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 1 of the GEN CEO Perspectives Roundup. It consists of five parts.
Part 2: Key Challenges
Part 3: Industry Growth
Part 4: Regulatory Initiatives
Part 5: Disruptive Technologies
GEN: If you could have 15 minutes with President-Elect Trump, what would you tell him about the importance of Pharma, Biotech, Diagnostics, Devices to the health of the U.S. population and the economy?
Mr. Manzello: Beyond any doubt, industry innovation has been the key to modern therapeutic solutions, not only in the U.S. but around the world, as evidenced through the advent of the recombinant protein and antibody therapies that are now commonplace treatments. To a significant degree, the genesis of this innovation was the government funding that backed the basic research decades ago. If I had 15 minutes with the new administration, I would state a case that the dramatic reduction of governmental support for basic research over the last 10 or 15 years is a real risk to further innovation. A redoubling of the government investment is a must if we’re planning to avail future generations of the benefits of the next therapeutic breakthroughs.
An immediate and dramatic increase in government-funded research investment would offer a dual-benefit for long-term healthcare benefits to the U.S. population: support the economic recovery through expansion in research and commercial healthcare organizations and reduce future healthcare costs.
Dr. Cohen: There is no greater investment we can make in our health and the health of future generations than in the development of more advanced pharmaceuticals and biologic medications. U.S. healthcare expenditures now exceed $3 trillion, almost 18% of GDP, and are projected to continue growing. Alzheimer’s disease alone will cost the U.S. over $230 billion in 2016 and an estimated $1 trillion by 2050. This is not counting the costs of the burdens on family members. A single medication that just delays the onset of Alzheimer’s by five years would save hundreds of billions of dollars over the first 10 years alone. And that’s just for a single condition.
Science has advanced to the point where we are on the threshold of developing cures for diseases that were incurable up to now—cancers, genetic diseases, inflammatory conditions, and more. Recently, we have developed drugs to cure a deadly liver infection, hepatitis C. These drugs cost a net $50,000 and have been estimated by independent groups to save an average of $250,000 per person over time, not to mention the benefits to the economy of reduced contagiousness, reduced caregiver burden, increased productivity, time at work, etc. That’s a great return on investment.
It would be a mistake to view drugs as expenses, rather than as the investment they are. We would do well as a society to provide even more funding for NIH-backed basic research and to provide an environment that continues to encourage the massive amounts of investment and time required to develop more effective, innovative medications.
Pricing issues are a legitimate concern. These can be managed through market mechanisms, with some help from government. Value- or outcomes-based payments are already beginning and should grow in prevalence so that payments are made for value delivered.
Mr. Leschly: In addition to talking about the importance of healthcare to the nation, I would focus on the power of innovation. The U.S. is an innovation-based economy and we are the leaders in this regard. Many of the major achievements in Biotech and Pharma have come out of the U.S. We must continue to fund and make sure we have the appropriate systems set up for innovation; both from an FDA point of view and from Medicare and Medicaid Services perspective. We need to be concerned not only with new drug approvals but we must find a better way to have value-based reimbursement, where everybody shares risk to the extent possible.
Another area I would discuss with the President-Elect is the regulatory environment. Regulations must be appropriately established to calculate risk-benefit decisions that make sense, in relation to the overall health of all the people in the U.S.
Mr. Connor: American health-science innovation has been a strategic advantage fueling the U.S. economy for decades. Nowhere has the economic and quality-of-life benefits of innovation been more evident. However, since the beginning of this century our health-science innovation advantage has been slipping relative to global competitors who are investing aggressively and making meaningful advances—China, India, Japan, and Europe in particular. America’s tremendously powerful life-science-to-healthcare-delivery value chain—from our educational institutions, to the discovery and commercialization of novel, game-changing drugs and devices, to the continual creation and growth of our biotech and biopharma companies, to the delivery of healthcare to our population which has had a profoundly positive impact on America’s economic health, human health and longevity, worker productivity, human capital development, jobs, welfare, and the well-being of our nation—is weakening. This is due in part to its scale and concomitant inefficiencies, increasing compartmentalization, regulatory burdens, payor/provider adversities, and the resulting growing cost structure. This situation, coupled with the huge global demand in the decades ahead for the innovative output that America’s life/medical science value chain can supply, will create an amazing opportunity for President-Elect Trump and his team to establish, as a priority, the creation of policies and programs at the federal, state, and community levels that holistically integrate end-to-end efficiencies throughout the value chain to re-establish the U.S.’s global leadership in health-science innovation trajectory. This ties directly to and substantively enables his “Make America Great Again” mission.
