The new chairman of the Biotechnology Innovation Organization (BIO) is promising to crack down on “bad actors” that increase drug prices “dramatically”—in part by expelling member companies that carry out the sky-high hikes.
Jeremy M. Levin, D.Phil., MB BChir., who is also chairman and CEO of Ovid Therapeutics, told GEN such expulsions would be considered individually, and didn’t define how high a dramatic price increase would be to incur the wrath of BIO.
“We need to look case-by-case. There are some that are blatantly obvious,” Levin said in an interview during BIO’s 2019 International Convention, held in Philadelphia at the Pennsylvania Convention Center. “We’ve seen gentlemen dressed in hoodies who’ve taken action to do this in a way which is nothing short of daylight robbery.”
“Hoodies” is an allusion to “Pharma Bro” Martin Shkreli, who is now serving a seven-year federal prison sentence following his conviction on security fraud and conspiracy charges.
“We are obliged to confront this transparently, openly, acknowledge past efforts that were incorrect, acknowledge past mistakes, and now engage incredibly constructively with everybody to ensure that we get the right policies put in place,” Levin acknowledged. “We are now garnering the results of a really poorly thought through strategy in the past of how you should represent the industry, how the industry needs to behave.”
“We’re harvesting what I think can only be described as the consequences of a number of years of failing to address public concerns,” Levin added. “We’re harvesting that in the form of tremendous anger by the public, very negative views by the press, and as a consequence of that, there’s some very serious and rapid-fire policymaking. And that’s exacerbated by the political environment of the 2020 election.”
As chairman, Levin said, he will lead BIO in trying to persuade biopharma companies to scale back price increases by tying compensation of top executives to innovation rather than simply the bottom line.
“If you have an organization that consistently relies on its price rises to increase its top line, they have no incentive whatsoever to develop new drugs to replace that old drug. And at the end of the life of the drug, the patent life, they’ll fight vigorously to protect it. We’ve seen that,” Levin said. “The question is, how do you change that? We’re going to have to tackle that. We can’t let that go by.”
Levin said the industry faces a risk that if it doesn’t act to contain drug prices, Congress will—and not necessarily in the interest of biopharma companies or the broader industry.
“At the end of the day, you’re going to face that, or you’re going to face the question of whether outside legislators are going to say, you can’t do price rises. Real simple. So why would we wait for someone else to control our lives when we can ourselves control our lives by saying, ‘Look, we may change our compensation structure. We’re going to focus on innovation. Let’s reward our teams for that: New launches, new drugs.’”
A persuasion campaign from BIO could succeed, Levin asserted, because a younger generation of biopharma executives have a stake in helping the industry chart its own course on prices rather than be forced to do so by lawmakers.
Additional pressure to contain drug prices has come from President Donald Trump, who has vowed to address the issue.
Like the other major U.S. biopharma industry trade group, Pharmaceutical Research and Manufacturers of America (PhRMA), BIO also blames escalating drug prices on pharmacy benefit managers (PBMs) due to consolidation that has three PBMs—CVS, Express Scripts, and UnitedHealth’s Optum—accounting for about 75% of all prescription claims.
Together with Humana Pharmacy Solutions, MedImpact Healthcare Systems, and Prime Therapeutics, the top six PBMs process more than 95% of total U.S. equivalent prescription claims, according to an article posted May 29 on the Drug Channels Institute website by its CEO Adam J. Fein, PhD, who tracks pharmaceutical economics and the drug distribution system as president of the Institute’s parent company Pembroke Consulting.
PBMs counter that they lower drug prices through discounts and rebates negotiated with pharmacies, wholesalers, and pharmaceutical manufacturers. “In classes where several products may be considered therapeutically equivalent, PBMs can negotiate with drug manufacturers for higher rebates, which in turn benefit patients and payers,” the PBM industry group Pharmaceutical Care Management Association (PCMA) states.
The issue of containing drug prices resurfaced last month, when the U.S. Senate Committee on Health, Education, Labor, and Pensions Chairman Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA) released the Lower Health Care Costs Act of 2019—a bipartisan discussion draft legislation designed to reduce health care costs.
In January, Sen. Bernie Sanders (D-VT), one of some two dozen Democrats seeking the party’s 2020 presidential nomination, introduced the Prescription Drug Price Relief Act of 2019 (S. 102). It would require the Department of Health and Human Services (HHS) to review all brand-name drugs for excessive pricing at least annually or upon a petition. If any such drugs are found to be excessively priced, HHS would be required to void any government-granted exclusivity; issue open, nonexclusive licenses for the drugs; and accelerate the review of corresponding applications for generic drugs and biosimilar biological products. HHS must also create a public database with its determinations for each drug.
Sanders’ bill defines a drug price hike as “excessive” if the domestic average manufacturing price exceeds the median price for the drug in Canada, the United Kingdom, Germany, France, and Japan. If a price does not meet this criteria, or if pricing information is unavailable in at least three of those countries, the price is still considered excessive if it is higher than reasonable in light of specified factors, including cost, revenue, and the size of the affected patient population, according to a summary of the bill posted on Congress.gov.
Levin will lead BIO’s board for 2019–2020. He succeeds John Maraganore, PhD, the CEO of Alnylam Pharmaceuticals.
Rare neurological focus
Ovid develops treatments for rare neurological disorders. Levin joined Ovid after serving as CEO of Teva Pharmaceutical Industries for 17 months until resigning in October 2013, about three weeks after unveiling a global restructuring program that included the elimination of 5,000 jobs worldwide, touching off outrage in Israel.
Before Teva, Levin held roles of increasing responsibility at Bristol-Myers Squibb, the Novartis Institutes of Biomedical Research, and other companies. Levin was also chairman and CEO of Cadus Pharmaceuticals, which he took public, from 1992 to 1997.
Two years later, Cadus lost a patent infringement lawsuit filed by Sibia Neurosciences over U.S. Patent No. 5,401,629, directed to a cell-based screening method useful for the identification of compounds that exhibit agonist and antagonist activity with respect to particular cell surface proteins.
Cadus was assessed $18 million in damages—a judgment reversed by the U.S. Court of Appeals for the Federal Circuit in 2000, after Cadus sold its drug discovery assets to OSI Pharmaceuticals and ceased internal drug discovery operations and research efforts. OSI was acquired in 2010 by Astellas Pharma.
Levin has served as Ovid’s chairman since April 2014, and as CEO since March 2015. Ovid’s pipeline includes OV935/TAK-935, being developed in collaboration with Takeda Pharmaceutical for the treatment of rare developmental and epileptic encephalopathies (DEE).
Ovid’s lead candidate is OV101, a treatment for Angelman syndrome and Fragile X syndrome. Ovid is set to dose its first patient in the Phase III NEPTUNE trial for OV101 in Angelman syndrome in the second half of this year, which is also when the Phase II ROCKET trial in Fragile X is expected to show results.
“We face the common challenge of having to educate the analyst and the investor community in a disease that they’ve never heard of, in an endpoint that they’ve never heard of,” Levin said of Angelman syndrome. “This is a very hard thing to do, but it’s a challenge that’s absolutely worthwhile doing because we are right on track to start Phase III. And if we are successful, in a very short period of time, we’ll have the first-ever therapy in an area that nobody had even heard of largely four or five years ago.”