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Pricing, Profits and Progress: Pharma’s Post-COVID Priorities

As post-pandemic recovery begins, big pharma remains in the spotlight. Jesse Mendelsohn explores pharma’s priorities on pricing, profits and
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As post-pandemic recovery begins, big pharma remains in the spotlight. Jesse Mendelsohn explores pharma’s priorities on pricing, profits and progress post-Covid.

It goes without saying that if pharmaceutical companies are not profitable, they will not survive. The need for firms to make a reasonable profit is paramount in today’s world; healthy pharmaceutical research and manufacturing are the keys to ending disease, curing chronic conditions, and discovering new therapies and vaccines that address the latest medical challenges.

Nowhere has this need for healthy companies been more apparent than during the current global coronavirus pandemic, with multiple manufacturers making COVID-19 vaccines rapidly available to the public. It can be reasonably argued that the upfront research and development of vaccine technologies leveraging mRNA – which can be widely applied against a number of viruses – will be the solutions that end our current pandemic and will effectively position society to be ready for the next.

Simply put, the revenues and profits from today’s mainstream drugs fund the scientific discovery that make tomorrow’s breakthrough drugs and critical vaccines possible. Against this backdrop, there has been substantial public debate about rising drug prices forced on consumers, including the trite notion that pharmaceutical companies are being “greedy” and seeking to price-gouge the public.

The Big Misconception

The truth about rising drug prices is more nuanced and merits exploration. The fundamental misconception among the public, the media and even some lawmakers is that higher drug list prices are the result of drug manufacturers being in a monopolistic position to endlessly raise prices on critical drugs like insulin and then rake in big profits.

If pharmaceutical companies’ steady price increases are wholly due to limitless greed or thirst for revenue growth, this certainly is not proven by the actual, factual financial results for these same companies.  While it is true that drug prices and pharma company revenues are going up, generating impressive cash flow, the pharma industry faces slow growth of topline revenue, lower overall profitability and financial valuations that are stuck in neutral. For drug companies, the combination of lackluster financial performance and simultaneous public and political scorn is a lose-lose proposition.

Is the Middleman at Fault?

A key reason for rising drug prices is the role of middlemen, in the form of health plans and pharmacy benefit managers (PBMs). These payers are best defined as entities that pay for or reimburse pharmacies for drugs dispensed to covered patients. In most cases, pharma manufacturers must pay health plans and PBMs in order to give their drugs preferred formulary placement – or to even have their drugs covered in these plans at all.

Manufacturers have been paying these rebates to PBMs, health plans and large employers for decades, because it gives them better access to patient populations via, for example, obtaining lower co-pays as compared to the competition. Rebate dollars are shared among pharmacy benefit managers, health plans and employers, and pharma companies must continually offer larger rebates to improve or even maintain formulary status and access to patients.

Quite often, middlemen like PBMs can earn as much revenue as a manufacturer on a given drug, and with just three major PBMs serving a majority of the market, their power is quite concentrated. The difference is, of course, that pharma manufacturers can typically spend a decade or more developing a given drug and are responsible for marketing it, while PBMs are responsible for managing claims, formularies, and overseeing discounts and rebates for drug makers – while doing little to support or drive innovation.

In the case of Eli Lilly, they reported that the list price of their Humalog (insulin) product rose from $391 to $594 from 2014 to 2018, yet the company’s net revenue (revenue after these PBM and other rebates are paid) per dose fell from $147 to $135 (per patient, per month) during the same period. The fees and rebates that Lilly was forced to pay have eaten into margin and, therefore, drove increased list prices. Yet the public experiences justifiable “sticker shock” at the steadily rising price of what is essentially a commodity drug while, after all rebates are paid, the manufacturer is making less on that same drug than they were years earlier. This is just one example of the cycle of rising drug prices created by PBM-mandated rebates.

