Drug companies greet 2019 with U.S. price hikes

FILE PHOTO: A person holds pharmaceutical tablets and capsules in this picture illustration taken in Ljubljana September 18, 2013. REUTERS/Srdjan Zivulovic

By Michael Erman

NEW YORK (Reuters) – Drugmakers kicked off 2019 with price increases in the United States on more than 250 prescription drugs, including the world’s top-selling medicine, Humira, although the pace of price hikes was slower than last year.

The industry has been under pressure by the U.S. President Donald Trump to hold their prices level as his administration works on plans aimed at lowering the costs of medications for consumers in the world’s most expensive pharmaceutical market.

During a White House meeting with members of his Cabinet, U.S. President Donald Trump on Wednesday said he expected to see a tremendous decrease in drug prices. Health and Human Services (HHS) Secretary Alex Azar was at the meeting.

The overall number of price increases was down by around a third from last year, when drugmakers raised prices on more than 400 medicines, according to data provided by Rx Savings Solutions, which helps health plans and employers seek lower cost prescription medicines.

Allergan Plc was particularly aggressive. It raised list prices on more than 50 drugs, and more than half of those by 9.5 percent, according to the Rx Savings data

AbbVie Inc increased by 6.2 percent the list price of its blockbuster rheumatoid arthritis treatment Humira, which is on pace to record about $20 billion in sales in 2018.

Allergan said in a statement that its average list price increase across its portfolio is around 3.8 percent this year. It said it does not expect to realize any net benefit from the increases this year because of higher rebates and discounts it expects to make to payers.

AbbVie did not immediately respond to request for comment.

More price increases are expected this month. Reuters reported late last year that nearly 30 drugmakers had notified California agencies they plan to raise list prices of their drugs. Not all of those increases have been announced yet.

The United States, which leaves drug pricing to market competition, has higher prices than in other countries where governments directly or indirectly control the costs, making it the world’s most lucrative market for manufacturers.

HHS has proposed policy changes aimed at lowering drug prices and passing more of the discounts negotiated by health insurers on to patients. Those measures are not expected to provide relief to consumers in the short-term, however, and fall short of giving government health agencies direct authority to negotiate or regulate drug prices.

“It’s business as usual” for drugmakers, said Rx Savings Solutions Chief Executive Michael Rea, who said he believes there has to be meaningful changes to the marketplace, rather than new regulations in order for drug prices to drop.

(Reporting by Michael Erman; additional reporting by Jeff Mason in Washington; Editing by Bill Berkrot)

Too many cancer drugs? Crowded market gives investors pause

FILE PHOTO: A scientist prepares protein samples for analysis in a lab at the Institute of Cancer Research in Sutton, July 15, 2013. REUTERS/Stefan Wermuth/File Photo

By Ben Hirschler

LONDON (Reuters) – In London’s world-famous Great Ormond Street children’s hospital, Dr. Karin Straathof is excited about a new cell-based medicine that offers hope for toddlers with incurable nerve tissue cancer.

Her progress with a handful of children for whom standard care does not work reveals the promise of modern cancer drugs, an increasingly crowded pharmaceuticals field from which investors must try to select future winners.

The new therapy using engineered white blood cells has shown anti-tumor activity in the hardest to treat neuroblastoma patients.

“The beauty is that it is very specific in targeting the cancer cells, while leaving healthy tissue unharmed,” Straathof told Reuters, after presenting her early findings at a science meeting in Chicago in April. “It’s an important step forward.”

Autolus – the small British biotech company developing the chimeric antigen receptor T-cell or CAR-T treatment – is equally excited, and is planning a potential IPO on Nasdaq.

But Autolus is far from alone in pursuing CAR-T therapy. In fact, CAR-T treatment – part of the wider field of cancer immunotherapy – is one of the hottest areas of drug research today, with multiple firms piling in.

The biotech dollars are flooding in not only in Europe and the United States but also in China which, with 162 clinical trials, now boasts more CAR-T studies than the United States, according to a Reuters analysis of the latest data.

With over 2,000 drugs in the cancer immunotherapy space, the competitive landscape has never been more crowded as each firm seeks its own proprietary version of often similar drugs.

Overall, researchers are working on more than 5,200 cancer drugs, up 7.6 percent from a year ago, according to the Pharmaprojects database. The sheer number is stretching the ability of scientists to find enough patients to test them on.

Cancer now makes up 34.1 percent of the total drug industry pipeline, up from 26.8 percent in 2010, as companies divert resources into a promising sector where new treatments can often fetch more than $100,000 a year.

‘MORE CIRCUMSPECT’

With the first two CAR-T treatments from Novartis and Gilead Sciences winning U.S. approval last year for rare blood cancers, the promise of such smart medicine is real and life-changing – especially if it can be made to work in solid tumors, as Straathof’s work suggests is possible.

However, the wholesale rush by pharmaceutical and biotech companies into the cancer area poses a dilemma for investors.

A flood of similar products makes it hard for investors to pick those companies that will achieve commercial success.

