Ep. 324 - Genmab, GSK and Drug Pricing

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<v Eric Pierce>BioCentury This Week is brought to you by IQVIA Biotech.

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<v Jeff Cranmer>Genmab's takeout of multispecifics company Merus is the Danish biotech's, latest and largest step toward marketing its own pipeline.

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<v Jeff Cranmer>After many years of relying on a fruitful partnership model that delivered blockbuster revenues, we'll discuss the $8 billion acquisition of Merus on the latest BioCentury this week podcast.

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<v Jeff Cranmer>And Emma Wamsley is stepping down after nearly a decade at the helm of GSK.

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<v Jeff Cranmer>What did she accomplish and what's next for the U.K. Pharma?

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<v Jeff Cranmer>And it's been another calm week in Washington.

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<v Jeff Cranmer>President Trump is threatening a hundred percent tariffs on pharmaceuticals.

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<v Jeff Cranmer>The deadline for industry to respond to the administration's most favored nation drug pricing demands.

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<v Jeff Cranmer>And a looming shutdown could close the door to new NDAs and BLAs.

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<v Jeff Cranmer>But wait, there's more.

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<v Jeff Cranmer>CDER Director George Tidmarsh has vowed to crack down on surrogate endpoints.

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<v Jeff Cranmer>I'm Jeff Cranmer.

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<v Jeff Cranmer>You're listening to BioCentury's this week, and joining me are my colleagues.

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<v Simone Fishburn>Simone Fishburn, editor in chief.

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<v Steve Usdin>Steve Usdin, Washington editor.

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<v Stephen Hansen>Stephen Hansen, director of Biopharma Intelligence.

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<v Jeff Cranmer>All right, and coming up this week on our sister podcast, the BioCentury's Show will have James Li of Frazier, We'll be talking about dealmaking innovation and more in China.

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<v Jeff Cranmer>Okay, Stephen, you've been following Genmab for safe to say about 20 years now.

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<v Jeff Cranmer>they've been doing some interesting Dealmaking.

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<v Jeff Cranmer>what do you make of this, uh, this play?

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<v Jeff Cranmer>$8 billion, eh?

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<v Stephen Hansen>Yeah.

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<v Stephen Hansen>Thanks Jeff.

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<v Stephen Hansen>No, it's, uh, yeah, it's a, it's a big swing, isn't it?

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<v Stephen Hansen>so Genmab, think their current market cap around just shy of 18 billion.

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<v Stephen Hansen>So, um, you know, I was sort of looking back through deals to see if I could find other other companies, like of Genmab size doing deals this size.

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<v Stephen Hansen>To be honest, there aren't many.

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<v Stephen Hansen>I mean, high single digit M&A takeouts, I mean, is predominantly this is pharma territory usually.

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<v Stephen Hansen>it's a big swing.

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<v Stephen Hansen>I guess, you know, maybe in one sense you gotta give 'em credit for that, but, uh, doesn't come without its wrist, does it?

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<v Stephen Hansen>Simone?

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<v Simone Fishburn>Right.

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<v Simone Fishburn>Well, let's get into the risks in a minute.

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<v Simone Fishburn>First of all, I'm delighted, Ste you've been covering Genmab since you were three years old.

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<v Stephen Hansen>is far too kind of you,

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<v Simone Fishburn>yeah Um, yeah, you know, we did write about Genmab in our back to school as a sort of example of a tear jumper because they really had this strategy of growth.

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<v Simone Fishburn>And I feel like we are going to find out if this is a new trajectory.

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<v Simone Fishburn>So last year they did their first M&A with about a billion plus,

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<v Stephen Hansen>1.8

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<v Simone Fishburn>$1.8 billion acquisition.

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<v Stephen Hansen>That's right.

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<v Stephen Hansen>Of ProfoundBio, which brought in an ADC asset for them.

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<v Simone Fishburn>Exactly.

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<v Simone Fishburn>I love it when you finish my sentences.

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<v Simone Fishburn>Um, um, but this one, as you say, is a different order of magnitude and this is like playing like the big kids.

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<v Simone Fishburn>Okay.

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<v Simone Fishburn>And, you know, we'll find out if this is what sends them on a trajectory.

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<v Simone Fishburn>Let's just before I know you, it's highly leveraged and there is some risk in that.

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<v Simone Fishburn>But let's just talk for a minute about the.

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<v Simone Fishburn>the positive side of this, which is they went for a bispecific in head and neck cancer, and that is incredibly synergistic, I would say adjacent.

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<v Simone Fishburn>A little bit overlapping, but that's fine in my mind with their core technology.

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<v Simone Fishburn>And so I feel like their ability to capitalize on this and synergize with their own internal expertise.

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<v Simone Fishburn>It should be quite good.

