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Notes From The JPM ’17 Vortex: Trump, Rainstorms & The Price You Pay

Xconomy National — 

[Editor’s note: Ben Fidler contributed to this report] The week of frenetic data sharing, deal talking, and party hopping of the J.P. Morgan Healthcare Conference—and the events that have mushroomed around it—took a punch to the gut just as most attendees were wrapping up and checking their outbound flight status.

The incoming party-pooper-in-chief, Donald Trump, said during his first press conference Wednesday that drug companies are “getting away with murder” and he’d work to rein in prices and other practices. You could hear the needle screeeeeeeeching across the vinyl. (Good thing it came Wednesday; Tuesday is the biggest J.P. Morgan party night.)

His soundbite offended many people who rightly noted that they are working to heal people, not kill them. But his rhetorical brinkmanship fed upon deep and legitimate concerns that many here in San Francisco were already debating in the days leading up to the Trump presser: Prices are unsustainable, and the industry’s reputation is in tatters. In interviews with Xconomy and others, Allergan (NYSE: AGN) CEO Brent Saunders added context to the high-profile pledge he made last year to limit price increases across his company’s extensive product line.

He wasn’t the only one talking up responsibility. Across many conversations, however, it was clear to us that good-pricing practices—especially the oft-bandied word “transparency”—mean different things to different companies. No company, as far as we know, is willing to tell the world what their products actually cost after middlemen like Express Scripts (NYSE: ESRX), who negotiate on behalf of health plans, extract discounts for their clients.

Most of the pricing talk has centered around big companies with multiple products, such as Allergan, Novo Nordisk, and Johnson & Johnson. But it’s also important to check with smaller biotechs that are gearing up for potential commercial launches whose fortunes hinge upon those sales. Read on to find out how the attitude of one biotech has evolved since last year’s J.P. Morgan, plus much more about pricing, politics, and… umbrellas? Step into the vortex.

…Or Your Money Back? Alnylam Pharmaceuticals (NASDAQ: ALNY) is one of the few companies that says it’s willing to give money back or leave it on the table if its products don’t work. At least in theory—it doesn’t have a marketed product. But if the experimental patisiran succeeds in Phase 3 trials this year, Alnylam could soon become a marketer, not just a developer.

Last year at J.P. Morgan, CEO John Maraganore told Xconomy that the company would be creative about drug pricing, but he wouldn’t talk specifics. This year, company president Barry Greene went a step further, saying Alnylam is “highly willing” to sign performance-based deals “so that payers will appreciate that they’ll only pay where the drug works.” Greene said Alnylam has been crunching numbers to justify the price it presents at the start of negotiations with payers. Patisiran is meant to treat the rare disease TTR amyloidosis. If patisiran fails, it would likely take Alnylam years to get back to this spot. “The opening of [that] envelope is probably the biggest pivotal moment for us,” said Greene.

Simon Says: Vice President Joe Biden’s handpicked “cancer moonshot” chief Greg Simon gave perhaps the best riposte to Donald Trump’s pharma attack this week—and it came the day before The Donald held his press conference. Speaking on a lunchtime panel of Washington bigwigs Tuesday, Simon described Trump’s previous criticism of drug pricing and gouging this way: Pretend Martin Shkreli is walking down the street with his wife, who happens to be the biopharma industry. Trump hates Shkreli, so as he approaches the couple, he loads up and punches Shkreli’s wife.

Simon is a Democrat through-and-through—he was Vice President Al Gore’s domestic policy adviser. He is also pro-drug development; he helped launch FasterCures and ran it for six years, then did a stint at Pfizer, and for a short time he led the healthcare crowdfunding firm Poliwogg. On the panel, in fact, he stumped for financial creativity as the solution to the drug price debate: “The problem is there are no future markets [in the pharma business], it’s all on a cash flow basis.” In other words, it’s hard for drug companies and their investors to spread the risk, he asserted: “It’s a financial issue, not a moral issue.”

Simon made other pointed political comments, fretting about the anti-science bent of Trump—a concern that many in San Francisco shared in light of Trump’s anti-vaccine stances and potential promotion of Robert Kennedy, Jr. So it was an awkward moment when one of the conference hosts, at panel’s end, chided Simon for getting political after apparently promising he wouldn’t. “You lied,” she said, perhaps tongue in cheek.

It was a puzzling moment, too. Wasn’t this a panel about politics and policy? She had no harsh words for Julie Gerberding, former director of the Centers for Disease Control and Prevention and now a top Merck executive, who said at CDC she had to deal with the “anti-science policies of the [George W.] Bush administration” and a right-leaning Congress. “Their effect was blunted because of the absence of big majorities,” she said, but most difficult for her was legislation that prohibited federal dollars going toward research on reproduction and gun violence. “We can imagine a lot of bad policy opportunities,” she said, “but change occurs slowly. Agencies are very stable.”

Troubled Waters: One CEO of a high-profile publicly traded biotech company told Xconomy he was hanging out with med-tech executives and got an earful. It was about time pharma gave up its “pound of flesh,” they said. Medical device makers don’t get nearly … Next Page »

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