“More competition means you should be more circumspect,” said Nooman Haque, head of life sciences at Silicon Valley Bank in London, which provides financing for start-ups and venture capitalists.

“The traditional investment thesis in biotech is to have a differentiated medicine with not many competitors, which helps drive value. Here the problem is that even if there is a big patient benefit, there are questions as to how long your advantage lasts and what your commercial edge will be.”

Pharmaceutical executives are not blind to the issue, although each hopes to find a winning formula in immunotherapy – the fastest-growing part of the $100 billion-a-year cancer drug market, with sales expected to top $25 billion by 2021, according to analyst forecasts compiled by Thomson Reuters.

Roche <ROG.S> CEO Severin Schwan, head of the world’s top cancer company, says he expects “an enormous drop-out”, while Sanofi’sĀ  outgoing research head Elias Zerhouni warned analysts last week that duplication of effort would shrink the time available for drugmakers to recoup theirĀ  investments.

“The cycle of innovation has been shortened significantly,” agrees Aiman Shalabi, chief medical officer at the non-profit Cancer Research Institute. “There is no doubt we are seeing fast follow-on and many identical agents hitting the same targets.”

The good news for society is that patients will find out much faster than in the past if new approaches work. But that means doctors can rapidly switch to alternatives, leading to increased product churn and uncertainty over future sales.

COMBINATION STUDIES

Twenty years ago, when Roche launched its state-of-the-art cancer drugs Herceptin and Rituxan, it enjoyed years without rivals. Today, there are multiple versions of new drugs targeting molecular pathways with acronyms such as PD-1/L1, PARP and CDK, as well as CAR-T.

“You’re either first or you’re best or you’re nowhere because it has become such a race,” said Paul Major, an investment manager at BB Healthcare Trust, who is cautious about investing in cancer immunotherapy.

Lydia Haueter at Pictet Asset Management is also wary, pointing out there are already five PD-1/L1 drugs on the market – from Merck, Bristol-Myers Squibb, Roche, AstraZeneca and Pfizer – and more are coming.

“It seems everybody has a PD-1, so we especially don’t go for those kind of cancer companies,” she said.

Some drugmakers like GlaxoSmithKline <GSK.L> and Novartis that missed the initial PD-1/L1 wave are trying to make a virtue of looking ahead to the next phase of cancer immunotherapy, particularly drug combinations.

Yet last month’s failure of a combination study using a next-generation drug from Incyte with Merck’s PD-1 Keytruda shows that adding a new agent is no slam dunk for expanding the reach of immune-boosting medicine.

At Great Ormond Street, Straathof is less concerned about doubling up on research and more focused on getting effective, affordable cures – and she hopes automated processes will eventually bring down today’s sky-high drug prices.

“I’m not too worried about duplication. It’s important to not ask the same question in two trials but I think there are a lot of questions to be addressed because there is a lot of nuance in the system.”

(Reporting by Ben Hirschler; Editing by Pravin Char)

Arkansas sues opioid manufacturers for roles in epidemic

A Johnson & Johnson building is shown in Irvine, California, U.S., January 24, 2017. REUTERS/Mike Blake

By Nate Raymond

(Reuters) – Arkansas’ attorney general on Thursday joined the widening mass of litigation against opioid manufacturers, accusing three drugmakers of promoting addictive painkillers in ways that falsely denied or trivialized their risks.

Arkansas Attorney General Leslie Rutledge filed a lawsuit in state court in Little Rock accusing Purdue Pharma LP, Johnson, Johnson and Endo International Plc of engaging in misleading marketing practices.

The case made Arkansas at least the 17th U.S. state to sue manufacturers of prescription opiods amid a nationwide epidemic of addiction to the painkillers.

The lawsuit contended the drugmakers spent millions of dollars on promotional activities that downplayed the risks of addiction associated with opioids while falsely touting the benefits of using the drugs to treat chronic pain.

“The reckless actions of these opioid manufacturers have wreaked havoc upon Arkansas and her citizens for far too long,” Rutledge said in a statement.

Purdue, the manufacturer of OxyContin, denied the allegations in a statement while saying it is “deeply troubled by the prescription and illicit opioid abuse crisis.”

Johnson & Johnson’s Janssen Pharmaceuticals unit – which manufactures drugs including the opioid Duragesic, a form of fentanyl – called its marketing activities “appropriate and responsible.” Endo did not respond to a request for comment.

Prescription opioids are intended to treat pain, but the outbreak of addiction to the drugs has led to a tsunami of lawsuits by cities and counties. The lawsuits have sought to recoup damages from drugmakers for their role in the epidemic.

Opioids were involved in more than 42,000 overdose deaths in 2016, according to the U.S. Centers for Disease Control and Prevention.

At least 433 lawsuits are consolidated before U.S. District Judge Dan Polster in Cleveland, who has been pushing for a quick settlement and has invited state attorneys general with cases and probes not before him to participate in the talks.

Plaintiffs’ lawyers pursuing the case have generally not quantified the potential costs involved in the cases but have compared them with litigation by states against the tobacco industry that led to 1998’s $246 billion settlement.

