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#deniedRX—Hashtag to Nowhere

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By Henry Ehrlich

This website has covered the progress of dupilumab, a monoclonal antibody to treat eczema, since before it had a brand name. The first sighting was in a presentation by Dr. Emma Guttman-Yassky of Mount Sinai. The before and after pictures, ideal accompaniment for a chicken dinner at the Harvard Club, were dramatic. Before looked like second and third degree burns. After looked bathing-suit worthy. Apart from this miracle drug efficacy, the other subject was the retail cost of the market version “Dupixent”. At $38,000, the price tag was so high that Regeneron’s CEO Leonard Schleifer anticipated that insurance companies might reject coverage and become an issue so he created a hashtag #deniedRX that itchy patients could use to share stories of being shot down. Presumably there would be a groundswell of pressure on the insurers.

I learned about this in a biotech podcast produced by STAT, an excellent medical website, called The Readout Loud (highly recommended for anyone interested in the business of pharmaceuticals), and I looked it up. I learned it’s not as easy for a big company to go viral as it is for the typical no-talent reality TV star. It only collected 13 Tweets, the last of which was in March this year, and several of those were about scandals that bore no relation to the drug.

Who knows? Maybe Schliefer had visions of a cause celebre on the order of Mylan and EpiPen. But it’s one thing to ratchet an indispensable product up to scandalous prices over a period of years—dependent patients will be outraged–and another to start out scandalously priced and then light a match, hoping the outrage would burst out. In fact, as the folks at STAT pointed out, this stunt was generated to boost earnings. And it didn’t work; as of this past spring, when both Regeneron and its partner Sanofi lost stock market value based on disappointing Dupixent sales.

Good drug. Iffy business model.

Graphic by eczemaliving.com

The EpiPen Fine

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By Henry Ehrlich

The New Year has just begun and we already have a new EpiPen story to ring it in. This one is about the $465 million fine that Mylan paid last year to Medicaid, which was discussed in an article published in FiercePharma by Eric Palmer about “misclassification” of drugs purchased through Medicaid.

The economics of drug prices have always been a bit of a mystery to me and this particular article had its own little puzzles so I wrote directly to Mr. Palmer and asked him to explain what it was all about.

He wrote back: “It is simply that all drugmakers pay Medicaid a rebate on their drugs. If the drugs are classified by the FDA as innovator drugs, the rebate is 23.1%. If they are simply generics, copies of someone else’s innovator drugs, they pay 13% of their sales back to Medicaid. The FDA classified EpiPen as an innovator drug but Mylan reported it to Medicaid as a generic, and so paid about 10% less in rebates on the sales than it should have.”

How lucrative is that difference? The fact that Mylan has raised the price steadily for years complicates the discussion, but 23 percent at today’s price of about $600 would mean kicking back about $140 to Medicaid. Thirteen percent means only $78. The most important figure is that $1.27 billion was earned on the differential from 2006-2016, some of it before Mylan acquired Epipen, and only $465 million was recouped in fines. Nice work if you can get it.

For me this begs the question, by what inverted logic is EpiPen classified as innovative? Epinephrine itself is a commodity drug and that autoinjector is still much as it was when the US military paid to create it many years ago. However, Mylan tweaks it now and then to stay a step ahead of the patent office, although as we have noted in these pages before, they don’t fiddle quite enough to make them safe to use or ensure their effectiveness). They also use their marketplace clout to price it like a new drug.

One choice tidbit I learned while looking at this case was that Sanofi–former makers of Auvi-Q–got a $38-million whistleblower payoff from the $465 million for tipping off the Feds that Mylan was playing the misclassification game.

