne­go­ti­a­tion pol­i­cy is ex­pect­ed to save $76 bil­lion over 10 years,’ or about 17% of what the full HR3 ne­go­ti­a­tion would save in an ap­ples-to-ap­ples com­par­i­son.

Even with the re­bates, to­tal­ing about $160 bil­lion over 10 years — which is about what the to­tal cost will be to the phar­ma in­dus­try (since the re­bate rule was go­ing away any­ways), ‘is a pret­ty small slice’ of the in­dus­try’s to­tal rev­enues, Adler said.

PhRMA, which man­aged to turn cer­tain mem­bers of Con­gress with fund­ing and al­ter the ne­go­ti­a­tions with an army of lob­by­ists, pre­vi­ous­ly es­ti­mat­ed about $560 bil­lion in to­tal rev­enue from bio­phar­ma­ceu­ti­cal busi­ness­es in 2017 alone, so $150 bil­lion over 10 years would be about 3% of in­dus­try rev­enue over the same pe­ri­od.

Sim­i­lar­ly, the CBO es­ti­mat­ed that about 10 few­er drugs (out of a cal­cu­lat­ed to­tal of 1,300 drug ap­provals) over 30 years would not be de­vel­oped as a re­sult of the lost funds.

‘The amounts in this es­ti­mate are in the mid­dle of the dis­tri­b­u­tion of pos­si­ble out­comes, by CBO’s as­sess­ment, and they are sub­ject to un­cer­tain­ty. CBO did not pre­dict what kind of drugs would be af­fect­ed or an­a­lyze the ef­fects of for­gone in­no­va­tion on pub­lic health,’ the score said.

This is worth em­pha­siz­ing.

CBO says the drug pric­ing pro­vi­sions in the #BB­BA would lead to less than a 1% re­duc­tion in drugs com­ing to mar­ket in the next 30 years.

In the­o­ry, CBO’s new es­ti­mate will make it hard­er for the drug in­dus­try to press the point about in­no­va­tion. https://t.co/egIREu4Rrh

— Tri­cia Neu­man (@tri­cia_neu­man) No­vem­ber 18, 2021 While House Re­pub­li­cans said Thurs­day evening that the CBO warned these lost drugs could spell the end for im­por­tant can­cer or Alzheimer’s treat­ments in de­vel­op­ment, the re­al­i­ty is that the bill’s en­act­ment could just as well spell the end of de­vel­op­ing 10 more me-too drugs, or 10 more ex­pen­sive drugs with no im­proved ben­e­fits over cur­rent treat­ments.

What the pas­sage of such a bill might do, how­ev­er, is open up the flood­gates for more drug pric­ing ne­go­ti­a­tions in the fu­ture.

‘BB­BA’s ne­go­ti­a­tion process will cer­tain­ly give us ex­pe­ri­ence with drug price reg­u­la­tion that will pro­vide a lot of in­for­ma­tion and in­form fu­ture re­form ef­forts. As a re­sult, it prob­a­bly in­creas­es the odds of ne­go­ti­a­tion get­ting ex­pand­ed in the fu­ture, es­pe­cial­ly be­cause rel­a­tive­ly small changes to the process could gen­er­ate sub­stan­tial deficit re­duc­tion,’ Adler not­ed.

For years, paper-based processes and individual point solutions dominated the clinical research landscape, and patient participation in clinical trials was largely an in-person engagement. But when the COVID-19 pandemic took a stronghold, traditional clinical trial methods emerged as inadequate, putting clinical trials and the life sciences industry at a crossroads. Practically overnight, the industry had to rapidly shift to decentralized clinical trial methods, while maintaining data quality and regulatory compliance.

Douglas Fambrough, Dicerna CEO (Dicerna via YouTube)

Early this year researchers at Novo Nordisk were beaming as they announced the first drug identified in their RNAi alliance with Dicerna was headed into the clinic. And now they’re coming back for the whole thing.

