New Report Shows Drug Spending Growth Slows Dramatically

Contrary to continued misleading claims about the increasing costs of prescription medicines, a new report was released this week offering more evidence that the competitive market for medicines is working to contain costs and slow spending growth. After price concessions from drug companies, net prices for brand name drugs grew just 3.5% last year, according to the report from the QuintilesIMS Institute.

The report also found that net spending growth on medicines slowed by half in 2016 compared to the prior year, rising just 4.8 percent – exactly in line with the growth rate for healthcare spending overall, according to the Centers for Medicare and Medicaid Services (CMS). That spending growth is projected to remain stable over the next five years – and has been revised downward from other recent projections:

The outlook for U.S. spending growth on medicines has been revised significantly downward as a result of weaker than expected new product spending and a slowing of invoice price increases for branded products…Average growth was projected in the 6-9% range prior to the autumn of 2016 but projections have been revised down to 4-7% through 2021.

The report also projected that net price growth for patent-protected branded drugs will be in the range of 2-5 percent through 2021; well in line with overall healthcare inflation.

Visit DrugCostFacts.org to learn more about the debate around the cost and value of innovative medicines.

ICYMI: Jim Greenwood’s Letter in NYT on Drug Importation

Yesterday, the New York Times published a letter to the editor from BIO’s President and CEO, Jim Greenwood. In the letter, Greenwood addresses drug importation concerns which were overlooked in a previously published NYT op-ed – concerns which are shared by many others, including former FDA Commissioners from both Democrat and Republican Administrations.

The full letter can be viewed on nytimes.com or read below:

To the Editor:

Re “How to Stop Drug Price Gouging” (Op-Ed, April 20)

Tim Wu’s call to open the American market to foreign drug supplies is cavalier in its dismissal of the safety risks of his proposal, and wildly optimistic about the potential savings such a move would create.

A bipartisan group of four former commissioners of the Food and Drug Administration wrote to Congress recently expressing concern over the idea. Such a move, they wrote, “is likely to harm patients and consumers and compromise the carefully constructed system that guards the safety of our nation’s medical products.”

How about the purported savings? A Department of Health and Human Services task force on importation found that “total savings to drug buyers from legalized commercial importation would be 1 to 2 percent of total drug spending and much less than international price comparisons might suggest.” The task force wrote, “The savings going directly to individuals would be less than 1 percent of total spending.”

There is no silver bullet for rising health costs. But exposing American patients to potentially counterfeit, unapproved or adulterated drugs — for what would probably be scant savings — is not the answer.

FBI cautions healthcare organizations of cyberattacks

If you think you’re free from cyberattacks, the FBI has news for you.

The Federal Bureau of Investigation has issued a private industry notification to medical and dental facilities regarding the looming dangers of cyberattacks.

The notification points out that cybercriminals have been targeting File Transfer Protocol servers to gain access to patients’ protected health information and personally identifiable information. The criminals access FTP servers operating in “anonymous” mode and use the information gained to “intimidate, harass and blackmail business owners,” according to the FBI.

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“Cybercriminals could also use an FTP server in anonymous mode and configured to allow ‘write’ access to store malicious tools or launch targeted cyberattacks,” the FBI notification said.

FTP servers are commonly used to transfer data between network hosts. A 2015 study out of the University of Michigan in Ann Arbor noted FTP has mostly been replaced by HTTP, SCP and BitTorrent. However, the study also found about 1.1 million extant FTP servers allow anonymous access. “These anonymous FTP servers leak sensitive information, such as tax documents and cryptographic secrets,” the study said. “More than 20,000 FTP servers allow public write access, which has facilitated malicious actors’ use of free storage as well as malware deployment and click-fraud attacks.”

To combat this growing threat, the FBI suggests healthcare organizations double-check their networks to ensure FTP servers aren’t running in anonymous mode. If organizations must use anonymous mode, the FBI recommends administrators refrain from storing PHI and PII on the FTP server.

This isn’t the first time the FBI has spoken out about the issue of cybersecurity. Earlier this month, FBI Director James Comey gave the keynote speech at the Boston Conference on Cyber Security. During his address, Comey said cyberthreats are “too fast, too big and too widespread for any of us to address them alone.”

