Pharma’s Cutting Edge

called its April 2005 draft guidance doc.pdf ”Factors CMS Considers in Making a Determination of Coverage with Evidence Development.” Now, you tell me what that means. Right. I thought so. It means nothing to most people. What it really means, however, is: “How CMS (overseers of Medicare) plans to decide when current clinical evidence supports coverage, and how to improve clinical evidence when coverage is not unconditionally supported.” As you probably know, CMS is obliged to provide coverage under Medicare for certain therapies, when such therapies are deemed to be reasonable and necessary for diagnosis or treatment of disease. Unconditional coverage is provided when “the evidence is adequate to conclude that the item or service improves net health outcomes for all patients with a particular clinical condition.” The draft guidance is a precursor to a future formal CMS guidance that will describe ways in which CMS will make this “reasonable and necessary” determination for coverage decisions. The 15-page draft is an exciting document for proponents of evidence-based medicine, since CMS proposes to promote collection of evidence in a variety of ways that will support clinical decision-making (and Medicare coverage) for individual patients. The document is brief and, aside from the title, clearly written and worth perusing.

CMS was apparently keen on inviting public commentary on its ideas. Two and half months later, they’ve published these comments. To save you the trouble of reading through all 400+ pages, I’ll highlight some of what Pharma and Biotech wrote (you’re quite welcome).

In all, 15 pharma/biopharma companies and their respective industry organizations submitted comments. While there was some expressed enthusiasm for incorporating additional elements of evidence-based medicine into CMS’ coverage determinations, there was also concern that CED is a thinly veiled euphemism for CMS attempts to limit Medicare coverage.

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I attended two full days of the BIO 2005 conference, held this week in my hometown of Philadelphia, and caught as much of it as I could, attending a variety of business forum sessions (where companies showcase either their partnering capabilities (licensors) or their product pipelines (licensees)) and lectures by biotech and finance executives. I also walked the entire exhibitor floor and even caught some of the meager protest outside the convention center.

So, what’s the unique purpose of the BIO meeting? The event is certainly a convenient way for companies to meet in anticipation of doing deals, but there are many other forums available for this purpose. The raison d’etre of this meeting, it appears, is for all variety of municipalities to impress upon entrepreneurs and investors the advantages of doing business in their city/region/state/country, primarily by locating (or re-locating) business there. Nearly the entire exhibit floor was occupied by representatives from governments and public-private economic development partnerships hoping to lure new business to their region. Bottom-line: Biotech and life sciences are still hot properties, perhaps hotter than ever.

What isn’t so hot, I was reminded over and over again, was the funding available to the startup and early-stage companies in the sector. Yes, the exhibitors all touted financial incentives, including grants and loans, available to start new businesses, but these modest sources amount to far less than what is needed to sustain new businesses. Venture capitalists continue to raise impressive funds, but are diverting such funds away from early-stage ventures towards established companies, with marketed or late-stage products. Suffering even more, are non-product companies, those developing technology platforms, for instance, who are finding the VC well nearly completely dry. So, what is the biotech entrepreneur doing to keep the cash coming in? If what I heard at the meeting is indicative, entrepreneurs are relying more frequently on private-investor (angel) money, and, concomitantly, angels are becoming more sophisticated in how they size up their biotech investments. I also heard more than once, however, that the early-stage VC drought will eventually work itself out and money will once again flow to the entrepreneur with a patent and a dream and little else.

This was my first BIO meeting, and one thing surprised me–perhaps I should have expected it–this industry is mature. I don’t mean mature in the sense that it’s profit growth has peaked, I mean mature in terms of its executives. These guys (And I do mean guys. There were very few women executives who spoke at the meeting. Even less visible were ethnic minorities.) are getting old. Many of the execs I heard from were first-generation biotech mavericks, guys who have been in this business since there was a business to be in.

Seemingly in concert with the graying of its executive class, has come a maturity in the industry’s views of how it must function now to continue to thrive. I heard what sounded like soul-searching from participants who are struggling to reconcile the need for funding and the desire to move quickly forward, with the need for corporate profits and the desire to serve society with novel, important therapies. The industry now well understands the weighty risks involved in developing new drugs and diagnostics, and the realities of serving multiple constituencies. Yes, biotech, as was said so often this week, has come of age.

The following letter by yours truly was published in the June 16th issue of the New England Journal of Medicine.
To the Editor: Okie’s article could lead the reader to the conclusion that an independent drug-safety agency would protect patients better. But Okie omits certain events surrounding the withdrawal of rofecoxib from the market that illustrate the potential downside of separating the FDA’s drug-approval function from post-marketing safety surveillance. In particular, she does not mention the fact that experts in drug safety and the relevant therapeutic field who gathered at an FDA advisory committee meeting in February to discuss the safety of cyclooxygenase-2 (COX-2) inhibitors and nonsteroidal antiinflammatory drugs (NSAIDs) voted 17 to 15 that rofecoxib ought to be allowed to be marketed. Nor did Okie mention that David Graham, the FDA epidemiologist who has heartily criticized the agency’s handling of the rofecoxib review, is rather more certain in his views of the benefit–risk equation for the drug; he has said that “there really doesn’t appear to be a need for COX-2 selective NSAIDs.” The point is that drug-safety experts tend to downplay therapeutic benefits, and clinical practitioners tend to downplay risks. What is needed at the FDA is an unrestrained voice for experts on both sides of the equation.

In today’s New York Times’ article on Medicare Part D formularies, Robert Pear interviews insurers and managed care executives who suggest that CMS is being more diligent in its efforts to ensure broad formulary coverage for the plan than some had previously expected them to be. What does this mean for pharma and for the program? Hard to say for sure, but right now, I would suppose two possible outcomes. The first is that smaller companies will be able to compete more effectively with larger companies, without having to partner, in order to get their follow-on drugs on these formularies (at least for the six key therapeutic classes identified in the article). This is very good news for some specialty pharma and biopharma companies. The second outcome, which is more speculative, is that costs to the program could spiral upward as some of the more expensive drugs get listed when they otherwise might not. This is alluded to in the NYT piece. It’s hard to say, though, until the formularies are revealed, as some of the less often used drugs for more prevalent conditions in this elderly population could be somewhat less expensive than those more often used. I’ll update this story when we know more specifics about the formularies.

In a ruling eagerly awaited by biotech investors and drug manufacturers alike, the Supreme Court has ruled today in Merck KgaA v Integra Lifesciences that Merck KgaA did not violate Integra’s patents when it used patented RGD peptides during the course of its drug discovery efforts. The unanimous decision delivered by Justice Scalia overturned a Federal Circuit Court ruling that had sided with Integra in the dispute.

The Court supported Merck’s activities under §271(e)(1), which provides that “It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention (other than a new animal drug or veterinary biological product (as those terms are used in the Federal Food, Drug, and Cosmetic Act and the Act of March 4, 1913) …) solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs … .” Read the rest of this entry »