What’s more, a recent USC study has closely associated the role of rebates to rising list prices and suggests that reducing rebates and increasing the level of transparency across the pharmaceutical distribution chain will be possible remedies for escalating prices. Further commentary from USC explains, “Understanding the relationships between list prices and rebates is important because it informs the degree to which policymaker efforts to lower drug prices should target manufacturers or other players in the system, specifically PBMs.”

Potential Public Remedies

Clearly, the cycle of rebates has something to do with increasing drug prices, and public and legislative pressure is poised to force changes to the current system.

A recent Supreme Court decision supported greater oversight and regulation of PBMs by individual states and includes provisions for enforcing contract transparency and documentation such as detailed annual reports. In addition, industry experts anticipate that the safe harbor changes for Medicare Part D rebates – effectively banning “behind the scenes” formulary-style rebates for Part D – will eventually be implemented by the federal government, although they are currently on hold. In addition to early executive action by the Biden administration, we’re expecting legislative activity by the 117th Congress. The industry itself is also responding, with a new policy agenda being advanced by PhRMA that includes endorsements for drug pricing reforms.

What’s Next: How Should Pharma Companies Respond?

In a time when profitability – along with the ability to freely spend on research and development – remains in question, pharma companies are looking for ways to respond to current market conditions.

The industry is increasingly turning to Silicon Valley technologists, instead of Washington regulators, to find new ways to optimize revenue at every point in the product lifecycle. Part of a comprehensive strategy is to focus on best practices for launching drugs into the market and then sustaining marketplace momentum through optimizing relationships with distribution channels/networks and payers. In addition, implementing systems and technologies that help optimize revenue by eliminating revenue leakage is crucial.

Companies must effectively manage rebate programs to capture as much revenue as possible while maintaining legal compliance and strive for full visibility when it comes to gross-to-net profits. Forecasting and pricing simulations are also key, as new technology solutions can help drug makers comply with policy and simplify drug delivery, payments and price negotiation by breaking down barriers and streamlining processes. Only by continuously optimizing global revenue and being prepared for ongoing price changes can a company survive in today’s turbulent pharmaceutical marketplace.

About the author

Jesse Mendelsohn is vice president at Model N. He is an experienced executive, business analyst and consultant in the realm of pharmaceutical regulatory compliance and government pricing.

The post Pricing, Profits and Progress: Pharma’s Post-COVID Priorities appeared first on .

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AstraZeneca antibody cocktail fails to prevent Covid-19 symptoms in large trial

AstraZeneca said a late-stage trial failed to provide evidence that the company’s Covid-19 antibody therapy protected people who had contact with an infected person from the disease, a small setback in its efforts to find alternatives to vaccines.

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Astra antibody cocktail fails to prevent COVID-19 symptoms in large trial

(Reuters; )

June 15 (Reuters) – AstraZeneca (AZN.L) said on Tuesday a late-stage trial failed to provide evidence that its COVID-19 antibody therapy protected people who had contact with an infected person from the disease, a small setback in its efforts to find alternatives to vaccines.

The study assessed whether the therapy, a cocktail of two types of antibodies, could prevent adults who had been exposed to the virus in the past eight days from developing COVID-19 symptoms.

The therapy, AZD7442, was 33% effective in reducing the risk of people developing symptoms compared with a placebo, but that result was not statistically significant — meaning it might have been due to chance and not the therapy.

The Phase III study, which has not been peer reviewed, included 1,121 participants in the United Kingdom and the United States. The vast majority, though not all, were free of the virus at the start of the trial.

Results for a subset of participants who were not infected to begin with was more encouraging but the primary analysis rested on results from all participants.

FILE PHOTO: A computer image created by Nexu Science Communication together with Trinity College in Dublin, shows a model structurally representative of a betacoronavirus which is the type of virus linked to COVID-19, better known as the coronavirus linked to the Wuhan outbreak, shared with Reuters on February 18, 2020. NEXU Science Communication/via REUTERS

“While this trial did not meet the primary endpoint against symptomatic illness, we are encouraged by the protection seen in the PCR negative participants following treatment with AZD7442,” AstraZeneca Executive Vice President Mene Pangalos said in a statement.

