King of BIO: The Chairwoman of Biotech’s Top Trade Org Talks Policy
Rachel King is CEO of GlycoMimetics (NASDAQ: GLYC), a Gaithersburg, MD-based drug developer, and the current chairwoman of the Biotechnology Industry Organization.
As a heavily regulated industry, biopharma’s interactions with politicians and policy makers are crucial, and BIO has grown in recent years to become a Washington, DC power broker. Look no further for proof than the presence of Hillary Clinton as the keynote speaker Wednesday at BIO’s annual convention in San Diego. Xconomy sat down at the show with King, in the second year of a two-year post, for a lightning-round discussion of policy issues facing biotech such as drug pricing, FDA regulation, and clinical trial recruitment and oversight. What follows is an edited and condensed version of our conversation.
Xconomy: As the industry plans for the next few years, what do you consider the most pressing policy priorities?
Rachel King: There are a whole set of opportunities, looking at the regulatory environment. Looking ahead to PDUFA VI, we have chance to influence how drugs are reviewed and approved. [Eeditor’s note: PDUFA stands for the Prescription Drug User Fee Act, last re-authorized by Congress in 2012, and is due for reauthorization in 2017 through 2017. It governs how the Food and Drug Administration collects fees from drug companies whose products are under regulatory review. It also shapes FDA regulations, such as the “breakthrough” designation approved in 2012 that has led to faster development and approval of drugs such as ivacaftor (Kalydeco) from Vertex Pharmaceuticals (NASDAQ: VRTX).]
In addition there’s an initiative from Congressman Fred Upton (R-MI) is taking on, called 21st Century Cures. He’s the chair of the House Energy and Commerce Committee. He’s taking the initiative as a way to step back and ask what can we do to expedite drugs to people who need them. The 21st Century initiative hasn’t been written yet. They’re seeking input from stakeholders, from patient groups, and from industry.
It’s a great time to think about what we can do to expedite approvals, facilitate development and get drugs to patients faster. [We’d like] to see an all-hands-on-deck response from FDA to commit to working with a drug sponsor to get as expeditiously as possible through drug development.
X: BIO is looking at PDUFA and other FDA challenges. Isn’t that traditionally PhRMA’s job? They handle that stuff, while BIO is for smaller biotechs?
RK: About 90 percent of our membership are emerging companies with 500 or fewer employees and are generally pre-revenue companies. So we do have a larger membership representing those so-called emerging companies. But those regulatory review issues are important to our members, because they’re working toward that. So the FDA review process is something our members are engaged in.
X: There have been successful and unsuccessful attempts to move companies abroad recently. Does redomiciling of Big Pharma hurt or help your constituency?
RK: I think companies will make rational decisions for the allocation of their resources. So there are incentive now to drive companies to make certain changes for tax purposes. Those incentives exist and are legal to take advantage of. I don’t know if t’s good or bad for the industry, it’s just the way it is.
X: Does BIO need to lobby to change tax policy?
RK: We are interested in lobbying on tax policy to the extent we can get policies in place that will incentivize investment in our industry. For example, R&D partnership is one area we’ve been working on to create tax incentives for investments in our types of companies.
X: Trial recruitment is a big bottleneck. Does there need to be any action as companies continue to have problems finding patients for clinical trials?
RK: At GlycoMimetics, our second drug is going into the cancer space so talk to me in a year, maybe I’ll have a more informed opinion. But I do think clinical trial recruitment is often a challenge and we need to find a way to make studies known to patients and try to make sure the right people want to be in the studies. There are other challenges around clinical trials, and BIO has identified areas where we can make improvements. One is centralized IRBs [institutional review boards, which have oversight of clinical trial conduct to protect the rights and health of patients]. Right now in some parts of the country you can go to centralized IRBs. But more often than not you’re going to individual IRBs [for each trial site]. But the concept of a centralized review would still inform appropriate review of things like informed consent.
X: Would Congress have to enact these changes?
RK: I don’t think we’d try to get that done legislatively. More perhaps working through regional groups, through patients groups, through the National Institutes of Health, perhaps.
X: Have you been surprised by the public backlash against the price Gilead is charging for [the hepatitis C drug] Sovaldi?
RK: It’s an interesting case. [Gilead has] a good case to make, in that they deliver a lot of value with that drug. It’s essentially a cure. They’ve got a good story to tell. But pricing is definitely coming to the fore now. And we have increasing responsibility to make the value case for our drugs, which I think each company will have to do. But for everything else that we buy, price is a factor. So it also makes sense that price would also be a factor in how people make buying decisions for drugs. It highlights the importance of what we need to do as an industry to make the value case for our drugs.
X: So BIO isn’t necessarily going to bat for Gilead to help them make their case.
RK: BIO isn’t involved in the pricing decisions of any of our companies. We are interested in the general question of how to define and communicate the value of our products.
X: But when Gilead doesn’t make a good case—although it seems it might have one—it hurts the whole industry. This is no longer a Gilead problem, this is a biopharma problem.
RK: There’s a lot going on in the marketplace. Under some insurance plans drugs covered in the “specialty tier,” patients have to pay and are put at the greatest disadvantage. Their insurance isn’t specifically covering it.
There are a number of issues focusing on the question of pricing. ASCO has an initiative looking at safety and toxicity and efficacy and pricing, in terms of trying to evaluate certain oncology drugs. I think it’s fair for price to be considered as part of the value equation.
X: Is it time to let Medicare negotiate drug prices?
RK: The challenge is that it’s effectively a single payer. It’s kind of like saying there’s one buyer for your house, and you’re trying to sell. Now negotiate the price. If there’s only one buyer it’s really not a market negotiation.
X: Couldn’t you say the same thing about any large insurer?
RK: There are multiple insurers in the market. Multiple players and multiple drugs, and all these forces will ultimately come up with some set of prices and uses of drugs. Better to have that negotiated in the marketplace that have a single payer setting the price. That could lead to price controls, which always disincentivize innovation.
X: So you’re saying that consumers who can use private insurers have a choice, but someone on Medicare only has Medicare. Therefore Medicare is a single payer and the others are not?
RK: Yes. And in the case of Medicare: if you [are a drug company with a] drug that’s used by people who are generally Medicare age and eligible, you may end up with a single payer for your drug.
X: Are your emerging company constituents concerned about the state of early stage venture and financing? In the past it’s driven a lot of innovation in biotech. And for even earlier research, we’re not seeing an expansion of NIH money any time soon. Is there an early stage biotech problem?
RK: There is certainly going to be tweaking of the model. That’s always going to happen. I think the success of the public markets and the numbers of companies getting out in the past year will incentivize some expansion of the venture investing.
X: Any evidence of that yet?
RK: I haven’t seen the latest numbers. I would expect we’d see increased venture investing because of the IPO market. But it might not get back to the level it was. At one point it was certainly much easier to fund earlier stage work. That said, I think the industry is more sophisticated than we were 15 years ago. It’s filled with people who have grown up in the industry with experience developing drugs. There are experienced management teams and experienced investors.