The U.S. economy and every citizen are meaningfully benefited by having America be the beacon and center for global excellence in life-science, medical, and healthcare innovation. This in turn should attract the best and the brightest from within our boundaries and from around the world to be educated in the U.S. for degrees, research, and the most advanced knowledge. The key is retaining this outcome within the U.S. for delivery globally. As such, the new Trump policy needs to be bottom-up and top-down. That is, at the front end it needs to stimulate our pre-college education process to inspire and develop America’s innovative talent from the grade-school level up, to channel more Americans into our world-class universities, and then into a broad spectrum of innovation-driven jobs. Today, our universities are training the world’s best and brightest. Regretfully, the balance of international students vs. Americans in our universities has become less favorable to America with some international students being retained, but many returning to their homelands rather than directly benefitting the U.S.
Most of the pieces and tools for an amazing transformation are already in-hand, but they are increasingly fragmented; thereby incurring avoidable costs and inefficiencies that are diminishing our leadership advantage. President-Elect Trump has the opportunity step back, assess the whole value-chain, and turn the tide by establishing a bold and aggressive roadmap for an integrated transformation of this value chain to be a national priority of government, our education system, and industry.
Mr. Equels: Critical to our nation’s progress as a leader in drug development is aggressively addressing serious diseases with unmet medical needs, i.e., diseases with no approved treatments. It will 1) advance public health, 2) reduce the cost to the nation due to the disease burden, and 3) support the pharmaceutical industry to work on these diseases—and funding should be commensurate with the disease burden.
For example, myalgic encephalomyelitis/chronic fatigue syndrome (ME/CFS) affects approximately one million people in the U.S. In the most severe cases, the people are totally disabled. The estimated cost to our nation, per the CDC, is approximately $22 billion a year in healthcare costs and lost productivity. ME/CFS has no approved therapy in the U.S. We just obtained the first approval in Argentina for our therapeutic Ampligen as a treatment for ME/CFS.
We need the U.S. to break through bureaucratic quagmires and work with us toward a rapid approval. Why? Billions in social costs are saved. Thousands of totally disabled people have an opportunity to recover and return to work. Finally, Ampligen production in the U.S. will mean more than 1,000 high-paying new jobs in biopharma manufacturing, labs, and clinics. Making America Great is all about exactly this type of focus and innovation. We must continue to be a leader in all industries and we cannot ignore the biotech sector by regulating it out of business.
Mr. MacMillan: The Pharma, Biotech, and Medical Device industries are among our country’s most robust contributors to employment and the economy. Thanks to the strength of these industries, Americans have access to the latest advances in healthcare—from new drugs to fight disease, to imaging technologies that detect cancer, to medical and surgical devices that improve patient care. And while Pharma and Biotech are deserving of attention from policymakers, I would also point out the significance of diagnostics and early detection.
According to AdvaMed, while diagnostics comprise less than 5% of hospital costs and about 1.6% of all Medicare costs, their findings influence as much as 60–70% of healthcare decision-making. Accurate diagnostics promote early detection of disease, which leads to earlier medical intervention and better, more cost-effective outcomes. Also, advances in medical imaging mean that we now have mammography systems, specifically our Genius 3D system, that detect cancer on average 15 months earlier than older technology, while reducing the number of false positives and unnecessary biopsies. Overall, the healthcare industry is one of the most significant drivers of the U.S. economy and has a direct and profound impact on the health of our population.
Dr. Brandon: Recently, Fox News indicated that the President-Elect Trump was going to repeal all of Obamacare. I don’t necessarily disagree with that, but what I would encourage the President-Elect to do is create a system that directly deals with reducing the cost of healthcare in this country.
Innovations in pharmaceuticals, biotech, devices, and diagnostics can help reduce costs, and this will help the U.S. population and the economy. Healthcare spending grew 5.8% in 2015, reaching $3.2 trillion or $9,990 per person. As a share of the nation’s GDP, health spending accounted for 17.8%. It’s going to be innovation in the healthcare industries that will allow reductions in cost. So, my one suggestion to the President-Elect is: please don’t throw out the baby with the bathwater. Continue to encourage innovation to reduce the cost of healthcare in this country.
I would also raise with President-Elect Trump the growing problem of antibiotic resistance and the ongoing and urgent need to address this problem.
Dr. Lichtenberg: From a European perspective, the U.S. pharmaceutical and biotechnology industry is an impressive innovation engine and outstanding business sector that, by all means, should be further developed and supported by President-Elect Trump. This includes active funding of life-science research and development activities, international collaboration, and access to international talent for the U.S. labor market. The U.S. has a strong leadership position in this domain, which is an advantage for the economy but also for the U.S. population. Any changes planned to be made to the Affordable Care Act should also be investigated concerning the effect on the spending of patients for products offered by the pharmaceutical and biotechnology industries. More patients with access to healthcare can offset some of the budget cuts that payor systems impose.
