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- Herausgeber: John Wiley & Sons
- Kategorie: Wissenschaft und neue Technologien
- Sprache: Englisch
High-level commentary on various facets of the pharmaceutical industry from a key leader in the field This book clearly explains the value that the pharmaceutical industry offers to society which is often underreported against the more negative topic of high drug prices. It also offers an overview for drug discovery and development professionals, highlighting the challenges that such drug hunters should be aware of when developing new drugs. Case studies to illustrate topics like hepatitis C, mRNA vaccines, insulin, and price controls are included to aid in seamless reader comprehension. Written by John LaMattina, former president of Pfizer Global Research and Development and well-known speaker and writer for the pharma industry, sample topics covered and questions explored within the work include: * Fiscal consequences of curing hepatitis C * mRNA vaccines and the race for a cure * Why the government does not deserve a piece of Biopharma's profits * Paying for drugs whose ultimate value is unknown * The impact of reduced revenues on R&D This book is a must-read for biopharmaceutical professionals and executives who wish to gain high-level insight into key challenges that must be first understood, then overcome, within the pharmaceutical industry.
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Seitenzahl: 224
Veröffentlichungsjahr: 2022
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Table of Contents
Cover
Title Page
Copyright Page
Dedication
ACKNOWLEDGMENTS
INTRODUCTION
REFERENCES
CHAPTER 1:
THE $1000 PILL
REFERENCES
CHAPTER 2:
ENTER THE PAYERS
REFERENCES
CHAPTER 3:
PANDEMIC
REFERENCES
CHAPTER 4:
FEDERAL INVESTMENT IN R&D
REFERENCES
CHAPTER 5:
INSULIN
REFERENCES
CHAPTER 6:
THE COSTLY ALZHEIMER’S DISEASE DRUG
REFERENCES
CHAPTER 7:
GENE THERAPY
REFERENCES
CHAPTER 8:
PROVING THE VALUE OF EXPENSIVE DRUGS
REFERENCES
CHAPTER 9:
GENERIC DRUGS
REFERENCES
CHAPTER 10:
ABOUT THOSE SOARING PHARMA PROFITS
REFERENCES
CHAPTER 11:
SCHEMES TO LOWER DRUG PRICES
REFERENCES
FINAL THOUGHTS
REFERENCES
Index
End User License Agreement
List of Tables
Chapter 3
TABLE 3.1
mRNA timeline for Moderna and Pfizer
List of Illustrations
Chapter 5
Graph 5.1 Lantus cost over time.
Chapter 7
Figure 7.1 Competition of spinal muscular atrophy drugs.
Chapter 10
Figure 10.1 Healthcare spending 2003–2018.
Guide
Cover Page
Title Page
Copyright Page
Dedication
ACKNOWLEDGMENTS
INTRODUCTION
Table of Contents
Begin Reading
FINAL THOUGHTS
Index
WILEY END USER LICENSE AGREEMENT
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PHARMA ANDPROFITS
BALANCING INNOVATION, MEDICINE, AND DRUG PRICES
John L. LaMattina
Stonington, CT, USA
This edition first published 2022© 2022 John Wiley & Sons, Inc.
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The right of John L. LaMattina to be identified as the editor of this work has been asserted in accordance with law.
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Library of Congress Cataloging‐in‐Publication Data applied for:
Paperback ISBN: 9781119881339
Cover Design: WileyCover Image: © Abscent84/Getty Images
For Sloane, Max, and Coco
ACKNOWLEDGMENTS
I must acknowledge the debt we all owe to the scientists around the globe whose tireless dedication and keen insights have produced the breakthrough vaccines and medications that have led the fight against Covid‐19. Countless lives have been saved by their efforts. They deserve our respect and admiration.
I would like to thank a few people for their advice and encouragement during the preparation of this book. Stephen Lederer provided terrific advice on key points in the narrative. The editorial skills of Mary LaMattina improved this manuscript immensely. Finally, Donna Green somehow managed to bring this all together.
J.L.L.
INTRODUCTION
The woman’s anguished accusation was stunning. “The pharmaceutical industry killed my daughter,” she yelled at me. I had just finished taping an episode of the syndicated TV series, The Dr. Oz Show, where I had tried, with little success, to defend that same industry … once the world’s most admired.
