Can A Low-Cost, Branded Medicine Succeed? TheracosBio Is About to Find Out

I’m back!

Man, there’s a lot today. Let’s see what we can get through.

Earning season kicks off each quarter with UnitedHealth’s numbers, which are always eye-poppingly good. On Friday, the insurance giant once again delivered: $5.5 billion in pure profit. That’s up 8%. Optum -- including United’s OptumRx PBM -- saw revenue and profits rise even faster.

That’s the story. No analysis. I’ve always felt that just shouting “$5.5 BILLION IN PURE PROFIT” is a useful service, especially for patients (or pharmacists or physicians or whoever) that feel like the system is broken and wonder where all of the money is going.

In 2020, EQRx launched with one heck of an interesting model.

What if, the company’s leaders said, we could use everything we know about biology to create low-risk, clinically competitive medicines in established, lucrative classes, then sell those drugs at prices so low that we can break the high-list, high-rebate game?

EQRx never managed to pull that off. Last fall, after less than three years, it abandoned the model.

But, very quietly, another company was working off of a similar approach. In January, TheracosBio (“affordable drugs for important diseases”) won approval for Brenzavvy, a diabetes med in the same class as Jardiance and Farxiga. Last week, the drug officially launched. It’ll be sold at a mammoth discount to other options in the class -- $50, cash, for a month’s supply -- via Mark Cuban Cost Plus Drug Co. (Other branded medicines are about 10 times more expensive, on a list-price basis.)

That’s it. No insurance, no rebates, no coupons, no games. Just a branded, mass-market product in a class thIat’s doing $10 billion-plus in sales a year.

It goes without saying that there’s no guarantee that Brenzavvy will be a success. Real Endpoints’ CEO, Jeff Berkowitz, said on LinkedIn that the price point “is likely not low enough to be truly disruptive.” And this is a class where the leaders have a depth of data that newcomers can’t match.

Questions abound. Is $50 low enough? Does Mark Cuban have a broad enough network? Will the small, new-school PBMs jump on board? How much of a $10 billion market does Brenzavvy need to be a success? What elements of TheracosBio made this strategy viable? (The private company’s CEO told Fierce that its invesors have“a different perspective on return of investment.”)

The answers to those questions will go a long way toward understanding how and where the low-price strategy will evolve. EQRx might not have been able to pull it off, but that doesn’t (necessarily) mean the model doesn’t work.

• If you are a nonprofit hospital, there’s probably nothing worse than this NEJM headline: “Do Nonprofit Hospitals Deserve Their Tax Exemption?” The piece includes a little bit on 340B, including this great line: “This ‘buy low, sell low’ program has evolved into a ‘buy low, sell high’ program.”

• The Wall Street Journal takes a hard look at the “gold rush” around obesity meds. We’re clearly in irrational exuberance mode right now, so let me lay a marker down: GLP-1-based approaches are the real deal, but there should be some healthy skepticism of almost everything else. As I’ve mentioned before: I was in the middle of this kind of a hype cycle almost 30 years ago.

• There are a couple of articles in JAMA Health Forum from a Bentley University team that looks at the role of NIH funding in drug development. They provide something of a Rorschach test for your perspective on the NIH’s role in the ecosystem. If you’re inclined to think that the government role in drug development is limited, you can point to the datapoints that show that a vanishingly small percentage of the NIH’s resources go to the hard work of clinical development. If you think that the government is a linchpin in the creation of new medicines, there’s fuel for that argument, too.

• Say it with me now: drug prices aren’t skyrocketing. Navitus, a smaller PBM with a 100% pass-through approach, pushed out its 2022 Drug Trends Report, and it matches pretty much every other report from every other PBM over the past five years: drug prices, on a unit-cost level, are falling (both specialty and non-specialty). And that means that drug spending remains below inflation, even though utilization is up.

• I don’t know what to make of methodologies that try to devine net drug prices, which often seem like Rube Goldberg machines. But I do like net prices, even if they’re just ballpark estimates. So I read with some interest this JAMA Network Open piece that concluded that the net price for Humira, for commercial payers, was $1,812 in 2020. That’s a useful stat for assessing biosimilar pricing (most stories about Humira biosims use the list price for comparison, which can be a bit misleading).

• I don’t know if I can trust this analysis either, but the Information Technology & Innovation Foundation has a white paper out that says that price controls in OECD countries decrease R&D spending by more than $50 billion a year and deprive us of 25 new drugs annually.

• J&J is licensing patents on its TB medicine to a United Nations-affiliated group with the goal of speeding access in low- and middle-income countries and -- perhaps -- tamping down controversy over the access to the drug.