The company is banking on further studies to revive the product’s fortunes. Five more trials are ongoing, testing the antibody cocktail as treatment or in prevention.

The next one will likely be from a larger trial testing the product in people with a weakened immune system due to cancer or an organ transplant, who may not benefit from a vaccine.

TARGETED ALTERNATIVES

AZD7442 belongs to a class of drugs called monoclonal antibodies which mimic natural antibodies produced by the body to fight off infections.

Similar therapies developed by rivals Regeneron (REGN.O) and Eli Lilly (LLY.N) have been approved by U.S. regulators for treating unhospitalised COVID patients.

European regulators have also authorised Regeneron’s therapy and are reviewing those developed by partners GlaxoSmithKline (GSK.L) and Vir Biotechnology (VIR.O) as well as by Lilly and Celltrion (068270.KS).

Regeneron is also seeking U.S. authorisation for its therapy as a preventative treatment.

But the AstraZeneca results are a small blow for the drug industry as it tries to find more targeted alternatives to COVID-19 inoculations, particularly for people who may not be able to get vaccinated or those who may have an inadequate response to inoculations.

The Anglo-Swedish drugmaker, which has faced a rollercoaster of challenges with the rollout of its COVID-19 vaccine, is also developing new treatments and repurposing existing drugs to fight the virus.

AstraZeneca also said on Tuesday it was in talks with the U.S. government on “next steps” regarding a $205 million deal to supply up to 500,000 doses of AZD7442. Swiss manufacturer Lonza (LONN.S) was contracted to produce AZD7442.

Shares in the company were largely unchanged on the London Stock Exchange.

The full results will be submitted for publication in a peer-reviewed medical journal, the company said.

Reporting by Vishwadha Chander in Bengaluru; Editing by Shounak Dasgupta

Our Standards: The Thomson Reuters Trust Principles.

 

Reuters source:

https://www.reuters.com/business/healthcare-pharmaceuticals/astrazeneca-says-its-antibody-treatment-failed-in-preventing-covid-19-exposed-2021-06-15

 

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Former FDA Head Takes on Exec Role at Flagship’s Preemptive Health Initiative

Stephen Hahn, the Commissioner of the U.S. Food and Drug Administration under former President Donald Trump, took on a new role as chief medical officer of a new health security initiative launched by Flagship Pioneering, a life sciences venture firm…

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Former FDA Head Takes on Exec Role at Flagship’s Preemptive Health Initiative

 

Stephen Hahn, the Commissioner of the U.S. Food and Drug Administration (FDA) under former President Donald Trump, has taken on a new role as chief medical officer of a new health security initiative launched by Flagship Pioneering, a life sciences venture firm that incubates and curates biopharma companies.

First announced Monday, Flagship’s Preemptive Medicine and Health Security initiative aimed at developing products that can help people before they get sick. This division will focus on infectious disease threats and pursue bold treatments for existing diseases, including cancer, obesity, and neurodegeneration. 

In a brief statement, Hahn, who served as commissioner from December 2019 until January 2021, said the importance of investing in innovation and preemptive medications has never been more apparent. 

“In my career I have been a doctor and a researcher foremost and it is an honor to join Flagship Pioneering in its efforts to prioritize innovation, particularly in its Preemptive Medicine and Health Security Initiative. The more we can embrace a “what if …” approach the better we can support and protect the health and well-being of people here in the U.S. and around the world,” Hahn said in a statement. 

During his time at the FDA, Hahn was at the forefront of the government’s effort to battle the COVID-19 pandemic. His office oversaw the regulatory authorization of antivirals, antibody therapeutics and vaccines, as well as diagnostics and other tools to battle the novel coronavirus. 