In 1997, three pharmaceutical companies were in the top 10 of Fortune’s list including Merck (#3), Johnson & Johnson (#4), and Pfizer (#8). Earlier, Merck had been lauded by Fortune magazine as the “World’s Most Admired Company” for seven straight years.
But by May 2011, when Dr. Oz hosted “The Four Things Drug Companies Don’t Want You to Know” that admiration and high regard had vanished. I had been invited to debate Dr. John Abramson, author of Overdosed America: The Broken Promise of American Medicine.
Back in the 1990s, those drug companies were best known for their breakthrough medicines for heart disease, depression, AIDS, and bacterial infections. They prospered with products that benefitted hundreds of millions of people. How could they not be admired?
Two decades later, on one of America’s most popular TV shows, a fired‐up, suspicious audience applauded Dr. Abramson’s premise that placed my industry in the same hall of shame as tobacco and oil. The industry had lost its way. And I became even more determined to help overcome this prejudice with counter arguments and data.
On that day, I tried to express my sorrow to the distraught mother, but she abruptly turned and walked away. I learned a few years later from Dr. Abramson that this young girl was being treated for depression and, while on therapy, committed suicide. (I do not know which drug she was taking.) I cannot think of anything more tragic than losing a child. While it is uncertain that the drug was the cause of this suicide, her mother was persuaded. She was unable to accept my sympathy, nor consider my conviction – that the goal of pharmaceutical R&D is to alleviate pain and suffering, not cause it.
My advocacy began in 2006, when I was invited to give a lecture at the University of New Hampshire, which was open not just to the university community but also to the general public. The talk, “Pharmaceutical R&D: The World’s Hope for Tomorrow’s Cures,” was designed to help combat the broad criticism of the industry by answering a number of questions:
What value do new medicines bring to society?
Where do medicines come from?
What innovation does Big Pharma bring?
How are risks and benefits of medicines evaluated?
This 45‐minute talk began at 4 pm with an audience of a few hundred people. The ensuing question and answer period lasted another hour and a quarter and would have gone even longer if the organizers had allowed. The questions covered the entire spectrum of drug R&D.
People were more than curious. They had dozens of questions and wanted answers. They were stunned to hear how long and costly it is to discover and develop new drugs. People had little appreciation of the cutting‐edge science needed to be successful. They asked how scientists remain motivated when after spending years on a program, it suddenly dies. By the end of the session, people had a better understanding of the tremendous challenges involved in bringing forward new medicines. The audience began to see a major piece of the healthcare debate in a totally new light.
This experience led me to write Drug Truths: Dispelling the Myths of Pharma R&D. As a result of Drug Truths, I began to get invitations to speak, not just about pharmaceutical research, but also the industry itself. The call from The Dr. Oz Show invited me to debate some of the issues I addressed in my book: the safety of new drugs, the myth that the industry invents diseases, that people are overmedicated, etc. The opportunity to join this discussion appealed to me.
Looking back, I was incredibly naïve. The first time I saw that theme, “The Four Secrets that Drug Companies Don’t Want You To Know,” was when I walked on stage. Drs. Oz and Abramson were not buying my arguments and nor was the audience.
Confronted with the negative public perceptions of the pharmaceutical industry, I wrote Devalued and Distrusted: Can the Pharmaceutical Industry Restore Its Broken Image? It addressed a number of issues that pharma was facing at the time, including: improving its ability to measure not just the benefits but also the risks of new medicines; the need for greater transparency in the conduct as well as the outcomes of clinical trials; changing how drugs are marketed; changing how physicians are compensated for their work with pharmaceutical companies; etc.
Remarkably, the industry has made many changes to improve its accountability – albeit with some prodding from the government. For example, all clinical trials must be registered on the website: www.clinicaltrials.gov. In addition, the results of these studies – positive and negative – must be reported within 12 months of completion. Companies are also making public any payment in excess of $10 made to any physician resulting from collaboration with a company. With respect to payments to physicians, the Centers for Medicare and Medicaid Services (CMS) publishes all of these on its Open Payments website (www.CMS.gov/openpayments).
