Next week, a big slice of the biomedical industry is gathering in San Francisco for the annual J.P. Morgan Healthcare Conference and other life sciences events that have emerged like sprouts around the base of an old redwood tree.
One year ago, the pharmaceutical folks—by far the largest delegation to this annual mosh pit of deal-making and fund-wooing—held their breath when President-elect Donald Trump said that they were “getting away with murder” and promised his administration would take action to combat high drug prices.
Since then, Trump hasn’t exactly put more cops on the pharma-homicide beat. Is 2018 the year the feds crack down on the ever increasing prices of prescription drugs? If so, it could be the year’s biggest flash point in biomedicine. For more looming questions—about federal policies, pricing, cutting-edge research, patient empowerment, digital health, and more—that could grow into 2018’s biggest stories, read on.
[Note: Ben Fidler, Corie Lok, and Frank Vinluan contributed to this report.]
Will The Federal Government Do Anything To Slow Down The Drug Industry?
But how good was 2017 for the biopharmaceutical business? Let us count the ways. As noted above, the faux-populist, anti-pharma railings of Trump—as candidate, president-elect and president—have resulted in zero policy or pushback against the drug industry. Tax reform brought down the corporate tax rate and eased the repatriation of overseas profits, a huge win for giant drug firms and their shareholders.
FDA commissioner Scott Gottlieb has presided over a record year of new drug approvals. And soon, Gottlieb’s new boss atop the Health and Human Services Department will likely be Alex Azar, fresh from the highest ranks of drug giant Eli Lilly (NYSE: LLY).
Gottlieb has initiated or helped continue ongoing reforms, many of them industry-friendly. He also has weighed in on high drug prices, calling them a “public health concern.” Some of his solutions include more competition by getting branded drugs to market faster but also closing loopholes that let drug makers keep generic competition at bay. It remains to be seen whether such rule changes, if they take effect, can move the needle on American pharmaceutical spending, which could top $600 billion in 2021.
They wouldn’t have nearly the impact as letting the Medicare system, the world’s biggest buyer of prescription drugs, negotiate prices. Trump has made noises about that possibility before, but at this point, when he fires his next buckshot of anti-pharma invective, will anyone take it seriously?
How Will the U.S. Healthcare System Handle Gene Therapy?
2017 was a year of scientific validation for gene therapy. Three treatments that modify a patient’s genes to treat disease—two for blood cancers, and one for a rare form of inherited blindness—were approved by the FDA. Others are making clinical progress in blood diseases like hemophilia and beta-thalassemia, rare disorders such as Duchenne muscular dystrophy, and more.
If these therapies work as intended, as a single, curative dose, it would usher in a new era in medicine. But how long their effects will last is an open question—and it’s not just a medical question. It’s also unclear how the U.S. healthcare system will pay for them, and who will be able to afford them. The two approved cancer treatments, known as CAR-T treatments, from Novartis (NYSE: NVS)and Gilead Sciences (NASDAQ: GILD), cost $475,000 and $373,000, respectively. They have reportedly struggled so far in the marketplace.
How will voretigene neparvovec (Luxturna), the recently approved blindness therapy from Spark Therapeutics (NASDAQ: ONCE), fare? CEO Jeff Marrazzo suggested in November a price north of $1 million, citing a bounty of health costs that successful treatment could help avoid. Details are coming any day now. Will payers limit access until there’s longer-term proof of the drug’s effect? Will the payment model include some sort of refund if the treatment wears off? Will the treatment only be available at high-end gene therapy centers? These questions should be answered in 2018 and serve as a bellwether for the entire gene therapy field.
Will Broad Cancer DNA Tests Finally Break Through?
The first approval of a cancer drug aimed at a tumor’s genetic signature, regardless of where it originated, came in 2017, for Merck’s pembrolizumab (Keytruda). Loxo Oncology (NASDAQ: LOXO) and Ignyta (NASDAQ: RXDX) could soon follow with two drugs, larotrectinib and entrectinib, that target genetic alterations found in a number of different cancers. Several large studies with nontraditional designs, such as the 30-arm NCI-Match trial, are underway that could open more doors to gene-driven therapies.
For genetic cancer medicines to become the norm, however, tests that pinpoint the signature genes must be trusted and widespread. Test makers have struggled to gain traction amid pushback from insurers, resistance from community oncologists, and other issues. But the FDA has pledged changes, including a faster review process. By the end of 2017, the agency had already approved three broad tumor profiling tests. One of them, FoundationOne CDx from Foundation Medicine (NASDAQ: FMI), also won coverage determination from the Centers for Medicare and Medicaid Services (CMS)—the first time FDA and CMS had issued a simultaneous thumbs-up for a broad cancer DNA test, which FDA commissioner Scott Gottlieb said would spur faster access.
Key to watch in 2018 will be Foundation’s revenues from Medicare and Medicaid. Until now, Foundation has struggled with payment from the massive government-funded insurance systems. Will the joint FDA-CMS approval break the logjam? Foundation’s numbers could be a harbinger of mainstream acceptance for other test makers, too.
