Whether your cultural point of reference is Jay-Z or Annie!, we can all agree that last week was a “hard knock life” for orphans…orphan drugs, that is. We saw Marathon hit pause on its launch of Emflaza, the steroid approved for treating Duchene’s Muscular Dystrophy, following scrutiny of its price tag. Another whack to the orphans came with Senator Grassley’s announcement that he will investigate “abuses” of the Orphan Drug Act. And on another front, former FDA Commissioner questioned whether the POTUS’s plans for the FDA could harm the public’s health.
So much for a quiet 2017! Read on for more in The Week That Was…
NO HOME FOR THIS ORPHAN…
Last week, Marathon Pharma decided to hit the “pause button” on its launch of Emflaza (deflazacort), a decades-old corticosteroid that was recently granted FDA approval with orphan drug status as a treatment for patients with Duchene Muscular Dystrophy (DMD). Following its approval, it took a New York minute before Marathon found itself in the proverbial hot seat. The press release announcing Emflaza’s approval contained zero information about the list price, but within a few hours, Marathon had told the Chicago Tribune the list price was $89,000. Then the trouble ensued. Savvy journalists quickly discovered deflazacort is readily available in Europe and Canada for about $1,200/year, or as little as $1 under Canada’s health system. Senator Bernie Sanders (D-VT) and Representative Elijah Cummings (D-MD) issued a letter calling the price tag “unconscionable” and asking Marathon to “significantly lower” the drug’s cost before it hits the market. In defense of his pricing strategy, Marathon CEO Jeff Aronin said most patients would pay $20 in out-of-pocket copayments, which others have since said will vary by plan. In an open letter to the Duchene community on Marathon’s website, Aronin then announced he would pause Emflaza’s launch and acknowledged the pricing concerns. The letter may have been better received if not for a Bloomberg piece unearthing Aronin’s ‘repeat offender’ status on price hikes. Remember Nitropres and Isoprel (some of the same drugs that got Valeant in the hot seat)? Aronin was associated with those too. As if Marathon’s woes were not manifold, the trade organization, PhRMA, is reassessing whether it wants companies like Marathon as members. Oy!
Emflaza is a case of a bad pricing strategy + bad pricing communications = a crisis. In today’s environment the “buy then hike” of old or generic drugs is not a sustainable pricing strategy. Marathon created several unforced errors by trying to manage pricing perceptions via interviews. That won’t work. Today, every reporter asks about price at approval. So, there is no way to keep up via interviews alone. A better practice: develop media materials that put the list price and actual patient out-of-pocket costs for a new medicine into context. If you choose not to “own your pricing narrative” read our lips: someone else will be more than happy to own the price narrative for you.
ORPHAN DRUG ACT UNDER THE SPOTLIGHT
Orphans, you are no longer alone… in fact, you’re under the spotlight. About a week ago, Sen. Chuck Grassley opened an inquiry into potential abuses of the Orphan Drug Act (ODA), the law that incentivizes the development of medicines for conditions impacting <200,000. Drafters of the original ODA, including former Congressman Henry Waxman have long complained biopharmas are exploiting the law and unscrupulously profiting (the average orphan drug list price is upwards of $100,000 annually). So, why is Grassley looking at orphan drugs now? The answer: a recent media investigation by Kaiser Health News. According to Kaiser, one-third of medicines granted orphan approvals were either “repurposed” mass market drugs, or, drugs that received multiple orphan approvals – a process sometimes referred to as “salami slicing.” Kaiser reported the tax incentives and patent protections granted by the ODA may allow some drug companies to inordinately profit, adding that 7 out of 10 top-selling drugs by annual sales have orphan designation. The debate over orphans is likely coming to a head as drug prices are increasingly headline news, and because nearly half of new drug approvals last year were orphans drugs. Will ODA “abusers” potentially be ‘tarred and feathered’ in the public spotlight in the weeks ahead? Time will tell…
Get ready for a battle. The ODA has undoubtedly allowed for a number of near-miraculous drugs to be created and approved over the last thirty years – significantly extending the lives of people with cystic fibrosis, cancers and countless other conditions. BUT (music stops), in the not-too-distant future we expect to see a rift between those developers who see themselves as “true orphan developers” versus chronic condition manufacturers who have strategically succeeded in achieving orphan status. As new schools of gene therapy and personalized medicines companies emerge, it may be in their interest to differentiate from traditional industry developers. And, in a Washington climate where nothing is certain, we may see subsets of the industry put on the gloves against each other.
CALIFF QUESTIONING POTUS’S FDA PLANS
Under the Trump administration, the FDA may be slated for YUUUUGE changes, but in the meantime it’s seemingly facing YUUUUGER (yes, we just intentionally misspelled our made up word) uncertainty. The POTUS has promised he will soon reveal his pick for FDA commissioner, who is a “fantastic person.” Names being circulated include: former deputy commissioner of the FDA, Dr Scott Gottlieb; Jim O’Neil, who has been linked to policies that shift the FDA’s criteria to approve drugs shown to be safe (vs. safe + effective), and finally Dr. Joseph Gulfo from the biotech industry. Regardless of who gets the pick, President Trump has stated his desire for the FDA to speed reviews of drugs and access to experimental medicines. But the last guy to hold the job, former FDA Commissioner Dr. Robert Califf revealed his concerns about the POTUS’s plans. Califf argues that faster drug approvals do not necessarily equate to less expensive drugs, and is concerned in the wake of Trump’s hiring freeze about the FDA being understaffed, with hundreds (!) of openings to fill. Among other concerns, Califf, pointed to the dangers of cutting corners in the review process… noting that 92% of drugs that get into human clinical trials don’t ultimately make it to market because of safety issues.
Shortening the time it takes to get from lab to life (shameless plug for inVentiv’s tagline) is imperative, but scrimping on safety is a dangerous idea that is unlikely to go far in Washington or anywhere really. The more concerning risk is the many unfilled cubicles at the FDA, just at the same time its remit increased under the 21st Century CURES Act. Last week, House Democrats sent a letter to the President raising concerns about the impact of a hiring freeze at the FDA and NIH. Whoever gets the call to lead the FDA will need to buckle up for a turbulent ride navigating the fulfillment of the President’s promises with potentially less human capital than needed.
Until next week,
– The Issues Management Practice @inVentiv Health PR