Despite this progress, there is still one reputational issue that dwarfs all others – the price of drugs. In fact, while our country is divided on almost every problem we face, drug pricing unifies political foes. It even brought together former President Donald Trump and his left‐leaning nemesis Senator Bernie Sanders. At a press conference in January 2017, President Trump said: “Our drug industry has been disastrous….And the other thing we have to do is create new bidding procedures for the drug industry, because they are getting away with murder [1].” Senator Sanders responded: “He’s right and I’ve been saying this for years. Pharma does get away with murder. Literally murder. People die because they can’t get the prescription drugs that they need [2].”
The pharmaceutical industry should not be surprised by the backlash. After all, stories about high drug prices appear almost daily. How can a single pill cost $1000? How can healthcare systems stay afloat when life‐saving gene therapies are priced at over $2 million per patient? Why is Senator Sanders taking busloads of Americans over the border to Canada to get insulin for their diabetes? How can Pfizer and Moderna justify billions of dollars in revenues for their mRNA vaccines? This book seeks to answer these and other questions. Is the drug industry filled with profiteers “getting away with murder” or is it an industry made up of companies that invest in a high‐risk business called “innovation” that makes reasonable returns on at‐risk capital? You decide.
REFERENCES
1. Karlin‐Smith, S. (2017). Trump says drug industry “getting away with murder” Politico, (11 January).
2. Carter, Zachary D. and Schumaker, Erin (2017). Bernie Sanders: Donald Trump is right about big pharma, HuffPost, (11 January).
CHAPTER 1THE $1000 PILL: THE FISCAL CONSEQUENCES OF CURING HEPATITIS C
The company in this case” is asking for a blank check which if granted will blow up family budgets, will blow up state Medicaid budgets, will blow up employer benefit costs and wreak havoc on the federal debt.” This provocative comment was made by Ms. Karen Ignagni, former president and chief executive officer (CEO) of America’s Health Insurance Plans, the trade association of health insurance companies. The cause of Ms. Ignagni’s alarm was SovaldiTM, a breakthrough drug that cured the liver disease hepatitis C. Manufacturer, Gilead, priced its new medicine at $1000 a pill. Given that the standard course of treatment was once‐a‐day for 12 weeks, the cost of this cure was $84 000/patient. Ms. Ignagni’s concern was shared. Dr. Steven Miller, chief medical officer (CMO) of Express Scripts, a prescription management company, called this drug pricing unsustainable [1].
The World Health Organization (WHO) estimates that globally 71 million people have chronic hepatitis C with roughly 3 million of those in the United States. The most common modes of infection are through exposure to small quantities of blood. While largely asymptomatic, the hepatitis C virus (HCV) resides in the liver and can lead to devastating consequences such as liver scarring, cirrhosis, liver failure, and liver cancer. Many of these patients will ultimately require liver transplants to survive – a surgery that costs more than $300 000.
Older treatments were modestly effective. Cure rates ranged from 40 to 80%, depending on the severity of the disease. Patients were given a cocktail of drugs plus injections of interferon for 24–48 weeks. However, these medicines are poorly tolerated, particularly the interferon component that causes flu‐like symptoms in patients. As a result, many with hepatitis C often avoided treatment.
SovaldiTM provided new hope. The pill was found to cure hepatitis C in more than 90% of patients in just 12 weeks. Furthermore, it is safer and roughly 20% cheaper than the older treatments that cost over $100 000. One would think that the maker of such a wonder drug would be hailed for providing a major medical advance. Instead, Gilead was vilified.
At a Financial Times U.S. Healthcare and Life Sciences Conference in New York City, I had a chance to hear Ms. Ignagni talk about the high cost of SovaldiTM. During the Q&A session, I asked her the following question.
“SovaldiTM is a drug that cures hepatitis C. It actually saves the healthcare system money in that it will prevent patients from dying from liver cancer, cirrhosis and liver failure. Liver transplants alone can cost $300,000 and then patients must take anti‐rejection drugs that cost $40,000 per year for the rest of their lives. The price of SovaldiTM, while high now, will drop, first when competitive drugs in late‐stage development reach the market and then when the drug is generic. Given all of this, what price for SovaldiTM would have been acceptable to you – $60,000, $40,000, $10,000? What price are you willing to pay for innovation?”
Ignagni never answered the price question. Instead, she focused on the innovation part, saying that, for years, she has heard that high pricing is needed to sustain innovation. Yet innovation is still occurring. Her response ignores worrying trends that roil the biopharmaceutical industry – the mergers, the small company closings, the reductions in private investment in drug research and development (R&D). Yes, innovation is still occurring, but lower revenues result in less money invested in R&D. Less R&D equals less innovation.