He noted that cybercriminals come from all over and use various means to gain what they want. “And we’re not only worried about loss of data, but corruption of that data and lack of access to our own information,” Comey said.

When asked to elaborate on the number one cyberthreat to healthcare providers, Comey replied with one word: ransomware, according to The National Law Review. On that front, Comey advised healthcare leaders not to pay ransom and to maintain backup systems to protect valuable data. Additionally, Comey urged healthcare organizations to collaborate and work with the FBI in situations involving a cyberattack.

Photo: Epoxydude, Getty Images

What do small business owners think of the AHA, AHCA?

Everyone has an opinion on the American Health Care Act, the new GOP plan to replace the ACA.

A new poll from the Small Business Majority surveyed 500 small business owners from across the country on their opinions on the AHCA. The survey was conducted online between March 17 and March 20 and had a +/- 4.5 percent margin of error.

Survey respondents came from a variety of backgrounds. Forty-eight percent were as male, while 52 percent were female. The majority of respondents (33 percent) were between the ages of 30 and 44, with the next largest proportions coming from the 45 to 54 age range (21 percent) and the 55 to 64 age range (20 percent).

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In a tele-press conference on March 23, Small Business Majority founder and CEO John Arensmeyer discussed what prompted the poll. “We’ve been intimately involved for years talking with small business owners about the ACA,” he said. “With the proposed changes in Congress, we knew this was a huge issue for small business owners.”

Near the beginning of the survey, respondents were asked about their existing knowledge of the ACA. Forty-eight percent of respondents admitted to only knowing “some” about the ACA. Another 24 percent said they knew “a great deal” about it, and 20 percent said they knew “not too much.” Five percent indicated they knew “nothing at all” about the ACA.

Next, the survey questioned respondents as to whether they support or oppose the ACA. Initially, 25 percent of respondents said they strongly support the ACA, while 29 percent said they strongly oppose it.

However, after answering a series of questions about their opinions on certain provisions of the ACA, respondents’ opinions changed slightly. Thirty-one percent said they strongly support the ACA and 24 percent said they strongly oppose it.

The poll then added the AHCA to the mix, initially asking respondents how much they knew about it. Thirty-five percent admitted to knowing “some” about it. Another 16 percent said they knew “a great deal” about the AHCA, and 28 percent said they knew “not too much.” Eighteen percent of respondents admitted to knowing “nothing at all” about the proposed plan.

Once again, the survey asked respondents whether they support or oppose the AHCA. Initially, 14 percent said they strongly support it and 27 percent said they strongly oppose it. After answering questions about specific provisions of the AHCA, respondents’ opinions changed. Fourteen percent of respondents said they strongly support the AHCA, and 33 percent said they strongly oppose it.

Finally, the survey asked respondents whether they would choose the ACA or the AHCA. Thirty-nine percent of respondents were strongly in favor of choosing the ACA, and 10 percent said they would choose the ACA but weren’t as strongly for it. Meanwhile, 16 percent said they were strongly in favor of the AHCA, and 10 percent said they would choose the AHCA but weren’t as strongly for it. Interestingly, 14 percent said they’d choose neither the ACA or the AHCA.

In a press release, the Small Business Majority noted that survey respondents were “politically diverse.” They seem to be, as 28 percent of respondents identified as Democrats, 27 percent identified as Republicans and 38 percent identified as Independents. The remaining 5 percent either indicated “other,” “don’t know” or refused to answer.

However, it’s important to note that a contributor to Forbes and The New York Times has said the Small Business Majority is left-leaning.

Photo: prinaka, Getty Images 

Editor’s note: This article has been updated to reflect that the same contributor wrote in Forbes and The New York Times that the Small Business Majority is left-leaning. A spokesperson for the Small Business Majority also told MedCity that the polling firm used for the survey, Chesapeake Bay Consulting, is right-leaning.

