Summer Reading List 2017: Even More Tales to Inform and Amuse You


It’s time once again for my annual roundup of some of the best books I've read this year. As usual, my focus is on non-fiction tales from the world of science, medicine, and technology. A master list of all books that I recommend can be found here, and you can also check out my previous book recommendations from 2016 and 2015. Here's my latest list:
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BioPharma and Hollywood: Land of the Blockbusters


When you hear the word “blockbuster”, what’s the first thing that comes to your mind?
a) A movie that earns hundreds of millions of dollars at the box office
b) A prescription drug that brings in more than $1 billion a year in sales
c) A bankrupt chain of video stores
d) A large bomb capable of destroying an entire city block

All four of these choices are valid answers, but the focus of this article is on the first two. The parallels between biopharma and Hollywood are strong. Both industries invest huge amounts of money in a large number of projects with the hope that some will turn out to be blockbusters i.e. massive money making machines. Sometimes it works out, but the failure rate is high, with most drugs (and many movies) never recouping their development costs. Both groups also love to develop sequels, which is a simpler strategy than developing riskier independent products that their fickle public may, or may not, embrace.There are many aspects of their businesses that are shared by the pharmaceutical and movie industries. Let’s see how they compare:
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Hollywood and BioPharma: Differentiated by Unique Economic Models


In my previous post, I detailed numerous similarities between the pharmaceutical and film industries. Now it’s time to point out the substantial differences between these two businesses that illustrate their different economic consumption and pricing models.

Production Costs - Big Barriers to Entry in Pharma, but Not Film
Nobody’s producing drugs in their basement that are going to earn them a ton of money. Okay, let me rephrase that. Nobody’s producing legal pharmaceuticals in their basement that are going to earn them big bucks. Creating prescription drugs is a very expensive enterprise. The cost of bringing a new drug to market has been estimated by the Tufts Center for the Study of Drug Development to be about $2.6 billion. That’s a huge hurdle to making money. There’s no getting around extensive research, filing multiple patents, complicated manufacturing steps, expensive clinical trials, and detailed regulatory and FDA filing requirements. How long might it take just to recoup those costs? Let’s return to my previously cited example of a very poor selling drug. Seattle’s CTI BioPharma sold only $3.47 M of their non-Hodgkin disease/B-cell lymphoma drug Pixuvri worldwide in 2015 (all sales were in Europe). If it cost the company the current industry “average” of $2.6 billion to develop it (which it didn’t), it would take about 749 years just to recoup that money, based on 2015 revenues. And that’s without showing a profit. It’s a pretty safe bet this drug will never recapture its development costs no matter what they were.
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Would Government Buyouts of Pharma Companies Really Be A Good Way To Lower Drug Prices?


Here’s a novel way to lower health care costs: make the US government a purveyor of drugs. In a recent
article in Forbes, Peter Bach and Mark Trusheim suggested that the US government could reduce drug costs by buying Gilead and distributing its hepatitis C medicines at a greatly discounted price. The idea, on the face of it, is an interesting one to consider. In their scenario, the government buys Gilead for a 30 percent premium on its current stock price, spending $156 billion. The government would then sell off the R&D operations as well as a strong franchise of HIV drugs, reducing the “net cost” down to $77 billion. Other financial adjustments reduce the price further, lowering the cost to treat each patient down to $15,733 from what they claim is the current cost of $42,000. This represents a pretty nice cost savings when spread out over a patient population of 3.2 million people (including about one out of every three people in prison). Gilead’s hepatitis drugs certainly rank at or near the very top of innovative medicines coming out of biopharma in the last 25 years. However, the Forbes article did not delve into some of the far-reaching ramifications of what government buyouts might mean to other players. Let’s take a deeper look below the surface to see what such a buyout might portend.
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The Covenant Between BioPharma Companies and Their Customers

Outrageous drug price increases have been a hot-button news story for most of the year. Even those who work in the industry know that drug pricing is incredibly complicated, tied to all sorts of group discounts, bundles, and a system of rebates (which are themselves tied to market share of the drug) that benefits both drug companies and pharmacy benefit managers. What was once explained by industry wags as the unfortunate actions of just a few exploitative bad actors (e.g. Turing and Valeant) has continued to expand to more firms. Generic drug maker Mylan (seller of the EpiPen) and Taro Pharmaceuticals have now been caught up in the contretemps, as has newcomer Novum Pharma. Venture capitalist Bruce Booth wrote a nicely detailed commentary comparing “innovator” vs. “exploiter” companies, but I’m not so sure that it’s easy to quickly distinguish one from the other. Many of the companies categorized as innovators (meaning they actually do R&D, and generate new products that meet unmet medical needs), are also responsible for some of these outrageous price hikes. These include companies that make drugs for multiple sclerosis and those who peddle high priced insulins.
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How Can You Make Money in Biotech If Only One In Ten Companies Turns A Profit?

It’s that time of year when we can finally sit down to enjoy the long awaited knock down, drag out battle of some national heavyweights. No, I’m not talking about Clinton vs. Trump; that fight may be too painful to watch. I’m talking about the upcoming clash between two battle-tested opponents. This fight pits lobbyists representing “Usurious” insurance companies against those for “Greedy” biotech and pharma firms. In the battle of Goliath vs. Goliath, the razor arrows have been sharpened and the lines in the sand have already been drawn.
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True or False: Only Two Out of Ten Drugs Earns Back Its Development Costs?

Drug pricing has been much in the news lately, with patients, pundits, and politicians all decrying the astronomical costs of many medicines. In response to this contretemps, trade organizations representing drug makers have provided explanations of why their prices are actually reasonable and provide good value to patients. According to a recently published white paper from BIO, the biotechnology industry’s trade association, “only two of every 10 drugs on the market ever earn back enough money to match the costs of R&D and the FDA approval process before their patent expires.”

Is this really true?
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Cancer Immunotherapy: It’s (Almost) All About the Combo

In the early days of cancer chemotherapy, doctors quickly realized that the single agents they were testing were not only highly toxic, they were simply ineffective at curing their patients. Initial discussions about combining some of these drugs were met with heated opposition by the medical community. As former NCI Director Vincent DeVita Jr. stated in his recent memoir The Death of Cancer (2015), “Using more than one drug at a time to treat something was, as a general rule, considered sloppy medicine.” The first effective cancer treatments evolved to include combinations of four chemotherapeutic drugs. This pattern is now repeating itself in the field of cancer immunotherapy.
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Drug Pricing: Lack of Transparency and Trust Compound the Problem

The latest attack on drug industry pricing has calmed down a little now, although the subject is sure to reignite as the 2016 Presidential election race heats up. Hillary Clinton, despite being the leading recipient of campaign contributions from drug industry insiders, recently issued a call to regulate drug pricing (and Bernie Sanders has actually co-sponsored new drug pricing legislation). These calls elicited the expected responses from PhRMA and BIO, with both trade organizations suggesting that such a move would restrict patient access and inhibit the development of new medicines. Read More…