Trump, Drug Prices and Deregulation

Posted in BioBusiness, BioEducation, BioJobBuzz

Donald Trump met with pharmaceutical leaders and their lobbyists yesterday. At the outset of the meeting he castigated executives for the high prices of prescriptions drugs in the US. Then, he mentioned that he thought that the regulations guiding new drug approvals by US Food and Drug Administration (FDA) are overly complex and are interfering with discovery and development of new life saving molecules for the American public.

While pharma execs may have cringed at the mention of high drug prices (Republicans never think that drug prices are too high), a majority were emboldened by the mention of loosening FDA regulations for new drug approvals. Drug makers have historically complained that overly aggressive FDA regulations drive up the costs associated with new drug development. What they fail to mention is that the regulations imposed by FDA on drug development are necessary to ensure drug efficacy and public safety.  And if you look at the overall track record of FDA for new drug approvals over the past 40 years the agency is clearly doing its jobs (less than 3% of approved drugs have been recalled from the market). Prior to implementation of modern FDA regulations and current good manufacturing practices (CGMP), the efficacy and safety of new drugs could not be accurately determined or guaranteed.

Now let’s talk about new drug discovery and development prices. Current estimates suggest that it takes  $1.0-2.0 billion to bring a new prescription drug to market. While the actual costs may vary, what the drug companies do not tell you is that included in those cost are the manufacturing, marketing and sales of the drug once it is approved. That said, the actual discovery and development of the drug is much less costly. Nevertheless, the high costs of discovery and development is the explanation that pharma executives give to justify high drug prices. Also, they frequently justify high prices because the high failure rate of new molecules i.e. we spend a lot of money on drugs that we want to advance but since so many of them fail we have to charge high prices for the ones that successfully garner regulatory approval.

While these arguments may be compelling let’s take the example of Lipitor, a cholesterol-lowing drug that has been on the market for about 20 years.  The graph below shows the sales history of Lipitor from 2003-2015.

As you can see the return on investment by Pfizer for Lipitor far exceeded the $1.0 billion development costs of the molecule. Also, the graph shows that Lipitor sales drastically fell off in 2012.  This is because Lipitor lost patent protection in 2011 and several generic competitors appeared on the market. Yet, despite the appearance of low cost generic alternatives, Lipitor sales were almost $2.0 billion in 2015.  Of course, you can argue that Lipitor is an extraordinary example and there are not that many $1.0 billion drugs out there. However, you would be wrong

Next, let’s consider how drug companies determine their retail price for the drugs that they sell. For those of you who may not know, the US government including its agencies, FDA and the Centers for Medicare and Medicaid Services (the largest provider of prescription drugs in the US) are not legally allowed to negotiate drug prices with their manufacturers. That right….you heard right. Instead, drug companies are required to tell FDA how much they plan to charge and then it is up to insurance companies/third party payers to determine whether or not they will reimburse patients costs for those drugs.  Put simply, the drug companies and insurers set drug prices in the US. This is in marked contrast with the rest of the world (possibly excluding New Zealand) where governments negotiate with drug companies to set drug prices that are affordable and consistent with the economic realities of their countries.

You may be asking what does all of this have to do with Trump and his news conference yesterday?

First, Trump essentially put drug companies on notice that he thinks US prescription drug prices are too high. Second, Trump also acknowledged that overly aggressive FDA regulations are responsible for the rise costs of prescription drugs in this country. Therefore, according to Trump, the best way to lower drug prices in the US is  to lower the regulatory requirements for new prescription drug development and approval. Theoretically, lowering regulatory requirements ought to help reduce drug discovery and manufacturing costs which, in turn, should translates into lower prescription drug costs. However, as previously mentioned, the government has no leverage over drug companies when it comes to drug prices. That said, less than mandatory price controls would have no noticeable or little effect on containing rising prescription drug prices in the US.

Ironically, the Affordable Care Act (aka Obamacare) is lowering drug prices by holding drug manufacturers more accountable for the drugs that they develop and try to bring to market. To wit, based on certain provisions of the ACA (which have nothing to do with the retail insurance part of the Act) drug manufacturers must meet certain clinical and safety benchmarks before the Centers for Medicare and Medicaid services will reimburse its patients for approved prescription drugs. To that point, the ACA stipulates that the government will not reimburse patients for new prescription drugs unless they demonstrate quantifiable improvements to clinical efficacy or safety!  In other words, the government will not pay a higher price for new prescription drugs if its efficacy or safety is not markedly better than existing cheaper alternatives.  Not surprisingly, these regulations have forced drug makers to think more strategically and to only advance drug candidates that are superior to already existing drugs. 