Given the $1000 pill headlines, it was not surprising to see politicians jumping on the bandwagon and expressing outrage over the price. Rather than reacting to this medical breakthrough with applause, this furor sparked Senators Wyden and Grassley to probe all of Gilead’s expenses, from the acquisition of Pharmasset (originator of SovaldiTM) to the costs of the development program. Their aim: to embarrass Gilead publicly and, perhaps, shame them into a price cut.
These senators and other politicians have little grasp of the intricacies of drug R&D. Sure, they know R&D is difficult and expensive. They might even appreciate that the entire process, from coming up with the initial idea to getting the US Food and Drug Administration (FDA) approval, can take 15 years. But they have little idea as to how and why drug prices are determined. Do patients or physicians really care how much a company spent in the discovery and development of a new medicine? What they want to know is whether the drug works and, relatively speaking, is it safe? The same can be said of payers. Again, they could not care less about R&D expenditures. They are much more concerned about the drug’s short‐term impact on their balance sheet.
Biopharmaceutical companies try to elicit sympathy by talking about failure rates. The industry works on the cutting edge of medical science, looking for novel compounds to prove or disprove medical hypotheses. This is difficult and often frustrating work. Far more projects fail than succeed. Thus, in justifying the high cost of new drugs, companies will cite figures showing that billions of dollars need to be invested across a portfolio of programs to get one new drug approved. Indeed, for a biopharmaceutical company to survive, it has to be profitable. It must provide a return on investment for its shareholders. However, patients, physicians, and payers do not shed tears over a company’s litany of failures. The belief is that companies should be rewarded for success, and not for “nice tries.”
Thus, in the minds of patients, physicians, and payers, the pricing of drugs should have little to do with the expense of biomedical R&D, nor should it be associated with recouping R&D investment. Pricing should be based on only one thing – the value that the drug brings to healthcare in terms of:
Saving lives.
Mitigating pain/suffering and improving the quality of life for patients.
Reducing overall healthcare costs.
OK, if one were to take that position, how do new, expensive medicines stack up in terms of delivering value? Are they worth the prices sought by drug companies?
In the case of SovaldiTM, we have a drug that cures hepatitis C and, in doing so, prevents the downstream consequences of patients contracting liver cancer or needing a liver transplant. Rather than questioning Gilead’s management on the R&D costs generated in Sovaldi’sTM development, Senators Wyden and Grassley should ask the following questions:
How does this compound compare with existing hepatitis C treatments in terms of efficacy and safety?
How expensive are these other treatments?
Without this drug, how many patients with hepatitis C will die?
How many patients with hepatitis C will contact liver cancer or will need a liver transplant if their disease remains uncured?
Without Sovaldi
TM
, what would be the ultimate cost to the healthcare system to treat the resulting cases of liver cancer and liver transplantations?
If these senators do this, they will find that even at $84 000 per patient, SovaldiTM is well worth the expense. Its value is neither the R&D costs incurred in its discovery and development nor in the years or time and money invested at exploring other approaches to hepatitis C cures that did not work. Its value comes from saving lives and ultimately saving the healthcare system millions. When it comes to drug pricing, to paraphrase a former President Clinton’s advisor, James Carville: “It’s the value, stupid!”
To this point, the focus has been on Sovaldi’sTM $84 000 price, which is its list price. This number is often the starting point in negotiations with payers to gain access to their formularies and healthcare plans. In the period when only SovaldiTM was on the market, payers had a relatively weak hand. That, however, all changed when AbbVie launched its hepatitis drug, Viekira PakTM. AbbVie’s list price was modestly lower at $83 319 for a course of treatment. However, now payers had a choice and competition can drive costs down. Big payers like Express Scripts and CVS Health do not pay the list price – the one usually quoted by the industry’s critics. Instead, given the vast number of patients in their plans, payers can negotiate significant reductions.