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<v Simone Fishburn>And I contrast that to something like, say Gilead when it brought in CAR T, when it brought in kite for CAR T as it tried to go into cancer.

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<v Simone Fishburn>But that's just sort of a bolt on that just involved a whole set of different expertise and you know, was a lot harder going.

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<v Simone Fishburn>how do you think about the.

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<v Simone Fishburn>Match of this for what Genmab's core capabilities are.

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<v Stephen Hansen>Oh, no, it, it definitely fits.

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<v Stephen Hansen>I mean, this is definitely right in their, as I would say, right in their wheelhouse.

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<v Stephen Hansen>Um,  I guess the, the, the one thing that surprised me was the fact that it was.

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<v Stephen Hansen>Another bispecific because as you say, they have their own duo body platform, which is a bispecific technology platform.

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<v Stephen Hansen>But I think the point here is that this, moves them along faster and gives them another late stage asset that they just wouldn't have had, organically.

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<v Stephen Hansen>They, you know, the pipeline just wasn't there to be producing another asset to help them push this along.

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<v Stephen Hansen>And just to reference what you said about, you know, what we wrote about the, um.

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<v Stephen Hansen>Company and Back to School.

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<v Stephen Hansen>A lot of the focus of that profile was around their ability to, basically transform the company through a partnership model and sort of leverage their, their partnerships and their assets to be able to build out the company.

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<v Stephen Hansen>And what I think we're seeing here, and what this sort of helps to point to is Genmab looking to now transition from being a predominantly partnership driven company historically.

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<v Stephen Hansen>To now really wanting to try and push their own commercial commercial weight.

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<v Stephen Hansen>I know, you know, having been spoken to Jan van de Winkel several times.

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<v Stephen Hansen>I know just a couple years ago they'd already started some of that transition where they were looking to co-develop, some of their internal assets and start to build sort of, their own commercial capabilities.

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<v Stephen Hansen>But I think this is just really them trying to speed up that process in terms of, you know, building out their own.

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<v Stephen Hansen>Wholly owned commercial assets and, and really drive that.

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<v Stephen Hansen>Um, and a lot of that obviously is with, they have their own patent cliff coming basically in some ways.

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<v Stephen Hansen>they're expecting to get 3.5 to 3.7 billion in revenue this year.

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<v Stephen Hansen>The vast majority of that are royalties from the sales of Darzalex and Darzalex.

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<v Stephen Hansen>You know, that's now like a 12, 13, $14 billion a year drug.

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<v Stephen Hansen>But.

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<v Stephen Hansen>Those patents are gonna start expiring, I think in 20 29, 20, 20, 30, period.

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<v Stephen Hansen>they're looking to replace some of that, some of that revenue.

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<v Stephen Hansen>And so I think this is just them helping to, uh, helping to try and, in their mind, try and speed that along.

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<v Simone Fishburn>I think that's absolutely right and I think we're gonna know in, a few years, maybe not a couple of years, whether this was a turning point and it could be a very smart move by Jan, by the CEO.

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<v Simone Fishburn>But there is also the risk side.

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<v Simone Fishburn>So just talk us through.

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<v Simone Fishburn>How much money they borrowed to make this happen,

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<v Stephen Hansen>Sure.

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<v Simone Fishburn>and the history of borrowing money to grow

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<v Stephen Hansen>So that's, I mean, so that's, so that's the risk, right?

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<v Stephen Hansen>I mean, so they're, they're taking on five and a half billion in debt, to finance this deal.

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<v Stephen Hansen>it's a pretty highly leveraged deal

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<v Simone Fishburn>pretty highly leveraged.

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<v Stephen Hansen>um, and I'm not saying that these are, that these are akin and that they're the same, but it, it reminded me of, you know, you're saying covered Genmab for 20 years.

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<v Stephen Hansen>It's not exactly 20 years, but I, I do remember covering the company back in 2007 when they were gearing up to start commercializing their own products.

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<v Stephen Hansen>They built a big manufacturing facility in my home state of Minnesota, that they spent a lot of money on, and they were.

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<v Stephen Hansen>getting ready to, you know, launch multiple products that were, you know, they had multiple products in Phase III, and they had several Phase III failures.

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<v Stephen Hansen>One of them ended up basically, ended up being a commercial dud, and essentially the company had sort of overextended itself in terms of kind of shifting to that commercialization strategy so fast.

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<v Stephen Hansen>And that ended up being why they turned to partnerships because they wanted to take a safer, more, more, um, what they thought was a better, better road forward.

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<v Simone Fishburn>there's a fundamentally different risk analysis though when you are leveraging yourself to buy a manufacturing facility to commercialize your own things versus levering yourself to bring in a whole new asset?

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<v Simone Fishburn>seems to me to be a different set of equations

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<v Stephen Hansen>we're also talking, I mean, you know, Genmab was a different company then, I mean, that was a much smaller company.

