Latest / Making Medicine / Biotech’s Biggest Stories: Drug Pricing, Access & R&D

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Biotech’s Biggest Stories: Drug Pricing, Access & R&D · Making Medicine

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  Speaker 1: At Making Medicine, we're reporting on the headlines, not making
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  Speaker 1: medical recommendations. For personal health questions, always ask your doctor.
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  Speaker 1: Nothing in this episode constitutes investment, financial, or legal advice.
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  Speaker 1: Consult your own advisors before making decisions. Even when companies
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  Speaker 1: successfully develop a promising drug, the system for actually testing
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  Speaker 1: it in patients has gotten so slow and so expensive
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  Speaker 1: that it's starting to function as its own barrier to
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  Speaker 1: getting those drugs to people who need them. Welcome back
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  Speaker 1: to the Making Medicine podcast, where science, policy, and innovation meet.
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  Speaker 1: I'm your host, John Stanford. This week, we're doing something
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  Speaker 1: a little different and sharing a what we're reading episode,
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  Speaker 1: where we pull from the stories that have been sitting
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  Speaker 1: in our tabs and making us think. We'll cover why
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  Speaker 1: testing a new drug in this country keeps getting slower
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  Speaker 1: and more expensive, how a looming patent cliff is reshaping
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  Speaker 1: the way companies are thinking about deal making, and we'll
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  Speaker 1: circle back to a pancreatic cancer breakthrough we covered a
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  Speaker 1: few weeks ago, to see what's happened for patients trying
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  Speaker 1: to access it since approval. There's a lot of great
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  Speaker 1: news out there, and we look forward to sharing some
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  Speaker 1: of the highlights that we've seen. So let's get into
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  Speaker 1: the show. The first article in coverage comes from CNBC,
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  Speaker 1: where not often on Squawk Box are pharma companies making
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  Speaker 1: big news. But that certainly was the case for Novartis.
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  Speaker 1: And as you'll read in the article, they've had a
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  Speaker 1: really tough couple of weeks. In the span of seven days,
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  Speaker 1: there were three separate disappointing news for the companies. A
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  Speaker 1: self-therapy trial was paused after three patient deaths. A late-stage
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  Speaker 1: cholesterol drug failed to show meaningful results. And then Deldesirin,
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  Speaker 1: a treatment for mitonic dystrophy type 1, a debilitating muscle-wasting disease,
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  Speaker 1: came up short in its phase 3 trial, unable to
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  Speaker 1: beat the placebo on its primary endpoint. That last one
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  Speaker 1: is where we're going to spend most of our time
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  Speaker 1: because it was the crown jewel of a recent acquisition
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  Speaker 1: of Avidity Biosciences that cost $ 12 billion. In just the
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  Speaker 1: days after all of these announcements, the market capitalization of
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  Speaker 1: Novartis dropped by a staggering nearly $ 50 billion. And while
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  Speaker 1: some of those gains have been made back, it's something
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  Speaker 1: we wanted to focus on because in this moment in time,
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  Speaker 1: We talk about the innovation ecosystem, the two-thirds of new
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  Speaker 1: drugs coming from outside of large pharma. We talk about
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  Speaker 1: this virtuous life cycle where small biotech takes on risk
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  Speaker 1: backed by venture capital and then is hopefully later acquired
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  Speaker 1: by one of these iconic companies like Novartis. We don't
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  Speaker 1: spend a lot of time talking about the one in
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  Speaker 1: three drugs that still come out of Novartis' labs. And
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  Speaker 1: we'll save that for a future episode that we have
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  Speaker 1: coming up with a large manufacturer and their own internal
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  Speaker 1: R & D coming up with new cures for patients.
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  Speaker 1: But let's focus on this acquisition of Avidity because I
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  Speaker 1: don't think we talk enough about that these acquisitions in
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  Speaker 1: themselves are incredibly risky. $ 12 billion amounts to almost a
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  Speaker 1: quarter of the entire venture capital investment in 2025 into
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  Speaker 1: the life sciences. And yet here is Novartis spending it
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  Speaker 1: on one company in the hopes that their platform and
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  Speaker 1: their pipeline will pay out. And while we won't get
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  Speaker 1: into the specifics of that particular trial, I think there's
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  Speaker 1: been some sort of misconception that these large pharma companies
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  Speaker 1: aren't taking risk anymore simply because small biotech is doing
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  Speaker 1: so much of the early heavy lifting. Novartis took a
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  Speaker 1: huge risk and it didn't pay off, or at least
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  Speaker 1: it hasn't paid off yet. And so I think it's
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  Speaker 1: worth remembering that the risk doesn't stop at any point
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  Speaker 1: in the clinical trial system or even beyond. This risk
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  Speaker 1: is existential in this business. And so Novartis joins a
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  Speaker 1: number of companies whose recent multi-billion dollar acquisitions haven't paid off.
