Biopharma trends to watch in 2018
The drug pricing debate will likely stay in the headlines in the new year, while M&A could get a jumpstart after Congress passed a new tax law that could make deals more lucrative. Here are BioPharma Dive's picks for hot trends to watch in 2018:
It's been a hot topic for more than two years, and it's not going away in 2018. Expect this debate to be reignited with some fresh vigor when Spark Therapeutics announces the price of its recently approved gene therapy in January.
While the current administration hasn't taken any action to lower drug prices just yet, President Trump has chimed in about the prospect a handful of times over the year. And more recently, Trump's pick for Health and Human Services Secretary Alex Azar said during his Senate confirmation hearings that lowering drug prices would be a top priority.
But don't expect the industry to take the changes lying down. Industry lobbying group PhRMA has been working tirelessly to change the conversation around drug pricing, redirecting the public's ire away from drugmakers and toward pricing middlemen like pharmacy benefit managers (PBMs). The group has launched multiple advertising campaigns on the topic and PhRMA President Steven Ubl told BioPharma Dive in November that he is starting to see a sentiment change.
While drug pricing will definitely be part of the conversation in 2018, expect drugmakers to do more self-regulating. We already started to see several drugmakers price newly approved drugs either below competition or well below expected value, hoping to come in at a price that would get payer praise and help boost marketshare.
2017 was a tough year for dealmaking in the pharma space. Uncertainty around tax reform had most big pharmas sitting on the side lines. But now that the GOP has pushed its rewrite of the tax code through, expect pharma to join the dealmaking fray once again.
Not only is uncertainty cleared up, but the new tax measures mean that corporations can bring back cash held overseas at a much cheaper rate. Expect several of the big pharmas and big biotechs to repatriate some green – while most of it will likely go to share buybacks, at least some of it will be used on deals.
Analysts and investors are also itching for companies to start making deals again as they watch pipelines progress and worry that pharma needs new innovations to move into the pipeline. The Food and Drug Administration has already approved a record number of new drugs this year, so expect pharma to look for early-stage compounds or platform technologies with the hope of producing blockbusters in five to seven years.
There has also been chatter that 2018 will be a year of megadeals. The industry hasn't seen any monster mergers since 2009 and a few of the smaller big pharmas (Bristol-Myers Squibb Company, Eli Lilly & Co., Allergan Inc.) are all looking ripe for take out. Check out BioPharma Dive's list of potential takeout targets.
2017 was a watershed year for gene therapy.
In August, and then again in October, the Food and Drug Administration approved CAR-T cell therapies that rely on ex vivo genetic engineering to reprogram immune cells to target certain blood cancers. Just this month, the first "true" gene therapy for an inherited disorder secured a regulatory nod, bringing hope to individuals with a rare form of hereditary vision loss.
More therapeutic advances could be in store, too. Clinical findings presented at the annual meeting of the American Society of Hematology in Atlanta showcased the emerging potential of gene therapies for hemophilia A and B.
The industry has seemingly been on the cusp of gene therapy breakthroughs before, only to see that promise fade amid safety concerns. This year's progress look both more durable and more broad-based.
Partly as a result, the conversation around gene therapy will begin to focus more on cost and reimbursement. Spark Therapeutics' blindness therapy Luxturna (voretigene neparvovec), for example, is widely expected to cost close to $1 million per patient. For indications with a few hundred or thousand patients, that might just be palatable if companies and payers show some flexibility and innovative thinking. In larger populations, however, cost could prove prohibitive.
Gene therapies approved in Europe offer a sobering example. A seemingly curative treatment for a rare inherited immunodeficiency secured approval in the EU last year, but only a few patients have received it more than a year later.
More than other therapies, gene therapy will require cooperation between drug companies, insurers and hospitals. 2017 showed what gene therapy can do clinically. 2018 (and beyond) will be a test of what the field can become commercially.
The Food and Drug Administration approved five new biosimilars in 2017, including the first and second copycat version of large-molecule oncologics. Yet only one of the drugs actually launched in the U.S., as legal hurdles hamstrung market entry.
