Patrick has been researching and writing about breakthrough tech for over 30 years. He has written over 200 editorials for USA Today. He has appeared in the Wall Street Journal and on CNN’s Crossfire news program.

Patrick has also served as a consultant for national political campaigns and Fortune 500 companies. He’s interviewed and speaks regularly to a host of nationally known CEOs and Nobel Prize-winning scientists and researchers.
Tags: aging | healthcare | drug prices | biotech

Demand for Drug Pricing Changes

By Tuesday, 15 November 2016 04:23 PM Current | Bio | Archive

Policy wonks are starting to face an important fact: The main cause of our economic woes is the aging of the population and the associated healthcare costs.

Western populations as a whole are aging rapidly. This means our economic problems will get worse until science can dramatically extend health spans.

Right now, we need to look at how our healthcare crisis will affect the pharmaceutical industry’s pricing models. There is a great deal at stake, and pressure will mount to control the rise in costs.

Former Fed Chairman Alan Greenspan recently warned that standard policy tweaks won’t fix the U.S. economy. The mandated 9 percent annual increase in entitlement spending for healthcare, retirement, and other programs is too great.

In the coming years, demands for lower healthcare costs will grow. Even though drugs account for just about 15 percent of total medical spending, I think that the pharmaceutical industry will bear the brunt of these efforts.

An innovative new strategy for dealing with this political problem has emerged. Ironically, it can be traced to the actions of one of the most hated men in America, Martin Shkreli.

The self-named “pharma bro” seems to have little grasp of the biological sciences. He has made sweeping attacks on the field of biotechnology and has encouraged others to short specific biotechs.

Clearly, this can seriously hurt innovative startups.

A favorite Shkreli target has been pluripotent stem cell or “regenerative” medicine. He has dismissed it as “a meaningless and embarrassing buzzword that means nothing.”

Given the near-miraculous results in a recent stem cell spinal cord clinical trial, it’s clear Shkreli’s forte is not science.

What the former hedge fund manager does know is how to exploit FDA-granted drug monopolies.

As Chairman and CEO of Turing Pharmaceuticals, his business model was basic. He got exclusive rights to drugs that were already on the market, or close to it, and then raised prices sharply.

He did that with Daraprim, a pyrimethamine drug used to treat toxoplasmosis. Shkreli raised the price from $13.50 to $750 per pill.

Most pharma industry veterans think that Shkreli’s drastic hike was doomed. If he’d taken his time, he could have made more money using incremental price hikes.

Many companies, including big pharma, do this over the course of years to avoid public backlash.

Some experienced biotech insiders tell me they think that Shkreli’s hike was, in fact, part of a plan. As a result of his hike, some presidential candidates threatened to nationalize the entire pharmaceutical industry.

That caused a general sell-off in the biotech industry. It drove down stock prices across the board and wiped billions of dollars from the collective biotech market cap.

If you’d known this was coming, you could have made a handsome profit.

While at Turing, Shkreli became a majority stakeholder in KaloBios Pharmaceuticals. He seemed to be planning a rinse and repeat of the same strategies used at Turing. But less than four weeks into his tenure, Shkreli was arrested by the FBI on charges of securities fraud.

This left KaloBios in a real bind (including a letter from the Nasdaq Listing Qualification Staff warning of its delisting). After that, the company filed for chapter 11 bankruptcy protection.

At that point, friends of KaloBios asked a well-known senior pharmaceutical executive and scientist, Dr. Cameron Durrant, MD, to save the company. Much of what I know about the pharmaceutical industry, in fact, I learned from Durrant.

Durrant told me that shortly after he took the helm of KaloBios, he thought about rejecting the potentially reputation damaging venture. But then he began to view his role in a new light. This challenge would give him the chance to turn around a failing business and create a new approach to drug pricing.

In April, Durrant laid out his regulatory jiu-jitsu. He designed a novel, specific, and concrete pricing model to set his company apart from the industry’s soiled reputation. He publicly committed KaloBios to focus on affordability, transparency, and a reasonable return.

This plan is not just words. Durrant has formed relationships with stakeholders who want his drug candidates to come to market at reasonable prices.

Durrant is betting that insurers, patients’ rights groups, and others will see the need to reward shareholders while helping the company surmount regulatory hurdles.

With this approach, the company should enjoy a favored status with regard to grants from disease research and advocacy groups.

Durrant tells me he has even made a new ally, a not-for-profit contract research organization that also seeks to improve patient access to medicine.

Durrant’s plan has gained the attention of both funds and investors who want to support a socially responsible form of drug development. And they are willing to supply capital with very favorable terms.

Dr. Durrant says, “We don’t have to go begging to greedy hedge funds, nor do you we want to.”

 

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PatrickCox
Western populations as a whole are aging rapidly. This means our economic problems will get worse until science can dramatically extend health spans.
aging, healthcare, drug prices, biotech
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2016-23-15
Tuesday, 15 November 2016 04:23 PM
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