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MNC's counterattack to the "bill": Lilly ends small molecule drug pipeline, AZ may never launch new cancer drugs in the United States again...

 Last Update: 2022-11-26
 Source: Internet
 Author: User

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With the release of the 2022 Q3 performance report, in addition to summarizing the performance of the past three quarters, some pharmaceutical companies have also responded (counter) to a recently released policy that has an impact on the pharmaceutical industry, the Biden administration's Inflation Reduction Act (hereinafter referred to as the "Act"
).

Alnylam, the leader in RNAi therapy, said it would abandon the launch of a Phase III clinical trial for an indication of rare disease RNAi therapy vutrisiran; Subsequently, Eli Lilly said that it terminated its development plan to introduce a BCL-2 inhibitor from Fosun Pharma and terminated the contract; The most "ruthless" is AstraZeneca (AZ), at the investor conference, AstraZeneca's CEO Pascal Soriot said it may not launch new cancer drugs
in the United States.

Alnylam Lilly AstraZeneca (AZ)

The power of the bill, as far as Sz?

Drug price stubborn disease

The United States is the world's largest pharmaceutical market, and various historical problems and strange market mechanisms have combined to give birth to an endless stream of high-priced drugs, and also attracted pharmaceutical companies from all over the world to rush in and compete for food
.

But the wool comes out of the sheep, and no matter what health insurance system is introduced, the cost of drugs will eventually be evenly distributed to each payer
.

The high cost of commercial insurance makes the American middle class miserable, and according to the American Bankruptcy Institute, 62% of individual bankruptcy filings are due to medical debt
.
After the Obama administration introduced the Affordable Care Act, some of the fiscal pressure was passed on to the country, and as the impact of the epidemic on the economy continued, the US government also felt pressure on high-priced drugs, so it jointly promoted the introduction of the bill
.

In the bill, for the first time, a proposal to allow the government to directly participate in drug price negotiations was proposed, and direct drug price restriction clauses were given, which gave a price reduction ceiling for innovative drugs that have been on the market for many years and were not affected by generic products, while limiting the annual increase in drug prices to not exceed inflation, which dealt a blow to
the previously "imaginative" drug revenue.

In the capital-dominated American society, cutting off people's wealth is something that capitalists will not tolerate
.

Therefore, although the actual content of the bill has been as moderate as possible, the first round of negotiations has been pushed to 2026, and only 10 varieties are targeted, pharmaceutical companies have shown extreme dissatisfaction and have begun to find ways to toss
.

This is also the reason why
the United States has been unable to pass "universal health care" for nearly a hundred years.

Alnylam: No new indications are being developed

On October 27, 2022, Alnylam released its third-quarter earnings, and its Vutrisiran approved for listing in June had a full commercialization quarter and achieved good results, with sales of $25 million
.

vutrisiran is an RNAi therapy for the treatment of adult hereditary transthyroxine-mediated (hATTR) amyloidosis polyneuropathy, a rare, hereditary, rapidly progressive, fatal disease with few treatments for polyneuropathy manifestations
.

As a rare disease RNAi therapy, vutrisiran's potential does not stop at hATTR amyloidosis, Stargardt disease (atrophic macular damage with yellow spots of the retina) is also one of its target areas, originally planned to launch a related phase III clinical trial
by the end of 2022.

But in the earnings report, Alnylam terminated the development of Stargardt's disease because the bill included a clause in the negotiation of rare disease drugs: if there is only one indication for rare disease therapy, it will be exempted from negotiations
.

If Vutrisiran has only one indication, it can maintain a high selling price, and if one more indication is developed, in addition to the additional R&D expenses, it will also face the risk of negotiating price reductions, which may outweigh the losses
.
An Alnylam spokesperson said it would continue to evaluate the impact
of the bill on the company's research and development pipeline.

It seemed reasonable, but then an Alnylam spokesperson added: "Our first drug affected by negotiations will be in the second half of the 2030s.
"

There are still more than ten years to go, as for stopping the plan now?

Eli Lilly: Small molecule drugs are no longer in line with the investment strategy

On October 29, 2020, Fosun Pharma's subsidiary, Fuchuan Pharma, and Eli Lilly of the United States developed BCL-2 on Fuchuang Pharma FCN-338, a selective small molecule inhibitor, signed a licensing agreement granting Lilly full rights
except Greater China.
The transaction value includes a $40 million down payment and up to $400 million in development and net sales milestone payments
.

