8.7.20
The most important news in healthcare: Friday, August 7th
Good morning. Today, we’re discussing the effect of President Trump’s new executive order on the pharma industry and the latest updates on a controversial Alzheimer’s drug.
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Buy American:
The pulse:
Yesterday, President Trump signed an executive order that requires the U.S. government to buy certain drugs and essential medical supplies from U.S. companies only.
How big of a deal is this?
Oh, it’s bigly. Though the exact number is unknown, experts estimate that about 90% of essential drugs are currently made abroad. The new order will likely cause a dramatic shift in manufacturing chains and the drug industry as a whole.
What’s the reasoning behind the order?
The federal government has stated that the U.S. has relied too heavily thus far on pharmaceuticals and medical supplies from other countries, particularly China. As a result, shortages of certain medical essentials have been common. White House trade advisor Peter Navarro said:
If we learned anything from the [coronavirus] pandemic, it is simply that we are dangerously overdependent on foreign nations for our essential medicines, for medical supplies — like masks, gloves, goggles and the like — and medical equipment, like ventilators.
In essence, this “Buy American” order aims to increase U.S. independence in healthcare, something many view as more critical now than ever.
Are there any downsides?
Some economic experts are worried that an order like this could drive up domestic drug prices, as labor and materials are often more expensive in the U.S. than in other countries. However, departments can opt out of the order if the product is either not produced sufficiently in the U.S. or if buying American would raise procurement costs by more than 25%. The order also includes a provision directing the Environmental Protection Agency and the Food and Drug Administration to relax certain current environmental and regulatory restrictions in order to encourage U.S. manufacturing.
Bottom line it for me
A new executive order will direct the government to “Buy American” only when it comes to essential medical supplies. The drastic order will undoubtedly have a significant impact on the global healthcare industry.
Source: Penn Memory Center
FDA Agrees to Review Controversial Alzheimer’s Drug
The pulse:
On Friday morning, the FDA agreed to review the marketing application for aducanumab, a drug for Alzheimer’s produced by Biogen.
Why does this matter?
There are two reasons this is more important than the average FDA decision to review a drug:
There are no good treatments for Alzheimer’s today. If the FDA finds no faults with the marketing application and chooses to approve the drug, Alzheimer’s patients will have a new therapeutic option, and Biogen will likely generate multi-billion-dollar revenues off the drug for the bulk of the 2020s.
Aducanumab is one of the most controversial drugs in years. In early 2019, Biogen announced that they were discontinuing studies of the drug because it showed no benefit in Alzheimer’s. Five months later, they revived aducanumab from the dead, saying that a new analysis of the same studies showed a positive effect on brain function. The rapid reversal has analysts unsure whether aducanumab is actually going to work or not.
What comes next?
The FDA will assemble an advisory committee of outside experts to review aducanumab’s data. The committee will be “one of the biggest events in biotech in the next six months,” according to RBC biotech analyst Brian Abrahams.
After the meeting, the FDA will make their decision in March.
Bottom line it for me.
Aducanumab is pretty unique. Biogen announced it as ineffective, then five months later, said “Oops, we read the data wrong,” and is now trying to turn it into a mega-blockbuster. By agreeing to review the application, the FDA is acknowledging that the drug may actually have potential – and a successful approval would represent one of the most dramatic turnarounds in recent drug history.
Rapidfire
New York governor Andrew Cuomo has announced that schools in the state are cleared to open. The decision to reopen now lies with individual districts.
The American economy gained 1.8 million jobs in July, even as case counts spiked dramatically. The unemployment rate sits at 10.2%.
Mega-telemedicine company Teladoc announced a buyout of digital health company Livongo for $18.5 B this week. The deal is a massive shakeup in the virtual healthcare space, creating the potential for a telemedicine monopoly. Read more about the merger here.
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