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January 01, 2017 (Vol. 37, No. 1)

GEN CEO Perspectives: Key Challenges

What Should Be Addressed by the New Administration?

  • 2017 not only ushers in a new year, but a new U.S. presidential administration as well. GEN interviewed top biotech/pharma CEOs to find out what they thought might be in store for the industry and what they would like to see happen in the new year. I think you will find their responses timely, thoughtful, and instructive.

    This is part 2 of the GEN CEO Perspectives Roundup. It consists of five parts.
    Part 1: What Would You Tell President-Elect Trump?

    Part 3: Industry Growth
    Part 4: Regulatory Initiatives
    Part 5: Disruptive Technologies

     

  • GEN: What are the key challenges facing the industry that you would like to see addressed by the new administration?

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    John Manzello, President, Abzena US

    Mr. Manzello: Certainly, the skewed profile that the presidential candidates presented on drug costs cast a shadow of doubt over the industry’s pricing practices. The new administration is going to be constantly challenged to raise awareness and take action in what I believe are false-flag pricing concerns. The President-Elect is continually going to be pushed to make impactful changes so that the actual pricing profile is aligned with our economic practices and industry standards.

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    Ron Cohen, M.D., President and CEO, Acorda Therapeutics

    Dr. Cohen: The societal uproar over patient access to medicines must be addressed. The almost sole focus on drug prices misses a large part of the issue, which is that over the past several years insurance companies have dramatically raised deductibles and co-pays on medications, such that people often have to choose between mortgage payments or filling prescriptions for medicines they need. The same has not been true for other major medical costs, such as hospitalizations or doctor visits. These issues can be managed successfully through market-based mechanisms.

    Government can help by modifying the laws to enable drug innovators and PBMs/insurers to discuss such plans more freely and to ensure that creative payment plans are not inhibited by restrictive rules, such as “best price” for Medicaid plans. For example, one could envision an insurer paying for a drug that cures a chronic condition (e.g., hepatitis C) over several years, as the benefits of the cure accrue; let's say a $50,000 drug would be paid for in equal installments over five years. But under current rules Medicaid would consider that the drug’s “best price” was $10,000, which would be economically onerous for the drug company.

    Proposals to impose direct price controls on drugs, or to permit Medicare “negotiation" or drug reimportation from other countries, which amount to de facto price controls, are problematic. These would squelch the investment in drug innovation that we all need, and should be avoided in favor of market-based solutions, such as those outlined above.

    Other challenges include efforts to undermine intellectual property, most recently with the introduction of the inter partes review system for challenging patents. This creates additional threats, over and above the well-established Hatch Waxman system for challenging drug patents that has worked very well for over 30 years.

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    Nick Leschly, CEO, bluebird bio

    Mr. Leschly: The need to fund the NIH, NCI, and institutions like those is absolutely critical. I don't think many people completely understand the roles that these institutions provide, such as basic research, the training of great scientists, and the formation of ideas that go on to become the basis for a lot of the innovations and the therapeutic drugs that are ultimately developed. If the funding should dry up, that’s something that would be very hard to catch up with.

    The other big challenge revolves around the conversation on drug prices and the resultant inflamed discussions that are causing the industry to be painted with a giant negative stroke. There are definitely some “actors” exhibiting bad behaviors, but we need to make sure we communicate, develop, and understand value-based pricing and reimbursement. And that goes not just for Pharma and Biotech, but there are also the payors (private and public), the providers, and the advocacy groups. Right now, the system is not set up to fundamentally digest highly innovative therapies.

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    Jeb Connor, Chairman, CEO, and Co-Founder, Genome Profiling

    Mr. Connor: The top items for me are first ransforming and streamlining the regulatory process for clinical trials to cut costs and time out and accelerate new therapies and technologies to market faster, but not compromise safety. It can be done through a government/private sector concerted effort. This will increase capital market stability, incent entrepreneurs/innovation, and deliver more value faster to patients in need.

    Second, addressing and transforming the many reimbursement issues with public and private insurers around standard care, but most importantly change the reimbursement game for new difference-making vetted innovations. Finally, taking a hard stance on increasing efficiencies and removing costs throughout the value chain while simplifying access to great healthcare while assuring affordability.

