Good afternoon, readers.
There’s a funny cycle that resurfaces every now and then within the life sciences industry. A particularly odious actor arises that’s pretty easy to turn into a boogeyman (see: Martin Shkreli, or the company that used to be known as Valeant Pharmaceuticals.) What some might call clear price-gouging tactics by such entities make for a convenient, and politically bipartisan, punching bag as a sort-of synecdoche of the sector’s moral failings.
But the thing about a punching bag is that, usually, once you’re done beating it up, you just leave the gym. The bag’s still there to get whacked another day. The gym hasn’t changed its fundamental structure. And the lives of everyday Americans sees few shifts for the better.
I’m wondering whether this story will play out yet again and whether it’s indicative of what may happen with AbbVie, the pharmaceutical giant that owns both Humira, the world’s best-selling drug at nearly $20 billion per year in annual revenues, and the beauty product Botox following its acquisition of Allergan last year.
Congressional lawmakers on both sides of the political aisle tore into the company and its CEO, Richard A. Gonzalez, this week over claims that the drug maker is abusing the patent system in order to thwart competitors and milk its cash cow for as long as possible. The combination of patent thickets and price hikes can put consumers at risk, according to multiple leaders who spoke at the Congressional hearing.
“Drug companies are actively targeting the U.S. for price increases, while cutting prices in the rest of the world,” said Rep. Carolyn Maloney, chair of the House Oversight Committee. “While seeking hundreds of patents on a medication or vaccine is not illegal under our existing system, it can be anti-competitive and result in higher costs,” added Rep. James Comer, the top Republican on the committee.
Gonzalez and AbbVie have always been aggressive in defending the company’s patent strategy, asserting nothing it’s done is illegal and pointing to Humira’s multi-faceted and evolving uses as a justification for its tactics. (A few years back, I took a deep dive into AbbVie’s business and all-in wager on Humira that you can read here.)
But drug pricing is a particularly fraught issue in the midst of a pandemic. Former President Donald Trump made it a massive campaign issue, sometimes to the chagrin of his own party, though it led to little change. Democratic and Republican politicians regularly denounce what they see as pharma industry greed. But major policy items such as federally negotiated drug prices through Medicare have yet to materialize.
Drug price negotiation was clearly at the forefront of this week’s AbbVie hearings. But the appetite for taking on such a well-oiled, well-monied industry like biopharma is a massive political lift. Which brings us back to the central question: Was this week’s pile-on over AbbVie really about creating policy change, or just another chance for politicians to fling some spaghetti at the walls and call it a day?
Read on for the day’s news, and see you again next Thursday.
Sy Mukherjee
sy.mukherjee@fortune.com
@the_sy_guy
DIGITAL HEALTH
Ro's expansion into women's health. My colleague Beth Kowitt explores how digital health startup Ro (whose CEO, I might add, has spoken with us on multiple occasions on the company's evolution) is expanding its footprint in the women's health space. Specifically, Ro has now acquired Modern Fertility, a deal reportedly valued at more than $225 million. On her end, Modern Fertility chief Afton Vechery figured that Ro's network was pretty convenient to leverage. “All of that infrastructure is now at our fingertips,” she told Fortune, “and instead of spending years building that infrastructure, we get to plug into it.” (Fortune)
INDICATIONS
FDA decision looms on Biogen's controversial Alzheimer's drug. I'll be covering this extensively in the coming weeks. The potential approval of the first drug to actually treat Alzheimer's, rather than just mitigate its side effects, isn't something you just ignore. But the path that's brought us here is truly bizarre and shines a light on some pretty nerdy-but-important issues like how clinical trials are designed, how they're interpreted, and the influence of industry and patient groups on the regulatory process. The idea of a treatment for Alzheimer's, which would be the first of its kind, would catapult Biogen's aducanumab into the history books. By June 7, if not earlier, we'll know whether or not the Food and Drug Administration (FDA) considers the treatment sufficiently effective in slowing dementia. The body's own advisory committee overwhelmingly decided that it was not. But while the FDA rarely ignores the advice of outside experts, it's happened before in treatments for diseases where no current options exist. Oh, and there still won't be a permanent FDA Commissioner in place by the time of the current approval deadline.
THE BIG PICTURE
The continued disparities in COVID vaccination rates. We've known for a while that the inequities of society would bleed into the COVID vaccination campaign. But state-level CDC data is starting to give us a more detailed look into what that means for various communities in a fluid and oft-chaotic situation. A Kaiser Health News analysis of these figures, provided under a public information request, underscore that Black Americans still fall far behind other racial groups in getting a COVID vaccine. In fact, just about 22% have received shots to date. Latinos and Hispanics are beginning to fare better, and Native communities are showing some of the highest rates of closing the immunization gap. But, as with everything in American health care, it's not a direct calculus. District determines destiny, and a vaccine's reach is entirely dependent on the local infrastructure of its communities. That's true for all Americans, but the opportunity gap for this shot continues to be telling. (Fortune)
REQUIRED READING
The generational gap in support for vaccination proof, by Lance Lambert
Trust in business continues to rise, by Alan Murray
Why the CEO of the world's most valuable startup resigned at 38, by Eamon Barrett
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