If it’s any reassurance to you as a taxpayer, the larger point of Palmer’s article was that such misclassification is rare. A study by the Inspector General of the US Department of Health and Human Services found that remarkably few drugs were misclassified–3% of the 30,000 analyzed. Only four drug makers were responsible for more than half of misclassifications and just two of the drugs accounted for 90% of lost revenue.

photo by drugcrime-law.com

Day in Court for EpiPen

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By Henry Ehrlich

Rube Goldberg

We have referred to Mylan, maker of EpiPen, as the luckiest company in the world because every time a plausible competitor to its near-monopoly status appears, the newcomer succumbs to an unforeseen problem like a supporting character in a horror movie. With Auvi-Q, the groovy, talking auto-injector, the culprit was a manufacturing flaw, although Auvi-Q has written its own second act.

Now, however, the colossus has taken a succession of hits. First there was the mediocre performance of CEO Heather Bresch for her “scared rabbit” performance in front of Congress where she seemed to admit that she didn’t understand pharmaceutical pricing any better than the rest of us.

More recently, Meridian Medical Technologies, which makes EpiPen for Mylan, announced a recall of the injectors “due to the potential that these devices may contain a defective part that may result in the devices’ failure to activate.” Big problem. When Auvi-Q took medical leave, EpiPen was there for backup. When EpiPen disappears, where do people go? Fortunately, we weren’t afflicted with a wave of catastrophe.

The newest threat to Mylan comes in the form of killer tort lawyer, Steve Berman, who (according to Damian Garde writing in the medical website Stat) calls pharmaceutical pricing a Rube Goldberg machine, which takes a cheap product like epinephrine and turns it into a gold on the journey to the patient’s thigh. He’s out to discover the alchemy by which this happens. His case against Mylan, Stat writes, argues that “the company ran a racket with its infamous EpiPen, doling out kickbacks to PBMs (pharmacy benefit managers) to ensure its epinephrine primacy.” Berman says, “The theme in all the cases is that the consumer is powerless, and the drug companies know that. It’s completely opaque, so the drug companies will take advantage of that any time they can.” How complicated is it? I recently asked a friend who ran a health insurance company, and who is a lawyer, if she could unravel this for our readers and she gave up.

I have a problem with having to resort to litigation to bring pharmaceutical companies to heel. I would like it better if there were a vigorous regulatory apparatus in place that could protect public health while protecting the financial interests of families and taxpayers alike. Unfortunately, as Nobel Prize economist and free-market purist Milton Friedman pointed out, regulators often go from being industry watchdogs to industry lapdogs. Into the breech steps the tort bar, well-capitalized, ruthless, and willing to wait and work hard in anticipation of a massive payday.

My friend Dr. Renata Engler spent a career as a physician in the US Army and has as broad a perspective on what’s right and wrong with American medicine as anyone I know. She had written a paper about “approved” therapy and “complementary and alternative” medicine. One comment stands out: “Ultimately, the standard of care will be determined by expert witness testimony in a court of law and is the same for all physicians regardless of whether they use conventional or CAM therapy.” The legal system fills the gaps between regulation and the marketplace.

As long as the regulatory system falls short we are stuck with the tort bar stepping in, which is why big money fights so hard to weaken it. Most of us hate what we consider to be nuisance suits that are cheaper for defendants to settle than to try, but whose costs are subsequently borne by the rest of us in the form of higher insurance premiums. But there are some instances where they are worth the fight. This is one I can’t wait for. If counselor Berman can unwind this mysterious process of price inflation for EpiPen and thousands of other drugs in American formularies, he will earn his third of the take.

{By coincidence, just as I was finishing this article I saw that Sanofi, which brought Auvi-Q to market under license, and later returned the rights to Kaleo during the recall, has filed suit against Mylan. This is another instance when litigation substitutes for government action. HE}

Dupilumab—Breakthrough Therapy Gets Breakthrough Price

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By Henry Ehrlich

The other day, I had a dermatologist appointment. The first thing I said was, “it’s a big day for you!” He said, “You read about the approval.” Yes, indeed. This was clearly a big day in skin health.

Dupixent—the brand name for dupilumab, the first biologic for moderate-to-severe atopic dermatitis—has been approved by the FDA, and as we predicted the price is a stunner. In fact, this breakthrough therapy for a truly miserable disease is even higher than we speculated last year–$37,000 list price, for what looks like forever. We have to ask, what do we mean by affordable health care when one drug is priced like this?