This morning the Copenhagen-based pharma giant put out word that it is buying Dicerna $DRNA — an RNAi pioneer that has had its up and downs over the years — for $3.3 billion. Novo is paying $38.25 a share — an 80% premium.

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Mathai Mammen, head of R&D for J&J’s Janssen unit (Rob Tannenbaum)

Last week, J&J took a step familiar to other pharma conglomerates in spinning out its consumer business to focus on R&D, but offered few details on what that might look like. But on Thursday, the company followed up with the scoop, and it’s making some bold predictions.

Over the course of a two-plus hour presentation on its pharmaceutical business, execs outlined their strategy for the new, slimmer J&J, promising investors it will file about 14 drugs for approval through 2025. Across all these drugs, J&J said it expects $4 billion average peak annual sales, and five could top the $5 billion mark.

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Jay Luly, Enanta CEO (via YouTube)

A Massachusetts biotech will discontinue the development of its oral drug intended to treat patients suffering from chronic hepatitis B infections, the company said Thursday.

Enanta Pharmaceuticals will no longer develop EDP-721. The news comes after safety signals were seen in healthy participants in a Phase I trial after they were administered the drug, and despite a clean safety profile demonstrated in preclinical trials.

Gilead is going all in — hook, line and sinker — on its oncology alliance with Arcus. And they are going for broke.

The big biotech unveiled a deal that now delivers $725 million in opt-in payments covering the clinical development programs for Arcus, ranging from their closely watched anti-TIGIT programs for domvanalimab and AB308 to etrumadenant (the A2a/A2b adenosine receptor antagonist) and quemliclustat, the small molecule CD73 inhibitor. Gilead will also cover half of the development costs, handing Terry Rosen’s biotech a deal that gives them a clear cash runway to achieving all its goals in oncology.

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In a surprise setback, Merck has slammed the brakes on the development of an experimental HIV drug — including a Phase II trial — after investigators flagged a drop in immune cell counts that an external committee determined was related to treatment.

The Phase II study that first sounded the alarm, dubbed IMAGINE-DR, was testing the once-weekly combination of MK-8507 (a non-nucleoside reverse transcriptase inhibitor) and islatravir, or ISL, a nucleoside reverse transcriptase translocation inhibitor.

Kathryn Corzo — an oncology veteran and the program head behind Sanofi’s multiple myeloma monoclonal antibody isatuximab — is now in the C-suite.

The newest member at cell therapy player bit.bio as their COO, the longtime drug developer left Takeda (where she served, in turn, as the head of oncology cell therapy and then a partner in its venture arm) to join the small biotech. For Corzo, bit.bio presented a unique opportunity to try and solve issues that had been plaguing cell therapy — and one of the three reasons why she left Takeda.

Protein degradation is one of the hot drug classes of the future, but competitors are piling in with the likes of C4, Arvinas, Frontier Medicines and Vividion jostling for position. A new startup wants to apply the lessons learned from degradation outside the cell, and it now has the greenlight from RA Capital to steam ahead.

Avilar Therapeutics launched Thursday with $60 million from founding investor RA to chase a novel protein degradation drug class the startup is calling ATACs— short for ‘ASGPR Targeting Chimeras’ — that looks to trash unwanted proteins circulating outside the human cell.

Generate co-founder Molly Gibson and CEO Mike Nally

As the future of machine learning and AI promises to make major breakthroughs in drug development, a suite of startups is looking to scale their own competing robot brain trusts. An ambitious startup out of Flagship Pioneering’s incubator uncloaked last year with its own spin in that arms race — and now it’s primed and ready for a major expansion in the coming years.

Generate Biomedicines has closed a giant $370 million Series B from founding investor Flagship as well as Alaska Permanent Fund, Altitude Life Science Ventures, ARCH Venture Partners, and funds and accounts advised by T. Rowe Price Associates, the company said.
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