It’s been an eventful and promising year for pharma. The eyeforpharma team choose their top five pharma news stories of 2014.
Globally, healthcare is high on citizens’ and policy-makers’ agendas and, wherever healthcare and business intersect, we find controversy. Indeed, this year, pharma has hardly seemed to be out of the headlines, becoming part of the international news agenda on several occasions. Yet, while knocking pharma sometimes seems to be every commentator’s favourite pastime – second only to bashing bankers – there have been instances when the blame game has been less than fair. Equally, of course, there have been other occasions when the criticism has seemed eminently justified.
So what have been the big stories that have caught the eye of the media over the past year? There has been the emergence of a potential new blockbuster, the threat of a global pandemic, criticism of the motives behind a megamerger between two industry giants, the rise of big data, and the promise of better returns from R&D.
Here is our pick of 2014’s top five pharma stories.
5 – Sovaldi
At number 5, we have a story that raises the thorny question of affordable innovation. It concerns the runaway success of Sovaldi, one of the brand names used in the treatment of hepatitis C virus (HCV) infection. In the current climate, anything that hints at having blockbuster potential is welcomed with open arms, but did pharma shoot itself in the foot with its approach to pricing Sovaldi?
According to one respected commentator, this runaway success story may turn out to be something of a Pyrrhic victory. For, the very success of Gilead’s approach to Sovaldi may have helped focus attention on the long-predicted unsustainability of extreme pharmaceutical prices, according to Bernard Munos writing in April for Forbes.
He explains: “On the face of it, Gilead did everything right. Its justification for Sovaldi’s hefty price is rock-solid: $84,000 for a cure is far cheaper than liver transplants that don’t prevent relapses, and much better for patients than debilitating interferon-based therapies. It is also more defensible than equally expensive anti-cancer drugs that only bring short respites with a dubious quality of life.”
Drug makers get intellectual property rights, which are essentially a license to print money, but in exchange society expects affordable innovation. For most of the past century, that bargain has worked remarkably well. But, if drug companies fail to live up to it, society can also revisit its part, and scale back patent rights, or deny reimbursement”.
However, pharma needs to remember that it can only operate with the will of its customer base – one that is increasingly disinclined to be held to ransom. Munos sums up the dilemma neatly: “What has changed is perhaps the fact that the industry no longer realizes – or accepts – that it has a covenant with society. This is no ordinary business as it can only operate by the will of the people. Drug makers get intellectual property rights, which are essentially a license to print money, but in exchange society expects affordable innovation. For most of the past century, that bargain has worked remarkably well. But, if drug companies fail to live up to it, society can also revisit its part, and scale back patent rights, or deny reimbursement. And this is happening in a rapidly-growing list of countries…”
Munos points out that “self-policy is always better than regulation” and that the moderation demonstrated by the industry’s founders served them well. In contrast, their successors’ failure to uphold their advice has led to an onslaught of regulations and policy changes that threatens to permanently remake the industry.
Hit-and-run strategies have put healthcare pricing on a collision course with society, Munos warns, and such policies are essentially short-term in outlook. “Society will win – it always does. But that may ultimately be a Pyrrhic victory. If those industries cannot police themselves, policymakers will do it for them, but that may also degrade the drug industry’s ability to carry on its research mission.”
4 – Ebola
Story number 4 concerns the deadly Ebola virus – 2014 was the year that it declared its presence once again in the deadliest outbreak since its discovery in 1976, firstly in West Africa and then in Spain and the United States. The first case on US soil was announced on October 1st: Thomas Eric Duncan, 42, contracted the virus in Liberia before travelling to the US; he died on October 8th. Two medical workers in Dallas, Texas, who treated Duncan, tested positive since his death but have both recovered.
Ebola helps us realize we are a global planet: the health of one region affects the rest of us”.
Some commentators have argued that it was the appearance of Ebola in America that has reignited interest in neglected tropical diseases. Writing in UK Sunday newspaper the Observer in October, Julia Kollewe suggested that the scale of the outbreak has been raising hopes that it could focus minds at the world’s biggest pharmaceutical groups, boosting research on other devastating tropical diseases that have been neglected for years by the drugs makers.
She wrote: “There are already an estimated 12 million Americans suffering from life-threatening or debilitating infections such as Chagas disease, dengue fever or West Nile virus. ‘Ebola helps us realize we are a global planet: the health of one region affects the rest of us,’ says Julie Jacobson, senior program officer for infectious diseases at the Bill and Melinda Gates Foundation. Mike Turner, head of infection and immunobiology at the Wellcome Trust, says that ‘almost certainly, Ebola will increase the visibility’ of tropical diseases”.
Until the latest outbreak, Ebola did not even feature on the World Health Organisation’s list of 17 neglected tropical diseases (NTDs) drawn up in 2012. It includes diseases such as tuberculosis, rabies, leprosy, river blindness, sleeping sickness and parasitic worm infections, which affect more than 1.4 billion of the world’s poorest people across Africa, Asia and Latin America. Publication of this list saw the first concerted effort to tackle those diseases, when 13 pharma companies teamed up with the WHO and the Gates foundation in a pledge known as the London declaration to control or eradicate ten of the diseases by 2020.
