Shkreli's latest acquire-and-hike antics spotlight review voucher critics' biggest fears
Update: Martin Shkreli has resigned as CEO of Turing Pharamceuticals. The current Chairman of the Board of Directors, Ron Tilles, will take his place as interim CEO.
Martin Shkreli is at it again.
The 32-year-old hedge fund manager-turned-biopharma exec wants to take yet another decades-old drug used to treat parasitic infections and dramatically raise its list price in the United States (sound familiar?) after pushing it past the regulatory finish line. And his strategy is likely to confirm critics' worst fears about biopharma efforts to game the FDA's priority review voucher system, which has proven to be a cash cow for industry players in recent years.
This time, Shkreli's sights are set on the 1970s-era therapy benznidazole, which is one of two medications for treating the parasitic infection Chagas disease (the other is nifurtimox). Chagas is caused by bites from insects such as the "kissing bug" and the "assassin bug," typically in rural Latin American regions, and may be relatively benign and asymptomatic for many patients (who tend to be poor, immigrants, or both). But in some, the infection can lead to deadly consequences such as swelling of the heart muscle and the lining of the brain, according to the CDC.
Shkreli nabbed the rights to benznidazole earlier this month from his new perch as CEO of the San Francisco-based biotech KaloBios, which was on the verge of collapse before the outspoken investor swooped in on a wave of cash to stave off its imminent bankruptcy (and was named its chief executive for his troubles). KaloBios paid $2 million upfront to benznidazole's previous owner, the privately-held specialty pharma Savant Neglected Diseases, LLC.
But why the interest in a relatively obscure infection (albeit one that afflicts about 300,000 people in the U.S. in one form or another)? For one, it fits with Shkreli's demonstrated modus operandi of cornering biopharma market niches wherein patients have few (if any) other options. He says that he wants to raise benznidazole's price to somewhere between $60,000 to $100,000 for a treatment course, according to the New York Times—a price hike at least as outrageous as Shkreli-run Turing Pharma's 5,000% bump for the toxoplasmosis medication Daraprim.
However, Shkreli could hit a buzzsaw on the path to his sales dreams at such a price point, since at least one other company is working on a competitor product and there are very few diagnosed acute cases of Chagas in the U.S. Furthermore, patients who truly need treatment could simply opt for nifurtimox instead. That medication may also be provided for free by the CDC (as may benznidazole currently), although the process of obtaining it is far more cumbersome than simply getting a doctor's prescription.
The more likely reason for Shkreli's latest antics? Benznidazole, despite being approved in many other countries, never received FDA clearance. And with a lack of officially approved treatment options, the FDA put Chagas disease on its list of tropical diseases that are eligible for priority review vouchers in August.
And that means a massive cash-out opportunity for Shkreli and KaloBios despite the fact that the company contributed absolutely nothing towards the drug's development. If Shkreli can get benznidazole approved by the FDA and on the priority review track (extensive clinical trials will likely not be required), KaloBios can then use that voucher for expedited approval of another drug, or, more likely, sell the voucher to another company for tens—or even hundreds—of millions of dollars.
Shkreli's path to getting his hands on such a voucher may seem unusually brazen. But he's far from the only biopharma exec to pursue this tactic.
For instance, United Therapeutics sold a pediatric review voucher to AbbVie for a whopping $350 million earlier this year. That's on top of BioMarin's 2014 voucher sale to Sanofi/Regeneron for $67.5 million; Gilead's $125 million purchase of a voucher for its HIV pipeline; Retrophin's (Shkreli's previous operation) $245 million sale to Sanofi; and others.
Review vouchers are meant to encourage innovation for therapeutic spaces in dire need of it. But the transfer options that come with owning them present plenty of opportunities for gaming the system or simply using the vouchers as bargaining chips to plug holes in a company's revenue stream. Sometimes, the sale and repurchase of these tools may seem like a game of biopharma-voucher hot potato.
The FDA's taken note of this, too. And senior officials like Dr. John Jenkins, director of the FDA's Office of New Drugs, have raised concerns that the vouchers are being misused. Shkreli's Chagas disease gambit will only further entrench those criticisms.