Pharmaguy's Insights Into Drug Industry News
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Pharmaguy's Insights Into Drug Industry News
Pharmaguy curates and provides insights into selected drug industry news and issues.
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America's Big Pharma Firms Spend More on Shareholders Than R&D and the New U.S. Tax Laws Won’t Change That

America's Big Pharma Firms Spend More on Shareholders Than R&D and the New U.S. Tax Laws Won’t Change That | Pharmaguy's Insights Into Drug Industry News | Scoop.it

At the J.P. Morgan Healthcare Conference in San Francisco this week, executives of big, U.S.-based pharma and biotech firms spoke approvingly of new U.S. tax laws, saying they will "even the playing field" with foreign competitors, lower effective tax rates and increase financial flexibility.

 

Several companies, including Johnson & Johnson, Merck & Co. and Eli Lilly & Co., said the laws would not fundamentally change their capital-allocation strategies. If we take them at their word, then what does that mean?

 

It means research and development spending will be about the same; dealmaking will be opportunistic and difficult to predict; and a lot of money will go back to shareholders in the form of dividends and buybacks.

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Top #pharma R&D Spenders in 2016 & R&D Share of Income

Top #pharma R&D Spenders in 2016 & R&D Share of Income | Pharmaguy's Insights Into Drug Industry News | Scoop.it

You usually don’t see much annual fluctuation in the overall R&D budgets of the top 15 companies. The trend over the last few years has been to keep the lid on spending, particularly among the giants in Big Pharma. Companies didn’t cut much overall, but there was plenty of realignment going on as the industry refocused pipelines and continued a migration to the big hubs.

 

This past year, though, it was clear that a few companies wanted to turn up the heat in drug development, and this kind of fuel costs real money for companies that traditionally focus heavily on late-stage blockbuster drug research.

 

The top five in the business saw their collective spending jump by more than $5 billion, from 2015 to 2016, based on the annual numbers filed largely — though not entirely — with the SEC and gathered by Endpoints News. Two of those companies, Roche and the new number 2, a hard charging Merck, accounted for the lion’s share of the increase. (To be sure, some onetime non-R&D spending, such as Merck’s patent settlement with Bristol-Myers on Keytruda, figured in. But so did bread and butter spending.)

 

Gilead also saw a significant increase in research costs, with Eli Lilly — now off course following two bad setbacks for solanezumab and baricitinib — and the ever aggressive Celgene joining the action as they pressed the accelerator on new drug programs.

 

Curiously, the added spending coincided with a bad drop in new drug approvals in 2016. But they don’t correlate, and we’ve already seen that turnaround under way as regulators get busy with a brand new year — and soon a brand new FDA commissioner.

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As Drug Approvals Dive in 2016, R&D ROI Retracts

As Drug Approvals Dive in 2016, R&D ROI Retracts | Pharmaguy's Insights Into Drug Industry News | Scoop.it

The global pharmaceuticals industry is set to win the lowest annual number of new drug approvals this year since 2010 (read “New Drugs Approved by FDA in 2016 is Half the Number Approved by This Time in 2015”; http://sco.lt/9CtktV) and a new report on Tuesday suggests drugmakers' returns on research investment are deteriorating (read “Consultants Advise Pharma to Act More Like Biotech to Revive ROI for New Drugs”; http://sco.lt/8qLTCT).

 

Only 19 new drugs have been approved in the key U.S. market so far in 2016 and, with less than three weeks to go, it is clear the full-year tally will be well down on 2015 and 2014's bumper haul of 45 and 41 new products respectively.

 

At the same time the profitability of drug research is being squeezed by steadily rising costs and increasing political pressure over the high prices of many modern medicines.

 

As a result projected returns on investment in research and development (R&D) for the top 12 pharmaceutical companies have fallen to just 3.7 percent this year from a high of 10.1 percent in 2010, according to consultancy Deloitte.

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Only One #Pharma in Top 10 Spends a Bit More on R&D Than on Marketing

Only One #Pharma in Top 10 Spends a Bit More on R&D Than on Marketing | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Terry Nugent: The chart above argues that only one of the listed companies spends more on research and development (R&D) than on marketing. That would be Roche. Kudos to them. But I think the chart is somewhat misleading for two reasons. 

First, I presume marketing includes sales, which consumes the vast preponderance of pharm a promotional spend. Sales is not marketing in my world.

Second, I think we have to start viewing pharma M&A of innovative biotechs as outsourced R & D. It would be illustrative to  redo the figures accordingly.

The truly interesting question then becomes which has better ROI: make or buy?


I hypothesize the latter.

Pharma Guy's insight:

Also see "Top 15 Spenders in Biopharma R&D"; http://sco.lt/8JHE01 

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Hey Big #Pharma R&D Spender, When's the Next Big Layoff?

Hey Big #Pharma R&D Spender, When's the Next Big Layoff? | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Just about every player on this list has triggered a major overhaul of R&D in the past decade, shuttering facilities, laying off staffers, or at the very least chopping out core research areas and either narrowing their focus or adding new ones.