That's largely unsurprising – only two of the four biosimilars approved in the previous two years are available to patients. Yet it's a trend that looks likely to continue, even as the Food and Drug Administration signals its eagerness to introduce more competition to the biologics market.
AbbVie Inc., for example, recently reached a settlement deal with Amgen Inc. that will delay introduction of the latter company's Humira (adalimumab) biosimilar in the U.S. until 2023.
For those three biosimilars that are available to patients, the competitive impact has been relatively muted. Pfizer Inc., which sells a biosimilar version of Johnson & Johnson's Remicade (infliximab), argues that exclusionary contracting between J&J and payers has artificially checked uptake of its copy.
Even with two biosimilars competing for market share, sales of Remicade only declined by 1.3% in the third quarter compared to the same period a year prior. (A third copy, Ixifi (infliximab-qbtx) hasn't launched.)
Biosimilars are expected to save the U.S. as much as $150 billion in prescription drug spending over the next 10 years. But as the past year has made clear, roadblocks to adoption remain, giving branded biologics makers a few more years of breathing room.
Expect more lawsuits.
They come weekly — and sometimes daily — at this point: a state sues an opioid manufacturer, usually claiming the company deployed illegal marketing tactics that ended up fueling the local addiction and overdose epidemic.
South Carolina and North Carolina have filed lawsuits against Purdue Pharma L.P.; New Jersey and Washington state, amongst others, have ones against Insys Therapeutics Inc.; Ohio alone sued five major drugmakers in May, including Johnson & Johnson and Allergan plc.
The lawsuits stem, at least in part, from the fact that partisanship has limited the amount of meaningful opioid-centric legislation coming out of Congress, in turn forcing states to pick up the slack. New state-level legislation is another byproduct of this issue, with lawmakers pushing for tighter pharmaceutical regulations and more transparency on drug pricing decisions.
In March 2016, for instance, Massachusetts Gov. Charlie Baker signed a landmark piece of legislation that put restrictions on opioid prescribing, such as setting a seven-day supply limit for first-time prescriptions. Many more states have followed Massachusetts' lead since then. As of August, 24 states had enacted bills that set limits, guidance or requirements related to opioid prescribing by August 2017.
The Food and Drug Administration is also using its clout to encourage drugmakers to develop abuse-deterrent or non-opioid painkillers. So far, several companies have answered the call, and there's a good chance more will join them in 2018.
Ampio Pharmaceuticals Inc., for one, is developing a non-opioid, non-steroidal anti-inflammatory drug for patients with osteoarthritis in their knees, and recently saw its stock spike after the candidate hit in Phase 3. Flexion Therapeutics Inc. has a non-opioid analgesic, Zilretta, for osteoarthritis knee pain as well that secured FDA approval in October.
Eye drugs are responsible for some of pharma's best windfalls, making the ophthalmology market highly attractive to many a drugmaker.
Particularly enticing are treatments for front-of-the-eye diseases like dry eye and age-related macular edema, which have generally seen less competition than their back-of-the-eye counterparts. Fresh off its FDA nod for Xiidra (lifitegrast), Shire plc doubled down in dry eye and bought rights to Parion Science's Inc.'s P-321, an epithelial sodium channel inhibitor in mid-stage testing. Novartis AG dove deeper into the therapeutic area too, licensing a recombinant form of a protein called lubricin from Lubris BioPharma LLC for an undisclosed sum.
The payout for those investments could be impressive. Allergan's Restasis (cyclosporine), which gained approval for tear production and has dominated the dry eye market for years, captured more than a billion dollars in sales over the first nine months of 2017.
Xiidra's approval in mid-2016 caused a shake-up in dry eye treatments, however, and by early 2017 the Irish pharma was touting how it had secured 22% of that market. Now, manufacturers are looking to unseat other leading ophthalmology products, including Regeneron Pharmaceuticals Inc.'s Eylea (aflibercept) and Roche AG's Lucentis (ranibizumab). Respectively, the two drugs raked in $1.8 billion and $727 million from January to the end of June.