So, what does this all mean?  First, if the ACA is repealed or modified it will weaken the ability of the federal government to prevent drug prices from rising.  Second, if FDA regulations are relaxed or reduced, it may lower drugmaker’s overhead costs but it will not necessarily lower drug prices (remember drug companies set drug prices and government cannot approve or not approve drugs based solely on price).  Third, before FDA modernized itself in the late 1930s the US drug supply was not safe and there were many drugs on that market that offered no clinical benefits). Consequently, deregulation may be good for drug companies but not necessarily good for the American public.

Until next time….

Good Luck and Good Job Hunting!!!!!!! 

The "Skinny" on the Emergence of Antibiotic Resistant Strains of Bacteria

Posted in Career Advice

For many years, I taught medical students that the emergence of antibiotic resistant strains of bacteria primarily resulted from the overuse and misuse of antibiotics by physicians. While this seemed to make sense, I started chatting in the late 1990s with Steve Projan— a well known and highly respect maven on bacterial antibiotic resistance—who told me that the physician story was an urban legend and that the main reason for the emergence of antibiotic resistance was directly related to the use of antibiotics as growth enhancers in livestock feed. Not surprisingly, shortly after my conversations with Dr. Projan, papers began appearing in the literature that corroborated the claims.

Despite a growing body of convincing scientific evidence, the Bush administration did nothing to regulate or reduce the use of antibiotics in live stocks feeds in the US for almost a decade. Last year it is estimated that 35 million pounds of antibiotics were used in the US. Interestingly, 70% were used in cows, chickens and pigs. It is important to point out that the US isn’t the only culprit; recent estimates suggest that 50% of the global antibiotic supply is used by the livestock industry. Recognizing a growing problem, the European Union and other developed countries (not the US) have adopted strong limits on the use of antibiotics for livestock purposes.

Thankfully, the pressure against the use of antibiotics in agriculture and livestock production is rising. The World Health Organization concluded this year that surging antibiotic resistance is one of the leading threats to human health, and the White House last month said the problem is "urgent." Also this year, the three federal agencies tasked with protecting public health — the Food and Drug Administration (FDA), CDC and U.S. Department of Agriculture — declared drug-resistant diseases stemming from antibiotic use in animals a "serious emerging concern." And, this past summer, FDA deputy commissioner Dr. Joshua Sharfstein told Congress that farmers need to stop feeding antibiotics to healthy farm animals.

Pharmaceutical companies and agricultural lobbyists argue that antibiotics keep animals healthy and meat costs low, and have successfully help to defeat a series of proposed limits on their use. To that end, in 2009, drug makers spent $135 million and agribusiness companies another $70 million, lobbying against new limits on the use of antibiotics as livestock growth enhancers. FDA official say that without new laws the agency’s options are fairly limited. Ironically, the agency approved antibiotic use in animals in 1951, before concerns about drug resistance were recognized. And, the only way to withdraw that approval is through a drug-by-drug process that can take years of study, review and comment.

Previous attempts by FDA to limit antibiotic usage have consistently met with limited success. For example, in 1977 the agency proposed a ban on penicillin and tetracycline in animal feed, but it was defeated after criticism from interest groups. In 2000 FDA ordered the antibiotic Baytril (used in the poultry industry) off the market. Five years later, after a series of failed judicial appeals, poultry farmers finally stopped using the drug as a growth enhancer. Finally, in 2008 the FDA issued its second limit on an antibiotic used in cows, pigs and chickens, citing "the importance of cephalosporin drugs for treating disease in humans." But the Bush Administration — in an FDA note in the federal register — reversed that decision five days before it was going to take effect after receiving several hundred letters from drug companies and farm animal trade groups.

Luckily, we now have a President who believes in regulation of big business to protect the health and welfare of Americans and is smart enough to make the scientific connections between emerging antibiotic resistance in animals and human. Maybe some real change will be coming soon….one can only hope!!!!!!!!!!

Hat tip to Ed at the Pharmalot Blog

Until next time…

Good Luck and Good Job Hunting!!!!!!!!!