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  Speaker 1: There'll probably be more to this story and more to
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  Speaker 1: come out with data and details of where the company's
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  Speaker 1: gonna take this acquisition moving forward. But what stood out
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  Speaker 1: to us is something that we just don't talk about,
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  Speaker 1: that these large pharmas, when they make these enormous investments,
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  Speaker 1: are still taking a great deal of risk right alongside
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  Speaker 1: the entrepreneur scientists that built the small biotechs to be acquired.
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  Speaker 1: In that same vein, another article caught our eye came
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  Speaker 1: from Endpoints and was talking about the patent cliff and
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  Speaker 1: the broader M & A ecosystem. It gets at something
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  Speaker 1: that continues to reshape strategy across the whole industry. What
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  Speaker 1: happens to a company when its biggest drug is heading
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  Speaker 1: towards a patent cliff? But what was great about this
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  Speaker 1: article is they painted the picture that this is bigger
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  Speaker 1: than any one company. Roughly 200 drugs, including about 70 blockbusters,
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  Speaker 1: are set to lose patent protection between now and 2030.
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  Speaker 1: That puts somewhere between $ 200 and $ 400 billion in annual
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  Speaker 1: revenue at risk across the industry. When Lipitor lost exclusivity,
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  Speaker 1: Pfizer sales on that drug dropped 71% in a single year.
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  Speaker 1: Humira went from $ 21 billion down to $ 9 billion just
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  Speaker 1: two years after Biosimilar came in. And that's the reality
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  Speaker 1: that almost every pharmaceutical is staring at right now. For Merck,
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  Speaker 1: that's going to be the key drug, Keytruda. Pulled in
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  Speaker 1: more than $ 31 billion in revenue last year, but Biosimilar
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  Speaker 1: competition will start in 2028. So this piece did a
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  Speaker 1: great job focusing on how Merck's dealmakers are thinking about
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  Speaker 1: what comes next. And the short version is a lot
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  Speaker 1: of M & A. As they put it, every company
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  Speaker 1: wants another clinical stage compound. Merck is staying committed to oncology,
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  Speaker 1: and it's incredible moonshot to put 10 new oncology drugs
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  Speaker 1: on the market over the next 10 years. That's leaning
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  Speaker 1: on newer bets, including a solid tumor drug, personalized cancer vaccine,
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  Speaker 1: and a nearly $ 7 billion acquisition this year entering into
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  Speaker 1: the leukemia space. They're also deliberately building out cardiovascular and
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  Speaker 1: immunology assets to diversify beyond cancer. And because it's 2026,
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  Speaker 1: there can't be an article written that doesn't talk about China.
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  Speaker 1: And this piece mentioned that Merck's dealmaker specifically called out
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  Speaker 1: China as a growing source of pipeline innovation. So if
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  Speaker 1: you read this piece from a financial lens, you're seeing
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  Speaker 1: an entire industry that's got to go through a rebirthing
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  Speaker 1: life cycle. Some really amazing products that have been brought
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  Speaker 1: to market will simply not drive revenue. But the great
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  Speaker 1: thing about this industry is looking at it from the
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  Speaker 1: patient's perspective. And while, yes, these companies are going to
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  Speaker 1: struggle to make up missing revenue, it represents the trade-off
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  Speaker 1: between intellectual property protections and now new drugs that will
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  Speaker 1: be available via generics and biosimilars. This is one of
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  Speaker 1: the great benefits to not just patients, but to the
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  Speaker 1: broader healthcare ecosystem, just how steeply these costs come down,
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  Speaker 1: and yet the same great innovation is available for patients.
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  Speaker 1: So the pressure will be on the companies without a
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  Speaker 1: doubt to find new things to put into the pipeline
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  Speaker 1: while we in the patient community will continue to benefit
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  Speaker 1: from innovations for more than a decade ago. The next
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  Speaker 1: piece that caught our eye comes from Stat and it
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  Speaker 1: covered the globe and guard rules that we've been talking about.
