drug pricing

Ed Abrahams has a message for Nancy Pelosi about HR 3. That’s the new bill in the House to reduce drug pricing.

Ed is the President of the Personalized Medicine Coalition, an advocacy organization in Washington representing our industry which will soon announce a new caucus in congress devoted to personalized medicine. Ed joins us today and says to Pelosi, there’s a better way, a more American way to reduce drug costs.

The argument is not new. Personalized medicine will reduce costs if we encourage it to play out. The industry hasn't been around long enough to have yet made the difference. We're just at the beginning of this new era. The name 'personalized medicine' itself is only about twenty years old, Ed points out. What is new is a "value-sharing" pricing model which guarantees that innovation remains strong while making sure that patients have access to new therapies. Ed advocates for this new model and others like it on today's program.

"We need innovative ways of looking at drug pricing. It's a paradigm shift," he says. "And it's happening, but it's happening too slow and below the surface so that the public, as reflected in the Republican and Democratic parties, is unaware that there is a solution outside of price controls."

During an election cycle there’s bound to be a lot of noise on the topic, but for anyone who is serious about real solutions to healthcare, Ed’s organization does some terrific work and represents all the groups involved. Their annual conference takes place in Boston this November 13-14. Today Ed gives a preview of the topics which include drug pricing, but also our annual roundup of new therapies and an in-depth look at the year in genetic testing.

Sara Radcliffe can be happy--extra happy. She is the CEO of the California Life Sciences Association at a time when the state is breaking records, beating out every other state in category after category. Today Sara discusses a new report the organization has released along with PWC detailing our sector’s explosive growth. Jobs: check. Wages and revenue: check. VC funding: check. NIH funding: check. California leads in all. Big yaaaawn?

Well, no. There are some interesting trends here. For example, the report shows that Orange County has shot up as the third major life science hub for California, with strong growth coming from new digital health companies. That emerging digital health sector state wide is projected to attract a whopping $3.9 billion in VC investment in 2018 which represents nearly half of all projected life science VC investment for the year.

We talk some policy too. Last time we chatted with Sara, the trade group was actively opposing a drug pricing and transparency bill by the California legislature. Since then the bill has passed, been signed by the governor, gone into law, and two components have been implemented. What has been the outcome? Has it been all doom and gloom? And does Sara at all agree with the bipartisan calls in Washington that we need some national controls on runaway drug pricing?

Yes. She does agree.

Listen in for her position, find out about this record growth in California, and hear about a few who were honored in last week's Pantheon Awards Ceremony as the sector's best and brightest. It’s time to shine a spotlight on California.

At the end of the year our goal is to bring the audience some unusual programming, some new outside perspectives on the topics we cover. As with last year, we talk today with science fiction writer, Kim Stanley Robinson, author of the Mars Trilogy, 2312, and Shaman. 

Known for working with science and technology that are feasible today, Stan goes out on his yet furthest journey into the future with his newest novel, Aurora. As the novel begins, we are with the descendants of a group of people who left our solar system a couple hundred years previously for the solar system of the star Tau Ceti. This star is eleven light years away, and the novel starts as the ship begins “deceleration” with the goal of landing down not on a planet in the “Goldilocks” position, but on that planet’s moon, Aurora. We learn right away that Stan is not really in Gene Roddenberry space here (creator of Star Trek). For once the travelers begin the process of trying to settle, the biology already on Aurora isn’t what you’d call friendly or indifferent.

In Aurora, Stan faces head on a notion we’ve pursued here on Mendelspod: the field's overly reductionist approach to the study of biology. The best example I can think of here came from one of our guests, John Dupre, who asked the question, "if you took all the atoms of an elephant into space and were able to reassemble them, would it still be an elephant?”

No, is Stan’s clear answer with this latest novel.

“This idea that we’ve had for a hundred years, or two thousand years, however long—of travel to the stars: it’s an impossible idea."

Not only does Stan bit by bit deconstruct biology and ecology, arguing that earth’s ecological success has as much to do with it’s size as other factors, he also deconstructs the process of formulating narrative and of  novel writing itself. On the spaceship is a computer which over the course of the first part of the book receives extensive training in doing narration.  Stan reads from one of these passages where the computer is wrestling with the idea of whether to use metaphor or not.

“A quick literature review suggests the similarities in metaphors are arbitrary, even random. They could be called metaphorical similarities. But no AI likes tautological formulations, because the halting problem can be severe, become a so called “ouroboros” problem, or a whirlpool with no escape. Ah hah, a metaphor.”

In Aurora, Stan is fascinated by problems which underlie current trends in the life science industry. For example, what training will IBM’s Watson need to receive as it is used more and more in the clinic? How important is our microbiome and the environmentalome to our own health?