Don’t get me wrong! This is a drug that will restore quality of life for millions of patients. I’ve been following it avidly for several years since I watched Dr. Emma Guttman-Yassky speak to the New York Allergy and Asthma Society over roast chicken and salad. The “before” slides she put up on the screen looked like napalm victims. Dr. Peter Lio described the misery of these patients for us when he wrote about the drug last year: “The relentless itch, continual skin breakdown, poor sleep, cracked and painful skin that can become infected: All of these are part of daily life for those with more severe eczema. The quality of life indices for this disease show that day-to-day suffering exceeds that of many other chronic conditions considered much more dangerous.”

The plight of these patients often begins in early childhood, and is a precursor to asthma and food allergies. As I wrote a couple of years ago, “People will go to great lengths to achieve some relief, even at the expense of their own long-term health. While most people are wary of steroids and will avoid their use even when it’s really bad for them, which happens often with asthma, AD patients will use them too much.”

How much will it really cost? The New York Times, which had an explosion of drug-price reporting last year because of the Mylan fiasco, did some excellent reporting on the new biologic.

Among the highlights, “Regeneron Pharmaceuticals and Sanofi took the unusual step of directly negotiating with insurers over the price and other details ahead of time….They also often must demonstrate that other, cheaper drugs did not work before an insurer will cover more expensive drugs. Regeneron has said it also negotiated a more streamlined approval process, although patients will still have to try other drugs first. It also said it had a patient assistance program to help people who have troubling paying.”

The Times also cited Dr. Steve Miller, chief medical officer at Express Scripts, the big pharmacy benefits manager, to the effect that the drug makers held all the chips because the drug works well and has no real competition. Also if it’s any consolation, the Times says that Humira and Enbrel, also for skin diseases, run about $50,000 list.

So what will they pay and when will they pay it? I asked Dr. Paul Ehrlich who said, “Since it’s only approved for patients 18 and up, it’s not going to be an issue for me since most of my patients are children.” For them, it’s wet wraps, topical steroids, and if all else fails referral to Dr. Xiu-Min Li. He did note that trials for younger patients are on their way, probably for ages 12-17 to start.

Our contributor, Dr. Purvi Parikh, who occupies the adjacent office to Dr. Ehrlich at Asthma and Allergy Associates of Murray Hill, adds, “This is a great non-steroidal alternative we can offer our severe eczema patients. Often eczema takes a toll on quality of life as well as self-esteem. It is nice to have another agent especially for those who have been reliant on steroids for many years with no avail.”

Promising though this treatment is, it won’t take patients by storm. Because of the expense, the criteria will include exhausting all other methods and then throwing them on the mercy of their insurance companies. I asked my dermatologist if he had any likely patients. “We’ll have to see.”

Windgap: We Talk to CEO of a Startup Focused on Epinephrine Autoinjectors

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By Henry Ehrlich

windgapWhere were you when you found out Auvi-Q was being recalled? Okay, I don’t remember where I was either, but I shared the disappointment of thousands of food allergy families who had embraced the sleek, talking device that was a fresh alternative to the clunky EpiPen, which dominated the market like the old IBM and AT&T used to dominate theirs. For younger readers, it was Apple to Epi’s Windows. And now that Sanofi has thrown in the towel and returned the rights to Kaléo, formerly Intelliject, the company formed by Auvi’s creators, Evan and Eric Edwards, it seemed like the right moment to follow up on a conversation with Christopher Stepanian, co-founder & CEO of Windgap, whom I met FABlogCon last fall. Chris was there carrying a trainer version of a new epi autoinjector about the size of a cigarette lighter.

Unfortunately it’s not yet under review by the FDA and can’t be marketed until the FDA grants approval to do so but I wanted to let you know what might be coming.