Kevin Dietsch-Pool/Getty Images

Hahn bore the brunt of verbal barbs aimed at the FDA by the former president for not rushing to authorize a vaccine for COVID-19 ahead of the November 2020 election. The second vaccine authorized by the FDA for COVID-19 was developed by Moderna, a Flagship company. 

Prior to his confirmation as FDA Commissioner, Hahn, a well-respected oncologist, served as chief medical executive of the vaunted The University of Texas MD Anderson Cancer Center. Hahn was named deputy president and chief operating officer in 2017. In that role, he was responsible for the day-to-day operations of the cancer center, which includes managing more than 21,000 employees and a $5.2 billion operating budget. He was promoted to that position two years after joining MD Anderson as division head, department chair and professor of Radiation Oncology. Prior to MD Anderson, Hahn served as head of the radiation oncology department at the University of Pennsylvania’s Perelman School of Medicine.

Flagship Founder and Chief Executive Officer Noubar Afeyan said the COVID-19 pandemic that shut down economies and caused the deaths of more than 3.8 million people across the world was an important reminder that health security is a top global priority. In addition, the ongoing pandemic brings into “stark focus” the importance of preemptive medications. 

Hahn, who helmed the FDA for three years and before that served as chief medical executive at The University of Texas MD Anderson Cancer Center, has extensive experience overseeing clinical and administrative programs. Afeyan said the new division would benefit from Hahn’s experience as FDA Commissioner and help steer the Preemptive Medicine and Health Security initiative as it explores Flagship’s “growing number of explorations and companies in this emerging field.”

It is not unusual for former FDA heads to take prominent roles with companies. For example, former FDA Commissioner Scott Gottlieb, Trump’s first FDA Commissioner, took a position on the Pfizer Board of Directors weeks after departing his government role. He has also taken positions on other boards since then, including Aetion, FasterCures and Illumina.

 

BioSpace source:

https://www.biospace.com/article/former-fda-head-stephen-hahn-takes-cmo-role-at-flagship-pioneering-preemptive-health-initiative-

 

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Five U.S. states had coronavirus infections even before first reported cases – study

At least seven people in five U.S. states were infected with the novel coronavirus weeks before those states reported their first cases, a new government study showed.

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Five U.S. states had coronavirus infections even before first reported cases – study

(Reuters) – At least seven people in five U.S. states were infected with the novel coronavirus weeks before those states reported their first cases, a new government study showed.

Participants who reported antibodies against SARS-CoV-2 were likely exposed to the virus at least several weeks before their sample was taken, as the antibodies do not appear until about two weeks after a person has been infected, the researchers said.

The latest results build on findings from a Centers for Disease Control and Prevention study that suggested the novel coronavirus may have been circulating in the United States last December, well before the first COVID-19 case was diagnosed on Jan. 19, 2020.

A protective face mask lays, as the global outbreak of the coronavirus disease (COVID-19) continues, beside leaves at the lakefront in Chicago, Illinois, U.S., December 6, 2020. REUTERS/Shannon/File Photo

The positive samples came from Illinois, Massachusetts, Mississippi, Pennsylvania and Wisconsin, and were part of a study of more than 24,000 blood samples taken for a National Institutes of Health research program between Jan. 2 and March 18, 2020.

Samples from participants in Illinois were collected on Jan. 7 and Massachusetts on Jan. 8, suggesting that the virus was present in those states as early as late December.

“This study allows us to uncover more information about the beginning of the U.S. epidemic,” said Josh Denny, one of the study authors.

The findings were published in the journal Clinical Infectious Diseases.

Reporting by Mrinalika Roy in Bengaluru; Editing by Anil D’Silva

Our Standards: The Thomson Reuters Trust Principles.

 

Reuters source:

https://www.reuters.com/business/healthcare-pharmaceuticals/five-us-states-had-coronavirus-infections-even-before-first-reported-cases-study-2021-06-15

 

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