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<v Stephen Hansen>$18 billion company now it's, potentially, you know, it's had a much larger market cap, you know, in a couple years prior.

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<v Stephen Hansen>So it's a different animal now.

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<v Stephen Hansen>And so I, I can, I can fully understand how, you know, the, as as I've said, they've already got some of their own sales through Epkinly, and Tivdak, which they're co-marketing with partners, so it's a different animal, but yeah, it doesn't come, without risks.

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<v Stephen Hansen>What I like about the deal is they've got the runway to figure this out.

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<v Stephen Hansen>They've got four or five years in which to see whether this, this works or not.

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<v Stephen Hansen>And if it doesn't, then you pivot again.

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<v Simone Fishburn>So it's not kind of existential for

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<v Stephen Hansen>I don't think it's existential.

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<v Stephen Hansen>I think it's, it's aggressive, but, um, I think, that's probably a good thing.

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<v Stephen Hansen>You'd rather be aggressive

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<v Simone Fishburn>We like bold over here.

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<v Simone Fishburn>Bold is, bold is welcome at BioCentury.

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<v Simone Fishburn>Reckless not so much, but bold yes.

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<v Jeff Cranmer>All right, well, let's, uh, let's head down to the U.K. uh, where Emma Walmsley, is departing GSK, Stephen, Simone, thoughts?

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<v Simone Fishburn>Uh, you take this one first, Stephen, because.

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<v Stephen Hansen>So.

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<v Stephen Hansen>let's see.

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<v Stephen Hansen>She started there in April, 2017.

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<v Stephen Hansen>I believe she was head of the consumer products, division at the time,  which at the time I remember we were surprised.

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<v Stephen Hansen>I think they were bringing someone in from the consumer side of the business to run everything.

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<v Simone Fishburn>How right.

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<v Simone Fishburn>We turned out to be.

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<v Simone Fishburn>Yes.

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<v Simone Fishburn>Keep

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<v Stephen Hansen>I was just gonna say, I think I, I don't think we were alone either in that, belief, but, um, yeah, I, I can't say it's gone great.

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<v Stephen Hansen>I mean, they've gone through several iterations of what they kind of wanted to do.

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<v Stephen Hansen>They brought, didn't Hal Barron come in with the idea of revolutionizing R&D at GSK?

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<v Stephen Hansen>That didn't turn out so well.

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<v Stephen Hansen>I guess the only major thing that's really happened is they've hived off the consumer business and now GSK is much more of a pure play, biopharma company, which that went

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<v Simone Fishburn>channel here, Stephen.

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<v Simone Fishburn>who will be listening.

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<v Simone Fishburn>And on their behalf, I'm gonna be quite critical of GSK.

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<v Simone Fishburn>at the end of the day, in Emma Wamsley's tenure, she did hive off the Haleon division, which you could call a low hanging fruit.

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<v Simone Fishburn>I think a few of the pharmas in that same time have, streamlined away from sort of consumer products or veterinary products or whatever.

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<v Simone Fishburn>so they've gone from $103 billion market cap when she joined roughly to roughly 80 billion now for GSK plus 40 billion for Haleon.

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<v Simone Fishburn>So you could call it up 20% in how many years did you say?

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<v Simone Fishburn>Eight years,

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<v Stephen Hansen>Eight years.

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<v Simone Fishburn>I just wanna point out that in that same amount of time, their friends, AstraZeneca have roughly tripled from 77 and a half billion to 227 billion, 228 billion or so.

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<v Simone Fishburn>And obviously other pharmas haven't done quite as well as AstraZeneca.

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<v Simone Fishburn>But it's really hard to look at this tenure as a success in my mind and in the mind of many people.

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<v Simone Fishburn>I think a lot of people have wondered why it's taken until now.

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<v Simone Fishburn>That's a question really for the board, you know, they've had some good readouts recently and.

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<v Simone Fishburn>I think that there are still some very talented, smart people at GSK.

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<v Simone Fishburn>I think it's also true that they have lost many talented, smart people in that time, and I think there's been a certain amount of disarray.

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<v Simone Fishburn>I'm talking about an R&D in particular.

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<v Simone Fishburn>Um, but Steve, I think you have contacts even beyond R&D.

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<v Simone Fishburn>I hope this is a good new page.

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<v Simone Fishburn>Um.

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<v Simone Fishburn>People that I've spoken to in the past have said good things about Luke Miels, the incoming CEO.

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<v Simone Fishburn>I don't know enough to talk about that, you know, we'll look into that.

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<v Stephen Hansen>Yeah.

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<v Stephen Hansen>No, I mean, I, I guess the thing that's always sort of, I guess especially over the last couple years, you know, GSK has kind of come to be what they do HIV, well, they do vaccines.

