Many senior leaders in the healthcare and pharmaceutical space gathered at the inaugural STAT Summit on Nov. 21st at the MIT campus in Cambridge, Mass. The invitation-only summit featured an interesting mix of exciting medical scientific advances, including bionic limbs, artificial intelligence, the impact of real-world evidence on drug development, and patient testimonials regarding some great medical and pharmaceutical innovations.
Attendance included many CEOs and senior development executives from big pharma and biotech firms, including Gilead Sciences, Vertex Pharmaceuticals, GSK, Pfizer, BMS, Biogen, Bluebird Bio, Turning Point Therapeutics, Agios Pharmaceuticals, Sage Therapeutics, Allogene Therapeutics, Stealth BioTherapeutics and Alkermes. In addition to the excitement over great innovations there was (of course) a lot of discussion about drug pricing. Here are some of the most remarkable discussions and expressed opinions:
- “Don’t do stupid shit.” “Chief Bluebird” Nick Leschly noted that some companies need to be called out on egregious behaviors with respect to drug pricing. Under his stated motto—“Don’t do stupid shit”—he argued for dialogue with shareholders to manage expectations and aim for socially acceptable prices. The aim should be to fix bad behaviors without hurting innovation. In his opinion, value-based payments, as proposed earlier this year in Bluebird’s five-year installment pay plan, helps to share the risk as only the first payment is guaranteed for the company and all others are contingent on continued drug effectiveness.
- “We would like to, but we just can’t.” Vertex CEO Jeffrey Leiden commented on discussions in England with respect to the pricing of the cystic fibrosis drug Orkambi. When the English demanded a 90% lower price, he commented “We would like to, but we just can’t.” (He was referring to the international implications of low prices in one country.) He also described the ordeal that the company had gone through with its breakthrough hepatitis C drug, Incivek, which was made obsolete after one year due to the introduction of the next-generation drug Sovaldi. As a result, the company was forced to go through some tough decisions in redirecting its research and development efforts towards cystic fibrosis with an associated high-risk, $500 million annual clinical investment for multiple years.
- Nancy Pelosi’s plan would cripple innovation. Stephen Ubl, CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA) industry association, noted that the R&D-based pharmaceutical industry is very willing to support measures to help patients with cost, if it indeed goes to patients. He also announced the disclosure of an analysis of the impact of Speaker Pelosi’s proposal in new medicines. According to a press release sent the day after the summit, PhRMA estimates a crippling 90% reduction in new medicines developed by small biotech companies, which is much more extensive than the negative impact on R&D that was estimated by the Congressional Budget Office.
- “You don’t burn the house down to get rid of rats.” Venture capitalists in the meeting emphasized that capital can move very quickly from biotech to other industry sectors if Speaker Pelosi’s H.R. 3 bill or similar initiatives are implemented. Jeff Jonas, CEO of Sage Therapeutics, said that H.R. 3 will have a chilling effect on drug discovery as most biotech companies are highly dependent on VC funding. “You don’t burn the house down to get rid of rats” was his response to the current proposals to address the behavior of a few bad actors. He wondered whether CEOs should call each other out on bad behaviors. Turning Point CEO Athena Countouriotis noted that egregious behavior is not unique to some pharmaceutical executives, as hotel rooms in San Francisco that may otherwise go for $180 per night fetch more than $900 during the J.P. Morgan Healthcare Conference.
The summit had some great discussions on drug affordability and pricing issues. Some argued that despite the political rhetoric, Washington “gets it” and understands that there is a delicate balance between addressing affordability challenges and ensuring that there’s a future for a research-based pharmaceutical industry in the United States. One would hope that collaboration towards meaningful solutions will take place in good partnership. Some of the current proposals may have a devastating impact on patients. We need to urgently address patient affordability issues and address egregious behaviors, but as Allogene CEO Arie Belldegrun’s data showed in his session, China is currently developing far more CAR-T therapies than the United States. Which U.S. industries will be strong global contenders in 10 years?