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  Speaker 1: These part B and part D requirements to enter into
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  Speaker 1: most favored nation pricing. Stat had a piece out that
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  Speaker 1: at the top of the month on the latest round
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  Speaker 1: of White House drug pricing deals, this time with mid-sized
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  Speaker 1: biotech companies. President Trump is framing it as a major
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  Speaker 1: win going into the midterms, and RFK Jr. said the
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  Speaker 1: companies that have now signed on represent about 90% of
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  Speaker 1: the U.S. pharmaceutical market. But analysts, as Stapp pointed out,
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  Speaker 1: are skeptical about what these deals actually do. The agreements
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  Speaker 1: mostly apply to Medicaid, which by law already gets the
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  Speaker 1: lowest drug prices of any U.S. payer. So companies are
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  Speaker 1: agreeing to price cuts in a market where prices were
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  Speaker 1: already deeply discounted. What they get in return is exemption
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  Speaker 1: from these Medicare pilots, which is where the real pricing
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  Speaker 1: pressure would have been. Teva, Insight, and UCB have all
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  Speaker 1: publicly said that's why they made this trade with the
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  Speaker 1: White House. Analyst Will Humphrey at Capstone said it plainly.
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  Speaker 1: The Medicare demonstrations look less like genuine tests of a
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  Speaker 1: new pricing model and more like leverage, a threat designed
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  Speaker 1: to push companies into signing Medicaid deals that generate good
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  Speaker 1: headlines for the GOP midterm messaging. Now that more than
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  Speaker 1: two dozen companies have signed on, that threat may have
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  Speaker 1: served its purpose, and Globe and Guard seems to have
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  Speaker 1: missed its August launch deadline. Guard's is actually November 1st,
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  Speaker 1: but it's still an open question where those two proposals
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  Speaker 1: are going to go moving forward. Stat also gave us
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  Speaker 1: our next article, which was a really compelling read because
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  Speaker 1: we just talked about the approval of RevMed's pancreatic cancer drug.
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  Speaker 1: It was the first real breakthrough in that disease in
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  Speaker 1: over four decades, nearly doubling median overall survival. So STAT
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  Speaker 1: followed up on what's actually happened since approval, and unfortunately
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  Speaker 1: it's a pretty dispiriting read. It turns out that the
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  Speaker 1: approval itself created a problem for some patients. The manufacturer
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  Speaker 1: had been running an early access program before FDA approval,
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  Speaker 1: and the moment the drug got approved, that early access
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  Speaker 1: program had to shut down, pushing those patients into a
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  Speaker 1: commercial insurance pathway instead. Insurers, as we have covered at
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  Speaker 1: length on this show, can take weeks, months, or even
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  Speaker 1: years to start covering a newly approved drug. One family
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  Speaker 1: described spending 48 hours making dozens of phone calls just
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  Speaker 1: to get a straight answer and being told that FDA
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  Speaker 1: approval does not guarantee coverage and that there was no
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  Speaker 1: timeline for when the drug would even be reviewed. Another
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  Speaker 1: patient was denied outright on the grounds that their oncologist
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  Speaker 1: called non-clinical nonsense. That denial only got reversed after the
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  Speaker 1: doctor went public with it, something that is far too
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  Speaker 1: often the case that when put to public scrutiny, insurers
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  Speaker 1: and coverage decisions are changed. Now, that's something for another time,
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  Speaker 1: but the piece is careful to note that this isn't
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  Speaker 1: a one-come, problem. A recent survey of more than 1,200
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  Speaker 1: cancer patients found that 85% had to go through prior
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  Speaker 1: authorization before getting a doctor prescribed treatment and 40% had
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  Speaker 1: treatment delayed actually because of it. That was even though
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  Speaker 1: 95% of the requests eventually got approved anyway. This delay
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  Speaker 1: is simply unacceptable, knowing that it eventually gets covered anyway,
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  Speaker 1: but radiation oncologists say it's getting worse. 92% report prior
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  Speaker 1: authorization causing delays. More than two-thirds say those delays now
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  Speaker 1: run five days or longer, and nearly a third say
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  Speaker 1: it's led to ER visits, hospitalizations, or even permanent disability.
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  Speaker 1: 7% of oncologists said that these delays contributed to a
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  Speaker 1: patient's death. For most conditions, the gap between approval and
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  Speaker 1: actual access is a frustration, but for pancreatic cancer, where
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  Speaker 1: the disease moves fast and the options are few, it
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  Speaker 1: could be this gap that matters most. One thing that
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  Speaker 1: this article also made us think about is these non-traditional
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  Speaker 1: pathways and the trade-offs being made along the way. It
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  Speaker 1: was great to see FDA move forward with an early
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  Speaker 1: access pathway. It was meaningful to patients that were in
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  Speaker 1: that trial, but more work has to be done so
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  Speaker 1: that there's a smooth exit out of that into regular coverage.
