Factors affecting pricing for Ibrutinib and Venetoclax

[Indolent]

The gaming of the US Patent system by Big Pharma makes critical drugs very expensive.

axios.com/big-pharma-abbvie...

[kathymac52]

And that is why Big Pharma is such a problem in the USA. We need more elected candidates who will fight to lower these prices, and truly care about the patients who need them. The fact that Abbvie can surround itself with patents to block competition and increase their sales on the backs of suffering people is shameful. Thanks for sharing this article...

[HopeME in reply to kathymac52]

Problem? The drugs to control and potential cure SLL/CLL are coming fast and furious into the market from “Big Pharma”. Is the system perfect? No. Can it be improved upon? Yes. Am I incredibly thankful for the innovation that will hopefully give me a chance to be around to see my kids graduate from high school? Yes! Constrain profit. Constrain innovation. Be careful what you wish for as you just might get it.

Best,

Mark

[2004CLL in reply to HopeME]

Well said...Thank you. I'm currently on my 6th product in 14 years. I appreciate the process & cost of bringing a product to market that works & the many in the drug companies pipeline that fail with no return on their investments. No return No innovation folks, governments are not going to get it done for us!

[kathymac52 in reply to HopeME]

I have no argument with innovation and research, and am very grateful for it. But making critical drugs so expensive that some people don't have access to them is not fair or humane. Ibrutinib is $12,000 a month for 28 pills, and this is the drug that my husband is on.....he has Medicare Part D which helps, and we are working with a social worker to access grants....It is an amazing drug that my husband has taken for a year now, and will have to take until it stops being effective....but we constantly worry if we will be able to afford this treatment...

[HopeME in reply to kathymac52]

Uneven access to healthcare is a major challenge in the US as well as across the world. I truly feel for your difficulties and hope that you are able to secure grants to pay for your husband’s medicine.

One of the reasons drugs are expensive is the cost to bring a drug to market is astronomical and investors require that they be paid handsomely to take risk as all investments do not pay off. For example, I have been following Verastem a small Boston based biotech company (ticker VSTM), the maker of Duvelisib which is a recently approved Cancer compound used to treat CLL. It is not certain if this treatment will be successful. As a result, the company’s stock price has gone from a peak of over $15.00 a share to $1.33 today. This performance reflects the fact that the company has lost approximately $230,000,000 over the past 4-years alone. To bring bring Duvelisib to market Verastem invested heavily in R&D, clinical trials, etc. and this investment may turnout to be worthless. There needs to be potential blockbuster returns to entice investors to take risks such as these. I’d rather have treatments at high costs as opposed to no treatments available.

I wish you and your husband well,

Mark

[Jonquiljo in reply to HopeME]

I wouldn't be surprised if Verastem was looking to be purchased by a large pharmaceutical company - making all of it's head scientists and officers quite wealthy in a nanosecond. This was the scene when I was working in that end of things.

Verastem likely first went public in an IPO netting 3 or 400 million in operating funds. Verastem loses most of it on Duvelisib (and may even have known in advance that this would happen).

Verastem then looks like a capable company with potential - just bad luck. A company like J&J or AbbVie gobbles them up without the least bit of reflux. Verastem stock which all the higher-ups of Verastem own, convert to Abbvie or J&J stock. A good term for it is called "trading-up."

Sorry to sound so cynical, but I saw so much of this in the 80's and 90's that I have absolutely no compassion for these companies. I really did! Their upper echelon staff do quite well and many retire for life. The buying company increases their portfolio and staff and passes on the cost to consumer. And again and again and again!

[HopeME in reply to Jonquiljo]

I believe you are incorrect in your analysis. Duvelisib was bought by Verastem from Abbvie for $6,000,000 and some potential milestone payments if things work. Abbvie originally paid $275,000,000 for the Duvelisib rights so Abbvie’s investors lost $269,000,000 plus millions more trying to bring Duvelisib to market. Those are real losses and so are the $230,000,000 in losses that Verastem has incurred over the past 4-years. That is 1/2 Billion dollars in losses by my math to get Duvelisib to market. Will Duvelisib be successful? This is still very uncertain. Further, for every Duvelisib that gets to market there are countless other companies/compounds that never make it. Investing in new drugs is a capital intensive, high risk, high return business. You choose to focus on the relatively small number of companies and executives that are successful and disregard those that lose billions in capital in failed attempts to bring drugs to market. If Verastem is such a no- brainer by your calculation I suppose we both should be buying its stock at $1.33 a share this morning?

Bottom line, if it were 20-30 or even 10 years ago I’d have maybe 2-3 years to live. Fortunately, as a result of the tremendous investments in drugs by “Big Pharma” I hopefully will have many more years to live. I’m incredibly thankful for the system that is in place and you should be, too.

Best,

Mark

[Indolent in reply to HopeME]

Good discussion on a thorny problem. Solving this problem will take more of this type of balanced and thoughtful conversation. Hopefully we can arrive at a solution that allows the profit motive to work its magic, while removing some of the abusive monopolistic behavior currently practiced in the form of gaming our patent system. We all want a system that keeps the innovation pipeline flowing, without putting many of us in fear of bankruptcy.

