In a session called “Five Fixes For Healthcare” at the recent Forbes Healthcare Summit, concerns were raised about how innovative the biopharmaceutical industry really is. Dr. Laurie Glimcher, CEO of the Dana-Farber Cancer Institute, chided the industry saying that, when it comes to productivity, we “need to make a distinction between drugs that are transformative and drugs that are ‘me-too’.” Dr. George Yancopoulos, President and Chief Scientific Officer of Regeneron, was even more strident in his remarks, criticizing the industry’s 2016 new drug output noting that of the 22 FDA approvals only seven compounds were novel breakthroughs.
Yet, as the day progressed at Forbes’ Summit, the focus shifted heavily toward the challenges around pricing and affordability of medicines. And, when it came to new medicines, the chief concern was lack of competition in the pricing of these drugs. Seema Verma, Administrator for the Centers for Medicare & Medicaid Services, represented the views of many when she said that the markets work well when there are competitors and that pricing challenges are presented when new drugs have no competition. Essentially, Verma is making the argument that each new therapeutic breakthrough needs to be followed with other agents in the same mechanistic class in order to create competition that tends to result in lower drug prices.
Indeed, this is what happened when the hepatitis C cures came to the market over the past few years. Gilead’s Sovaldi was launched at a list price of $84,000 – basically $1000/pill – for a course of treatment. But with the launch of new products from AbbVie and Merck, the list prices for hepatitis C drugs dropped to as little as $26,400 for AbbVie’s Mavyret. In fact, Dr. Steve Miller, the Chief Medical officer of Express Scripts has said publicly that the cost of hepatitis C drugs in the U.S. is less than in the rest of the world.
There is an unfortunate negative connotation to the term “me-too” drugs. This implies that companies sit around and wait to see clinical results from a competitor’s drug and then set out to get a copycat version of their own. Such a strategy is a recipe for failure. Given that the timeline from starting a program to getting a new drug approved by the FDA can span 10 – 15 years, by the time you would get to market with a drug from a late-starting program, the original drug has likely lost its patent protection and the price has dropped precipitously. Thus, in this scenario, a “me-too” drug will be a commercial flop as it would need to be priced at the level of a generic.
But, for the most part, multiple competing drugs in a given therapeutic area are the result of companies capitalizing on a basic research breakthrough and then executing their R&D program as rapidly as possible in order to get their drug to patients. A great example comes from Dr. Yancopoulos’ own company Regeneron. Regeneron, in partnership with Sanofi, received FDA approval for the novel LDL-cholesterol lowering PCSK9 inhibitor, Praluent, on July 24, 2015. Regeneron set a list price for Praluent at $14,600/year. However, a mere five weeks later, Amgen received FDA approval for its PCSK9 inhibitor, Repatha. Repatha’s list price was set at $14,000/year. That’s not a big difference, but now payers were able to negotiate much lower prices with these companies in order to allow them access to their formularies – the exact situation that Verma espouses. The prices that Regeneron and Amgen actually charge payers are not public. However, industry scuttlebutt is that, thanks to the bargaining position that the payers have, the actual price is on the order of $8,000.
But the second entrant, Repatha really isn’t a “me-too” drug. In fact, one could argue that, while approved 5 weeks later than Praluent, Repatha is the true scientific leader as it is the first PCSK9 inhibitor to receive FDA approval for reducing heart attacks, strokes and coronary revascularizations in adults. Maybe it is Dr. Yancopoulos’ drug that should be regarded as the “me-too”.
But, in reality, we need multiple entrants in therapeutic categories for reasons other than pricing. It is foolish to assume that a single entrant in a therapeutic category will be equally effective in the broad population – young and old, male and female, Asian, African, European, etc. Such universal utility of any medicine is unrealistic. Being able to choose from a few options is important for physicians in managing patients’ diseases across the broad heterogeneity of the human population to ensure optimal safety and efficacy.
In addition, it is rare that the first drug in a new therapeutic class is the best-in-class. Often, a compound that follows turns out to be the best. Lipitor was the fifth statin to make it to the U.S. market, but it proved superior to its predecessors.
So, let’s not denigrate new drugs that are not first-in-class upon FDA approval. These can be valuable new medicines whose true value will be determined only after significant use in patients.