 

  1. Roche: Being no. 1 means trying harder
  2. J&J: Global ambitions spur a worldwide hunt for new drugs
  3. Novartis: Quiet, fast and big
  4. Pfizer: The big one keeps getting away
  5. Merck: After a big year, still looking to be No. 1
  6. Bristol-Myers Squibb: The immuno-oncology leader is thinking big
  7. AstraZeneca: One step forward, two steps back
  8. Sanofi: The master R&D partner at work
  9. Eli Lilly: Progress, but is it enough?
  10. GlaxoSmithKline: Still can’t win respect
  11. AbbVie: A company in a hurry
  12. Amgen: Ready for another buyout
  13. Celgene: No fair prices, but lots of deals
  14. Takeda: A culture shift precedes R&D overhaul:
  15. Gilead: The 600-pound gorilla goes hunting
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No Taxation Without Incentivisation! Say UK #Pharma Re: Anti-Infective Drug R&D

No Taxation Without Incentivisation! Say UK #Pharma Re: Anti-Infective Drug R&D | Pharmaguy's Insights Into Drug Industry News | Scoop.it

We desperately need new anti-infective drugs to avoid life threatening infections. Let’s make that happen by punishing companies who don’t invest in R&D for these specific drugs.

 

No, this is not a bad joke, but rather a slightly paraphrased recommendation of a UK government-commissioned Review of Antimicrobial Resistance (AMR).

 

I [Ed Schoonveld is Managing Principal at ZS Associates] certainly agree with the urgency in need for new drugs, but the report is suggesting levying a tax on drug companies that don’t engage in R&D efforts for anti-microbial drugs. It is referred to as “play or pay.” This proposed tax solution is horrifying for many reasons. It may very well cause significant harm rather than address the issue.

 

Some sort of market entry reward or a guaranteed stockpile order for these critical drugs would indeed create a natural incentive for the pharmaceutical industry to invest in these programs, which would otherwise yield little revenues. But let’s talk about funding because this is where the report is flawed.

 

It will take additional incentives to motivate a competitive industry to invest in risky discovery and development programs for anti-infective drugs that we hope will only be used sparingly.

 

Merck CEO Ken Frazier put it very nicely: The drug R&D business is not innovation (like a new iPhone version), it is invention, which is much more complex and uncertain.

 

This is where the report is horribly flawed. A tax to force invention? Forcing every pharmaceutical company to spend resources on anti-microbial drug development to avoid tax punishment is an equivalent of “the beatings will continue until morale improves!” All this will do is encourage all, rather than only the most talented in AMR, to spend money on anti-microbial research programs, preferably those that qualify for the tax exemption, but still give a relatively low-risk return on investment. It will drain intellectual resources from those companies that are better situated to truly invent new solutions in this space.

 

Stimulation leads to invention, never taxation.

Pharma Guy's insight:

In the U.S., meanwhile, some manufacturers may be hesitant to enter the Zika vaccine race because of the uncertainty around public funding in the U.S. After the White House requested $1.9 billion, the Senate last week endorsed a $1.1 billion compromise package, and the House of Representatives passed a $622 million plan. The Obama administration, calling it “woefully inadequate,” has threatened to veto the legislation.

 

“This is not seen as a commercial market, at least for the time being,” said Marie-Paule Kieny, an assistant director-general at the WHO.

 

Read more here: http://sco.lt/6AVU6D 

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Doctors Without Borders Compiles Differing Estimates of #Pharma R&D Cost per Drug

Doctors Without Borders Compiles Differing Estimates of #Pharma R&D Cost per Drug | Pharmaguy's Insights Into Drug Industry News | Scoop.it

In this report, MSF compiles the different studies or reporting on R&D costs for average drug development or specific products identified in the literature, and shows to what extent estimates vary. The studies’ estimates of costs range from $30.3 million to $2.6 billion, in 2013 dollars. The most widely-cited figures of $802 million (DiMasi et al., 2003) and $2.6 billion (DiMasi et al., 2016) are based on industry-funded studies whose methodology has been widely challenged by observers, and even by Big Pharma leaders, for including sizeable, arbitrarily inflated ‘time costs’ and costs of failure. Comparing estimates of average R&D costs across time and studies is impossible because of wide variations in methods.

Pharma Guy's insight:

Also see: "Cost to Bring a New Drug to Market Is $2.6 Billion According to Tufts - 3X More Than in 2003!"; http://sco.lt/5xFKKH 

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PhRMA Touts Benefits of Post-Approval Studies, But 70% Are "Pending"

PhRMA Touts Benefits of Post-Approval Studies, But 70% Are "Pending" | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Today, PhRMA released a new video about the importance of post-approval research, featuring Dr. Tim Garnett, Chief Medical Officer of Eli Lilly & Company.

Post-approval research utilizes data produced in the practice of medicine, including from patients, providers and payers. This information is known as real-world evidence (RWE) and it helps physicians, patients, payers, health authorities and biopharmaceutical companies better understand the medicine and its appropriate use. A

 

ssessment of RWE could lead to the discovery of new potential uses for the medicine and/or to a greater understanding of how the medicine can work with other therapies to deliver greater benefit to the patient.

In addition to post-approval research, biopharmaceutical companies and the FDA have systems in place to ensure patient safety by monitoring medicines for adverse effects, as reported by patients, health care professionals, and others.

