Bristol Myers Squibb and Celgene got a beating in Congress on drug prices—but only Congress can fix the problem
Good afternoon, readers.
Drug pricing is in the headlines once again. This time, Celgene and parent company Bristol Myers Squibb are in the spotlight.
The United States is one of the only countries in the world that mismanages checks and balances on drug prices. It’s what drives economic anxiety for patients who have chronic illnesses and have to reload on their supply every month without knowing if a company may arbitrarily raise its prices.
It’s an issue that afflicts the most afflicted. Harmed most are those who depend on the biopharma industry’s admittedly remarkable innovations but may not be able to get their hands on treatments because of a labyrinth of middlemen, a lack of transparency, and a deference to the most powerful players.
The Food and Drug Administration (FDA) can only judge a drug by safety and efficacy standards—and those standards don’t necessarily mean that an approved drug is a whole lot better for you than others already on the market.
Cost-effectiveness is out of the agency’s purview. In short: Drug makers can charge you whatever they want if their therapy makes it past the regulatory green line. And they’re free to hike prices whenever they want, too.
Big pharma companies like to argue that this is the cost of innovation. Hey, if we can’t raise prices every single year for a drug we developed a decade ago which took hundreds of millions of dollars to create, how can we develop more in the future?
This is a uniquely U.S. position. Pretty much no other country buys it. And we got to witness a tangible case study about this dilemma, and the moral hazard it presents, during a Congressional probe on Wednesday focusing on Celgene, the biotech that was snatched up in a massive deal by Bristol Myers Squibb late last year.
Celgene’s cancer drug Revlimid saw massive price hikes year-over-year in order to reach sales targets, according to a scathing Congressional probe on Wednesday.
Revlimid was first approved in 2005. Yes, 15 years ago. It’s an important treatment which has helped patients with a rare form of blood cancer called multiple myeloma. It hasn’t changed on a biological or molecular level since then—yet, curiously, its price kept rising, as Congresswoman Katie Porter of California said in searing questioning on Wednesday.
Porter pointed out that Celgene had a structure set up where executive compensation was tied to sales goals for Revlimid. In fact, the drug’s price has been hiked 20 times in the past few decades in order to make up for lagging sales by Celgene, according to an extensive investigation by the House Oversight Committee.
Those are the kinds of facts that will outrage the public. But the larger issue is that Celgene, under the law anyways, did nothing wrong. Congress called them out. But Congress is also the only entity that can fix the problem.
Read on for the day’s news, and see you next week.
The World Health Organization (WHO) looks to big tech during the pandemic. My colleague Nicole Goodkind has an excellent report on how the World Health Organization (WHO) is relying on Big Tech to tackle the COVID pandemic. In an interview with the global agency's chief information officer Bernardo Mariano Jr., Nicole delved into issues such as the future of dealing with outbreaks and the platforms which can support those efforts. "I understand that each sector may have its own interests, but that doesn’t mean that we can’t share the common goal to make sure that we’re better prepared for a pandemic. That we have the right technology, the right data and the right predictive models to minimize the impact on people’s lives and also the impact on the economy and social problems that we currently have with the pandemic," said Mariano. (Fortune)
Moderna's CEO says a vaccine won't be ready until next year. Despite President Trump's claims that a COVID vaccine will be available in mere weeks or months (more on that below), C-suite executives from companies like Moderna that are working on such drugs would beg to differ. Moderna got some of the biggest hype at the head of the crisis for its vaccine candidate. But CEO Stephan Bancel said on Thursday that even if its vaccine gets an emergency use authorization from the FDA by late fall, wide-scale distribution won't happen until next spring. (CBS News)
THE BIG PICTURE
The health care industry's needs in an election year. I encourage readers to read through our election package and what this race means for businesses at large. Of course, here at the Capsule, we focus on health care—and my colleague Erika Fry nails what the industry wants out of this bizarre presidential referendum. We can talk about everything ranging from COVID to Obamacare (and we will), but here's one of the biggest takeaways from Erika that gets to the heart of the ideological debate: "Both parties believe health care spending is out of whack. But they’re divided over the best way to address the issue. While the Republicans are generally in favor of more competition to control costs—price transparency has been an elusive goal of the Trump administration—the Democrats argue for a combination of competition and regulation," she writes. (Fortune)
A presidential debate filled with lies about health care. Speaking of health care... I doubt many readers are unaware that Tuesday night's presidential debate was somewhat embarrassing. There was shouting. There was constant interruption. There was confusion. But there were also a litany of lies on the specific issue of health care, ranging from the science of COVID to medical policy at large. I attempted to parse through a confusing standoff in this breakdown. (Fortune)
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What the unbanked need from the 2020 election, by McKenna Moore