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    Thomas K. Equels, President and CEO, Hemispherx Biopharma

    Mr. Equels: More burden needs to be placed on the FDA to produce meaningful progress in the approval of drug treatments. Well-monitored, conditional approvals would put us safely into "warp drive" in drug development, allowing us to regain world leadership in this important industry. Currently the FDA’s initiatives to expedite drug development are strictly measures of review time, not necessarily creating clear paths for regulatory approval. The expedited pathways only advance getting into the system, not getting across the finish line. This is particularly true in unmet medical needs that are serious and life changing for patients and their families, but are not necessarily life threatening for all members of a disease group such as ME/CFS. If we cannot get a clear path for approval of new drugs into the system: the manufacturing and distribution, the jobs, and profits will inevitably flow to those countries who adopt reasonable and expedited approval processes.

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    Stephen MacMillan, President and CEO, Hologic

    Mr. MacMillan: Innovation depends on robust R&D within companies, which is an expensive, high-risk endeavor. At Hologic, we invest from our profits back into the company in the form of new product development and longer-term research projects. As an example, in June the FDA granted us an Emergency Use Authorization for a molecular test to detect Zika virus in potentially infected individuals and an IND protocol for a similar test to screen donated blood for Zika. Hologic was able to rapidly develop these tests in the months immediately following the outbreak in Brazil, following recognition that this virus was a potential threat to the American public. We were able to do so in part due to funds we had on hand as a result of the hold placed on the Medical Device Excise Tax. A permanent repeal of this tax would be very helpful in spurring additional and sustained innovation in the diagnostics space, which is a key area of growth for the nation’s healthcare industry.

    The potential repeal or replacement of the Affordable Care Act would be significant and should not be underestimated in terms of impact to all hospitals, providers, the insurance industry, and medical manufacturers such as ourselves. When endeavoring to affect change, one should ensure that the impact of doing so is fully understood and that a bridge or transition is fully vetted before being proposed.

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    Roslyn Brandon, Ph.D., President and CEO, Immunexpress

    Dr. Brandon: We have an aging population and an increasing incidence of chronic disease. Both of those issues are going to push up healthcare costs and need to be addressed quickly.

    The other challenge that I see is U.S. patent law. The Supreme Court has made some recent rulings which disallow certain gene patents. This has caused quite a lot of business uncertainty and it's quite a troubling departure from decades of judicial and patent office precedence. There needs to be a lot more certainty around patent law, especially in relation to biomarkers and multiplexed molecular diagnostics, because that's where the future is—in personalized medicine.

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    Jan Lichtenberg, Ph.D., CEO and Co-Founder, InSphero

    Dr. Lichtenberg: Many of the pathologies addressed in pharmaceutical research today are difficult to tackle, especially when looking at diseases related to an aging society (e.g., neurodegenerative diseases). Time to market is long and risks along the way are high. Funding for nonprofit organizations, startups, small and medium-sized biotechs, and larger players should be increased to offset these risks and assure a research focus on these diseases, as they will have a substantial impact on U.S. and global healthcare costs in the future.

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    Edison Liu, M.D., President and CEO, The Jackson Laboratory

    Dr. Liu: There are two areas that will need attention. The first involves the power of next-generation sequencing (NGS) technologies and the attendant Big Data requirements. The uncertainty spawned by the FDA’s changing rules in laboratory developed tests (LDTs) has slowed investment in making this form of comprehensive diagnostics available to the healthcare system. These technologies can be regulated through the promulgation of test standards and should not require heavy-handed approaches.

    Similarly, the data generated from NGS technologies is immense and its management (including security) will be a challenge, but the rewards are potentially great. HIPAA privacy rules are well intentioned, but also have added significant costs and restricted information access, often where access is truly needed. 

    The second is managing the cost of expensive drugs. This is important because science is providing therapeutics that have high efficacy, but in smaller targeted populations. When such drugs are needed for prolonged periods (sometimes a lifetime), or are combined for curative intent, the costs can be astronomical. There should be some pathway to reward success, but to also modulate costs in future policies.

    On a macroeconomic scale, if the $2.1 trillion in accumulated offshore profits from American companies can be repatriated, even if taxed at a nominal value, the economic stimulus would be tremendous. Major Pharma, Biotech, and other Tech sector players are among the companies and are industries that would benefit from this and that have an impact on the U.S. life and medical sciences industries. 

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    Troy Wilson, Ph.D., J.D., President and CEO, Kura Oncology

    Dr. Wilson: The industry is under significant and sustained pressure to rein in the costs of prescription drugs. One of the best things the new administration could do is to provide an opportunity for key industry participants—drug companies, insurers, and regulators—to arrive at a “grand bargain” for drug pricing.