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<v Stephen Hansen>Well, it didn't really feel like they did much else, all that well, at least from a R&D new product launch, sort of like commercial success point of view.

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<v Stephen Hansen>now that obviously could change.

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<v Stephen Hansen>they're expecting five new product approvals this year.

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<v Simone Fishburn>They've done some nice acquisitions

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<v Stephen Hansen>They've done some nice acquisitions, so they brought in an FGF21 for MASH, which we've seen some good data from that target class in MASH.

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<v Stephen Hansen>they've got a new sort of long-acting six month dose, IL-5 that's expecting to get approved by the end of the year for asthma, Depemokimab, um, that I think some people have, decent expectations for in terms of what it could do there.

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<v Stephen Hansen>And, they kind of big up 14 in total programs that they think over the, like the next six years could be, you know, 2 billion pound plus, peak sale programs.

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<v Stephen Hansen>But I, there's not a lot that I see like in their pipeline that sort of has me wild in terms of like, oh, this is really cutting edge, or this is,  That this is gonna draw a ton of investor attention, essentially.

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<v Stephen Hansen>see what Luke does.

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<v Stephen Hansen>I mean, he's basically been the commercial, the chief commercial officer for almost the entire time that Emma's, you know, been at the helm.

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<v Stephen Hansen>So, does that bring changes or, you know, are you gonna see a major strategic change for someone who's been on the inside for same amount of time?

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<v Stephen Hansen>I don't know.

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<v Stephen Hansen>I don't know.

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<v Simone Fishburn>Yeah, I mean, I think in the history, not just of our industry but of other industries, there's plenty of examples of both right.

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<v Simone Fishburn>The insider who then did take it in a new direction, the insider who just carried on the same, you know, it's really hard to know when you're on the out.

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<v Simone Fishburn>you're not in that boardroom.

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<v Simone Fishburn>but obviously we're hoping for, good things from there.

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<v Stephen Hansen>Fingers crossed.

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<v Jeff Cranmer>Okay.

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<v Jeff Cranmer>Good stuff guys.

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<v Jeff Cranmer>hey, it's China's innovation moment.

00:14:41.480 --> 00:14:53.259
<v Jeff Cranmer>We have the China Healthcare Summit kicking off, later, next month, October 22 to 24 at the St. Regis in Shanghai.

00:14:53.625 --> 00:14:57.962
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00:15:24.956 --> 00:15:27.793
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00:15:27.793 --> 00:15:29.928
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<v Jeff Cranmer>Okay, we're gonna take a quick break and then, blue skies over Washington.

00:15:37.302 --> 00:15:41.673
<v Jeff Cranmer>We will, uh, bring Steve in,  and, figure out what he's been covering.

00:15:42.140 --> 00:15:46.211
<v Alanna Farro>BioCentury This Week is brought to you by The 12th China Healthcare Summit in Shanghai.

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00:16:18.110 --> 00:16:25.250
<v Jeff Cranmer>we're back on the BioCentury's this week podcast, if you could redesign FDA from the ground up, what would it look like?

00:16:25.250 --> 00:16:43.601
<v Jeff Cranmer>That's the fundamental question underlying the 2025 BioCentury Back to School essay, authored by our very own Washington editor, Steve Usdin, who has been a leading voice on regulation and policy for over two decades, almost three decades now since he was three years old.

00:16:43.601 --> 00:16:46.572
<v Jeff Cranmer>Much, much like Stephen, Uh, subscribers.

00:16:46.638 --> 00:16:52.778
<v Jeff Cranmer>Go to BioCenturybacktoschool.com for immediate access to our eight part series.

00:16:52.778 --> 00:17:10.762
<v Jeff Cranmer>Not yet a subscriber, a complimentary trial to BioCentury is available via the same link granting access to the in-depth data and analysis Essential for navigating today's rapidly evolving sector, including the back to school report.

00:17:10.762 --> 00:17:14.732
<v Jeff Cranmer>And Simone, uh, at the top of the show mentioned,  tier jumpers.

00:17:14.732 --> 00:17:22.173
<v Jeff Cranmer>That was the theme behind, back to school, a couple of years back, and you would get access to that too.

00:17:22.641 --> 00:17:23.909
<v Jeff Cranmer>Okay, Steve?

00:17:24.175 --> 00:17:33.285
<v Jeff Cranmer>You sent such lovely pictures to me of your weekend picking apples and wandering around the, the beauty that is the, greater Washington area.

00:17:33.519 --> 00:17:38.123
<v Jeff Cranmer>and then you told me what you wanted to talk about today and where, where to begin.

00:17:39.090 --> 00:17:40.526
<v Steve Usdin>Let's start with the tariffs, right?

00:17:40.659 --> 00:17:44.430
<v Steve Usdin>so last week in a 63 word, social media posting.

