The annual J.P. Morgan healthcare conference starts this weekend in San Francisco. Pundits are predicting a much higher tally of shoulder injuries than usual. You know, from all the people patting themselves on the back.
After a year filled with medical promise and cash raining down from everywhere, the self-congratulation could be thicker than the summer fog at Ocean Beach. But it can’t possibly continue for another year… can it?
I don’t own a crystal ball. I don’t even have a snow globe with a tiny Golden Gate Bridge to shake around. So instead of an answer, I prefer to offer up five potential flashpoints that could shake up the biopharma world in 2015.
1) The first is a no-brainer. Drug price discontent had been simmering for years, but the main event started just before the holidays in the hepatitis C space. And we’ve got many rounds to go. Like any good boxer, Express Scripts (NYSE: [[ticker:ESRX]])—the most powerful U.S. drug-purchasing agent (known as a pharmacy benefits manager)—first spent months talking trash about Gilead Sciences’ (NASDAQ: [[ticker:GILD]]) prices for sofosbuvir (Sovaldi) and its follow-on sofosbuvir-ledipasvir combination (Harvoni): $84,000 and $94,500 per course, respectively.
Finally Express Scripts threw a punch on Dec. 22, announcing that the just approved Viekira Pak combination from AbbVie (NYSE: [[ticker:ABBV]]) would be its exclusive hepatitis C treatment. The two parties agreed upon an undisclosed discount price, presumably well under Harvoni’s list price. Then, just yesterday, the counterpunch: Express Scripts’ rival CVS/Caremark (NYSE: [[ticker:CVS]]) declared Gilead its exclusive hepatitis C provider.
If contained to hepatitis C, this would be a brush fire, not a conflagration. But that seems unlikely. “The drug industry needs to realize we’ve reached the tipping point,” says Roger Longman, who runs the pharmaceutical reimbursement consultancy Real Endpoints. Insurers and middlemen like Express Scripts and CVS/Caremark have played favorites and excluded drugs for years—mainly lower-cost primary care drugs. Now, with the so-called “specialty” markets seemingly fair game, treatments for autoimmune diseases, HIV, perhaps even some cancers could see a price war, says Longman. If that brings down healthcare costs, it’s a very good thing indeed, and in hindsight it could be the best healthcare news of 2015.
Watch the customers of Express Scripts closely. Those needing hepatitis C treatments will still get the same cure rate with Viekira Pak but less convenience—more pills to take, perhaps different side effects. Will “good enough” (and cheaper, assuming the discounts make a difference in healthcare costs) be just fine? If not, a backlash could blunt the rush toward similar exclusive deals in other specialty markets where there is too much daylight between competing products.
2) My second flashpoint is admittedly more speculative. What happens when cell-based cancer immunotherapy has its first big setback? The data have been practically magical to date: Large majorities of leukemia and lymphoma patients in dire circumstances have seen their cancers stopped cold with one type of treatment, called chimeric antigen receptor T-cell (CART) therapy, from Juno Therapeutics (NASDAQ: [[ticker:JUNO]]), Novartis, and Kite Pharma (NASDAQ: [[ticker:KITE]]).
Investor enthusiasm has followed: Juno had the biotech IPO of the year, and Kite’s debut last June wasn’t shabby either, with its shares now quadruple their $17 IPO price. (Bellicum Pharmaceuticals (NASDAQ: [[ticker:BLCM]]) of Houston benefited, too, although its main program hasn’t produced data yet.)
The side effects have included so-called cytokine storms—an overheating of the immune system that left unchecked can be fatal. While the side effects rates have been notable, they’ve also been manageable to date.
But these are small groups of patients in Phase 1 studies: roughly 150 total have received CART immunotherapies across several programs. Now, larger Phase 2 trials have begun or will soon begin, and in the biopharma world, bigger clinical studies have a way of bringing