Here’s what C-suite leaders plan to focus on under the Trump administration

President Donald Trump, his administration and a Republican Congress have big plans for changing healthcare. For now, the future of the American healthcare system is up in the air. But healthcare leaders across the country have already started to make initial plans.

Charlotte, North Carolina-based Premier Inc. decided to find out what is top of mind for C-suite leaders now that the new administration has taken the helm. The company conducted an online survey of 63 healthcare C-suite leaders, including CEOs, CFOs, CMOs, COOs, CIOs and CTIOs, between January 3 and February 6.

The results found leaders zeroed in on five primary areas on which they will focus under the Trump administration, according to a press release from Premier. In priority order, they are:

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1. Controlling costs and focusing on drug spending

Sixty-five percent of survey respondents said they will increase their focus on ways of managing the cost of care. Another 61 percent said they plan to concentrate on managing rising drug costs and pharmaceutical spending, which aligns with President Trump’s claims that he wants to decrease drug prices.

2. Heading from meaningful use to meaningful insight

Rather than a sole focus on putting data in EHR systems, respondents indicated they plan to focus on analytic capabilities. Half of the respondents said they will work to increase interoperability, and 53 percent plan to improve data integration and invest in analytics.

3. Consumer engagement

Even with the transition to a new administration, healthcare leaders are increasingly looking for ways to both engage and satisfy consumers. As such, 56 percent of respondents said they want to use telehealth to improve patients’ access to physicians. Another 45 percent plan to build on their organization’s patient engagement initiatives.

4. Movement toward population health efforts

Respondents indicated their interest in the value-based care initiatives lauded by the Obama administration. Of the leaders surveyed, 40 percent said they plan to expand the healthcare team to include nurse practitioners, care coordinators and others. Another 45 percent indicated they will increase their use of post-acute care services.

5. Ongoing focus on clinical quality

Though it’s becoming a standard for healthcare leaders, respondents indicated they will continue to concentrate on quality reporting. While 46 percent of respondents said their organization will increase the use of quality reporting systems such as the Merit-Based Incentive Payment System, 2 percent of respondents said they plan to decrease their investment in such systems.

The results of the survey hint at a future that will revolve around lowered costs and improved quality, according to Premier COO Mike Alkire. “These findings highlight how providers are taking the long view — not just focusing on the here and now, but ultimately on what will be most beneficial to patients and sustain the viability of our nation’s hospitals,” he said in an email to MedCity.

Photo: MANDEL NGAN/AFP/Getty Images

Will the PTAB Be A Roadblock for Biotech? Stories from Sessions at BIO 2016

We’re at the beginning of day 3 here at BIO 2016, and that means we’ve already had a full day of high quality programming for our Intellectual Property track! Let’s take a look at one of yesterday’s most popular sessions.

Will the PTAB be a Road Block for Biotech? Lessons Learned from the First Three Years of Inter-Partes Review and Future Prospects

Moderated by William Kubetin, Managing Editor at Bloomberg BNA

Panelists:

  • Kevin Noonan, Partner at McDonnell, Boehnen, Hulbert & Berghoff LLP
  • Teresa Stanek Rea, Partner at Crowell & Moring LLP
  • Michael Tierney, Lead Administrative Patent Judge at U.S. Patent and Trademark Office (USPTO)

The USPTO’s inter partes review (IPR)  has emerged as one of the most concerning elements of the 2011 America Invents Act. An administrative trial method for challenging patents, it has generated criticism that legitimate biopharma patent claims are being invalidated.

Yesterday’s panel walked through a case study of the procedures of IPR, examining the processes both petitioner and patent holder would use within the USPTO system.

Panelists introduced arguments for the petitioner’s claim and Judge Tierney offered insights on how PTAB judges would evaluate and likely rule through each part of the process.

Topics of discussion ranged from USPTO’s evaluation of priority determination, prior art, obviousness, and claim construction.

