BioPharm Executive: Biotech, Is It Time To Secede?

Published: Feb 23, 2017

Biotech, Is It Time To Secede?
February 22, 2017
By Karl Thiel for

No, I'm not talking about Texas or the recent mumblings from California following the presidential election. I'm talking about the nation's largest drug manufacturers and a lobbying group seemingly too hamstrung to watch out for its own best interests.

As if the past few months haven't been distracting and volatile enough, industry critics from the White House just got a fat new target. It came in the form of Marathon Pharmaceuticals, which won approval for a drug to treat Duchenne muscular dystrophy and priced it at $89,000 a year.

Sounds like a bargain compared to Sarepta 's Exondys 51, priced at $300,000, right? Except Marathon's Emflaza (deflazacort) is an old corticosteroid that has long been available outside the U.S. and was often imported by patients' families at a price of $1,000 to $2,000 a year. Marathon took advantage of the FDA's push to register older drugs, gaining exclusivity and a Priority Review voucher worth millions. And, according to at least some reports, it did very little new clinical work.

This is hardly a new strategy. The acquire-and-gouge maneuver that made Martin Shkreli and Turing Pharmaceuticals infamous, that bankrupted K-V Pharmaceuticals, and that ultimately brought down Valent , seemingly remains irresistible. But there's been an important shift: Up until now, pharmaceutical execs could cluck and shake their heads at these companies as upstarts and interlopers engaged in abusive behavior, distinguishing it from their path of innovation and responsible price increases.

In 2015, Industry group PhRMA went so far as to put out a white paper explaining how Valeant, not a PhRMA member, had a strategy "more reflective of a hedge fund than an innovative biopharmaceutical company." The problem now is that Marathon is a PhRMA member, and PhRMA so far hasn't made a peep. Awkward!

This has led John LaMattina, former president of Pfizer Global Research and Development and Forbes columnist, to call on large companies to leave PhRMA and form a new industry arm that truly focuses on the needs of research-driven companies.

That might indeed better serve those companies, but it's unlikely to improve the industry's image in the eyes of the public. In fact, the script is so far playing out in a familiar and unproductive way: Marathon has been blasted by members of Congress (Bernie Sanders and Maryland Democrat Elijah Cumming) and has said it will "pause" the rollout as it tries to gauge how lengthy and costly the negative attention will be and weighs it against future profits.

The biotech sector has been rallying this year as the market learns to discount outbursts from President Trump. His January 31 meeting with the industry was even viewed as a net positive: His repeated comments about lowering drug prices was balanced with talk of relaxed regulation, faster approvals, and tax cuts. More recently though, it seems like Trump has been too distracted by the press, internal chaos, and the needs of his own fragile ego to take much concrete action on an issue that most Republicans would probably rather ignore.

That is, unless companies like Marathon keep pushing it to the top of the agenda.

-Karl Thiel

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