Pharma Guy's insight:

Capital expenditures (R&D costs) are still a big deal for pharma executives. I have been reporting on various estimates of the costs to bring new drugs to market for several years now. Most of these estimates come from the Tufts Center for the Study of Drug Development.

Tufts has a new estimate of these costs that includes a new cost item: The new cost item is an estimate of post-approval R&D costs. For more about that see: http://bit.ly/newtufts 

 

P.S. The Food and Drug Administration Amendments Act (FDAAA), passed by Congress in 2007, authorized the FDA to require postmarketing studies for a prescription drug’s approval. Many drug approvals were fast-tracked on the promise that pharma companies would meet study deadlines and supply the FDA with data about any adverse events discovered via observational postmarketing studies after market approval.

So, how well has the FDA held pharma companies feet to the fire regarding postmarketing commitments under FDAAA jurisdiction?

Not very well at all. For more on that, read "FDA is Lax in Enforcing Law Regarding Prescription Drug Postmarketing Studies"; http://bit.ly/1PoqAsY 

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Wait, What? #Pharma Asks Governments to Subsidize Antibacterial Drug Research!

Wait, What? #Pharma Asks Governments to Subsidize Antibacterial Drug Research! | Pharmaguy's Insights Into Drug Industry News | Scoop.it

More than 80 international drug and biotech firms urged governments to work with them to combat drug-resistant superbugs which could kill tens of millions of people within decades unless progress is made and new antibiotics found.


The 83 pharmaceutical companies and eight industry groups urged governments around the world to commit money "to provide appropriate incentives...for companies to invest in R&D to overcome the formidable technical and scientific challenges of antibiotic discovery and development".

Pharma Guy's insight:

I thought HIGH drug prices paid for drug R&D!

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Brent Saunders, Pfizer-Allergan CEO Apparent, Has History of Anti-Discovery Research Views

If you are an R&D “lifer” as I [John LaMattina, former Pfizer R&D President] am, particularly one who spent 30 years with Pfizer, you have to be a bit worried about the Pfizer –Allergan deal. The worry stems not from all the talk about inversions and tax avoidance, but rather about Brent Saunders, current Allergan CEO and the future president and COO of the newly combined company. After all, this is the person who told Forbes last January that “the idea that to play in the big leagues you have to do drug discovery is a fallacy”. If you believe, as I do, that Pfizer is one of the few companies in the world that can take an idea and convert it into a new medicine (albeit over 15 years at a cost of $2.6 billion), these words are chilling.


Since plans for the new merger were jointly announced by Pfizer CEO, Ian Read, and Saunders, the Allergan CEO has curiously dialed back his rhetoric.


A cynic might say that Saunders is simply telling the public, as well as his future Board of Directors, what they want to hear. Perhaps this is the case.


It will be interesting to see if he continues to play down his previous anti-discovery research views. But it is safe to say that, over the coming months, there is no other pharmaceutical executive whose words and actions will be more closely monitored by both Wall Street and Pfizer scientists than Brent Saunders. After all, presumably he will become the CEO of the world’s largest pharmaceutical company.

Pharma Guy's insight:

Writing in Nature, former Pfizer R&D executive John LaMattina noted that the company's three largest buyouts--Warner-Lambert, Pharmacia and Wyeth--resulted in sweeping research cuts and site closures, leaving more than 20,000 scientists out of work. And those who stick around were saddled with major R&D delays, LaMattina wrote, as integrating two large companies involves a painstaking review of assets that can slow development down to a crawl. Even more difficult to quantify is the effect on productivity, he wrote, as word of potential layoffs spreads fast throughout a large company and distracts workers from their projects.

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The Drug Industry's Eroom's Law: Diminishing Returns on Investment - But Don't Sell Short Yet!

The Drug Industry's Eroom's Law: Diminishing Returns on Investment - But Don't Sell Short Yet! | Pharmaguy's Insights Into Drug Industry News | Scoop.it

In technology there’s Moore’s Law, which says that semiconductors will keep getting cheaper and better. In drug development there’sEroom’s Law (Moore spelled backward, get it?), which posits that:


********

the number of new U.S. Food and Drug Administration (FDA)-approved drugs per billion U.S. dollars of R&D spending in the drug industry has halved approximately every nine years since 1950, in inflation-adjusted terms.

********


That’s from an article by three securities analysts and a venture capitalist that was published in the journal Nature Reviews Drug Discovery in March 2012 and got a lot of attention in the industry.


Just as it was published, though, the tide seemed to turn. The number of FDA new-drug approvals rose a lot in 2012 and stayed high in 2013. Last year it exploded. By the count of the Boston Consulting Group,2014 was the biggest year ever for new therapeutic drug approvals:


There’s a happy way to look at this: Eroom’s Law has been repealed, the pharmaceutical industry is back, and the so-called biotech bubbleis entirely rational exuberance.


Then there’s the other way. BCG estimates that peak sales from the drugs approved last year will actually add up to less than those approved in 2013, and much less than those approved in 1996, the previous high point for drug approvals. That is, more drugs are being approved, but most are aimed at smaller targets -- rare diseases, very specific cancers.

In fact, the authors of the Eroom’s Law article -- Jack W. Scannell, Alex Blanckley and Helen Boldon, then all of Sanford C. Bernstein in London, and Brian Warrington of Phoenix IP Ventures -- predicted back in 2012 that this might happen, in part because researchers were getting better at developing narrowly targeted drugs.