Judge Tierney closed with practice tips for both petitioner and patent holders when subject to the IPR process. Some key takeaways included:

  • The petitioner must demonstrate that there is a reasonable likelihood that he/she would prevail as to at least one of the claims challenged.  In instituting a review, the Board may take into account whether, and reject the petition or request because, the same or substantially same prior art or arguments previously were presented to the Office.
  • Include intrinsic reference in claim construction
  • Expert testimony must have underlying facts or data of record
  • Petitioners should address specific teachings that disclose claim elements, and support reasoning why claimed elements were known in prior art, used for a known purpose, and yielded predictable results.

In the question and answer session, BIO’s Deputy General Counsel for IP, Hans Sauer expressed skepticism about recent assertions that IPR petitions against biopharma patents were declining.

When panelists pointed out to Dr. Sauer that petitions to challenge biotech pharma patents had decreased by 25% for the first four months of 2016 compared to those filed for the same period in 2015, he was quick to point out that seven to 15 biotech pharma IPR petitions is still significant. The drop off could likely be due to a decrease in filings from Kyle Bass and hedge fund entities, who filed over 33 challenges against drug related patent claims in 2015.

As Jacob Sherkow, associate professor at NYU’s Innovation for Law and Technology said in Bloomberg BNA’s  2016 Life Sciences Law & Industry Report:

“If there’s seven to 15 challenges a month, and one out of 15 wins, that’s one patent invalidated by a generic drug maker each month.”

Check out more of our IP Coverage later this week here in San Francisco!

Filed under: Patently BIOtech, Public Policy, , , , , , , , , , , , , , , ,

BIO Releases Largest Study Ever on Clinical Development Success Rates

On Wednesday, BIO released the largest ever study of clinical development success rates. The study, conducted in partnership with Amplion and Biomedtracker, recorded and analyzed 9,985 clinical and regulatory phase transitions, across 1,103 companies. Using clinical trial data from the past decade, “Clinical Development Success Rates 2006-2015” compares groups of diseases, drug modalities and other attributes to generate the most comprehensive analysis, to date, of biopharmaceutical R&D success.

“This study provides a wealth of information about drug development success rates across a broad range of indications,” said Cartier Esham, PhD, BIO’s Executive Vice President, Emerging Companies. “The results may be used to pinpoint disease areas and phases of development where the industry has been most successful in recent years, as well as areas presenting challenges along the capital intensive-pathway of drug development.”

Key findings from the study include:

  • Clinical trial programs that used selection biomarkers saw an overall likelihood of approval (LOA) from Phase I of 25.9%, compared to 8.4% when no selection biomarkers were used.
  • The overall LOA from Phase I for all developmental candidates was 9.6%, and 11.9% for all indications outside of Oncology.
  • Of the 14 major disease areas studied, Hematology had the highest LOA from Phase I (26.1%) and Oncology had the lowest (5.1%).
  • Oncology drugs were approved the fastest of all 14 disease areas.
  • Rare disease programs had higher success rates at each phase of development vs. the overall dataset.
  • Chronic diseases with high populations had lower LOA from Phase I vs. the overall dataset.

The study relied upon years of clinical program monitoring and data entry by Informa’s Biomedtracker service. BIO has long partnered with Biomedtracker to calculate success rates based on this data. More recently, BIO and Biomedtracker partnered with Amplion, the inventors of BiomarkerBase, to analyze the effects of biomarkers in clinical trial success.

“Combining Amplion’s biomarker database with Biomedtracker’s clinical transition records we were able to, for the first time, quantify the benefit of using selection biomarkers in drug development,” said study author David Thomas, CFA, BIO’s Senior Director of Industry Research. “In combination with the rare disease section of the report, these results appear to be revealing the overall strength in targeting well-defined, homogenous patient populations.”

A full version of the report is available for download here.

Thomas will be discussing the report on June 6 at the 2016 BIO International Convention during his session, “The State of the Innovation Industry.”