The U.S. Justice Department in a March 1 filing sought 30 days to evaluate participating in the litigation, citing the “substantial costs that the federal government has borne as a result of the opioid epidemic.”

(Reporting by Nate Raymond in Boston; editing by Jonathan Oatis)

Trump chooses Gottlieb to run FDA; Pharma breathes sigh of relief

Dr. Scott Gottlieb is seen in this American Enterprise Institute photo released in Washington, DC, U.S., March 10, 2017. Courtesy The American Enterprise Institute/Handout via REUTERS

By Toni Clarke

WASHINGTON (Reuters) – U.S. President Donald Trump has chosen Dr. Scott Gottlieb, a conservative health policy expert with deep ties to the pharmaceutical industry, to lead the U.S. Food and Drug Administration, the White House said on Friday.

If confirmed by the Senate, Gottlieb would be in charge of implementing Trump’s plan to dramatically cut regulations governing food, drugs, cosmetics, dietary supplements and tobacco.

Gottlieb is well known on Capitol Hill, where he has testified multiple times on hot-button health issues, including complex drug pricing matters, and is viewed favorably by drug companies and pharmaceutical investors. He sits on the boards of several small drug and biotech companies and is an adviser to GlaxoSmithKline Plc <GSK.L>.

“Thank God it’s Gottlieb,” Brian Skorney, an investment analyst at Robert W. Baird, wrote in a research note. “We view this as a favorable development for the sector.”

Gottlieb was chosen over Jim O’Neill, a libertarian investor close to Silicon Valley billionaire Peter Thiel, a PayPal co-founder who now advises Trump on technology and science matters. O’Neill’s stated view that drugs should be approved before being proven effective generated widespread alarm.

Gottlieb, 44, is a resident fellow at the conservative American Enterprise Institute think tank and a partner at a large venture capital fund. He is a former FDA deputy commissioner who has advocated a loosening of requirements needed for approval of new medical products.

“Scott knows how the agency works and he will move it forwards, though maybe not always in ways the agency is comfortable with,” said John Taylor, a lawyer and president of compliance and regulatory affairs with the consulting firm Greenleaf Health and a former acting FDA deputy commissioner.

In addition to his public health and health policy roles, Gottlieb has for the past decade been a partner at New Enterprise Associates, a large venture fund with investments in the life sciences, medical technology and healthcare services.

Critics of the nomination say Gottlieb’s financial background present an array of potential conflicts of interest.

Dr. Michael Carome, director of Public Citizen’s Health Research Group, said Gottlieb “has spent most of his career dedicated to promoting the financial interests of the pharmaceutical industry.” If confirmed, he added, “he will have to be recused from key decisions time and time again.”

SIGNIFICANT CHANGES AT FDA EXPECTED

Stephen Ubl, a spokesman for the Pharmaceutical Research and Manufacturers of America, said it “looks forward to working with Dr. Gottlieb in his new role and engaging with him and the Agency as they seek to modernize the drug discovery and review process.”

Gottlieb, who declined to comment on the nomination, is unlikely to up-end the FDA in the way O’Neill might have, but he is nonetheless expected to bring significant change, including moving the agency to increase flexibility in the clinical trial development process.

In this he will be supported by the recently passed 21st Century Cures Act which instructs the FDA among other things to consider the use of “real world evidence” to support new drug applications. This could include anecdotal data, observational studies and patient reports

“People don’t want to take chances with safety, but there’s increasingly some clamor to be more flexible on the efficacy side,” said Kathleen Sanzo, who leads the FDA practice at the law firm Morgan, Lewis & Bockius. “You need to have some signal of efficacy. The question is, how much?”

The FDA has attempted to push back against moves to sideline randomized clinical trials, long considered the gold standard. In January it issued a report documenting 22 cases in which drugs that appeared to show promise in early trials turned out to be either ineffective or unsafe or both in larger trials.

One of Gottlieb’s priorities will likely be to streamline the process for approving generic versions of complex, difficult-to-copy therapeutics. He has stated publicly that he does not believe the FDA has good tools or policies to move such products and has advocated the creation of different approval standards.

“He’s a thoughtful and nuanced kind of guy, and not solely an industry shill,” said Jim Shehan, head of Lowenstein Sandler’s FDA regulatory practice.

A survey conducted by Mizuho Securities USA Inc of 53 pharmaceutical executives found that 72 percent favored Gottlieb over other potential candidates. Many described him as knowledgeable, experienced and balanced.

“Gottlieb is someone who the industry and investors view as an incremental positive,” said RBC Capital Markets analyst Michael Yee. “The industry and investors need rational scientific logic and an understanding of risks and benefits.”

Patient advocates welcomed the news.

Gottlieb “has firsthand experience at the FDA and as a physician that has treated patients understands the breadth of work that needs to be achieved on their behalf,” said Ellen Sigal, founder of Friends of Cancer Research.

(Reporting by Toni Clarke; Additional reporting by Deena Beasley; Editing by Alistair Bell and Lisa Shumaker)