Wall Street Is Amping Up Pressure on Drugmakers to Stop Studies Early for IRA-Related Reasons

For more than a quarter-century, I’ve been a member of the National Association of Science Writers, a group that does great work supporting a broad range of folks who write about science and medicine. Last week, they came out with a statement on the use of artificial intelligence that included this line: “We also will not use A.I.-generated images, such as with DALL-E — except under very particular conditions and with artists directly involved.”

For the last few months, I’ve used DALL-E-generated images to illustrate this newsletter (if you’ve viewed the content on the web, you’ve seen them). In keeping with the NASW statement, though, I’m going to stop. NASW raises good points about copyright, and it’s important to me to be on the right side of this. 

And though I’ve played with them, I’ve never used ChatGPT or similar tools for content creation for Cost Curve or my consulting work, and I don’t plan to start. The health care system is too complex and too fast-moving to trust a content-generating black box, even if there were no legal and ethical issues.

One of the issues inherent in running a daily newsletter is that I’m tempted to go all-in on breaking news, trying to see around the corner immediately rather than waiting to see what comes into view. 

I see that temptation today, with regard to the late-Friday news that a bipartisan group of six Senators has released a framework for 340B reform (here’s the legislation, and here’s the summary). I’d love to do some naval-gazing here, but that’s absolutely the wrong instinct. The mud needs to settle. 

Some of the muddiness comes from the reality that the framework is pretty skeletal in parts -- there is no marker put down on the definition of “patient,” for instance -- though there are hints scattered throughout of where the next set of discussions will begin (e.g. the presumption that restrictions on contract pharmacies are probably not OK). 

And some of the cloudiness stems from the caution of the stakeholders. PhRMA told STAT, “We look forward to working with Congress.” The American Hospital Association had a just-the-facts post on its website. 340B Health: “We look forward to reviewing the materials in more detail.” ASAP340B -- the pharma/provider alliance: “We look forward to working collaboratively on the issues the Senators flagged for additional stakeholder input.”

So everyone is “looking forward,” without much commentary, and that feels like the right move. It’s not clear to me how locked-in the Senators are, and it feels like we’re still setting up the chessboard for a game that won’t start for at least a year. 

(On the flip side, if you really need a hot take, former Sidley Austin lawyer Bill Sarraille has a LinkedIn post where he suggests that the discussion draft is a big win for the covered entities.)

So this is interesting. 

Novartis has a long-term study of its Leqvio heart drug underway designed to cement the impact of the medicine on outcomes. There’s only one problem: the drug was approved in 2021, which means that the IRA’s clock is running. The drug has only been on the market for a couple of years, and the end already seems near, if you’re an investor, anyway. 

That led one of the company’s analysts -- Citi’s Andrew Baum --  to float, on the company’s 4Q call, the idea of stopping that long-running trial in the hopes that it’ll still show a benefit, allowing the company to ramp sales before the IRA door starts slamming shut. It’s not the first time that Baum’s raised the issue, either. It came up on the company’s 3Q call, too. 

Novartis shot down the idea of stopping trials early, but it’s a reminder that the IRA means that companies will be under pressure to run shorter, less-definitive trials and move resources away from post-marketing studies. It’s not something that appears to have happened yet, but it’s notable that Wall Street is already pushing in that direction. 

And if that’s what the public pressure looks like, I can only imagine what’s being said privately, not just to Novartis but any company with a long trial.  

It’s not an illogical reaction from investors. Last week, the National Pharmaceutical Council published an illuminating article in the American Journal of Managed Care looking at indications based off of post-marketing research. It turns out that, with indications based on post-approval research, “the majority (55.8%) receiving FDA approval more than 7 years after the initial approval.” 

That doesn’t leave much time for a company to be rewarded for the investment in additional research.

No wonder Wall Street is antsy.

I’m not going to put much commentary around this, but there is a hot-off-the-presses Health Affairs Forefront piece by Tufts’ Peter Neumann and Josh Cohen titled “Are We Valuing Prescription Drugs Appropriately?” 

It’s a fantastic and easy-to-approach piece on how we need to approach value assessments going forward, including more thoughtful approaches to genericization, discount rates, spillover effects, and willingness-to-pay benchmarks. 

My hope is that everyone reads it and that it has a profound impact on how we talk about value, because Peter and Josh really do seem to have a better view on how we should talk about value. (And just in time.)

Elsewhere:

• By not publishing Friday, I didn’t have a chance to link to three Rand reports commissioned by the Biden administration. One looked at U.S. vs. ex-U.S. prices, with predictable results. One looked at international differences in insulin prices. And one quantified the gap between availability in the U.S. and availability elsewhere. On the one hand, it’s hard to argue (or be surprised) by the idea that prices are higher in the United States. On the other hand, the big question is how large the pricing differences are, and here Rand is not very helpful, in part because its approach to net prices is not very nuanced. 

• The Wall Street Journal has kind of a weird op-ed on the same topic with the headline “Be Thankful for High Drug Prices.” The general thrust is that other countries pay too little compared with the United States -- the familiar “free-rider” argument -- but it’s couched in the idea that, damn, U.S. prices really are high. The subhed refers to Americans being “overcharged,” which is probably not a useful frame. 

• The other item I missed by not having a Friday edition was a link to some of the reactions to the start of the IRA “negotiations.” Endpoints has the most complete list of corporate no-comments. I’m partial to Merck’s.

• One piece of evidence that obesity medicines are high-value interventions is the fact that consumers are willing to pay for them out of pocket. Even in Europe.

• It’s not clear that stories about the aggregate number of price increases are remotely educational or useful, at least not without more context, but here we are. USA Today is retracing that well-trod ground.   

• I’m not sure anyone should take legislative efforts to “fix” the IRA seriously right now, but it’s still worth noting what’s popping, including last week’s introduction of the Ensuring Pathways to Innovative Cures (EPIC) Act, which would fix the “pill penalty.”

• The New York Times has a pretty good look at why you can’t get one of the new obesity medicines. The pharmacy-profit issue is one to watch here. 

• AbbVie thinks it can maintain share in the Humira market for another couple of years, which suggests, once again, that there are some market failures to address here.