That’s better than not developing any drugs at all. But it’s an indication that diminishing investment returns on  drug R&D  may persist, even if Eroom’s Law doesn’t hold up in coming years. In their article, Scannell & Co. gave four main reasons for the poor return on investment: Read more here.

Pharma Guy's insight:


According to a new study by the Tufts Center for the Study of Drug Development (CSDD), which receives funding from the pharmaceutical industry, the estimated cost to develop a new Rx drug for marketing in the U.S. is $2,558 million or $2.6 billion (see press release). That 3.25 times the $800 previously estimated and frequently cited by the pharmaceutical industry, pharma trade publications, and the general media. Read more here: http://bit.ly/tuftsnewdata

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"Venture Philanthropists" Bet Big on Orphan Drugs for Rare Diseases

"Venture Philanthropists" Bet Big on Orphan Drugs for Rare Diseases | Pharmaguy's Insights Into Drug Industry News | Scoop.it
Venture philanthropy risks benefiting companies, not patients.


ROBERT J. BEALL, the president and chief executive of the Cystic Fibrosis Foundation, called his recent decision to sell the royalty rights to his organization’s research a “game changer.” Indeed: Deals like this, in which an investment company paid the foundation $3.3 billion for its future royalties from several cystic fibrosis drugs it helped finance, could revolutionize the way medical research is funded. Rather than the staid model of government-funded institutions handing out grants to academic research facilities, a new breed of “venture philanthropies” like the Cystic Fibrosis Foundation could corral private investment into developing lifesaving drugs quickly and cheaply.


The problem is that venture philanthropy is, essentially, another term for privatizing scientific research. Instead of decisions about the fate of scientific funding being made by publicly oriented institutions, those decisions are being put in the hands of anonymous philanthropists and ostensibly benevolent nonprofits.


So far, there is no effort to extend government price controls to venture-philanthropy-derived research. The Cystic Fibrosis Foundation did little to lobby for lower prices on the drugs that were developed from the research it funded. As a result, Kalydeco, a cystic fibrosis medication it funded, is one of the most expensive drugs available, at $300,000 a year.


One argument in favor of venture philanthropy is that it creates a way to sustain small foundations that study rare diseases that, from a for-profit point of view, aren’t worth investigating.


But while Big Pharma might be faulted for funneling billions of dollars into erectile-dysfunction drugs and off-label drug marketing, researching extremely rare diseases may also represent a misuse of public and private funds. Efforts to cure, rather than treat or prevent, obscure diseases can be expensive, diverting investment from more common afflictions. The high costs of focusing on rare diseases are then eventually pushed onto the health care system by way of egregiously high drug prices. Such a choice involves an incredibly complex moral calculus, one that is best processed by democratic public institutions.


To make medical advancements truly philanthropic, the profit motive needs to be removed from the equation. If the intent is to cure rare diseases, then we should be increasing the budget for the National Institutes of Health and other research initiatives. Instead of gala balls and donor drives, higher taxes on the same rich benefactors could be used to fund the research that isn’t already being supported. Biotech patents developed through venture philanthropy should not have exclusive rights attached to them.


This would allow generic versions of drugs onto the market, which would go a long way toward keeping health care costs down and not driving the uninsured into debt.


Pharma Guy's insight:


When a dumb reporter asked "Willie" Sutton, the famous bank robber, why he robbed banks, he is reported to have said "Because that's where the money is." Duh!

Until a few years ago, if you asked a pharmaceutical company executive why his or her company developed and marketed an "orphan drug" -- ie, a drug for a disorder affecting fewer than 200,000 people in the U.S. -- you would likely have gotten a response such as "because there is an unmet medical need" or something similar.

Today, however, orphan drugs also have the potential to turn into blockbusters; ie, be where pharma's money is at (see "Analyst says smart money is on drugs for certain orphan diseases" and "New Big Pharma Economies of Scale: Less Patients Needed to Reach Blockbuster Sales").


From a Feb 5, 2015, editorial by a CF patient in Cystic Fibrosis Today:


Despite the incredible success of the CF Foundation in the sale of its royalty rights through the venture philanthropy model, concerns have been raised about collaboration between non-profits and pharmaceuticals.


“There is some concern that a profit motive could divert the organizations from their primary mission — helping patients — and create a conflict of interest,” Andrew Pollack comments in his New York Times article. “For instance, the price of the main drug developed through Cystic Fibrosis Foundation’s investment is $300,000 a year.”

The article addresses a serious issue surrounding the high cost of CF modulators that can be cost prohibitive for patients. The high costs begin to enter the ethical dilemma, which asks, how much would you pay to be healthy?


The argument presented in the article is that if non-profits such as the CF Foundation are receiving royalties from the sale of drugs, there is less incentive for them to lobby the company to reduce the costs for the patients. However, Dr. Beall of the CF Foundation has contended that despite their concerns for the high priced ivacaftor (kayldeco) there was little they could do to reduce the cost, which was at the discretion of Vertex.


I am the first to argue that it is an imperative that every person with CF who is eligible for novel CF modulator therapies have access to the drugs. However, it is misplaced to discredit the venture philanthropy model as a result, since the discussion surrounding the affordability of the drug only exists because the CF Foundation invested the capital to have it created.