Dr. Liu: The life sciences industry is one of America’s most powerful and secure sectors, and where this country still has an indisputable, global lead. This lead emerged from a rich ecosystem of academic strength, investment savvy, marketing know-how, and production sophistication. It is also without question that government investment in upstream biomedical research through the NIH, NSF, and DOD has been one of the key magic ingredients.
For us to maintain this lead, we will need to continue government funding in the type of research that industry generally does not pursue. We need to make regulations clear and consistent, and we need a stable and rational medical finance system. All of this will benefit the American people and the American economy.
Dr. Wilson: Along with most of the world’s developed economies, the U.S. is characterized by an aging population and a rising incidence of chronic disease. These trends mean that the healthcare industry will remain one of fastest-growing segments of the U.S. economy, growing faster than the overall market. President-Elect Trump has proposed to cut the business tax rate to 15% from 35%, so the tax burden on profitable, large-cap biotech and pharma companies could drop meaningfully. In addition, the President-Elect has advocated for a one-time discount on taxes owed by corporations that repatriate cash held overseas.
One of the best things the president-elect could do to stimulate the Pharma and Biotech industries would be to provide a fair system under which U.S.-based pharma companies could take their tax savings and/or repatriated, off-shore cash and use it to promote investment in real innovation.
I would encourage President-Elect Trump to restrict repatriated cash to bona fide research and development (whether done internally or through M&A or licensing deals with smaller companies). This would provide a significant stimulus for large-cap biotech and pharma companies to invest in the future rather than drive up their stock prices in the near term with stock buybacks.
Dr. Schwieterman: The first thing I would tell President-Elect Trump is that this is the golden age of biotechnology. Biotechnology itself, the therapeutics, the diagnostics, and the new sort of treatment paradigms that people are using, are having tremendous impacts and changes on the health and well-being of Americans. And this revolution is only in its infancy.
We are beginning to see the full fruits of this endeavor across many different disease areas. Before, the focus was on life-saving areas, particularly when I was at the FDA regulating biotech and CBER, when great attention was placed only on those diseases where there were serious or lethal outcomes. But now, as many predicted (and it’s really exciting to see), we’re seeing this advance having an impact on other diseases: asthma and other lung diseases, diabetes, etc.
I would also emphasize that the development of a wide number of biologic therapies is something that’s tremendously important for not just the health of the American patient population, but also for the economy; that this is a real boon to American industry and that it needs to be nurtured.
Ms. Cournoyer: I would first tell the President-Elect that the U.S. has historically been a leader in Pharma and Biotech, and that the rest of the world looks to our country when seeking cutting-edge care. It’s incredibly important to maintain this leadership position. While we currently account for a significant portion of global revenue in these sectors, we need to watch China as it has a very rapidly growing Pharma and Biotech sector.
Innovations in technology and drug development have transformed the way we treat many diseases in the U.S. If you look at hepatitis C, multiple sclerosis, and childhood leukemia, we’ve made tremendous progress because of the innovations from this industry. But the healthcare problems facing the U.S. population are far from solved. Cancer, obesity, cardiovascular disease, and Alzheimer’s represent significant areas of healthcare spending.
Fostering discoveries that lead to treatments and cures for many of these chronic diseases are going to be derived from innovations in Biotech and Pharma. That innovation can help control overall healthcare spending, which represents a significant portion of our GDP.
I would encourage the President-Elect to have sustained and robust investment in the Biotech and Pharma sectors.
Dr. Clarke: The U.S. is a leader in both Pharma and Biotech, as we continue to bring new and innovative medicines and devices to the public. Our goal is to improve human health in the U.S. and globally as well. I think President-Elect Trump in his post-election statements has already demonstrated that there will be a willingness and a consideration to try and improve how drugs are developed in the U.S. under the auspices of the FDA. We are looking for a more streamlined process while, at the same time, thinking about the socioeconomic incentives that can be put in place, especially to help small companies as we move forward in trying to take early-stage products and get them to the point where they can get to later clinical development with the FDA.
I’d like to have him help us consider what tax breaks might look like for companies, to help us be able to put that money toward R&D given the exorbitant costs of developing drugs. And as we consider enhancing growth within the industry, the idea that the President-Elect will have some sort of revised approach to the Affordable Care Act may also then allow pharma companies to move in a more efficient manner to bring things to the people who are in need.
Mr. Farrell: With just 15 minutes, I’d focus my discussion with President-Elect Trump on how the healthcare industry needs to be empowered and incentivized to better manage chronic patient populations, and how focusing on continued access to chronic care diagnosis and treatment ultimately strengthens the U.S. healthcare system. Currently, almost 20% of our GDP is spent on healthcare and more than 85% of that is spent on chronic disease management.