We also push Stan to talk about the issue of drug pricing. To fully flesh out his ideas, he has to go quite far into a post capitalist society, but he does agree that price controls at this point might be a first tool. As for the power of the new CRISPR gene editing technique, Stan says doing gene drive on humans is an old science fiction idea.  "But I always thought that it was a hundred or two hundred years off. So I was wrong.  Now we have to decide how to keep it safe, and what we should allow.”

It's a fun time with Kim Stanley Robinson.  Enjoy.

We toss the term "precision medicine" around with ease today, and yet payers continue to refuse to pay for diagnostic tests.

These are tests that might indicate which treatment will work for a specific patient, thereby saving perhaps hundreds of thousands of dollars, not to mention protecting the patient from unnecessary harm. These are tests which prevent invasive procedures such as unnecessary biopsies.

A few weeks ago, we featured the CEO of a leading diagnostics company who has been desperately fighting a recent proposal by CMS to reduce reimbursement of his company’s leading test by a whopping 70 percent. If the cut goes through, the company would probably go belly up.

How does this happen in 2015?  Why, in the golden age of molecular testing, do diagnostics continue to be so devalued?  As a society, why are we undercutting our own investment in biomedical research by not paying for the resulting tests?

These questions led us to today’s guest, Bruce Quinn, a diagnostics reimbursement consultant. Bruce worked five years on the payers’ side and now spends his time helping labs and diagnostics companies get their tests paid for.

Starting with the story mentioned above, Bruce says that the latest CMS proposal to cut rates reflects an old way of calculating reimbursement that goes back to the ‘70s. These old methods such as “crosswalk" and "gap fill” do not work with the sophisticated and costly diagnostics tests coming on the market today. Bruce is hopeful that a new market-based pricing method—similar to that used for drug pricing—which will be implemented as part of the recent PAMA (Protecting Access to Medicare Act) legislation will improve reimbursement rates for the more complex tests. He also warns that it could reduce rates for more simple tests, such as the PSA (prostate specific antigen) test.

Attempting explanation as to why diagnostics are so undervalued, Bruce says that payers have been burned over the years. Many companies and labs say that they are not understood by the payers,  but the payers DO understand them, he says.  The payers just don’t believe them. So what can these companies do? And who will pay for the expensive studies and trials needed to convince the payers?

“The book still remains to be written on how to develop these diagnostics tests with the optimal efficiency and the optimal chance of success,” Bruce says.   “I think people need to recognize we’re still learning how to do it, and we don’t have the answers in hand.  It’s still kind of a white space."

Earlier this year, the California Life Sciences Association (CLSA) launched, becoming the first statewide policy and advocacy group for biotech. The new nonprofit, a merger between BayBio and the California Healthcare Institute, is led by CEO Sara Radcliffe, former Executive VP of Health at the international Biotechnology Industry Organization (BIO) in Washington.

Sara steps into this new role at a time when biotech is booming in the state and in the nation. Yet she will face some difficult challenges ahead:  drug prices are going through the stratosphere,  drawing increasing ire from the general public and state and national goverments while diagnostic test makers see their often patchy reimbursement being further reduced.  Facing a new statewide ballot initiative that aims to fix drug pricing and an upcoming drug cost transparency bill scheduled for the next legislative session, how will Sara defend CLSA members, such as Gilead and Celgene, who are charging ever higher drug prices? And what will she do for a promising yet underpaid diagnostics industry?

Welcome to California, Sara.  How does she like the Bay Area so far?   “It’s a much more laid back environment,” she says at the end of the interview. "Washington can be quite a staid environment. So I’m enjoying the entrepreneurial atmosphere."

Guest:

John LaMattina, Senior Partner, Pure Tech Ventures Bio and Contact Info

Listen (6:27) Comparing drug approvals: 2014 with 1996

Listen (7:10) More rational drug development?

Listen (1:58) Did public image of big pharma improve last year?

Listen (7:00) The Peter Bach argument

Listen (5:16) Who is winning the debate?

John LaMattina, the former president of Pfizer Global Research, is spending his semi-retirement cultivating the brand of public defender of pharma. As a contributor to Forbes, he showcases some of the great stories of drug development and offers counter punches to pharma’s detractors.

His recent column: FDA Approvals 1996 vs. 2014: The Two Most Prolific Years, But Stark Differences provides the context for today’s interview.

After a look at what is now seen as a banner year for drug development, LaMattina comments on highlights from last week’s JP Morgan Healthcare Conference in San Francisco. He's excited not only about all the business deals, but the new science as well.

The interview ends with a discussion about the debate over drug pricing, and who John thinks is winning it.

Trailer for This Month in Biotech - A new monthly show from the producers of Mendelspod.

Coming January 30th.