Pradaxa and Drug Safety: Product Liability Played a Role

This week’s post is about the problem of product liability in pharmaceutical policy, an issue that I have not discussed since my first posts on this blog in February.  Boerhinger-Ingelheim’s drug Pradaxa (dabigatran) is a “thrombin inhibitor,” an anticoagulant drug used to prevent strokes and embolisms in patients with atrial fibrillation or other conditions that put them at high risk for stroke. One of the principal selling points of Pradaxa and other direct thrombin inhibitors is that their recommended use does not monitoring patient’s blood levels of the drug, unlike the much older drug Coumadin (warfarin) which is used for the same purpose but has a different mechanism of action and requires individual dosing and monitoring. Pradaxa has been the subject of very interesting news this past week, initiated by an article by Deborah Cohen, M.D. in the British Medical Journal (BMJ) entitled: Concerns over data in key dabigatran trial.  Accompanying the article was a feature editorial with the even more attention-grabbing title: Dabigatran: how the drug company withheld important analyses

Pharmaceutical Pricing-- The Story That Just Keeps Going

After last week’s foray into patents and pharmaceutical policy, which is perhaps the most technical and specialized area of pharmaceutical policy, I will return to the never-ending story of pharmaceutical prices and the controversy over Sovaldi, Gilead's break-through Hepatitis C drug.  Sovaldi has a "sticker price" of $84,000 for a 12-week course of treatment, at the end of which 90% or more of patients would be expected to be cured. Since Sovaldi is a pill that is given once a day, the 12-weeks of treatment means that there are 84 daily doses. The math is easy, even if the price, unlike the pill, is hard to swallow--$1,000 per pill. The drug has been a huge financial success for Gilead, which reported $2.274 billion in sales in just the first quarter of 2014.   However, the backlash has been equally huge.  In a rare display of bipartisanship in Washington, Senator Ron Wyden (D.-Ore), the Chair of the Senate Finance Committee and Senator Chuck Grassley (R.-Iowa), the Ranking Member of the Finance Committee, sent a demand for information concerning the development costs of Sovaldi and Gilead’s pricing decision.  However, even more than the investigation by two senior senators, the impetus for today’s post came from the blog RxObserver, which featured a post entitled Sovaldi: A Poster Child for Predatory Pricing [sic].  Before discussing the epithet “predatory pricing,” the perspective of RxObserver requires a bit of explanation.  RxObserver is a site that primarily provides the views of pharmaceutical benefit managers (PBMs), or as the blog itself states its purpose: “the Clearinghouse of the Future for Pharmacy Benefits.” It is, in general, a very high-quality blog, with an editorial staff composed primarily of well-recognized academic and government experts in health care policy.  I regularly read it and find it useful, although I was taken aback by that “predatory” epithet.   Download PDF

The Good, the Bad, and the Ugly: Developments in the Intersection of Patents and Pharmaceutical Policy

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This week I am focusing on patent law, which is one of the more arcane and technical areas of pharmaceutical policy. A recent major decision by the Court of Appeals for the Federal Circuit (CAFC) in Bristol-Myers Squibb v. Teva Pharmaceuticals (BMS v. Teva) is rather remarkable in the degree to which it departs from prior decisions on the patentability of small molecules as the active ingredients in drugs. Chris Holman, a leading scholar in the intersection of intellectual property and the biotechnology and pharmaceutical industries, wrote a great article a few years ago arguing that a significant degree of unpredictability in patent law would substantially depress pharmaceutical innovation. Holman argues persuasively that the uncertainty as to whether or not a patent claim to a drug's active ingredient would be enforceable is, in essence, an additional cost burden on pharmaceutical research and development, and that this increasing cost burden is responsible for a decrease in the output of pharmaceutical research. Holman pointed to a long period of stagnation in the number of new drugs approved as evidence of the decreased output of pharmaceutical research. He uses two examples of Eli Lilly patents that had been invalidated as evidence of the unpredictability of patent law. Holman's analysis of the unpredictability problem centered on three different ways in which uncertainty is created:

the proliferation of loosely defined standards rather than bright line rules; unpredictability associated with long-delayed clarification of critical and identifiable ambiguities in patent law; and perhaps worst of all, unpredictability that occurs when courts adopt a new interpretation of legal doctrine and apply it retroactively, to the detriment of the investment-backed expectations of patent owners.

The End May Not Be Near But The Future Is Not Looking Very Good

I have always been an optimist about the future of biotechnology and the future contribution of the life-sciences industry to health and healthcare. There have been a fair number of market cycles since I first began studying the biotechnology industry in 1984. When venture capital was tight or the window for initial public offerings slammed shut, I was always confident that those downturns in financing were temporary. Sooner or later the level of investments in early-stage biotech would rebound and the public markets would again be open to biotech companies with significant products in later stage development. My optimism that the markets would recover rested on my faith in the long-term rationality of the investment markets, both public and private. As long as basic research continued to provide the foundation for significant commercial opportunities, sooner or later profit-seeking investors would seize on those opportunities. It is the "as long as basic research" part of that premise that causes me to be concerned.

Reflections on BIO 2014: From FIPCOs to VIDDCOs

I attended the big annual BIO Convention this past week in San Diego. BIO is THE trade association for the biotech industry and the annual BIO Conventions are HUGE events. This year's keynote speakers included Hillary Clinton and Richard Branson, to give some idea of how high-profile the BIO meeting is. One of the primary functions of the BIO meeting is to provide a variety of vendors and service providers a marketing opportunity. Wandering about the vast floor of the main exhibit hall provided an interesting perspective on the overall biotechnology industry, the vast majority of which is focused on developing products for human healthcare.  download PDF

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?

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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