Some teams resorted to asking the judges to imagine that these drugs were better than they actually were, had a higher chance of succeeding that they actually have, or would treat more patients than could possibly be true. And when these teams tried to win funding for these programs but asked investors to accept a much lower price, they couldn’t. But the actual programs are funded because those companies and investors have an expectation that, if successful, those drugs will get reimbursed at prices close to those drugs we have on the market now, which are all higher than prices that HR-3 would allow. “A lot of the submissions were based on actual drugs in development by real companies. “The participants made an admirable effort, but every single team was forced to make unrealistic assumptions to try to make their business pitches seem fundable despite the limitations of price controls. How were students forced to adapt to the new environment? What did it tell us? Forget about it.Ī few days later, I asked the judges to reflect. The team concluded that it didn’t make sense to develop such a product as a low-volume/high-priced ($9,000) product for the high risk population. They considered a low price for a national population and a higher price for a subpopulation deemed to be “high risk.” The students thought the vaccine could be given to everyone in the US. Next came a team with an mRNA vaccine for HIV that elicits broadly neutralizing antibodies. Turning to his fellow judges, he said: “What they are asking us to do is stop investing in plausible, realistic science and start investing in fantasy.”Īnother group sized up a new treatment for irritable bowel syndrome with constipation or diarrhea, and imagined generating three times as much sales volume in Europe to make up for an anticipated shortfall in the US. “We never see this kind of efficacy,” Kolchinsky told the students. Peter Kolchinsky, managing partner, RA Capital But there is no such drug on the market, or in R&D. At that price, the fictional company would beat existing PD-1 inhibitors from Merck and Bristol Myers Squibb on a QALY-based comparison. Such a drug could be administered for about two years on average, and priced at $210,000 a year in Europe and $250,000 a year in the US, they figured. One group imagined it had an antibody-drug conjugate for lung cancer that delivered an 85 percent Complete Response rate, few side effects, and an average improvement in life expectancy of 10-11 years. RA Capital managing partner Peter Kolchinsky served as a judge with Jeb Keiper, CEO of Nimbus Therapeutics, and Sara Nayeem, partner at Avoro Ventures. RA Capital Management, the Office for Technology Development at UTSW, Biotech+ Hub at Pegasus Park and McKinsey supported the competition. The goal was to come out with an investment pitch that investors might buy into. Small teams of postdocs, grad students and MBAs were asked to think of a product profile, a relevant disease indication, and - assuming success in clinical development and regulatory approval - a price that could withstand the hard calculations of Incremental Cost-Effectiveness Ratios ( ICER) and Quality-Adjusted Life Years ( QALY). Students at the University of Texas Southwestern Medical Center were challenged to think along these lines through a business plan competition on Mar. It’s fascinating, when you dig in, to think through the implications of this thought experiment. How would entrepreneurs adapt? What types of drug discovery programs might be prioritized, and which ones cast aside as impractical? How would management teams have to adjust their strategy, and pitches, to successfully attract investors? How would certain patient groups be affected? What would it mean for the sector? What would it look like if some of the bill’s provisions, like indexing US prices to 120 percent of prices in Europe, were enacted? 3 - the drug price-control bill that has significant support in the House of Representatives - were to become law. Luke Timmerman, founder & editor, Timmerman Report
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