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Tufts Again Will Estimate How Much it Costs to Develop a Drug. Will It Be Forever Quoted in the Press?

Tufts Again Will Estimate How Much it Costs to Develop a Drug. Will It Be Forever Quoted in the Press? | Pharmaguy's Insights Into Drug Industry News | Scoop.it
The Tufts Center for the Study of Drug Development tomorrow will release a report that will take yet another stab at determining the true cost of developing a medicine.


Drug makers maintain the true cost should reflect the investment in not only the hits, but the misses. In other words, the pharmaceutical industry says the expense needed to successfully concoct any one medicine should incorporate the costs of the many failures that occur along the way.


Conversely, consumer advocates and some academics, among others, regularly contest industry estimates, which have been rising over the years. As they see it, the numbers proffered by drug makers mask a combination of irrelevant and overstated expenses. And these estimates, they go on to argue, are unfairly used to justify rising prices.

For these reasons, arguments are likely to continue. Nonetheless, the Tufts Center for the Study of Drug Development on Tuesday will release a report that will take yet another stab at determining the true cost. The last time the think tank offered an estimate was in 2003, when it calculated the cost to develop a drug at $802 million.

Pharma Guy's insight:


"After years of debate over the cost of developing a drug, GlaxoSmithkline ceo has uttered a sentence that might resolve the issue once and for all – or reignite the argument," reports Pharmalot (here). "Speaking at a healthcare conference in London ... Andrew Witty explained that the $1 billion cost to develop a drug, which is often cited as the reason why some medicines have high price tags, is actually 'one of the great myths of the industry.'”


I have tackled the estimated $800 million drug develop cost gorilla before and garnered a lot of comments from readers, including Dr. Joseph DiMasi, whose team at Tufts came up with that number way back in 2003. Since then, the number has been adjusted upward to over $1 Billion due to inflation/increased costs.


A report  published in Biosciences entitled "Demythologizing the high costs of pharmaceutical research" (BioSocieties 6, 34-50; March 2011) claims the MEDIAN cost to develop a new drug is $59.4 million, which is more than an order of magnitude LESS than the DiMasi estimate. Fore more on that, read A New Estimate of Drug Development Cost

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@PhRMA Mulls Limiting Members to Appease Trump Amid Drug Price Scandal

@PhRMA Mulls Limiting Members to Appease Trump Amid Drug Price Scandal | Pharmaguy's Insights Into Drug Industry News | Scoop.it

The pharmaceutical industry’s Washington lobbying group will likely adopt new membership rules this week that will oust many smaller companies that don’t spend heavily on research, people familiar with the matter said, amid increasing scrutiny of prescription drug prices.

 

The lobby group, Pharmaceutical Research and Manufacturers of America, or PhRMA, is proposing that to remain a member, companies will have to spend $200 million a year on research and development, based on a three-year average. They’ll also have to have to show that their research spending amounts to at least 10 percent of their global sales, according to the people, who asked not to be identified because the matter is still private.

 

PhRMA’s membership includes industry giants such as Eli Lilly & Co. and Pfizer Inc., as well as smaller companies that don’t have the same research pedigree. The thresholds are a high bar for some companies whose businesses have focused more on buying older drugs and raising their prices, and for smaller companies that don’t yet have drugs on the market.

 

The review began earlier this year after one of PhRMA’s then members, Marathon Pharmaceuticals LLC, said it would charge $89,000 a year for a drug that was being imported from overseas for about $1,000. The company had done limited new research to get the drug approved in the U.S. The drug is used to treat a rare and deadly pediatric condition.

 

Soon after Marathon announced the price for its drug, Steve Ubl, chief executive officer of PhRMA, said Marathon’s “recent actions are not consistent with the mission of our organization” (read “PhRMA Offers Up Marathon Pharmaceuticals as “Sacrificial Lamb” to Trump?”; http://sco.lt/5uZwMD and “PhRMA Embarrassed by Marathon is Forced to “Review” Membership Criteria – Is a Purge in the Cards?”; http://sco.lt/5XUvqL). Marathon left PhRMA last month ahead of the review, which the lobbying group’s board is scheduled to vote on Tuesday, according to the people familiar with the matter. The changes would be immediate, according to a third person familiar with the matter.

 

Further Reading:

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Immigrants Make Up to One-Third of Pharma’s R&D Workforce But It Kept Mum About Trump’s Travel BAN

Immigrants Make Up to One-Third of Pharma’s R&D Workforce But It Kept Mum About Trump’s Travel BAN | Pharmaguy's Insights Into Drug Industry News | Scoop.it

As leaders from across the business world chimed in to speak against the temporary travel ban President Donald Trump implemented last week on citizens from seven predominantly Muslim countries and refugees, one industry that relies on immigrant labor stayed under the radar: big pharma (read “The Silence of the #Pharma Lambs on Trump's Immigration Policy”; http://sco.lt/8rSYwD).

 

According to a 2014 study by researchers at George Mason University, immigrants made up 13 percent of the U.S. population in 2011, but made up 17 percent of the pharmaceutical industry labor force. That reliance has only increased according to Justin Lowry, a postdoctoral researcher at George Mason’s Institute for Immigration Research: An estimate using 2015 data shows that immigrants made up 23 percent of the pharma workforce. Lowry said the industry is “very heavily reliant” on foreign-born workers.

