Despite the hot, hazy days of summer, the third quarter has been rife with pricing scandals, CEO departures, company restructurings and clinical trial blow-outs. Here's a look at the top 10 stories that BioPharma Dive readers considered a must-read:
The house of cards Mylan built as it cornered the epinephrine auto-injector market crumbled in late-August after consumers, the media and Congress lambasted the company for increasing the price of its life-saving EpiPen product more than 500%, from about $100 for two pens to more than $600 currently. The company acquired EpiPen in 2007 and had recently come to control more than 85% of the market, largely through successful branding campaigns and a lack of competition. But price hikes — already a hot-button topic after scandals at Valeant and Turing — caused public outcries. Between August 18 and August 25, Mylan’s stock plummeted more than 13%. What’s more, three U.S. senators are calling for a Department of Justice investigation into whether Mylan paid the proper Medicaid rebates for EpiPen.
With drug pricing the hot button issue of the moment, the industry is keeping a close eye on the gatekeepers of pricing — pharmacy benefit managers. PBM formularies can make or break a blockbuster, but those lists aren't always governed by pure market dynamics. While Express Scripts and CVS Health claim to have saved consumers billions of dollars, critics are pointing to the behind the scenes negotiations and increasing revenues at the PBMs. CVS Health, for instance, excluded Sanofi’s top-selling Lantus from its 2017 formulary list despite the French company’s efforts to make the insulin competitively priced, in favor of Eli Lilly's biosimilar Basaglar, which is set to hit the market in December.
Merck’s continued restructuring in mid-July, cutting more than 350 research and development jobs in three New Jersey and Pennsylvania facilities while also going forward with plans to open two new labs in Cambridge, MA and San Francisco. Merck’s decision aligns with larger industry trends that have biotech and pharma companies placing less emphasis on blockbuster primary care drugs and investing in more narrowly tailored portfolios. This shift in therapeutic focus has meant a culling of pipelines (and facilities) as big pharmas seek to optimize resources. Merck is in good company; we're seeing similar initiatives at Sanofi, Novartis, GlaxoSmithKline, AstraZeneca and Pfizer.
With four biosimilars now approved by the FDA, the "copycat" biologics are slowly working their way into public and patient consciousness. Yet, they still have a long way to go before being market-ready as low-cost alternatives to blockbuster biologics. Like generics before them, biosimilars are facing tough battles in the courtroom from the brandname sponsors. At the same time, biosimilar developers are waging an uphill battle to educate the public on exactly what they are.
Underscoring the reach of Valeant’s scandal, Endo Pharmaceuticals unceremoniously ousted its own CEO — a former Valeant exec — in late September. Rajiv De Silva worked at Valeant from 2009 to 2013 and held positions as the company’s president and chief operating officer for specialty pharmaceuticals prior to taking up the helm at Endo. He quickly adopted the aggressive, acquisition-based business strategy that he helped cultivate at Valeant. But that strategy, along with all things Valeant, became taboo over the last year as the Quebec-based pharmaceutical developer faced allegations of fraud and price hiking. Now, most of the biopharma world is working to distance itself from Valeant's business model.
A setback during clinical trial testing has narrowed the gap between Bristol-Myers Squibb and Merck & Co. as the companies race for dominance in the immuno-oncology space. The former of those two — regarded as the frontrunner due to the more than $1.5 billion Opdivo (nivolumab) sales generated during the first half of 2016 —announced in late August the drug had failed a Phase 3 study in first-line non-small cell lung cancer (NSCLC). With Opdivo’s trial failure, the $12 billion NSCLC market could become more competitive and may give Merck's Keytruda (pembrolizumab) a chance to make up some ground before the market becomes more crowded.
Adding another layer of uncertainty to CAR-T development, Novartis revealed in late August that its four-year old Cell & Gene Therapies Unit would be dissolved and merged back into the main pharma unit. While Novartis painted the decision as part of an ongoing restructuring effort, industry followers largely viewed it as the company losing faith in CAR-T immunotherapy development outside of its lead candidate CTL019. The restructuring came almost two months after the FDA put a clinical hold on (and quickly removed) a Juno Therapeutics clinical trial due to patient deaths. In the aftermath of that trial and Novartis’s restructuring, Kite Pharmaceutical has pushed ahead to cement its leadership role in CAR-T therapeutics. Kite announced on Sept. 26 positive results from the Phase 2 ZUMA-1 study of its lead drug KTE-C19.
Biogen’s George Scangos was one of many to get swept under during the wave of CEO changes that took place in 2016. Though Biogen’s revenue doubled in the six years Scangos was at its helm, his business strategy moved the company away from its strength in multiple sclerosis and toward investments in high-risk disease areas. The company has since announced it will spin out its hemophilia business and is searching for a new leader. Scangos will step down once a replacement has been found. A PwC study found 29% of all CEO changes among healthcare companies brought in someone from outside the company. That’s 6% higher than across all industries. Other companies that have announced CEO changes this year include Novo Nordisk, Valeant, GlaxoSmithKline and, most recently, the biotech Merrimack.
Gilead shot down media speculation that the big biotech might spin out its hepatitis C business into a stand-alone entity. While the company saw incredible success with its near-curative hepatitis C drugs Sovaldi (sofosbuvir) and Harvoni (sofosbuvir/ledipasvir), sales of the latter decreased more than 50% in the first half, from $5.8 billion last year to $2.8 billion. The worry from shareholders is that hepatitis C revenues will continue to decline as the treatable patient population dwindles. Expect executives to tap its $25 billion war chest to fill its pipeline instead.
After the launch of the highly-anticipated Repatha (evolocumab) proved a disappointment, Amgen has been combating criticism of its high price tag as well. The company’s cholesterol-fighting PCSK9 inhibitor was the subject of a report published in JAMA which found the drug was not price-efficient. Amgen fired back at the study’s authors, stating they used an inaccurate model and pricing, which led to cost approximations 400 times larger than consensus estimates. While Amgen is quick to point out the shortcomings of the study and defend its approximately $14,000 list price, the market will ultimately decide if the drug is worth taking over low-cost statins.
And just in case you missed it:
The approval of Sarepta Therapeutics' Duchenne muscular dystrophy treatment Exondys 51 (eteplirsen) has caused quite the stir. Not only was it the first drug to be given the greenlight for the rare disease by the FDA, but the approval revealed upheaval within the ranks of the regulatory agency itself. Even though Sarepta gained only conditional approval for Exondys 51 (and still has to conduct further clinical trials), regulators were not in agreement on the effectiveness of the therapy. The approval has raised questions about the process at the FDA and whether the agency has caved to political pressure, instead of making its decision based on science.