    The President-Elect is one of few people who can bring the diverse actors to the negotiating table. And although he does not have direct experience in the healthcare system, there are key figures both in government and the private sector, who have the ideas, experience, and credibility to forge a compromise that would be beneficial to the U.S. healthcare system.  The industry is arguably in the best position to self-regulate, and if industry participants could arrive at a fair solution, it would set the stage for sustainable growth and have the potential to generate significant goodwill among a skeptical public.

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    William Schwieterman, M.D., President and CEO, Mateon Therapeutics

    Dr. Schwieterman: The challenges facing the industry now are related to the very benefits of biotechnology, i.e., identifying individual patients or patient subgroups that are able to be diagnosed and predicted for treatment effects. The capabilities of biotechnology to attack, and be precise with regard to particular biologic markers, means that the patient populations that we're now trying to treat are smaller and more specific than ever.

    Consequently, there needs to be a lot of work on identifying these particular markers so that we can use them to be even more precise in the way we go forward and in the methods that we design for our clinical trials; so that ultimately we are using proper prognostic covariates for various populations to show treatment effects. We're hoping to use markers and endpoints that actually predict these things, and we're really doing this in a sophisticated way so that we're targeting patients efficiently and running the trials efficiently as well.

    I think this is the key challenge: making use of all this power we have in biotechnology to modify the diagnostic and therapeutic approach we've had to-date.

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    Christine Cournoyer, CEO, N-of-One

    Ms. Cournoyer: Let me focus on oncology, because that's where our expertise is. Two challenges in which I am most interested are 1) increasing overall access to molecular diagnostic testing, and 2) improving awareness and access to targeted therapies. There's strong evidence that therapy for advanced cancer, guided by molecular diagnostic testing and targeted therapies, can lead to better outcomes for patients as well as improved quality of life. There are also studies showing that targeted therapies are not more expensive than the current standard of care. Most would agree that precision medicine is the future, and basing treatment on the understanding of the patient's unique molecular and immunological profiles will increase the chance of therapeutic success and actually save us money.

    The oncology drug pipeline has grown significantly over the past 10 years. 2015 was a banner year, with many new therapies receiving breakthrough therapy designation. By the end of 2016, the FDA will have approved four novel drugs and 13 new indications in oncology.

    Clinical trials are becoming an increasingly important and effective way for patients to access novel therapies, and they may, in fact, represent the best treatment option for that patient. There are over 3,000 trials in the U.S., and yet access and enrollment in trials is limited. In the U.S., only 3–7% of oncology patients enroll in a clinical trial. Access and enrollment in trials is hindered by the low levels of reimbursement of next generation sequencing (NGS) and limited awareness of available clinical trials. Less than 1% of all cancer patients receive molecular testing; greater reimbursement of this testing could lead to improved access to trials.

    The Centers for Medicare and Medicaid Services (CMS), which often lead the way in private payer reimbursement policy, cannot pay for clinical trials because the trials are considered experimental or research. That limits a large and growing population from getting access to these trials because they aren't reimbursed by CMS. I think we need to enact legislation that allows Medicare to reimburse for testing and drugs associated with appropriate clinical trials for oncology patients.

    If we look past the challenge of reimbursement for testing, another challenge we have with clinical trials is to ensure physicians have a thorough understanding of the available clinical trials for the patient—in conjunction with the molecule profile of the patient and other eligibility criteria for the trial. What we found with several studies is that when physicians are provided with this information, clinical trials can become a more realistic option for patients, especially as it relates to targeted therapy.

    Intermountain Healthcare last year conducted a study comparing cancer treatment decisions with and without the use of molecular data and clinical interpretation from an N-of-One. They demonstrated that the treatment for the patient changed to targeted therapy in 62% of cases where molecular testing and interpretation was available at the point of care. And, as important, they demonstrated that progression-free survival was 22.9 weeks for precision therapy cohorts compared to 12 weeks for standard of care cohorts.

    So, on an industry level, greater access to molecular diagnostic testing along with improved understanding of the molecular profile of a patient's tumor is paramount. Combining this with knowledge of pertinent clinical trials at the point of care could lead to increased enrollment in clinical trials. We believe this has the potential then to accelerate the pace of drug development. A recent NCI study showed that 40% of trials fail because they didn’t achieve the minimum patient enrollment levels.

    If we can increase the enrollment levels and reduce the time it takes for the drug companies to enroll patients, we believe that we'll help in the effort to reduce the cost of drug development and ultimately reduce the cost to the patients and insurance companies.