 

And among those who work in research and development — the engine of discovery and innovation for the industry — immigrants made up one-third of the labor force, according to the 2014 report. Foreign-born scientists made up 43 percent of medical and life scientists, the study found.

 

“In general, intellectual endeavors in the U.S. — education, research — they rely on immigrants,” Lowry said. “It’s important to have innovation, and innovation comes from diversity. A difference in perspective allows for a difference in approach.”

 

Yet in the run-up to a big meeting Tuesday morning with Trump, the pharmaceutical industry was muted compared with other big businesses responding to the ban.

 

Pharmaceutical Research and Manufacturers of America, the trade group that represents the industry and usually speaks on its behalf, said it didn’t have a comment about the ban. Neither did Pfizer, one of the world’s largest pharmaceutical companies. And those that did have a response to the ban often struck a neutral tone and focused on its employees.

 

“We are working to fully understand the implications of the Executive Order on our business and our employees,” Astra Zeneca said in a statement.

Pharma Guy's insight:

Further Reading: “Pharma's Top Execs React to Trump Immigration Ban With Near Universal Silence”; http://sco.lt/8fzALh

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Consultants Advise Pharma to Act More Like Biotech to Revive ROI for New Drugs

Consultants Advise Pharma to Act More Like Biotech to Revive ROI for New Drugs | Pharmaguy's Insights Into Drug Industry News | Scoop.it

The an­a­lysts at De­loitte con­tinue to cal­cu­late a dwin­dling re­turn for Big Pharma’s R&D dol­lars. Their lat­est num­ber crunch­ing for the world’s top 12 bio­pharma com­pa­nies con­cludes that ROI on their in­vest­ment cash has shrunk to 3.7%, the low­est level yet after hit­ting 10.1% in 2010.

What’s killing these com­pa­nies’ num­bers, De­loitte says, is that while de­vel­op­ment costs on new drugs has plateaued at about $1.5 bil­lion on each pro­gram, their rev­enue keeps falling. There’s been an 11.4% drop in rev­enue year-on-year over 6 years, which has now fallen to $394 mil­lion in av­er­age peak an­nual sales.

A hunt for any sil­ver lin­ing in this new re­port can be des­per­ately hard. The De­loitte guys — Colin Terry and Neil Lesser — con­clude that the num­ber of block­busters pro­duced by this crowd has dwin­dled by more than half, so they keep spend­ing big in search of smaller drugs. And as they focus more and more on their own pipeline, they are ig­nor­ing the ex­ter­nal pro­grams that can de­liver bet­ter re­turns — set­ting up a push, per­haps, for a surge in M&A as the re­al­iza­tion sinks in that they are on the wrong track.

The best ap­proach, they add, is to think and act like a biotech. Smaller biotech groups sim­ply do bet­ter than Big Pharma at R&D. And the big com­pa­nies that stay fo­cused on core dis­eases do far bet­ter than the com­pa­nies that keep shift­ing R&D spot­lights.

Pharma Guy's insight:

What's the best way to emulate biotech companies to increase ROI? Raise prices like Gilead did, of course (read, for example, “Gilead Dodges Taxes While Gouging Prices, Says Advocacy Group”; http://sco.lt/7IjyXR). Or hire consultants to be CEO like Valeant did.

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Lyrica's Success Story: Pfizer's Development & Marketing, University Research

Lyrica's Success Story: Pfizer's Development & Marketing, University Research | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Pfizer’s Lyrica leads drug sales for the company--but it’s also doing big things for another of the med’s developers.

Royalties on the nerve pain and seizure med have powered the endowment at Northwestern University--which helped develop Lyrica--to $10 billion, making it the eighth largest endowment in the U.S., Bloomberg reports.

Lyrica is responsible for about $1.4 billion of that tally, the news service notes.

The drug has been a strong performer for Pfizer in recent years. It edged out anti-TNF giant Enbrel for the top spot in the pharma giant’s innovative products portfolio, and totted up $3.66 billion in sales last year. Only the Prevnar franchise of vaccines--which hauled in $6.25 billion last year--was a bigger moneymaker for the company.

The Pfizer-Northwestern relationship isn’t an unusual one. Universities increasingly rely on royalty income to fund research, and the pharma industry increasingly relies on--and partners with--academia on early-stage R&D. Princeton University, for one, collected $524 million in licensing income after Eli Lilly cancer therapy Alimta took off.

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Direct patient engagement through social media speeds recruitment to cancer research study

Direct patient engagement through social media speeds recruitment to cancer research study | Pharmaguy's Insights Into Drug Industry News | Scoop.it
A crowd-sourcing strategy aimed at accelerating research into metastatic breast cancer has registered more than 2,000 patients from all 50 states in its first seven months, report researchers from Dana-Farber Cancer Institute and the Broad Institute of MIT and Harvard at the American Society of Clinical Oncology Annual Meeting.