00:17:44.762 --> 00:17:50.469
<v Steve Usdin>President Trump threatened to impose a hundred percent tariffs on imports of branded drugs starting October one.

00:17:50.903 --> 00:17:58.143
<v Steve Usdin>he also said he would exempt companies that have pharmaceutical plants that are quote breaking ground or already under construction in the U.S.

00:17:58.743 --> 00:18:00.144
<v Steve Usdin>That leaves a lot of questions.

00:18:00.511 --> 00:18:05.116
<v Steve Usdin>Will countries and regions that have trade deals covering pharmaceuticals be exempt?

00:18:05.550 --> 00:18:07.519
<v Steve Usdin>If that's the case, and it seems to be.

00:18:07.885 --> 00:18:19.597
<v Steve Usdin>That means that these a hundred percent tariffs would not be imposed on pharmaceuticals manufactured in the European Union, Japan, the United Kingdom, or South Korea that leaves China, Singapore, and Switzerland.

00:18:20.065 --> 00:18:21.432
<v Steve Usdin>Which brings up the next question.

00:18:21.633 --> 00:18:33.010
<v Steve Usdin>Will companies that have broken ground on U.S. manufacturing plants have all of their products exempt are just those that they plan to make in the U.S. If it's all, and that's what some people seem to think.

00:18:33.511 --> 00:18:47.092
<v Steve Usdin>Then most of the Swiss based and Singapore based manufacturing is off the hook because a lot of that manufacturing is from big multinational pharmaceutical companies that have announced or will soon announce, big manufacturing investments in the United States.

00:18:47.726 --> 00:18:49.327
<v Steve Usdin>What does that leave China?

00:18:49.661 --> 00:18:55.901
<v Steve Usdin>Here's the rub, because Chinese manufacturing's essential for small biotechs that want to bring their own products to the U.S. market.

00:18:56.367 --> 00:18:58.436
<v Steve Usdin>If they're cut off, if this option is cut off.

00:18:59.037 --> 00:19:09.147
<v Steve Usdin>The hammer is gonna fall on those companies, on the small biotech companies that see Chinese contract manufacturing as their only option for getting onto the U.S.

00:19:09.147 --> 00:19:10.915
<v Steve Usdin>getting their own products onto the U.S. market.

00:19:11.616 --> 00:19:21.692
<v Steve Usdin>That may create a situation where small biotechs feel pressure to sell their assets or even sell the, the, the companies to big pharmas that have exemptions.

00:19:21.894 --> 00:19:28.866
<v Steve Usdin>If that's an option, if these exemptions carry through, kind of creates an umbrella for everything that those, big pharmas, sell.

00:19:28.866 --> 00:19:31.036
<v Steve Usdin>All of this is really speculative.

00:19:31.537 --> 00:19:34.071
<v Steve Usdin>The White House should be releasing details soon.

00:19:34.373 --> 00:19:35.740
<v Steve Usdin>and I wouldn't be amazed if.

00:19:36.407 --> 00:19:38.143
<v Steve Usdin>The tariffs get, um, delayed.

00:19:38.143 --> 00:19:44.982
<v Steve Usdin>That seems to be a Patten, with this administration of announcing something bold, in bold, um, letters and capital letters actually.

00:19:45.349 --> 00:19:51.390
<v Steve Usdin>And then, when it gets time to make the nitty gritty details, then things get delayed a little bit, but we don't know.

00:19:51.957 --> 00:19:53.458
<v Steve Usdin>lots of other things on the, docket too.

00:19:53.458 --> 00:19:53.692
<v Steve Usdin>Yeah.

00:19:54.058 --> 00:20:00.365
<v Simone Fishburn>Yeah, Steve, I mean, in a minute we can do the thought exercise of if this carried through, what would it mean?

00:20:00.832 --> 00:20:16.781
<v Simone Fishburn>But I think that's heavily caveated or cautioned by whether it happens and even if it gets reversed in the future, because a scenario that makes it really difficult for small companies to take their own products to market.

00:20:17.249 --> 00:20:22.554
<v Simone Fishburn>Means that, it's much harder to grow the Genmabs of the future, right?

00:20:22.554 --> 00:20:28.426
<v Simone Fishburn>It's much harder to grow big biotechs if companies can ever commercialize by themselves because of this.

00:20:28.426 --> 00:20:37.868
<v Simone Fishburn>And then there's the flip side of that, which is if it's really only the small companies that are gonna get kind of affected by this, how much actual revenue.

00:20:38.103 --> 00:20:40.137
<v Simone Fishburn>to the treasury, are we even talking about?

00:20:40.471 --> 00:20:43.040
<v Simone Fishburn>But I agree with you that there's a lot of things that can still happen.

00:20:43.741 --> 00:20:44.442
<v Steve Usdin>Yeah, many.