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    Robert Clarke, Ph.D., CEO, Pulmatrix

    Dr. ClarkeAs always, it's the balance of the high cost of companies’ developing drugs versus the concern about the high cost of the drugs to the public and to the payer.  We all are most concerned with safety but, at the same time, we want to be able to take what could be revolutionary innovations and get them to the public as soon as we can. We need to get the FDA onboard in the dialogue with pharma to work through a more streamlined process.  So, in terms of key challenges, it's the cost of developing the drug, it's how we manage the risk-benefit of cost versus getting something to market and making sure it's safe in the eyes of the FDA, and then getting the agency to work more closely with pharma about how we can get past these challenges and get to the U.S. marketplace more quickly.

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    Michael Farrell, CEO, ResMed

    Mr. Farrell: The new administration must focus on the proliferation of digital technology in healthcare delivery and management. As innovators continue to bring new, tech-enabled methods of providing consultation, diagnostics, therapy delivery, and patient management, the administration must ensure that oversight agencies, including FDA, FTC, FCC, and ONC, develop balanced requirements for medical device classification, cybersecurity, interoperability, privacy, and data encryption. Common sense changes to payment policies must also be considered to ensure that purely utilization management and single-focus, cost-cutting programs are not detrimental to quality of care. I would ask them to consider serious reforms of the DMEPOS competitive bidding and bundling programs, and to review enablement of telemonitoring reimbursement through alternative payment models.

    Finally, I would want to see a strong reinforcement of the importance of intellectual property, both in support of patent applications processes and protection enforcement, so that innovation and invention can be appropriately rewarded.

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    Harry E. Gruber, M.D., Co-Founder and President, R&D, Tocagen

    Dr. Gruber: One of the greatest impediments to the advancement of new therapeutics is clinical trial enrollment. I encourage the new administration to develop and/or support policies that incentivize and drive patients to enter trials, particularly for diseases with high, unmet need or trials involving breakthrough treatments.

    While clinical trials are necessary to advance new treatments, nearly 80% of clinical trials do not complete enrollment on time. This delays development of important treatments and increases drug development costs. In cancer, less than 5% of adult patients enroll in clinical trials. 

    Vice President Joe Biden has recognized this hurdle and made it a core tenet of the Cancer Moonshot, and the initiative has already announced specific steps to reduce this barrier, including making it easier for participants to find clinical trials, incentivizing clinical trial design to maximize participation while minimizing risk, and increasing transparency of trials and results. I applaud the initiative’s efforts in this area, and encourage the new administration to further expand this and other initiatives or policies that boost patient enrollment in clinical trials, in cancer and other medically unmet diseases.

    Another challenge revolves around flexible policies for drug development in areas of high, unmet need. For deadly and/or difficult-to-treat diseases, where few to no efficacious treatments exist, clinical trials are often recommended for treatment and therefore flexible policies for clinical trial design and reimbursement, without impacting patient safety, would greatly aid the development of new therapies. For these patients, treatments can’t come soon enough as they don’t have time to wait.

    The Cancer Moonshot has announced that the FDA plans to work with researchers in government and private industry to design more efficient clinical trials. This includes modifying entry criteria for a trial or sharing control groups across different studies involving the same indication. This is a modest step in the right direction and could increase development of treatments for the patients that need them most, while also decreasing development costs.

    However, more radical, out-of-the-box ideas need to be conceptualized and implemented. For diseases with particularly high, unmet need I encourage exploring potential guideline and reimbursement changes that would financially incentivize doctor and healthcare services to first explore a clinical trial, versus prescribing treatments that have not been studied and approved, or have been conditionally approved by the FDA but haven’t necessarily demonstrated clinically meaningful efficacy.

    We can use the treatment of brain cancer as an example. Avastin received accelerated approval to treat an aggressive form of brain cancer, recurrent glioblastoma multiforme. However, subsequent studies have shown the treatment did not improve overall survival. There may be subsets of brain cancer patients who could benefit from Avastin, but these have not been convincingly demonstrated so far. While an experimental treatment may be able to extend patient survival, doctors understandably continue to prescribe Avastin because it is approved and reimbursed.

    For a disease as devastating as recurrent brain cancer, where patients typically are left with less than a year to live, they deserve the opportunity to participate in clinical trials of promising investigational therapies that may extend survival. Precious time lost with treatments that were shown to have no impact on survival also means patients may progress to a near terminal or advanced disease state and then be unable to enroll in a clinical trial. Allowing reimbursement of experimental treatments, integrated referral services to help match patients with well-suited clinical trials in areas of high, unmet need, or greater emphasis of clinical trials in standard of care guidelines, would ameliorate this issue and help patients access more treatment options.

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