On October 29, 2022, exactly two years after the signing of the agreement, Fosun Pharma announced that it had received notice that due to the adjustment of Lilly's R&D pipeline strategy, Lilly decided to terminate the existing development activities of the Bcl-2 inhibitor FCN-338 and terminate the license cooperation
in accordance with the agreement.

Source: Company announcement

The termination of the transaction has nothing to do with the efficacy and safety of FCN-338 products, but is based on Lilly's business decisions, and the specific reasons for the decision are disclosed in Lilly's subsequent third-level report
.

A spokesperson for Eli Lilly said: "Given the impact of the Inflation Reduction Act, the pipeline no longer meets our criteria
for continued investment.
”

Under the bill, the government can open health insurance negotiations
for small molecule drugs that have been on the market for 9 years, or large molecules that have been on the market for 13 years.
If the market is less than 12 years old, the negotiated price ceiling is 75% of the average price, 65% in 12-16 years, and directly down to 40%
after 16 years.

Nine-year market exclusivity still can't satisfy the appetite of pharmaceutical companies, after all, they have too many tricks to play on patents, and thus created Humira's 20-year "drug king" record
without competing products.

AstraZeneca: New cancer drugs may no longer be introduced in the United States

Each fall, a forum is held at the Alexandria Life Sciences Center in the United States, inviting Nobel laureates, top policymakers, and industry leaders and executives to engage in a lively discussion to provide perspectives on the most important health challenges of our time
.

At this year's forum, Merck CEO Robert M.
Davis said that the development of anti-cancer drugs often starts with the easiest and fastest "probable hypothesis", and then conducts follow-up research to expand and deepen, and K drugs have passed more than half of their patent term so far, but their development plans have not yet passed half
.

Another example is DS-8201, as a blockbuster new drug in the field of anti-HER2 drugs and ADCs, no matter how high its upper limit, the initial indication is still the most conventional HER2-positive breast cancer, because it is the easiest target
to achieve.

However, the advent of the bill has affected this strategy, whether it is 9 years for small molecule drugs or 13 years for large molecule drugs, the timer starts when the first indication is approved
.

According to this logic, if you want to obtain the maximum profit, you should start from the largest indication of the population, not the most easily verifiable indication, but this is not in line with the law
of drug development.

AstraZeneca's approach is to downgrade
the U.
S.
market.

"For antineoplastic drugs, it is best for patients to start with third-line indications, but we will not do so in the future, or not prioritize third-line indications of anticancer drugs in the United States," said Pascal, CEO of AstraZeneca Soriot said at the investor conference that it "will not be rolled out in the U.
S.
, at least until larger indications are approved.
"

This is a sound business decision, but only from a business perspective
.

epilogue

Fast, cheap, and high-quality, these three attributes are naturally contradictory
in the current medical field.

Products that are launched at the fastest speed and cheapest price must not guarantee the best quality; If you want a product to be listed at the highest quality and cheapest price, it must be like AstraZeneca's decision, delaying the speed of listing; In order to bring products to market with the highest quality and fastest speed, the payment side will have to bear great pressure
like the US market has always been.

Coincidentally, there is also such a contradiction in China's pharmaceutical market, when medical insurance negotiations began in 2022, 13 domestic innovative drugs gave up participating in medical insurance negotiations, still maintaining high prices and self-payment, and seeking a balance
between price and sales.

Domestic innovative drugs eligible to participate in the 2022 medical insurance negotiations but not (Source: Essence Securities)

Foreign pharmaceutical companies are already trying to "grab" every penny of profit from the American pharmaceutical market, but for Chinese pharmaceutical companies, being able to send drugs out is the first task, and if there is still spare power, it may be possible to incorporate the strategy of US health insurance negotiations into business decisions
.

Resources:

https://endpts.
com/ira-impact-astrazeneca-and-merck-ceos-warn-of-oncology-drug-development-shifts/

https://endpts.
com/alnylam-appears-to-blame-the-inflation-reduction-act-for-shutting-down-a-rare-disease-trial-experts-disagree/

https://endpts.
com/eli-lilly-rolls-snake-eyes-as-it-axes-two-early-stage-drugs-including-a-40m-cancer-therapy-from-fosun/

https://bankruptcyresources.
org/content/what-are-top-causes-bankruptcy

The official website of each company

【Essence Securities】Innovative Drug Research Framework for 2022 Medical Insurance Negotiation Perspective: The renewal policy of innovative drugs is expected to improve long-term volume

Other publicly available information

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