Kollewe reported that GSK has started making 10,000 doses of its experimental Ebola vaccine – claimed to be the most advanced product around – and could supply it to WHO for an emergency vaccination programme early in 2015, assuming clinical trials go well. The vaccine has been rushed into tests on healthy human volunteers in the UK and US. Meanwhile, a trial of a vaccine developed by NewLink Genetics (recently bought by Merck) in Switzerland has been interrupted after some patients complained of joint pains in their hands and feet.
She continued: “ZMapp, made by a San Diego-based company, is the most advanced of the experimental treatments and has cured some patients, including the British nurse Will Pooley, but stocks have now run out. ZMapp’s development was supported by the US military’s main biodefence research facility, amid fears that the virus could be turned into a biological weapon.”
It seems that some good has emerged from the horror of Ebola – research into tropical diseases has been chronically neglected, but this latest epidemic may have sparked a new era of pharma engagement. For instance, Sanofi has developed a dengue fever vaccine with a 60% success rate that will be on the market next year after two decades of research. Mexico, Brazil and Colombia could be the first to market the vaccine. Unlike treatments for many other tropical diseases it is expected to become a commercial blockbuster, with annual sales of more than €1bn.
3 – Megamergers, but for the wrong reason?
Mergers and acquisitions happen all the time in pharma, but can they sometimes be pursued for the wrong reasons? For instance, while megamergers may be good for the balance sheet, they can be detrimental to research, a number of commentators have observed.
Story number 3 was the April announcement of a hostile takeover of the UK’s AstraZeneca by US giant Pfizer, which was eventually abandoned after concern from commentators and legislators that it would shrink Britain’s research capability. Reporting for Bloomberg in May, Shannon Pettypiece wrote: “Pfizer Inc’s plan to buy AstraZeneca Plc probably will lead to billions of dollars in research cuts, the closure of laboratories and thousands of scientists being fired if history repeats itself.
Pfizer’s three mega-mergers cut the industry’s capacity to produce new drugs by about two to three new medical entities per year.”
‘The fewer number of companies that exist, the worse it is for patients because you have fewer people out there discovering things,’ said John LaMattina, who was Pfizer’s chief scientist during two large mergers before leaving the company in 2007.”
Pettypiece also quoted well-know research commentator Bernard Munos: “The effects of a megamerger on drug development can be ‘devastating,’ said Bernard Munos, a former Eli Lilly & Co executive who founded InnoThinkCenter for Research in Biomedical Innovation, an Indianapolis consulting company.”
The problem is that, while pharma routinely refers to the synergies that result from large takeovers, the bottom line for patients is often fewer new medicines being pursued. “When it comes to pipeline consolidation, 1+1=1,” Munos wrote in an e-mailed response to questions. “Pfizer’s three mega-mergers cut the industry’s capacity to produce new drugs by about two to three new medical entities per year.”
Furthermore, megamergers tend to significantly delay research in progress. Some view such exercises as essential to improving the competitive advantage of an organization, but at what cost? Such expensive exercises often add little to drug development, slow down the development cycle of the acquired company and are hugely disruptive to the research program, with many scientists being lost to drug development altogether.
2 – Big data leads to big collaboration for big pharma
Story number 2 in our countdown concerns the potentially transformational impact of big data, with competitors looking to become collaborators as they seek to accelerate drug discovery and development. Writing in Forbes in August, commentator Dan Munro declared: “In the course of one short week, no less than three different models have emerged for sharing big data in the pharmaceutical industry.”
Using clinical trial data sets collaboratively is a big leap forward in the cancer drug discovery process. 8.2 million people still die of cancer every year while the attrition rate for clinical testing of promising compounds can be as high as 95%.
The first of these involves an impressive list of companies willing to collaborate and share their clinical trial data in the oncology space as part of an initiative called Project Data Sphere. The project involves AstraZeneca, Bayer, Celgene, Janssen Research and Development (an affiliate of Johnson & Johnson), Pfizer, Memorial Sloan Kettering Cancer Center and Sanofi US among others.
Charles Hugh-Jones, Chief Medical Officer for North America at Sanofi is quoted as saying: “Using clinical trial data sets collaboratively is a big leap forward in the cancer drug discovery process. 8.2 million people still die of cancer every year while the attrition rate for clinical testing of promising compounds can be as high as 95%. This could become substantially lower once researchers in both academia and industry share clinical trial data.”
The second model was voted on in the summer by the European Parliament in the form of legislation likely to take effect by 2016 and aims to promote clinical trial data transparency, but only targets new trials after the law takes effect. “Assuming it’s enacted, the benefits of a legislative model will be some strict conditions,” Munro writes.