Who Will Take Action to Combat the Opioid Crisis?
Life expectancy in the United States dropped in 2016 for the second year in a row, the first time since the early 1960s. Public health officials are blaming opioid overdoses, which killed more than 42,000 Americans in 2016. In 2017, President Trump declare the crisis a public health emergency, but that did not come with new money to combat the addiction problem.
FDA commissioner Gottlieb is pressing his agency to do more, including greater emphasis on treating addiction with medication, including methadone. The National Institutes of Health has partnered with biopharma companies to speed up the development of new addiction medicines and non-addictive pain treatments. But NIH director Francis Collins has said that this initiative also needs government funding to really get off the ground. In 2018, we’ll see what, if any, actions government and the private sector will take as the death toll continues to mount.
Will Digital Health Provide More Alternatives to Pharmaceuticals?
Last September, Pear Therapeutics’ mobile app Reset received FDA clearance to treat substance abuse, a first for a so-called digital therapeutic. Evaluated as a medical device, Reset is an example of the growing overlap between non-pharmaceutical devices and drugs. 2017 also saw FDA approval of an Otsuka Pharmaceutical product that tracks whether patients have ingested the antipsychotic drug aripiprazole (Abilify) via a sensor in the pill and a wearable patch. It was the first approval of a digital system as a pharmaceutical product. Executives for Proteus Digital Health, the Redwood City, CA, company that developed the sensor, said the decision paves the way to digitally track other medicines.
Expect digital technology to continue blurring therapeutic lines. Akili Interactive Labs recently reported positive results for its video-game treatment for attention deficit hyperactivity disorder, and it will seek FDA approval in 2018. The company is also testing its approach in other neurological disorders such as Parkinson’s disease and traumatic brain injury.
To adapt to the technological changes, the FDA is working on new criteria for product evaluation. (Currently, the agency compares an experimental device to one already on the market—in some cases, to a product that’s decades old.) The FDA is accepting comments on its draft guidance.
What Will Patient-Centered Drug Development Look Like?
Passed with bipartisan huzzahs at the close of 2016, the omnibus 21st Century Cures Act, among many things, called for patients to have a stronger voice at the table during development and regulatory review of new drugs. As 2017 ended, the FDA was working to make it happen, with workshops on what it calls “patient-focused drug development” and guidance to companies detailing the kinds of patient experience data it wants—that is, how patients experience a disease and the treatments they’ve received—and how to collect those data.
These are not trivial changes. How will biopharma companies react to them? Patients groups have typically been involved at the clinical trial stage, helping recruit participants and providing input on trial endpoints. Now some companies are engaging with patients at earlier, preclinical stages of drug development. Many patient advocates say this is where the field is headed. But turning grand ideas into reality is rife with obstacles, and in this particular field, there is an extra layer of caution: When reviewing a drug, how should the FDA balance patient input with the drug’s clinical data, especially when faced with lackluster or negative efficacy data?
In 2018, as the FDA builds systems to incorporate patient data and input, it will need to find that balance, and drug companies could start to change the way they develop their products.
Is Microbiome Research Going to Help Us Anytime Soon?
The trillions of microbes in and on our bodies—especially in our intestines—are considered intrinsic to our health. The potential to exploit that knowledge and develop new medicines has resulted in a variety of startups, as well as internal programs and investments by pharmaceutical companies.
Efforts have yet to bear fruit, however, even in a disease where the cause-and-effect of an out-of-whack microbiome has been well established. People with stubborn gastrointestinal infections from the nasty C. difficile bacteria improve with a dose of someone else’s healthy poop. (Also known as a fecal microbiota transplant, or FMT.)
It was a shocker, then, when a pioneer in the sector, Seres Therapeutics (NASDAQ: MCRB), reported a failed Phase 2 pivotal study of its microbiome therapeutic for C. difficile that the company had previously touted as an improvement upon FMT. (Seres’s product, SER-109, was a mix of “good” bacterial spores from healthy donor feces that would take root in a patient’s gut and drive out the C. difficile.)
Meanwhile, another pioneer in the field, Second Genome, keeps shifting targets for its lead drug. First it was Crohn’s disease, then it was ulcerative colitis, and now it’s nonalcoholic steatohepatitis (NASH), the firm said just before the holiday break.
Seres and others, including Enterome, Finch Therapeutics, and Vedanta Biosciences, are pushing ahead with clinical tests using bacteria to treat C. diff and other gastrointestinal diseases. Beyond that horizon, academic and industry researchers are exploring more far-out links between the microbiome and conditions such as cancer and autism. If the therapeutic solutions that seem more obvious—those linking gut diseases and the microbiome—continue to prove elusive, perhaps the mysteries of our microbes and ourselves might be harder to solve than we think.
Here’s a fun bar bet to propose when you’re out one night at J.P. Morgan. Which will succeed first: An effort to use natural bacteria as a therapy? Or an effort to engineer bacteria into tiny drug-making factories?