About this Author
DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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February 9, 2009

We Won't Stay Off The Radar Screen For Long, Y'Know

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Posted by Derek

And here’s an even more Macro topic: when do you think the new administration is going to turn its attention to the drug industry? That’ll be after this stimulus-bill business is settled, one way or another – and the only thing I’ll say about that, this not being the soapbox for my political opinions, is that (as far as I know) the only way for the government to come up with money to spend like this is to tax it out of its citizens, borrow it from third parties, or print it from thin air.

But once we’ve decided which of those will bring us prosperity, health care will surely make its way up the list, even if Tom Daschle won’t be around to lead the effort. So I’m throwing this question out to the readership: what are we in the industry likely to see, and to what effect? Negotiation of Medicare drug prices? Reimportation or other attempts to arbitrage the difference between US prescription prices and those in many other countries? And how about the FDA – without a new commissioner, it’s hard to say what the administration’s up to, but who do you think we’ll see? (Here are the current front runners).

Speculate away in the comments; later we’ll see whose crystal ball has been properly shimmed up.

Comments (21) + TrackBacks (0) | Category: Regulatory Affairs


1. on February 9, 2009 1:00 PM writes...

Let me speculate about the speculation: given the difficulty a Democratic president is having get a Democratic congress to pass a "pass-it-or-die" stimulus package, I'd venture that Obama can propose whatever he wants about pharma and it will only be another voice in the cacaphony.

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2. Hap on February 9, 2009 1:04 PM writes...

Probably on the other side of the aisle from most people here, so...

I would go for bulk negotiation from Medicare, etc. for drug prices and for some sort of biosimilar/biogenerics policy. Money saved through bulk negotiation on drugs is money that doesn't have to be taxed (which already going to happen more than lots will want to pay off the debts run up by the previous Admin. and its predecessors). Biogenerics might help lower drug prices in the future, even a little bit (they won't be as competititive as small molecules, which is why pharma companies are investing - like small molecules without patent expiration), and so both insurance companies, employers, and the feds will pushing for it. I hope not for reimportation (if you don't have the guts to screw your own drug companies, it's sort of ridiculous to expect someone to do it for you), but it's a rather facile political solution, so I could see it happening as well. The FDA is going to have to come up with money somewhere to fund the safety initiatives Congress will probably impose. Maybe restrictions on DTC ads? I don't see either of the first two being bad, though the first will hurt drug companies some. Reimportation seems like a bad idea. The FDA probably won't do much either way for pharma, although drug companies are going to have to make sure their chains of production are clean.

And now for the realm of fantasy...maybe Congress will actually require supplement makers either to make no claims (rather than making them and then denying them with the FDA disclaimer) or to have data (with some sort of review) to back them up.

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3. FormerMolecModeler on February 9, 2009 1:21 PM writes...

Given that a) Democrats do not have a majority in the Senate, b) there is no political benefit for Republicans to support any legislation proposed by the president (cynical, but true), the fact that the stimulus has not passed effortlessly is not surprising.

One question people should ask: why should Americans be subsidizing (through relatively higher drug prices) the drug costs of people in other countries?

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4. milkshake on February 9, 2009 1:29 PM writes...

Healthcare reforms will take years but I expect the government to bring pressure on drug pricing - and maybe even try the patent law overhaul. Together with the credit crunch and the many failures of big pharma it will be a trying time for the industry. You thought the last five years were bad but I am afraid it was nothing in comparison to the end of age that is upon us.

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5. weirdo on February 9, 2009 1:52 PM writes...

I don't now what election FormerMolecModeler saw, but last time I checked the Democrats held the Senate pretty handily. They can pass pretty much anything they want, if they can bring it to a vote.

What they don't have is a supermajority; i.e., the ability to stop a filibuster.

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6. HelicalZz on February 9, 2009 1:57 PM writes...

Direct price negotiation via Medicare is a short term given in my opinion. So is undermining any legal preemption precedents that have or may come about with legislation.

Reimportation, maybe, but less relevant after Medicare negotiation comes to pass. Bio-generics is on the short list, but that will depend on the commissioner and is not a simple situation. I think you will see an end to generic deal making i.e. a negotiated dates like we had with Pfizer and Ranbaxy.

Universal healthcare agendas will be slowed without Daschle.

What I would like to see (and won't) is a minimum 10 year market exclusivity post approval, regardless of patent life.


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7. HelicalZz on February 9, 2009 2:03 PM writes...

Forgot to add a major push for standardization of electronic health records.


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8. not holding my breath on February 9, 2009 2:14 PM writes...

My bet is on reimportation. Ideally if the compunds are manufactured here in the good ol' USA- and not a out-of-country subsidiary. Shipped somewhere very far and shipped back again making as many stops as possible, at least one leg of which has to be via camel (Bactarian/Dromedary will be up for debate).

I just don't see government actually finding a sensible solution. Instead they will find the easiest - i.e. least amount of thought/effort/time- but most beurocratic way to deal with it. And maybe even get a job for their 3rd cousin twice removed as caravan manager.

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9. CMC Guy on February 9, 2009 4:32 PM writes...