I’d also encourage him to help us better invest in Medicare and Medicaid to support patients with chronic conditions, improve their quality of life, and reduce overall system costs by shifting care from the hospital to the home. I would encourage President-Elect Trump and the new team to consider focusing on fixing broken and flawed elements of the Affordable Care Act, rather than a complete repeal-and-replace. This could be designed to ensure a smooth transition for the 20 million folks who have signed up for care under the existing model, and to keep some very good elements of the model: such as the accountable care organization model of caring for patients both at hospital and at home, and for hospitals to care—both ethically and financially—about patient readmission rates and timing.
One of the key parts to improve chronic care delivery is to ensure continued investments in connected care and digital health models, so my final minutes with the President-Elect would be spent on sharing some best practices we have seen: including increased therapeutic adherence and reduced costs of care, combined with improved patient quality of life through these digitally enabled models.
Dr. Gruber: We are at a very exciting and pivotal time in medicine. Thanks to advances in technology, diligent work by scientists in both academia and industry, and funding from government agencies such as the NIH, NSF, and DOD, we are on the verge of major breakthroughs in cancer and other diseases that in the past have taken hundreds of years to achieve.
The fields which have made some of the most promising advances are genomics and immunology, enabled by advances in computing, including developing more powerful computers, networks, software, and specialized devices. For example, the advent of sequencing and flow cytometry have revealed new insights and given us a deeper understanding of human biology and health. With visionary leadership and the right resources, we could eradicate or control cancer and genetic disease, with minimal side effects, in our lifetime. Imagine what this could mean for our economy, including healthcare savings, providing more years of productive employment, and generating a major economic boost that would create high-paying jobs in the biotech sector—not to mention the health and well-being of our citizens. To cultivate and drive this potential era of medical advances will require your vision and commitment of support. Mr. President-Elect, you would stand out as the United States president with potentially the greatest impact in the history of our country.
New treatments that are safe and effective, and especially those that are curative, could lower healthcare costs dramatically. We can take cancer as an example: the cost of cancer care is estimated to be $157 billion (in 2010 dollars), and our aging population is only increasing its incidence. Now, years of cancer research is bearing fruit, most notably the discovery of the role of the immune system in fighting cancer. Targeting the immune system is yielding unprecedented efficacy for cancer patients and paradigm shifts in how we think about and treat cancer. This year, checkpoint inhibitors replaced chemotherapy as the front-line treatment for certain lung cancers, due to their unprecedented ability to extend overall survival and improve quality of life.
An excellent prior example is the ultimate preventive treatment, vaccines—which have nearly eradicated once deadly diseases such as polio, hepatitis B, and small pox; eliminating cost of care and enabling those patients to instead contribute to the economy. Scientists are currently evaluating potential vaccines for cancer. Imagine the impact a cure for cancer would have on patients, the healthcare system, and economic growth.
In addition to efficacy, quality of life plays an important role in reducing healthcare costs and boosting the economy. The ability to return to work enables patients to contribute to the economy and support their households, in addition to being able to spend quality time with their families and minimize their healthcare costs. Imagine the difference between surviving a year, but being bed-ridden in the hospital or feeling extremely sick from the treatments that keep you alive, versus leading a relatively normal life where you are able to go to work, spend time with your family, or travel. In addition to economic gains, any patient will tell you that quality of life is as important as just extending life.
Leadership of our country at such a critical time in medicine is essential toward driving such innovation and commercialization. The greatest needs right now are streamlining clinical development, drug approvals, and earlier access to treatments, particularly for life-threatening and debilitating diseases such as cancer and other genetic diseases.
In addition, laws and attitudes need to change rapidly to reduce regulation, without impacting patient safety, and provide capital to drive innovation and commercialization. This will allow the United States to continue to be the world leader in new drug development. For example, Right to Try legislation, which has been passed in a growing number of states, allows patients with deadly diseases much earlier access to promising medicines and is increasingly important as more and more treatments are on the horizon. For this policy to succeed, drug companies need to be able to recoup costs of drug development and early access programs. This could be achieved by allowing the company to charge for experimental treatments. Laws ideally would also be passed that require insurance companies and other payers to help pay for these costs through reimbursement for experimental drugs and trials.
Novel, potentially transformative treatments need to be made available commercially much sooner. As a result, cost of disease would drop dramatically, while corporate revenue and tax revenue will experience explosive growth. Allowing capitalism to prosper in the pharmaceutical industry enables the country to prosper, while enjoying better health at drastically reduced costs. Mr. President-Elect, you have the vision, courage and mandate to change the world. Please place the unleashing of breakthrough drug development and commercialization extremely high on your list of priorities.