[Jonquiljo in reply to Indolent]

We are the only ones in fear of bankruptcy. These companies are essentially another planet. It’s really hard after a point to go down the tubes. It would take many many bad investments.

A $269 M loss is simply food for their accountants to turn into a good event. We’re talking big big big companies.

[HopeME in reply to Indolent]

I couldn't agree more. Viable solutions are always somewhere in the middle. I'm not sure if we will ever again have a class of politicians who place solving issues such as this above their personal interests.

[Jonquiljo in reply to HopeME]

Well, yes - big pharma keeps us alive. The reality of it is that they are “big”. If Abbvie had a $269M loss, then they can use that loss to write off gains. And Abbvie has many substantial gains. Abbvie is a multi-drug company. Something like Ibrutinib is minor to them.

Either way, losing money and taking that loss to offset tax from gains on other drugs is not even unique to the pharma industry. Boeing is losing a fortune on the 737 max and will simply take those losses to offset taxes on more profitable sales.

I’m afraid we are in the era where a gain or loss of $1/4B dollars is really not that much money to big companies. Tax write-offs for large losses is just what they do, and why corporations (at least in the US) pay a relatively small percentage of the tax revenue in the US. Actually, you lose money and the US (and other) government (s) take a bigger financial hit.

Verastem sounds like they have nothing to write off their losses against, but they would be nuts to bet the farm (and the company) for a single drug. That’s why I guess that they have done it on purpose. If Duvelsib had done well, great. If not, the company is a prime target for a buyout. That may have even been pre-negotiated. Being bought out can be very profitable for all concerned.

Anyway, you have to think of it this way ... if it weren’t for people like us - i.e. people with medical problems that need expensive pharma help - then companies like Abbvie (or even Verastem) would not exist. They are doing just fine - certainly the big ones like Abbvie.

Its one thing when investment banks make and lose money but always come out on top. The reason that the US government cannot mess with the big pharma companies, is that these companies have perhaps more financial clout than the US government itself. Deciphering their balance sheets is a formidable task.

[HopeME in reply to Jonquiljo]

We will have to agree to disagree.

[Jonquiljo in reply to HopeME]

Agreed. But the giveaway was going from $15 a share to $1.33 per share today. This valuation can only mean that they are a one drug company - or one drug of any potential. When you risk a whole company like this you still must have golden shoes at the end of the rainbow. I know - did this in Biotech from the 80’s to 90’s.

Most of my contemporaries (and we were all kids starting out) made millions. Some made many tens of millions long before they ever reached 50 years old. Their employer kept changing as companies would get bought and bought - each one swallowing the other. We were paid largely in company stock. Each successive swallow resulted in our stock appreciating in value as converted to the buyer’s stock. It was luck of the draw - who would be in the right position at the right company to make millions? The VP’s and CEO’s did the best and usually left to retire (young) with tens of millions in the bank.

I did fine, but eventually tired of bilking the public of their investment money and left the field altogether. Frankly, it was boring - just pretending to be scientists so that so larger company would want to buy us. This still goes on today - as we add tech firms to the mix. Yes, all this research produces results, but it is a very inefficient way to do so. Ironically most of the technology that we “sold” or “developed” was purchased from academic labs.

I worked in a company that was at about 200 staff when I left, 7 of which did nothing but public relations. They spun the tall tales that made everything look good. Places like Abbvie were grown from Abbott Labs (real big pharma) over the years. The company I worked in eventually was assimilated by J&J. I think it took a few mergers to get there. Even Genentech was fairly small as I was starting out, they were purchased early on by Roche (I think?) and grew exponentially from there. The one feature common to most of them was that many staff ended up quite rich. Lots of money was wasted - and it was not nearly the help others atmosphere that you would expect. There was a lot of me, me, me - and $, $, $ involved. All this made and makes pharmaceutical costs high - pharmaceuticals that were first developed in academic labs.

I know I sound cynical, but I have reason to be. I lived through this for a very long time. It hasn’t changed - and likely gotten worse as the stakes become higher and higher. But the (senior) staff in many of these companies are looking to walk away will tens of millions or more by the time they are done.

[kathymac52 in reply to HopeME]

thanks Mark....the frustrating thing about Ibrutinib, is that it has been out for over 5 years in the US (been through all the trials and is now the first line treatment for some of the CLL patients).....and it is still a Tier 5 drug which means the cost is staggering....For some people, it may mean that although this drug is the best choice.....they may not be able to afford it...so it means that that this treatment at high cost....for them...is no treatment available.

[LovecuresCLL]

Yes but making these immunotherapies is going to get easier and easier ., one day an analyzer will sit on your desk and create your own CarT cells from your own blood. The machine will cost 5k and you can lease it. You will be able to sequence your own tumor from a drop of blood and your own pocket sequencer.

This is like IBM controlling home computers and the internet. This is big Phamas last gasp.

We don’t need to privatize big Pharma and regulate the industry.,

Technology will cure the problem.

Look what’s happened with phones and landlines.