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Trump v. Drug Makers? And 6 More Burning Biopharma Questions for 2018

Xconomy National — 

Next week, a big slice of the biomedical industry is gathering in San Francisco for the annual J.P. Morgan Healthcare Conference and other life sciences events that have emerged like sprouts around the base of an old redwood tree.

One year ago, the pharmaceutical folks—by far the largest delegation to this annual mosh pit of deal-making and fund-wooing—held their breath when President-elect Donald Trump said that they were “getting away with murder” and promised his administration would take action to combat high drug prices.

Since then, Trump hasn’t exactly put more cops on the pharma-homicide beat. Is 2018 the year the feds crack down on the ever increasing prices of prescription drugs? If so, it could be the year’s biggest flash point in biomedicine. For more looming questions—about federal policies, pricing, cutting-edge research, patient empowerment, digital health, and more—that could grow into 2018’s biggest stories, read on.

[Note: Ben Fidler, Corie Lok, and Frank Vinluan contributed to this report.]

Will The Federal Government Do Anything To Slow Down The Drug Industry?

Some biopharma executives have criticized the president and his administration over immigration policy, equivocation about racism, and more.

But how good was 2017 for the biopharmaceutical business? Let us count the ways. As noted above, the faux-populist, anti-pharma railings of Trump—as candidate, president-elect and president—have resulted in zero policy or pushback against the drug industry. Tax reform brought down the corporate tax rate and eased the repatriation of overseas profits, a huge win for giant drug firms and their shareholders.

FDA commissioner Scott Gottlieb has presided over a record year of new drug approvals. And soon, Gottlieb’s new boss atop the Health and Human Services Department will likely be Alex Azar, fresh from the highest ranks of drug giant Eli Lilly (NYSE: LLY).

Gottlieb has initiated or helped continue ongoing reforms, many of them industry-friendly. He also has weighed in on high drug prices, calling them a “public health concern.” Some of his solutions include more competition by getting branded drugs to market faster but also closing loopholes that let drug makers keep generic competition at bay. It remains to be seen whether such rule changes, if they take effect, can move the needle on American pharmaceutical spending, which could top $600 billion in 2021.

They wouldn’t have nearly the impact as letting the Medicare system, the world’s biggest buyer of prescription drugs, negotiate prices. Trump has made noises about that possibility before, but at this point, when he fires his next buckshot of anti-pharma invective, will anyone take it seriously?

How Will the U.S. Healthcare System Handle Gene Therapy?

2017 was a year of scientific validation for gene therapy. Three treatments that modify a patient’s genes to treat disease—two for blood cancers, and one for a rare form of inherited blindness—were approved by the FDA. Others are making clinical progress in blood diseases like hemophilia and beta-thalassemia, rare disorders such as Duchenne muscular dystrophy, and more.

If these therapies work as intended, as a single, curative dose, it would usher in a new era in medicine. But how long their effects will last is an open question—and it’s not just a medical question. It’s also unclear how the U.S. healthcare system will pay for them, and who will be able to afford them. The two approved cancer treatments, known as CAR-T treatments, from Novartis (NYSE: NVS)and Gilead Sciences (NASDAQ: GILD), cost $475,000 and $373,000, respectively. They have reportedly struggled so far in the marketplace.

The two approved gene therapies in Europe, from UniQure (NASDAQ: QURE) and GlaxoSmithKline (NYSE: GSK), cost much more. They have been commercial busts.

How will voretigene neparvovec (Luxturna), the recently approved blindness therapy from Spark Therapeutics (NASDAQ: ONCE), fare? CEO Jeff Marrazzo suggested in November a price north of $1 million, citing a bounty of health costs that successful treatment could help avoid. Details are coming any day now. Will payers limit access until there’s longer-term proof of the drug’s effect? Will the payment model include some sort of refund if the treatment wears off? Will the treatment only be available at high-end gene therapy centers? These questions should be answered in 2018 and serve as a bellwether for the entire gene therapy field.

Will Broad Cancer DNA Tests Finally Break Through?

The first approval of a cancer drug aimed at a tumor’s genetic signature, regardless of where it originated, came in 2017, for Merck’s pembrolizumab (Keytruda). Loxo Oncology (NASDAQ: LOXO) and Ignyta (NASDAQ: RXDX) could soon follow with two drugs, larotrectinib and entrectinib, that target genetic alterations found in a number of different cancers. Several large studies with nontraditional designs, such as the 30-arm NCI-Match trial, are underway that could open more doors to gene-driven therapies.

For genetic cancer medicines to become the norm, however, tests that pinpoint the signature genes must be trusted and widespread. Test makers have struggled to gain traction amid pushback from insurers, resistance from community oncologists, and other issues. But the FDA has pledged changes, including a faster review process. By the end of 2017, the agency had already approved three broad tumor profiling tests. One of them, FoundationOne CDx from Foundation Medicine (NASDAQ: FMI), also won coverage determination from the Centers for Medicare and Medicaid Services (CMS)—the first time FDA and CMS had issued a simultaneous thumbs-up for a broad cancer DNA test, which FDA commissioner Scott Gottlieb said would spur faster access.

Key to watch in 2018 will be Foundation’s revenues from Medicare and Medicaid. Until now, Foundation has struggled with payment from the massive government-funded insurance systems. Will the joint FDA-CMS approval break the logjam? Foundation’s numbers could be a harbinger of mainstream acceptance for other test makers, too.

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