FTC Files Brief in Mylan v. Celgene

Mylan, the generic drug company, is suing Celgene.  The issue is Celgene's use of its REMS programs to deny Mylan to purchase Celgene's drugs, which Mylan needs to develop generic versions.   REMS programs are FDA mandated and approved in order to ensure that access to some drugs is restricted when use in some populations poses unusual risks.  In the case of Celgene's drugs, the REMS programs are designed to insure that the drugs are not dispensed to women who are pregnant or may become pregnant while taking the drugs.  This is a significant move by the FTC against the increasing use of REMS programs to thwart generic competition.  Obviously the use of the drugs in bioequivalence testing by Mylan should take all necessary precautions to avoid exposing pregnant women to the drug, but that is not really Celgene's objective.  The FTC's brief is here.  Let us hope the FTC's position prevails in this case.

Andrew Pollock's NY Times Article on Increasing Pressure on Drug Prices: Do Health Insurers Now Have Skin in the Game?

article

In this post I will speculate very briefly about an important new development reported by Andrew Pollock of The New York Times. The subject of Pollock's article is how health insurers at long last appear to be putting real pressure on drug prices. Though readers of this blog will not be surprised by the discussion of how drug companies price their drugs and avoid competing on price, the heart of Pollock's story is the recent efforts of pharmaceutical benefit managers (PBMs) to use their formularies to reduce insurers' prescription drug costs. There has always been some use of formularies to negotiate prices: but, according to Pollock, such efforts have now greatly increased. The article highlights how PBMs are restricting their formularies much more than in the past and drug companies are confronted with the choice of reducing their prices or finding themselves excluded from coverage for most of an insurer's patients.

The big question is. "What is responsible for the new attitude of PBMs?" Could it possibly be the case that some of the insurance reforms that are part of the Affordable Care Act/Obamacare (ACA) are actually working to either slow the rate of increase in the pharmaceutical component of health care costs or even to bring those costs down? This may indeed be the case. There are several components of the ACA that could be contributing to the new, tougher stance by PBMs. First, plans are increasingly standardized because the ACA has imposed a number of requirements for health insurance plans to meet and because the new health insurance exchanges created much more transparency in the health insurance marketplace. Second, the new ACA rules impose strict limits on the proportion of insurance company revenues that can be spent on administration rather than on medical care, a standard known as a company's Medical Loss Ratio. Taken together, this means that insurers are competing much more openly on price, and the share of premiums that can be taken by PBMs for their services is also under pressure. It seems plausible that the new, tougher attitude towards drug prices is the result of the significantly increased pressures on both the insurers and their PBMs under significant new constraints. In a future post, I will explore what this pressure on drug prices may mean for the direction of drug development.

Amgen's R&D and Roche's Tarceva Patent Mediation In India: Risks, Prices, and the Right off Access to "Essential" Drugs

There are two stories in the recent pharma news that are completely unrelated. In this week's post I will ponder their possible relationship. In the first story, Damien Garde of FiercePharma reported that a highly-regarded biotech industry analyst, Geoffrey Porges, is highly critical of Amgen's ambitious and risky R&D efforts.¹ In the second story, also in FiercePharma, Eric Palmer reported that a court in Delhi, India, has ordered Roche and Cipla to enter into mediation of their dispute over the patent on Roche's cancer drug Tarceva.²

Profits or Drugs?

There are two stories in The New York Times that, although not directly related, are the basis for today's post. The first, by Andrew Ross Sorkin, Do Drug Companies Make Drugs, or Money?, appeared in the Business Section on page B1 on June 3, 2014. The second, by Andrew Pollock, New System for Treating Cancer Seen as Hopeful, appeared on the same page of The New York Times on the same day. Sorkin's provocatively titled article focused on Valeant Pharmaceutical International's takeover bid for Allergan and on Valeant's strategy, which Sorkin characterized as buying pharmaceutical companies with revenues produced by active and successful pharmaceutical research programs and then increasing profits by cutting back on R&D. Sorkin's article, as the title indicated, posited a tension between focusing on rewarding investors with increased profits and investing in the development of new and innovative therapies. My purpose in highlighting Sorkin's article alongside Pollock's is not to take issue with Sorkin's analysis of Valeant's business strategy, but to respond to the article's title question. The answer is that pharmaceutical companies' primary obligation is to their shareholders and that means their primary objective is to reward those investors with increased profits--that is, "make money." However, as Pollock's article about a very promising new class of anti-cancer drugs illustrates, developing new and medically-valuable therapeutics is a major, although not the only, way that pharmaceutical companies seek to earn those increased profits. Now if all I had to say about these two articles is that pharmaceutical companies, like all other businesses, attract and reward investors by making profits and developing important new drugs is a way of making large profits, I would only be stating the obvious.

Comparative Effectiveness: A Major Priority for Pharmaceutical Policy

Last week, FiercePharma contained a story that referred to the superior efficacy of Roche's newest anti-CD20 antibody Gazyva compared to the original anti-CD20 antibody, Rituxan, in the treatment of chronic lymphocytic leukemia (CLL).¹ However, just this week another head-to-head study in CLL, comparing a kinase inhibitor, Ibrutinib, against yet another anti-CD20 antibody, was published in the New England Journal of Medicine.² The study concludes that Ibrutinib was superior to the antibody Ofatumumab in both progression-free survival and overall survival. Now is it also better than Gazyva? Who knows? So let me use this week's post to make a few additional comments on comparative efficacy.  Download PDF

Similar Drugs, Different Doses: A Serious Problem for Comparative Efficacy

Sorry- this post is temporarily unavailable.