00:20:44.442 --> 00:20:45.844
<v Steve Usdin>Uh, uh, many, uh,

00:20:46.678 --> 00:20:47.511
<v Simone Fishburn>Many a slip.

00:20:47.511 --> 00:20:49.847
<v Simone Fishburn>Twix, the Twix, the lip in the cup.

00:20:50.182 --> 00:20:51.148
<v Steve Usdin>exactly, exactly.

00:20:51.148 --> 00:20:52.917
<v Steve Usdin>That's what I was trying to, that's what I was reaching for.

00:20:53.050 --> 00:20:55.386
<v Steve Usdin>So, look, um, and just one more, point on this.

00:20:55.453 --> 00:21:06.298
<v Steve Usdin>If it is the small companies, then the thing that will be hurt the most, I think will be the small companies that are manufacturing orphan drugs for very small populations because.

00:21:06.798 --> 00:21:10.701
<v Steve Usdin>Those assets aren't really attractive for big, multinational pharmaceutical companies.

00:21:10.701 --> 00:21:12.403
<v Steve Usdin>The revenues are simply too small.

00:21:12.804 --> 00:21:16.575
<v Steve Usdin>and that would be really kind of a tragedy for those patients and their families.

00:21:17.142 --> 00:21:17.875
<v Steve Usdin>Well, let's move on.

00:21:17.976 --> 00:21:18.844
<v Steve Usdin>MFN, right?

00:21:19.310 --> 00:21:20.244
<v Jeff Cranmer>So Yeah.

00:21:20.244 --> 00:21:26.718
<v Jeff Cranmer>I was gonna ask Steve, um, is this kind of a tactic as part of the MFN strategy of the Trump administration?

00:21:27.051 --> 00:21:29.621
<v Steve Usdin>Well, it hasn't been explicitly, stated that way.

00:21:29.755 --> 00:21:30.989
<v Steve Usdin>at least not in the last few days.

00:21:31.056 --> 00:21:36.595
<v Steve Usdin>Um, commerce Secretary, Howard Lutnick did say a while ago that  the tariffs were part of the MFN strategy.

00:21:36.928 --> 00:21:39.230
<v Steve Usdin>so we, it remains to be seen how that's gonna be tied in.

00:21:39.230 --> 00:21:42.733
<v Steve Usdin>But, so today's a deadline, um, for MFN so far.

00:21:43.101 --> 00:21:53.644
<v Steve Usdin>We've heard from PhRMA, the trade association, but not from the 17 companies that received letters from Trump requesting massive price concessions to match OECD pricing across their portfolios.

00:21:54.112 --> 00:21:57.015
<v Steve Usdin>The PhRMA response fell far short of Trump's demands.

00:21:57.148 --> 00:21:59.351
<v Steve Usdin>It touted huge commitments to invest in U.S.

00:21:59.351 --> 00:22:00.751
<v Steve Usdin>manufacturing and R&D.

00:22:00.986 --> 00:22:02.820
<v Steve Usdin>Again, that's probably tied to the tariff threats.

00:22:03.555 --> 00:22:06.490
<v Steve Usdin>They save $500 billion over the next decade.

00:22:06.758 --> 00:22:12.431
<v Steve Usdin>This includes some investments that haven't yet been announced, so I guess we're gonna be hearing about some more very soon.

00:22:12.864 --> 00:22:16.067
<v Steve Usdin>But the PhRMA announcement contains some very interesting qualifiers.

00:22:16.300 --> 00:22:23.842
<v Steve Usdin>Basically it said those investments are contingent on a favorable business climate, and it said tariffs and price controls aren't good for business.

00:22:24.476 --> 00:22:25.844
<v Steve Usdin>We've seen recently in the U.K.

00:22:25.844 --> 00:22:32.550
<v Steve Usdin>how companies can pull back from splashy commitments in the face of a deteriorating public policy and commercial environment.

00:22:32.951 --> 00:22:34.385
<v Steve Usdin>So we'll see how that plays out.

00:22:34.853 --> 00:22:42.461
<v Steve Usdin>PhRMA also said that it's creating a website to connect patients to direct to consumer purchases from individual companies.

00:22:42.827 --> 00:22:47.965
<v Steve Usdin>That's intended to cut PBMs out from sales, to un and underinsured patients.

00:22:48.599 --> 00:22:50.801
<v Steve Usdin>It remains to be seen how significant that is.

00:22:51.068 --> 00:22:58.309
<v Steve Usdin>but I should say another announcement, this morning from Novartis puts a whole thing, another, a kind of spin on the whole thing.

00:22:58.710 --> 00:23:02.480
<v Steve Usdin>So Novartis said that they're starting direct to consumer sales of one of their drugs.

00:23:02.847 --> 00:23:03.882
<v Steve Usdin>But here's the key thing.

00:23:04.215 --> 00:23:07.385
<v Steve Usdin>They said that they may extend that  to big employers.