At a Forbes Healthcare Summit [2] shortly after AbbVie’s launch of Viekira PakTM, the aforementioned Dr. Steven Miller, then the CMO of Express Scripts, could not hide his glee that SovaldiTM now had competition. In fact, he had selected Viekira PakTM for the 85 million members in the Express Scripts network. At the Forbes meeting he surprisingly announced that the price paid in the United States for hepatitis C drugs was less than in Europe. The Express Scripts number remains confidential. However, drug prices in Europe are public. At that time, the United Kingdom paid $55 000/patient for hepatitis C drugs and Germany $67 000. Given Dr. Miller’s comments, we can speculate that the US price for these drugs was under $50 000.
After the launches of SovaldiTM and Viekira PakTM, however, a new generation of hepatitis C drugs became available such as HarvoniTM (Gilead), ZepatierTM (Merck), and MavyretTM (AbbVie). The last is particularly interesting. AbbVie’s list price for the drug, which is approved for all genotypes of hepatitis C, was $26 400 for an eight‐week treatment. If the infection was not cured after this time, another four weeks of treatment would cost an additional $13 200 (total of $39 600 for 12 weeks). Suddenly, curing hepatitis C had become relatively cheap.
Against this backdrop, it was surprising to hear Gilead’s then CEO, John Milligan, apologize for the original price of SovaldiTM. Milligan’s act of contrition was made at another Forbes Healthcare Summit [3]. Forbes had assembled an impressive panel of biopharmaceutical CEOs to discuss the sorry state of the industry’s reputation. Any conversation of this topic immediately turned to drug pricing and Gilead’s SovaldiTM took center stage. Milligan was asked if Gilead’s pricing strategy was a mistake.
“Yeah, it was an interesting launch for the HCV product. We priced the product at exactly the same as the existing standard of care, which worked about 50 percent of the time, and are providing a benefit that, based on real world experience, works about 98 percent of the time. From our perspective, it was a very good value. What happened was a failure to understand exactly how many people were direly ill and had to come into care. That is, there were hundreds of thousands of people who needed this immediately, whose doctors felt that they needed this immediately. The surge into the system was very large, and that created a lot of anxiety around the payers and of course created an outcry against us for having mispriced the product.”
As Milligan pointed out, no one questioned the value of the product. Not only are people cured of hepatitis C but an enormous saving is also accrued by the healthcare system down the line as SovaldiTM reduces the ultimate consequences of HCV: cirrhosis of the liver, liver failure, the need for liver transplants, liver cancer, and, ultimately, death. But despite the tremendous benefits of SovaldiTM, Milligan took a contrite tone:
“I think our failure, if I have to take a step backwards, was that we were unable to have a good enough conversation with the payers. Perhaps we were a little conservative about what we could have or should have said to them to allow them to prepare for the number of patients that came forward. Honestly, it was far more than we thought. We did not think the system could or would try to handle as many patients as it did. We essentially quadrupled the number of patients treated in a year. That surge really created a lot of pain.”
Milligan was being overly apologetic. Payers certainly know how many of the patients in their plans have HCV. Furthermore, the FDA approval of SovaldiTM was no surprise. The clinical trials for this drug were well publicized, as were the remarkable results. Payers often claim that they will pay for true value. SovaldiTM certainly demonstrated that both in terms of benefiting patients and offering reduced healthcare costs. This is a life‐saving, cost‐saving drug. Their outcry against Gilead’s list price went against the claims that this is the type of therapy they want the biopharmaceutical industry to produce.
But, again, the discussion focused on Sovaldi’sTMlist price. In fact, as other companies like Merck and AbbVie came up with their own cures, the price to the US payers dropped precipitously. Curing patients for $40 000 or less is a bargain compared to the cost of previous, less effective treatments.
SovaldiTM is a great example of the value that innovative drugs can bring to us all. Yes, there are examples of terrible gouging, such as irresponsible price hikes for generic drugs or wanton price increases that some companies make for their drugs two or three times a year. But Gilead did not do that. If a company is denied reasonable pricing for excellent new drugs, then the biopharmaceutical industry will likely stagnate and many new opportunities for drug R&D will go unfunded.
This was a great opportunity for Gilead’s CEO to voice these issues. It is too bad he did not.
The availability of HCV cures was especially timely for Vietnam War veterans. Many of these heroes contracted the disease as a result of battlefield injuries requiring blood transfusions. They were now suffering from the consequences of this largely silent menace – liver disease, cirrhosis, and liver cancer. Without these drugs, the sicker of these patients were facing certain death.