Via Julie O'Donnell, Lionel Reichardt / le Pharmageek
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#Pharma Drug Repurposing: How Drugs Spread from Disease to Disease

#Pharma Drug Repurposing: How Drugs Spread from Disease to Disease | Pharmaguy's Insights Into Drug Industry News | Scoop.it

While drug development is typically thought of as the disease-centric process of finding a drug that can treat a disease, much effort goes in the reverse, drug-centric direction of finding a disease that can be treated by a drug. The diseases for which a drug is intended can change over the course of its development and post-marketing. During pharmaceutical development, new diseases can be selected or dropped at every stage of the pipeline on the basis of pre-clinical and clinical results. When a drug starts to show signs of success with a particular disease, additional diseases are sought to broaden the drug’s therapeutic and commercial appeal. Once a drug has been approved by regulatory agencies, its use may not be restricted to the diseases for which it was approved, as medical practitioners may prescribe it off-label. Indeed, a drug’s efficacy against certain diseases may only become fully apparent once it is consumed by a large number of patients or made widely available for scientific experimentation. New findings about a drug’s efficacy can prompt the original drug developer to seek supplemental indication approvals or pursue life-cycle management strategies such as combining the drug with other new or existing drugs.

This is not to say that drugs are created ex nihilo. They are generally designed with an intent rooted in biological rationale, such as to inhibit a disease-causing gene. However, the interconnected nature of human biology and of pathological mechanisms, the steady advance in our understanding of diseases and the potential lack of target selectivity means that drugs designed for a specific purpose can end up having different or additional applications. Once a drug is created it can fail with diseases for which it was designed and succeed with unanticipated diseases. Thus, drugs hold an intrinsic value based not only on their proven therapeutic effect but also on their therapeutic potential, both suspected and unsuspected.

Because the process of pharmaceutical drug discovery is long and uncertain, a central part of a drug’s suspected therapeutic potential is the drug’s prospects to treat multiple diseases. Challenges to a drug’s development may come from faster-advancing competing drugs that can become standard of care and discourage further work on other drugs. They may also come from business vagaries such as department closures in pharmaceutical companies that lead to re-alignment of internal drug portfolios. Thus, having multiple potential applications increases the likelihood that a drug will be able to navigate the development process.

The unsuspected therapeutic potential of a drug is illustrated most clearly by the field of drug repurposing. Drug repurposing has drawn attention in part due to the commercial interest of pharmaceutical companies possessing an abundance of safe drugs that have failed to show sufficient efficacy in any disease. The “poster child” of drug repurposing success is that of a safe but abandoned drug that is discovered to be efficacious with a previously unsuspected disease. While drug repurposing focuses on late-stage and post-marketed drugs, the search for unsuspected diseases for existing drugs can be undertaken at any point in a drug’s history.

Pharma Guy's insight:

A good example is Botox. Read "Botox: Pharma's Answer to Duct Tape"; http://bit.ly/botoxducktape 

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Tufts' Joseph A. DiMasi Debunks the Andrew Witty R&D Cost Meme

Tufts' Joseph A. DiMasi Debunks the Andrew Witty R&D Cost Meme | Pharmaguy's Insights Into Drug Industry News | Scoop.it

I read with interest your article in FiercePharmaMarketing on pharma pricing debates (March 16, 2016). I have been the principal investigator for the Tufts Center for the Study of Drug Development studies on pharmaceutical R&D costs (including the latest one which is available now in the Journal of Health Economics). It is your reference to that work that I wish to address.

In particular, I would like to correct what I believe is a misinterpretation of something that GSK CEO Andrew Witty stated at a healthcare conference in 2013. Some industry critics have picked up on a comment he was reported to have made, taken it out of context, used it to try to discredit our work and repeated it so often that it has become a meme. The quote that the critics use, without context, is "one of the great myths of the industry," referring to a $1 billion R&D cost figure.

 

The original reporting on Mr. Witty's comments is from Reuters. An explanation by the reporter of what Mr. Witty meant immediately follows the quote in question ("since it was an average figure that includes money spent on drugs that ultimately fail"). That, of course, is what we measured, and our estimates rightfully consider the costs of failures.

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Pharma Marketing Blog: Tufts New Estimate of Costs to Bring a Drug to Market & Beyond

Pharma Marketing Blog: Tufts New Estimate of Costs to Bring a Drug to Market & Beyond | Pharmaguy's Insights Into Drug Industry News | Scoop.it

The pharmaceutical industry is currently struggling to defend the high cost of drugs. It is using advertising and lobbying to reach lawmakers and payers (read, for example, "#Pharma Ramps Up Ads & Lobbying to Fend Off Rx Pricing Regulation").

PhRMA's multi-million dollar "From Hope to Cures" campaign, for example, pulls the heart strings by featuring a 5-year-old boy with Type 1 diabetes. This is part of PhRMA's pledge to spend several million dollars this year, and 10% more than in 2015, on digital, radio and print ads that emphasize the industry’s role in developing new drugs and advancing medical science. It also plans to spend more money lobbying and donated to political campaigns.

In these campaigns, the strategy is less focused on defending drug costs to pay for the cost of developing new drugs and more focused on the benefit of new drugs in fighting intransigent diseases such as diabetes, rare cancers, and Alzheimer's Disease.

Nevertheless, many pharma CEOs still speak of "return on capital" to defend high drug prices.