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  Speaker 1: And it's time that payers come to the table. These
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  Speaker 1: drugs and medicines are shown to work as they go
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  Speaker 1: through the FDA approval process, but instead patients are left
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  Speaker 1: in limbo while paperwork and bureaucracy decides who's gonna get
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  Speaker 1: a life-saving treatment. And finally, and we have sort of
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  Speaker 1: saved the best for last, and that's no disparagement to
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  Speaker 1: endpoint CNBC or STAT, but a piece that ran in
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  Speaker 1: the New York Times in their opinion section might be
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  Speaker 1: one of the best reviews of where we stand as
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  Speaker 1: an ecosystem trying to bring new drugs forward in at
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  Speaker 1: least several years. The argument of the piece is basically this.
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  Speaker 1: Even when companies successfully develop a promising drug, the system
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  Speaker 1: for actually testing it in patients has gotten so slow
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  Speaker 1: and so expensive that it's starting to function as its
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  Speaker 1: own barrier to getting those drugs to people who need them.
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  Speaker 1: The numbers in the piece were striking. Opening a phase
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  Speaker 1: one trial in the US, just the first step of
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  Speaker 1: giving an experimental drug to patients for the first time,
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  Speaker 1: now costs on average double what it cost less than
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  Speaker 1: a decade ago in 2017. For complex therapies, that can
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  Speaker 1: run into the millions of dollars per patient. And companies
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  Speaker 1: are responding exactly the way you'd expect. They're opening fewer
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  Speaker 1: trials here and moving more of them to places like
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  Speaker 1: Australia and China. That's a topic we've covered at length
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  Speaker 1: here on the show. The piece centers its arguments around Dr.
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  Speaker 1: David Hong at MD Anderson and one of his patients,
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  Speaker 1: a woman named Annette Harlow, who got into a trial
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  Speaker 1: for an experimental KRAS drug after being told there was
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  Speaker 1: nothing left to try. She's still alive six years later.
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  Speaker 1: And Dr. Hong's worry, shared by a lot of oncologists
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  Speaker 1: quoted in the piece, is that we're approaching a moment
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  Speaker 1: where American patients are no longer first in line for
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  Speaker 1: breakthroughs in the development phase. And it's genuinely a new concern.
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  Speaker 1: What's causing the slowdown isn't really safety, the piece goes on.
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  Speaker 1: It's a duplicative review process across ethics boards and the
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  Speaker 1: FDA and manufacturing rules written for commercial scale production being
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  Speaker 1: applied to trials that might only need a handful of doses. Australia,
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  Speaker 1: which is held up as a model here, focuses its
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  Speaker 1: regulatory review tightly on safety and can cut nine months
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  Speaker 1: or more off a startup time for a trial without
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  Speaker 1: a worth safety record to show for it. There's some
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  Speaker 1: policy momentum to note, HHS and FDA launched a pilot
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  Speaker 1: program this summer called Operation Trial Blazer, modeled on the
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  Speaker 1: Australian approach, and next year's FDA user fee reauthorization gives
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  Speaker 1: Congress a real opening to attach lasting reform. Whether or
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  Speaker 1: not that happens is a different question. and there are
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  Speaker 1: champions on both sides trying to strengthen the FDA. This
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  Speaker 1: is definitely common ground between Democrats and the Trump administration.
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  Speaker 1: There has to be the political will to get something done.
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  Speaker 1: This brief summary does no justice to an incredible piece
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  Speaker 1: that is fact-based, well-researched, and well-resourced with quotes, and is
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  Speaker 1: a must-read for everyone in the space. You'll of course
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  Speaker 1: be able to find a link to it in the
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  Speaker 1: episode description below. But I want to give a lot
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  Speaker 1: of thanks to all the reporters, and in this case,
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  Speaker 1: an opinion author, who've given us these great pieces as
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  Speaker 1: we took this episode to let you know what we've
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  Speaker 1: been reading. That wraps up this episode of the Making
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  Speaker 1: Medicine podcast. You can find the link to all of
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  Speaker 1: the stories we discussed today in the episode description. Be
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  Speaker 1: sure to subscribe on YouTube and follow us on other channels.
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  Speaker 1: Thanks for listening. And as always, keep innovating.