The third initiative is a five-year commercial agreement between Genentech and PatientsLikeMe, which is also targeting cancer research as the lead effort. The data in this case isn’t clinical trial data, but data provided by actual patients in the course of their current treatment for a wide range of conditions ‒ including cancer, Munro explains.
1 – Research returns on the up
Our top story is the welcome news that pharma R&D productivity figures are at last reviving. Reuters correspondent, Ben Hirschler reported in December that pharma companies may be moving out of the doldrums and “finally getting more bang for their scientific buck, with the rate of return on pharmaceutical research and development (R&D) increasing for the first time since 2010”.
He cited a Deloitte survey which found that overall R&D returns have improved to 5.5% percent this year from 5.1% in 2013, reflecting a modest uptick in productivity in company labs. “There are signs that returns from pharmaceutical R&D are turning a corner,” Julian Remnant, head of Deloitte’s European R&D advisory practice, is quoted as saying.
It’s no secret that pharma needs to replenish its medicine chest after a wave of patent expiries that peaked in 2012 but now, it appears, the numbers show that pipelines are becoming fuller. So far this year the U.S. Food and Drug Administration has approved 35 new products, up from 27 in the whole of 2013 and close to the bumper 39 cleared in 2012, according to the agency’s website.
We continue to see a relentless rise in the costs to develop a new medicine – this year to $1,401 million – with little change to the billions of dollars of value lost from products failing in the final stage of development.
”However, there are significant variations between companies – which may highlight significant efficiency issues – “with the largest firms having the greatest development costs for each new medicine and the lowest returns on R&D investment. The most successful of the 12 leading companies assessed in the survey had an R&D return of 11.7% in 2014, while the worst-performing saw a negative return of 0.7%”, Hirschler reported.
Nevertheless, it’s not all good news, according to Remnant: “We continue to see a relentless rise in the costs to develop a new medicine – this year to $1,401 million – with little change to the billions of dollars of value lost from products failing in the final stage of development.”
From eyeforpharma’s experts
In conclusion, we have spoken to some of our own industry contacts to obtain their view of the key trends of the past year.
Dan Munro, healthcare writer and Forbes contributor argues that it’s very early days for the sharing of clinical data (story 2 above), and society needs to incentivize pharma to collaborate in an open source way, in the context of the threat from patients and biohackers using crowdfunding to finance and develop drugs themselves. The area of rare diseases in children is especially ripe for collaboration because it’s hugely emotive and the motivation is there to collaborate.
Jeff Elton from Accenture considers the new generation of specialty therapeutics to be “transformative” with cure rates in excess of 99% in the case of Hepatitis C, “sustaining a longer, high-quality life for the growing population of heart failure patients, and giving the promise of many quality years in previously terminal cancers”. He adds that the “years required to generate the insights that enabled the therapeutics and the costs to bring them through clinical development required enormous investment. The innovators are looking to assure patients have access and that there is compensation consistent with the value they deliver. The entire process is: redefining expectations for specialty therapeutics; challenging historical pricing approaches; and driving payers and risk-bearing providers into new access and payment models.” (See story 5 above.)
For patient compliance program specialist, Kevin Dolgin, the biggest news was also the new Hep C treatments. He tells eyeforpharma: “Of course, I’m biased; my focus is on patients and adherence issues, but I think the arrival of these treatment has got to be high on anyone’s list. I also think, through my biased lenses, that this only accentuates the need for adherence support. These treatments are revolutionary, they represent a shining example of how the pharmaceutical industry can truly save lives and improve society. At the same time, they are extremely expensive and in order to deliver their benefit, they must be taken properly”.
He adds: “As news stories go, this one represents, for me, an example of everything pharma is doing right in drug development coupled with the glaring need to get patient support right as well.”
Forbes commentator John LaMattina focuses on the Ebola outbreak (story 4 above): “I was surprised by how many drugs and vaccines were already in development. These aren’t just from small biotech companies but also from GSK and J&J. This is an interesting counterbalance to those who attack Big Pharma and who claim that the industry is only interested in producing treatments for those who can afford them.”
Pierre Morgon, CEO AJ Biologics, picked out the Ebola and Hepatitis C stories too, but also chose to focus on the issue of solid tumours and the potential for tension between patients and payers, saying: “It all started with metastatic melanoma, and it is now demonstrated that PD-1 and PD-L1 antagonists (BMS’s nivolumab and Merck’s pembrolizumab) are changing the prognosis for grades 3 and 4 solid tumors in a dramatically positive way. Fantastic news for the patients, not so great for the payers who see that cancer is increasingly becoming a chronic disease, hence resulting in longer-term financial commitments.”
Formulary development pharmacist, Omar Ali also echoed the concerns for payers, highlighting value-based pricing as his major trend for 2014.
So, 2014 has been an eventful year and one in which pharma is definitely moving forward, responding to the challenges of both the marketplace and demand from patients for new treatments. Overall, there are many reasons to be optimistic but there’s plenty more to do.