So capital expenditures (R&D costs) are still a big deal for pharma executives. I have been reporting on various estimates of the costs to bring new drugs to market for several years now. Most of these estimates come from the Tufts Center for the Study of Drug Development.

Tufts has a new estimate of these costs that includes a new cost item.

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Deloitte Claims Pharma R&D Returns Are Too Low: No Wonder Drug Prices Are Rising

Deloitte Claims Pharma R&D Returns Are Too Low: No Wonder Drug Prices Are Rising | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Returns on R&D in the drug industry are too low to sustain future pipeline investment, according to a new Deloitte study.


While the number of new drugs reaching the market last year reached a record 43 products, the headline figure masks underlying problems that will require a transformation of the R&D approach to fix, the study suggests.


The report - Measuring the return from pharmaceutical innovations 2015: Transforming R&D returns in uncertain times - reveals that R&D returns for the top 12 pharma companies in 2015 have fallen to 4.2% - less than half the 10.2% return enjoyed in 2010.


The bottom line is that costs to develop new products are rising - from an average of $1.18bn in 2010 to an estimated $1.58bn this year - while average peak sales have halved from $816m to $416m.

"The numbers simply do not add up for life sciences R&D to generate an appropriate return," notes Deloitte. 


Some companies have responded with a push into specialty therapeutics, but they need to be mindful about potentially missing valuable opportunities in primary care categories.


On the plus side, costs associated with terminated R&D projects have reduced from $80bn in 2010 to $30bn this year. Meanwhile, a new cohort of four smaller, mid-to large-cap companies - included in the report for the first time this year - paints a rosier picture.

Pharma Guy's insight:

No wonder the drug industry is emulating Martin Shkreli in jacking up drug prices while vilifying him unjustly (see here: http://bit.ly/1TRLhB8

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Clinical Research Site Professionals Focus on Improving Lives

Clinical Research Site Professionals Focus on Improving Lives | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Clinical research site professionals (investigators, site directors, study coordinators, and pharmacists) play a very important role in shaping a clinical trial volunteer’s experience. That role can be a complex one, as they work to build bridges between the sponsor’s goals for a trial, the physician’s care plan for the volunteer, and the volunteer’s own needs and wishes. They are often “the face” of the trial, and provide the much-needed personal connection for patients as they navigate the process of participating in a trial.


We know there’s a lot we can learn from their experiences and insights. We recently created a Lilly Innovation Site Advocacy Group to help keep the lines of communication open and encourage innovative thinking around improving the clinical trial experience. Our hope is that we can make site professionals jobs a little easier, and offer exceptional trial experiences for patients.


Leigh Anne Naas, a member of our Lilly Clinical Innovation team, recently asked a few site professionals about their connections with their clinical research patients.

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Former Pfizer Exec LaMattina Challenges Chuck Norris on #Pharma R&D

Former Pfizer Exec LaMattina Challenges Chuck Norris on #Pharma R&D | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Clearly, Norris is an actor who knows nothing about drugs, the challenges of R&D, and the unmet medical needs of suffering patients. People should ignore his comments and advice. The problem is that there are a lot of people who actually believe he knows what he is talking about. The result is further erosion of people’s trust in those who are responsible for bringing 41 new medicines to the world in 2014 and the hundreds of new drugs that should arrive over the next decade. Chuck Norris is not helping the healthcare system nor patients – he is doing them a disservice.

Pharma Guy's insight:


Them's fighting words! John, have your heard this Chuck Norris joke?: There used to be a street named after Chuck Norris, but it was changed because nobody crosses Chuck Norris and lives. I guess you haven't heard this one: Chuck Norris doesn't lie, he makes up truths.

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Cost to Bring a New Drug to Market Is $2.6 Billion According to Tufts - 3X More Than in 2003!

Cost to Bring a New Drug to Market Is $2.6 Billion According to Tufts - 3X More Than in 2003! | Pharmaguy's Insights Into Drug Industry News | Scoop.it

According to a new study by the Tufts Center for the Study of Drug Development (CSDD), which receives funding from the pharmaceutical industry, the estimated cost to develop a new Rx drug for marketing in the U.S. is $2,558 million or $2.6 billion (see press release). That 3.25 times the $800 previously estimated and frequently cited by the pharmaceutical industry, pharma trade publications, and the general media.

I have tackled the estimated $800 million drug develop cost gorilla before and garnered a lot of comments from readers, including Dr. Joseph DiMasi, whose team at Tufts came up with that number way back in 2003 (for more on that, read "Tufts Hangs Tough on Opportunity Cost Analysis").

It's about time CSDD threw out the old number and came up with a new, much larger number! But Tufts is not the only academics who have tackled the problem. As I reported in 2011, the London School of Economics and Political Science (LSEPS) cam sup with quite a different - much lower! - estimate of $59 million (see "A New Estimate of Drug Development Cost") and the Office of Health Economics (OHE) at the University College London estimated the cost to be $1.5 billion in 2013 (see here).

These various historic estimates are summarized in the accompanying chart.


You'll never guess who said the oft-cited 2003 Tufts estimate was  "one of the great myths of the industry". To find out who, click here.

Pharma Guy's insight:


PhRMA is already reaping the PR value from this study: "The road to bringing a new FDA-approved medicine to patients is long and the costs are formidable" (see PhRMA's comments here).

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