I didn't hold out much hope before on selection of FDA Commissioner that would not be overtly of "against the evil pharma industry" bent and see as more likely since part of Daschle's downfall was ties to healthcare industry (though not Drug companies as far as I saw). Extrapolation would suggest anyone who has ever worked in or just consulted for a pharma would be outright excluded more so now even if was being considered prior. Head of FDA is a tough tough position as requires Science/Medicine/Reg/Legal/Admin/Political functions so admittedly hard combo to find. Hard to see how anyone who has not been direct participant to some degree can truly understand what is involved. Currently Agency in very bad shape for its job, largely due to Congress IMO (years of neglect and/or increasing mandates), and Pharma is likewise messed up, mostly via self-inflicted stupidity ("hiding" SAE data, Marketing>>R&D) so cooperation is needed to progress but any cooperation will just be perceived as Coziness.

Yes let's all get behind "Price Controls" which should directly greatly diminish future drug discovery and development because we all know as revenues decline R&D departments will not be touched. While in principle I agree US should not be footing a disproportionate cost, because we still have a free market, does it make sense to take the baby out with the bathwater approach to fix. Many Countries basically extort prices from Pharma now while same/others also permit/encourage Patent Violators to act unencumbered.

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10. Steve Parker, M.D. on February 9, 2009 5:10 PM writes...

We won't see any significant health care reform over the next four years. Americans are still to individualistic and entrepreneurial to accept further government involvment.

This doesn't mean there won't be an effort to change the system.

The Democrats will have their hands full tinkering with this deep recession the polititians created.

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11. Mimi on February 9, 2009 6:19 PM writes...

Nationalized Health Care is already here, they've obviously been working on this for months, if not years. It is hidden in the 500 page stimulus bill. Read this article for more details of what it will do and where it can be found in the stimulus bill.

It's all over now but the cryin

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12. Handles on February 9, 2009 8:05 PM writes...

If the "cost-effectiveness standard" mentioned in Mimi's link gets passed, I would predict that we will see more money-back guarantees, where the manufacturer refunds the cost of drug for non-responding patients.

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13. AR on February 9, 2009 8:17 PM writes...

Everyone seems to be thinking big pharma is a wily, lithesome gazelle leaping over tree snags and boulder instead of what it is, a ponderous beast sinking into the tar pits. Doesn’t matter who’s holding political power – we’re still a ponderous beast. Of course, the chemists on this blog can work some magic to lower the viscosity of the tar.

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14. Bored on February 9, 2009 8:26 PM writes...

Politics is organized deception. I first became interested in science as a very young man because I saw it as a pure way to learn. Science is based on facts.

If politicians had to publish, if politicians views were subject to peer review, if political ideas had to be tested repeatedly before they gained acceptance, politicians might actually have credibility, in my view. I would rather spend the rest of my days working with azidotetrazolate salts than be a politician.

Unfortunately for us, science must deal with politics every day. There will never be a happy ending to this story.

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15. kieth on February 9, 2009 8:43 PM writes...

If our new congress could pass constitutional legislation that would (A), reduce currently available drug costs but (B), reduce the return on investment in research for new drugs do you think they will do it? hell yes.

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16. D-Ala-D-Ala on February 9, 2009 10:58 PM writes...

We will see a centralized national healthcare system within the next five years. It will be funded by the defunct Medicare and Medicaid money - and it has to be done fast before the money is all gone. The current system simply cannot cope with the growing number of retirees.

The only other way to go would be to admit that we're about to let mass quantities of our elderly and infirm people to die on the streets - destitute and untreated for diseases that the elderly are currently being treated for. Good luck with this political platform, because sick or not - the old people represent THE major power block in this country, and they're not going to be very happy w/o healthcare.

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17. SP on February 9, 2009 11:55 PM writes...

Derek is clearly not an economist. The government can currently borrow at about a 0.1% interest rate because everyone is too scared to invest in anything else- why on earth would they not do so in order to do the investing that the private market can't do right now? At one point in December the yield on T-bills was negative. Think about that- people were paying for the right to lend money to the government because it was considered safer than putting it anywhere else. These are not ordinary times.
As for printing money, we could use some of that as well, since the big threat of the moment is deflation, not inflation.

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18. Pfizerite on February 10, 2009 1:26 AM writes...

My guess is a program funded by payroll taxes that would look a lot like Medicare for everyone. This would bailout Medicare, Medicaid and the childhood health initiative. For pharma I can see

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19. Pfizerite on February 10, 2009 1:27 AM writes...

My guess is a program funded by payroll taxes that would look a lot like Medicare for everyone. This would bailout Medicare, Medicaid and the childhood health initiative. For pharma I can see where the government would bid for supply of a drug or a preferred place on the formulary, similar to the system in the UK.

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20. befuddled on February 10, 2009 8:00 AM writes...

I'm a bit surprised to see all the doom and gloom here.

First off, the government is of course going to borrow the money for the stimulus. A stimulus package is of necessity deficit spending. And as #17 notes, the gov't will be borrowing the money on very favorable terms.

Second, while universal healthcare (if we get it) will mean a larger government role in the economy, and somewhat reduced drug prices, it will also (almost certainly) lead to significantly increased drug spending, simply because more people are covered.

Finally, why is everyone so certain that any goverment price controls will be draconian. Are defense contractors known for being impoverished?

Reforming the FDA is definitely a difficult job. But I'm unaware of any indications that Obama is business-hostile in general.

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21. HelicalZz on February 10, 2009 1:18 PM writes...

Oh yeah, and a movement toward a NICE like measure of reimbursability.

Thanks to FIERCEPhamra for the reminder.

I don't see (all) this as doom and gloomy, but clearly different from business as usual (and change always begets resistance). I think it similarly naive to expect that status quo will be maintained for much longer.


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