A Few Thoughts About Biosimilars

I have more than a few thoughts about biosimilars, but will provide a more extensive version of my views at a later date. For now, I would like to point to two significant new developments in the biosimilars field, both in the news this week. In the first, the FDA released a Draft Guidance that provides more details of the Agency's approach to the nitty gritty of the clinical testing of investigational biosimilar products.¹ In the second major biosimilar news of the week, Samsung (yes, Samsung the Korean electronics giant) announced that it is committing at least $2 billion dollars to developing biopharmaceuticals through two separate efforts. In one venture, "Samsung Bioepis" is  partnering with Biogen Idec to develop biopharmaceuticals including biosimilar versions of Roche's Herceptin anti-cancer antibody as well Sanofi's Lantus diabetes drug.² In Samsung's other biologics effort, Samsung Biologics will work with Quintiles, the global contract research organization (CRO), to develop biologics for Roche and Bristol Meyers Squibb. I believe that taken together these two events, the FDA's emerging regulatory requirements and Samsung's commitment to biologics and particularly biosimilars, underscore the two very different kinds of risk that confront entrants into the biosimilars field. The first risk, which is reflected in the FDA's Draft Guidance, is the scientific/regulatory risk that is entirely a function of the developing science of protein production and analysis. The second risk, which is reflected in Samsung's partnerships with Biogen Idec, Roche, and Bristol Meyers Squibb, is the market risk, which is a function of the difficulties of competing both against the original "reference" biologic as well as the other entrants into the biosimilars field. I am willing to stick my neck out on this issue and say that, in my view, it is this second risk that is more significant.

Ethics, Bioethics, and Biomedical Research

Two stories in the past two weeks, one on the therapeutic cloning of human stem cells,¹ and the other on the successful replication of DNA containing two new, non-naturally occurring synthetic DNA bases in a cell² have prompted me to turn to the subject of bioethics.  I have been studying and writing about biotechnology since 1984 and for quite a while people would conflate biotechnology with bioethics. When I would tell people that my area of law was focused on biotechnology, I would frequently get the response, "like designer babies?"   I would respond, "No, that's a bioethics issue, and I rarely do anything ethical."  My joking response was intended to emphasize the distinction between biotechnology, which is simply the use of modern molecular biology as a tool in a variety of areas, from bioethics, which is the effort to analyze issues concerning human life and health in ethical terms. In the 1980's and much of the '90's,  my response was true. The biotechnology industry was focused on healthcare innovation and faced numerous issues concerning intellectual property rights and federal regulation. Very few, if any, of the issues faced by the developing biotechnology industry raised new or difficult ethical issues.  Companies were (and are) trying to develop human therapeutics and diagnostics and the ethical issues were much the same as had faced the pharmaceutical and medical device industry for decades: informed consent; ensuring that clinical trials provided a sufficient potential for good to justify human experimentation; and, providing access to lifesaving drugs in less developed regions of the world. Then, in 1998, James Thompson and others at the University of Wisconsin reported that they had successfully isolated and cultured human embryonic stem cells.³ With that step, some of what biotechnology researchers and companies were attempting to do became embroiled in ethical controversy. Soon afterwards, in 2001, the Human Genome Project announced the completion of the first draft of the complete human genome. Issues of genetic testing and genetic discrimination, which had been simmering for some time, became much more imminent. I could no longer make my joke, as embryonic stem cells and genetic testing were no joking matter and could not be ignored.

FiercePharma: 10 big brands keep pumping out big bucks, with a little help from price hikes

Tracy Staton, writing for FiercePharma, provides a very interesting analysis of ten drugs that somehow keep sales up and prices rising despite challenges from competitive drugs, patent expirations and safety issues.

http://www.fiercepharmamarketing.com/story/10-big-brands-keep-pumping-out-big-bucks-little-help-price-hikes/

A Brief Comment on Patents and Particularly Pharmacogenomics and Personalized Medicine

download PDF

To begin this discussion of patents in pharmaceutical policy, let me first set out two basic points that I think are central to pharmaceutical policy. First, I believe that strong patent protection, at least in developed countries, is an essential component of pharmaceutical policy. Second, I believe that the rapid development and implementation of pharmacogenomics and personalized medicine are absolutely critical for pharmaceutical policy. However, I do not necessarily believe that the development and implementation of pharmacogenomics and personalized medicine require the same breadth of patent protection afforded to the development of new drugs. Patent protection, and with it the rewards of the exclusive rights to make, use, or sell the patented invention, has been a feature of the legal landscape in every country in which significant numbers of new drugs have been developed since the modern pharmaceutical industry began. There have been proposals to do away with patents.  Prizes seem to be a recurrent suggested alternative to patents.¹  However, I think it is clear that prizes are not a viable alternative reward for the occasional success in a risky and expensive enterprise. No one suggests prizes on the scale of the profits that are earned through patent protection when that risky and expensive enterprise succeeds.  It is simply not logical that the amounts of capital required to drive pharmaceutical innovation and drug development would be invested under a prize system, or any other system which significantly reduces the rewards obtainable with strong patent protection. However, that is not to say the details of the current system get the balance right. A number of years ago I suggested that much broader patents should be awarded for the significant innovation that is accomplished by the discovery and validation of a new target for drug development.² While the Court of Appeals for the Federal Circuit (the principal forum for patent law in the U.S. other than the Supreme Court) has moved further in the other direction (over the vigorous dissent of Judge Rader),³ I still believe in the core of that argument and will expand on that problem in a future post. For now, it is sufficient to say that the validation of new biological targets for pharmaceutical therapy are the biggest (and riskiest) innovations in the drug development enterprise. Ideally the patent system would provide financial rewards that are proportional to the degree of innovation. That is not the system we have, but it is a reasonable and reasonably obtainable goal.