It improves on its predecessors in one big way, and one smaller but also significant way. The big way is that the active ingredient—the epinephrine —is stored in powder form, not liquid. This dry storage appears to give it longer shelf life and makes it more resistant to temperature changes when not in use than the epinephrine solutions in current autoinjectors. The smaller way is that it is activated mechanically, not electronically as with Auvi-Q, by simply twisting and removing the cap. This action enables the drive spring to automatically mix the wet and dry components together to form a solution, ready for injection. Once this is done, you press the autoinjector’s nose trigger against the thigh muscle and it injects automatically.

Chris is trained in mechanical, oceanic, and aerospace engineering, which seem somewhat removed from the crisis atmosphere that accompanies anaphylaxis. But engineers are trained to solve problems, and rather than ask him about the device itself, I decided to ask about how he and his colleagues set out to solve this one.

AAC: Thank you, Chris, for taking the time to talk with our readers. First, much innovation is driven by personal experience. For example, the Edwards brothers were themselves food allergic. Do you have a personal connection with this problem, and would you mind sharing it with us? If not, would you like to tell us how you decided to tackle it?

Chris Stepanian
Chris Stepanian

Stepanian:The person that inspired me most strongly was my mother. She’s along-time owner of an epinephrine autoinjector for her severe allergies. It made me begin to understand the need that patients have for an epinephrine autoinjector that is lifestyle compliant, one that you can take with you wherever you might need it. I don’t live my life at room temperature and I don’t think your readers should have to either. I was also able to talk with hundreds of current patients and their parents to learn more about how their lives change when they’re at risk of anaphylaxis.

AAC: Many of us mix up innovation with invention. Steve Jobs was an innovator. He could look at the inventions of others and envision revolutionary ways to use them. Your device is going to become quite familiar to our readers, but I’m more interested in how you thought about it. Can you describe for us how you looked at the problem and assembled the tools to solve it?

Stepanian: It started as a series of conversations and connections. One was on how dry epinephrine should be more stable than epinephrine in solution. The other was with my co-founder Brent Buchine on how a technology called “microfluidics” could be used to mix liquids and solids together in a very small device. Connecting those two conversations was the beginning of what is now Windgap Medical. We’ve a team of five people today and all of us have had a strong impact on the development of our product. We were helped by our board members, investors, champions, advisors, consultants, interns, and contractors who have helped us transform our basic concept into the production prototypes that we’ll be seeing in a few months. We kicked off the prototype injection molds this week!

AAC: Can you give us a feel for how the work is done? How do you design the machine—I assume a lot of it is done on a computer loaded with very special software. How many prototypes do you expect to build? How do you document the work?

Stepanian: We use software called computer aided design (CAD) running on a fast PC to develop, analyze, and refine our prototypes. We’ve found 3D printing to be really helpful in quickly figuring out how well components fit together and how a device might feel in your hand. We’ve also worked with local machine shops and injection molders to help refine our design. Over the upcoming months our manufacturing partner will be injection-molding hundreds of components to test out mold design and overall fit and function. These devices will be injected into chemical and mechanical test machines and blocks of ballistics gel to inform our design. The FDA has provided the healthcare industry with a set of guidelines on the process by which you develop your product: connecting condition, patient, drug, device and testing to help produce an epinephrine autoinjector that is both safe and effective for patients.

AAC: You are operating in a highly regulated environment, as is appropriate given the life and death stakes for patients who use your device. But patients and their families get restless. They want it NOW. Without getting too detailed or analytical, can you describe the process going forward?

Stepanian: Once we are satisfied that we understand our product and our process, we’ll produce new, high-quality molds and put the drug-filled autoinjectors that result on long-term stability testing, for at least a year. Once that testing is complete, we’ll submit those results to the FDA along with our full design package. We’re using an approval process with the FDA that is relatively rapid and we anticipate a response within a year. Some things cannot be rushed and proving that our device functions acceptably after long-term storage is critical for the FDA and their review of our application to market our product.

AAC: Thank you for your time.

Stepanian: You’re welcome Henry. I appreciate the opportunity to share some of what we’re doing with you.

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