00:23:07.652 --> 00:23:12.923
<v Steve Usdin>so big employers might get a, you know, 55% discount from list, basically cutting out the PBMs.

00:23:13.357 --> 00:23:25.604
<v Steve Usdin>If other companies do this, this model of, doing direct you know, kind of business to business sales basically, and cutting out the PBMs, for, uh, big employers, I think that that could have a really big impact.

00:23:25.871 --> 00:23:26.771
<v Steve Usdin>So what's next?

00:23:27.305 --> 00:23:27.772
<v Steve Usdin>Who knows?

00:23:27.772 --> 00:23:31.041
<v Steve Usdin>As I said, pharma's response falls far short of Trump's demands.

00:23:31.509 --> 00:23:34.779
<v Steve Usdin>Maybe some of the 17 companies are gonna make bigger concessions.

00:23:35.247 --> 00:23:42.453
<v Steve Usdin>Likely, I think we're gonna see a CMS mandatory demonstration project or maybe projects that attempt to impose price controls.

00:23:42.621 --> 00:23:49.461
<v Steve Usdin>There was a hint of this last week, CMS sent a proposed rule on a global drug pricing benchmark rule to the White House.

00:23:49.760 --> 00:23:55.500
<v Steve Usdin>Details haven't been released, but this seems to be a CMS Part B demo imposing MFN pricing.

00:23:56.233 --> 00:24:03.141
<v Steve Usdin>I'm hearing there could also be a Part D demo, but that's, uh, much harder to pull off so it's not completely clear what the, what that could be.

00:24:03.407 --> 00:24:05.009
<v Simone Fishburn>Hey Steve, one question.

00:24:05.009 --> 00:24:15.353
<v Simone Fishburn>I know we have to wrap in a minute, but going back to the Novartis thing, which I think is really interesting,  you know, the pharmas generally are so annoyed with the PBMs, like going back years.

00:24:15.619 --> 00:24:17.855
<v Simone Fishburn>That's another area of mounting frustration.

00:24:18.722 --> 00:24:27.199
<v Simone Fishburn>What are the chances that that kind of strategy, even outlasts or outlives, this sort of MFN scenario?

00:24:28.200 --> 00:24:31.803
<v Steve Usdin>Oh, I think there's a good chance, I think, this could be, the start of a trend.

00:24:32.203 --> 00:24:33.838
<v Steve Usdin>there's a lot we don't know about it.

00:24:33.872 --> 00:24:34.605
<v Steve Usdin>There's a lot we don't know about.

00:24:35.207 --> 00:24:54.726
<v Steve Usdin>how it's going to work, and you have to remember this, there's a reason why PBMs were created in the first place, which is, to create a kind of centralized mechanism for, negotiating for bargaining with drug companies over drug prices, because it was felt that it wasn't, um, efficient, or practical for every, employer.

00:24:54.726 --> 00:25:02.299
<v Steve Usdin>For example, or every, insurance plan to negotiate prices one by one with each drug company over each drug.

00:25:02.666 --> 00:25:08.807
<v Steve Usdin>We'll see, I think this, I think this could be the beginning of a, of a shift, toward, cutting out, um, the PBMs.

00:25:09.007 --> 00:25:19.617
<v Steve Usdin>it's also important to remember, and I discussed this on the, The BioCentury Show recently with Fritz Bittenbender, the chairman of Bio and SVP of Genentech, that, there are unintended consequences.

00:25:20.085 --> 00:25:21.286
<v Steve Usdin>to cutting out PBMs.

00:25:21.419 --> 00:25:26.758
<v Steve Usdin>one of them is the fact that some of the PBM money goes to subsidizing premiums.

00:25:26.991 --> 00:25:31.028
<v Steve Usdin>If they're, cut out completely, then premiums are going to rise.

00:25:31.262 --> 00:25:34.231
<v Steve Usdin>And that's something that, is very difficult.

00:25:34.266 --> 00:25:38.236
<v Steve Usdin>It's difficult for employers, it's difficult for employees, and it's politically difficult.

00:25:38.670 --> 00:25:44.843
<v Jeff Cranmer>And the Bittenbender conversation, was on our sister podcast, the BioCentury Show.

00:25:44.843 --> 00:25:47.511
<v Jeff Cranmer>You can find it wherever you get your podcast.

00:25:47.511 --> 00:25:49.814
<v Jeff Cranmer>Steve, quickly, shut down.

00:25:49.814 --> 00:25:54.019
<v Jeff Cranmer>We don't really know what's gonna happen, but are the key things that would be affected?

00:25:54.385 --> 00:25:55.519
<v Steve Usdin>we don't know if it's gonna happen.

00:25:55.554 --> 00:25:56.788
<v Steve Usdin>It's looking likely now.