Filed under: Business and Investments, Health, Inside BIO Industry Analysis, , , , , , , , , ,

Understanding the Biotech Market in Brazil

The biotechnology market in Brazil has seen enormous activity this year in both the areas of industrial biotechnology and healthcare. In a recent webinar that discussed the latest results of the annual Scientific American Worldview report, panelists were especially excited by the partnering opportunities in Brazil. Mike May, Editorial Director, Scientific American Worldview, commented, “Brazil is, as a country, like a master of partnering. They partner in the country between industry and government. They partner outside the country with industry and industry in other places. They have huge networks of partnering. They’re bringing industries in from other countries to help them with things where maybe they don’t have the technology… So you know, it’s like they’re finding creative ways to deal with some of the challenges they have that, say, the United States doesn’t have.”1

Building on this movement, BIO and Biominas have partnered to co-host the first annual BIO Latin America September 9-11, 2014 in Rio de Janeiro, Brazil, the industry’s must-attend conference for innovation and collaboration in Latin America’s rapidly-growing biotechnology sector. Here is a look at the current state of the biotech market in Brazil.

Industrial Biotechnology

Brazil is well known for its research and investment in industrial biotechnology, particularly in regards to cellulosic sugars and agribusiness. In April, several companies including Amyris, BP, Dow Chemical, DuPont, and Novozymes came together to launch of the Brazilian Industrial Biotech Association (ABBI) to promote dialogue with stakeholders, policy makers, and the public about advancing industrial biotechnology in Brazil. The trade group aims to improve current patent laws in light of new biotechnology advancements, support investments in R&D, laboratory infrastructure, and capacity and training for skilled and technical labor.

At the launch event for ABBI, Greg Stephanopoulos, from the Department of Chemical Engineering at MIT, said that industrial biotechnology would help Brazil take a leadership position in the 21st Century global economy2.

Biotech Sales Growth among BRIC Countries

Despite representing under 5% of global biotech sales, BRIC countries (Brazil, Russian, India, and China) have seen a 29.3% compound annual growth rate (CAGR) from 2010-2012.

Figure 1, BRIC Biotechnology Sales Growth for the top 100 Global Pharma Companies, 2010-2012 (source: EvaluatePharma)

More Biotech Companies in Brazil Focus on Human Health than Agribusiness

Biotechnology makes up an especially large portion of the current bioscience enterprises in Brazil. Out of 271 bioscience enterprises, 143 (or 51%) are biotechs. Out of the 143 biotech enterprises, the largest segment by application (33%) is comprised of companies with a human health focus.

While Brazil is valued as a leader in industrial biotechnology and is known for their investment and R&D in cellulosic sugars and biofuels, there is a portion of a the biotech market that is focused on human health. In 2012, there were 89 biotech companies dedicated to the development of new medications (small molecules and biological), diagnostics, vaccines, cell therapy, regenerative medicine and tissue engineering, advanced method for assisted reproduction, genetic and molecular testing, etc.3

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Figure 2. Number of Biotech Enterprises in Brazil (source: pwc/Biominas)

fg3Figure 3: Brazilian Biotech Companies by Application (source: pwc/Biominas)

The Healthcare Market in Brazil

Brazil is currently the largest healthcare market in Latin America, covering almost one-fourth of the population3. It also has the highest per head healthcare spending in Latin America, which has seen steady growth year over year alongside Brazil’s growing population of 195 million4.

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Figure 4, As Brazil’s Population Grows, So Does Its’ Health Spending (source: Sutherland Global Services)

The pharmaceutical market in Brazil grew at a CAGR of nine per cent from 2004-20105,6. According to Business Monitor International (BMI),7 Brazil’s pharmaceutical market is projected to reach $26.2bn in 2014. A report by Deloitte8 found that Brazil’s government has moved to align the drug regulatory environment with international standards, including intellectual property (IP) reforms carried out in recent years.

Deal making between global pharma giants and smaller Brazilian companies are helping to drive the success of the healthcare industry in Brazil, such as Sanofi’s purchase of Medley, Brazil’s largest generic-drug company and third-largest pharmaceutical maker9, and Amgen’s acquisition of privately-held Brazilian generics firm Bergamo, for $215 million10.

This demonstrated growth of the healthcare industry in Brazil and recent deal making activity highlights the importance of accessing the innovation and partnering opportunities in Latin America’s rapidly-growing life science industry. Registration for BIO Latin America is now open. We hope to see you there!

Filed under: Events, The One-on-One Compass, , , , , , , , , ,