BIO CEO 2016 Educational Sessions Provide Enlightenment

By Rob Wright, Chief Editor, Life Science Leader
Follow Me On Twitter @RfwrightLSL

During this year’s BIO CEO Conference (partially covered here), much of my time was spent in the educational sessions, which I would rank as some of the best I have seen at any conference — ever. For example, the CRISPR/Cas9: Excitement and Concern for First Therapies had three gene editing company CEOs (i.e., Katrine Bosley of Editas Medicine, André Choulika of Cellectis, and Sapna Srivastava, Intellia Therapeutics) as well as arguably the world’s most renowned medical ethics experts, Arthur Caplan, director of the division of medical ethics at NYU and overseer of the Compassionate-Use Advisory Committee (i.e., CompAC) aimed at preventing the use of social media or other means of influence to gain clinical trial preferential treatment. And while this panel was truly outstanding, as were others, my favorite had to be Tuesday’s Understanding the Total Value of Innovative Therapies session.

Why Communicating Value For Drug Companies An Uphill Battle

Moderated by Faster Cures executive director Margaret Anderson, panelists of the Understanding the Total Value of Innovative Therapies session included Scott Gottlieb, MD, resident fellow at the American Enterprise Institute (AEI); Ron Cohen, CEO of Acorda Therapeutics; Matthew Herper, senior editor at Forbes; and Ed Silverman, senior writer at  STATnews.com. There was tremendous debate on how drugs should be priced. For example, Silverman shared a story about a former colleague whose wife has MS. He complained to Silverman how the price of an MS drug had gone up in price the last three years. “It’s not a new drug. There is no additional benefit. There is no additional research to warrant the increased price. But I still gotta pay it,” related Silverman as to his friend’s plight. The lifelong journalist said that he liked these anecdotes because they are informational. “They [anecdotes] do serve a purpose.” According to Silverman, when you have enough of these stories, they provide understanding to the market sentiment that exists, and may be predictive for what to expect. For example, he believes that one of the challenges being faced by the biopharmaceutical industry in the U.S. today is that more people “feel” like they are a senior citizen. As a result, when these types of people think of value, they immediately think of cost today, not the better healthcare value/quality of life they will have tomorrow. Silverman believes the task of communicating value faced by the biopharmaceutical industry will be difficult. I agree. It seems that when it comes to the price of drugs, we as a society have this perception that inflation, capital improvements to manufacturing facilities, increased costs of raw materials, and other aspects of business that result in higher prices for nearly every product we consume, shouldn’t apply to drugs. Why? Well as Silverman mentioned, his friend didn’t see a “noticeable improvement” in the product to justify its increased price. Consider a comparative example. I haven’t seen a noticeable improvement in the quality of a McDonald’s Big Mac. Am I getting it any faster? When thinking back to the days when the burger was premade and sitting the warming bin, in actuality we are probably getting the product slower. Yet, in 15 years the average price an American pays for the two all-beef patties (continue with jingle here) is nearly double. However, we don’t hear a lot of complaining about the cost. In addition, unlike biopharma, McDonald’s isn’t tasked with having to convince society that paying a higher price today will result in more innovative burgers tomorrow, or other long-term health benefits. This is not a diatribe in support of the actions of Martin Shkreli and others in biopharma that seem set on gouging the public with increasing a drug’s price just because they can. Rather, it is to put into context the predicament faced by those biopharmaceutical companies investing billions to develop cures for terrible diseases, and when successful, priced such that they can recoup their costs and remain viable and thriving businesses.

Does Failed Drug Discovery = Wasteful Spending?

Another interesting insight was revealed by an exchange between Ron Cohen, CEO of Acorda, and Matthew Herper of Forbes. Cohen, drawing on Biogen as an example, noted how the company’s MS drugs have increased in price over the years, stating that the argument could be made that this is what allows the company to take huge research risks for diseases of the next frontier (e.g., Alzheimer’s). Cohen asked Herper, given these types of circumstances, would such price increases be justifiable? Herper’s responded, “I think not, honestly.” Herper went on to note that there were periods when AstraZeneca and Pfizer took “huge increases” in drug prices, and threw “huge amounts of money into R&D,” and according to him, that money was pretty much wasted. I disagree. Just because every biopharmaceutical investment doesn’t result in a viable drug doesn’t mean that valuable insights weren’t gained. Thomas Edison put it this way: “Negative results are just what I want. They’re just as valuable to me as positive results. I can never find the thing that does the job best until I find the ones that don’t.” 

High Risk, High Reward, But For Whom?

Another concept seemingly lost on society is how biopharmaceutical companies have to make huge investments in building manufacturing facilities long before they are certain if a drug will work. Manufacturing enough of an experimental drug to supply a few thousand people participating in a clinical trial is very different than having to supply the world’s 44 million people currently suffering from Alzheimer’s. As this is a prospect faced by Biogen, during the Q&A part of the session, I asked Herper that if the company’s research efforts on its experimental Alzheimer’s drug, BIIB037 (aducanumab), prove successful, how does he feel the company should prepare. His response — if Biogen has an effective Alzheimer’s drug, the company will be certainly be able to fund the building of a manufacturing plant. However, panelist Ron Cohen quickly pointed out the problem with this type of thinking. When it comes to building a biopharmaceutical manufacturing facility, there is much more involved than design, bricks and mortar, and staffing. Plants have to be tested and validated to make sure they run properly. As a result, regulatory requirements can add years to the process of getting a new manufacturing facility fully operational. If you wait until a drug is approved before building commercial scale manufacturing capacity, you will delay by years the number of patients that could benefit. This is why in December 2014, when Biogen received positive Phase 1b clinical trial results for BIIB037, the company’s top manufacturing executive, John Cox, began the process of adding manufacturing capacity. The centerpiece of this strategy is a billion-dollar manufacturing facility in Solothurn, Switzerland. Now, when you consider that Biogen finished 2014 with nearly $3 billion in profits, committing one third of that to build one plant, on the chance that aducanumab may have favorable Phase 3 clinical trial results, and might get an FDA approval, is an enormous risk. Should aducanumab fail, it will be easy to “Monday morning quarterback” Biogen’s fiscal decision making. But should it succeed, friends and loved ones of Alzheimer’s patients will rejoice. In a free market economy, shouldn’t the taking of such high risks by Biogen result in high rewards for patients as well as investors?