00:25:57.221 --> 00:25:58.690
<v Steve Usdin>Similar to previous shutdowns.

00:25:58.890 --> 00:26:06.698
<v Steve Usdin>FDA will retain a large percentage of its workforce either because there are funds available from user fees or because they are deemed essential.

00:26:07.365 --> 00:26:11.736
<v Steve Usdin>It's likely that it won't accept new marketing applications as long as the shutdown is in effect.

00:26:12.202 --> 00:26:15.606
<v Steve Usdin>it won't be doing any research, it won't be doing any work on guidance documents.

00:26:16.040 --> 00:26:21.613
<v Steve Usdin>Uh, I wonder if we'll be seeing any more videos from Commissioner, Makary during a, during a shutdown.

00:26:21.880 --> 00:26:23.414
<v Steve Usdin>He hasn't made any recently actually.

00:26:24.082 --> 00:26:25.916
<v Steve Usdin>so, uh, you know, we'll see.

00:26:26.017 --> 00:26:29.621
<v Jeff Cranmer>And, and very quickly, uh, we just, we just have minute left.

00:26:29.820 --> 00:26:35.527
<v Jeff Cranmer>what's with, uh, CDER Director, Tidmarsh vowing to crack down on surrogate endpoints.

00:26:36.060 --> 00:26:38.496
<v Steve Usdin>So it's sort of like, uh, Trump's social media posting.

00:26:38.496 --> 00:26:41.333
<v Steve Usdin>We've got a very brief, announcement that he made on LinkedIn.

00:26:41.599 --> 00:26:45.303
<v Steve Usdin>He says, CDER will be evaluating surrogate endpoints used for FDA approval.

00:26:45.769 --> 00:26:51.942
<v Steve Usdin>Well, there's no doubt that the use of such endpoints has benefited patients by bringing valuable treatments to patients sooner.

00:26:52.309 --> 00:27:02.487
<v Steve Usdin>There have been notable failures in confirmatory trials such as those for exon skipping therapies in DMD and some diseases such as lupus nephritis.

00:27:02.487 --> 00:27:08.326
<v Steve Usdin>Companies have not run trials to demonstrate a benefit on hard clinical endpoints like progression end stage renal disease.

00:27:08.759 --> 00:27:17.167
<v Steve Usdin>So we have approved drugs with significant toxicity like Voclosporin, that has not been shown to provide a direct clinical benefit for patients.

00:27:17.635 --> 00:27:25.676
<v Steve Usdin>know, I think this is kind of extraordinary, uh, for the CDER director to be making a statement like this, and especially to be doing it in this forum.

00:27:25.943 --> 00:27:30.280
<v Steve Usdin>His statement about, exon skipping therapies, in DMD that Sarepta drugs.

00:27:30.582 --> 00:27:33.218
<v Steve Usdin>I've put out a query to them, haven't heard back from them yet.

00:27:33.218 --> 00:27:34.419
<v Steve Usdin>It hasn't been very long.

00:27:35.053 --> 00:27:36.121
<v Jeff Cranmer>you'll following then.

00:27:36.453 --> 00:27:41.459
<v Steve Usdin>My understanding is that those trials are ongoing, they haven't, read out yet.

00:27:41.459 --> 00:27:44.429
<v Steve Usdin>It has been very, very many years and people are very frustrated.

00:27:44.729 --> 00:27:49.667
<v Steve Usdin>But I think,  it's interesting that he says that there have been failures in those confirmatory trials.

00:27:49.834 --> 00:27:53.938
<v Steve Usdin>if the trials have failed, those readouts haven't been made public yet.

00:27:54.405 --> 00:27:56.540
<v Jeff Cranmer>Alright, Steve, gonna have a busy week.

00:27:57.142 --> 00:28:00.845
<v Jeff Cranmer>Look forward to editing your copy and, uh, thank you for that update.

00:28:00.845 --> 00:28:07.618
<v Jeff Cranmer>Stephen and Simone, appreciate your insights today and we'd like to thank.

00:28:07.951 --> 00:28:15.826
<v Jeff Cranmer>Kendall Square Orchestra, which provides the music for BioCentury this week and the BioCentury show.

00:28:16.326 --> 00:28:28.906
<v Jeff Cranmer>The group connects science and technology professionals and other members of the Greater Boston community to collaborate, innovate, and inspire through music, while supporting causes related to healthcare and education.

00:28:29.273 --> 00:28:30.375
<v Jeff Cranmer>We'll catch you next week.

00:28:31.643 --> 00:28:36.480
<v Alanna>BioCentury would like to thank IQVIA Biotech for supporting the BioCentury This Week podcast.

00:28:36.780 --> 00:28:45.190
<v Alanna>To learn more about how IQVIA Biotech can help you turn your vision into venture capital, go to IQVIABiotech.com/visionaries