The Empire State woos pharma, biotech industries

The 21st Century Cures Act (Cures Act) was passed by the House on November 30, 2016 and the Senate on December 7, 2016. The President signed it into law on December 13, 2016.  The Cures Act contains three primary titles that makes good on the promise of its name through FDA reforms by accelerating drug and device development and delivery. The Cures Act also creates new administrative positions related to mental health and substance abuse and provides state funding to combat opioid addiction. The President applauded Congress’ approval of the bill, commenting, “I think it indicates the power of this issue and how deeply it touches every family across America.”

In a similar vein, New York Governor Andrew Cuomo and New York City Mayor Bill de Blasio recently unveiled two initiatives that would commit $1.15 billion in funding and tax incentives for education, business development, and job creation in the life sciences sector. Of the total amount,  New York City will be investing $500 million in biotech and life sciences over the next decade via a program called LifeSci NYC, the largest piece is composed of $300 million in tax credits that will be made available to companies building lab space in the city, in order to defray the high costs of construction in the city. The state’s contributions include $250 million in tax incentives for new and existing life science companies, $200 million in state capital grants to support investment in wet-lab and innovation space, and $100 million in investment capital for early stage life science initiatives with an additional match of at least $100 million for operating support from private sector partnerships.

Citing the lack of affordable and appropriate lab space as a barrier to industry, especially in the New York City real estate market, the state and city initiatives will provide more than 3.2 million square feet of innovation space and 1,100 acres of developable land available tax-free at 45 colleges and universities statewide. The availability of grants, land and space would offer an incentive for life science industry to access labs, infrastructure, and other equipment for product development.

 

FDA relaxes guidelines for abortion-inducing drug, flames abortion controversy

The FDA announced a labeling change for the drug Mifeprex®, which, when used together with another drug called misoprostol, will terminate a pregnancy in the early stages. The labeling change will relax certain guidelines in prescribing practices and expand the time in which women can take this drug in order to induce an abortion. This change comes at a controversial time as the Supreme Court just heard oral arguments, and oddly asked parties for additional briefing, in a challenge to the contraception mandate under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). At the same time, anti-abortion candidates in the race to the White House have recently fueled the fire with inflammatory remarks while some pro-life proponents are framing the FDA’s change as a political move.

Labeling changes

While the FDA first approved Mifeprex in 2000, the latest announcement outlines a new approved regimen which was found to be safe and effective after a supplement application was submitted by the manufacturer. The FDA stated that the drug may be appropriately used to end a pregnancy through 70 days of gestation and through the following procedure:

  • The ingestion of 200g of Mifeprex on day one;
  • The ingestion of 800mcg of misoprostol 24 to 48 hours after taking the Mifeprex; and
  • A follow-up with a health care provider seven to 14 days after taking the Mifeprex.

The FDA also outlined an appropriate risk evaluation and mitigation strategy (REMS) for Mifeprex, as follows: (1) that it must be ordered, prescribed, and dispensed under the supervision of a health care provider with certain qualifications; (2) that those health care providers must complete a Prescriber Agreement Form before prescribing; (3) that it only may be dispensed in clinics, medical offices, and hospitals; and (4) the provider must obtain a Patient Agreement Form before dispensing it.

Effect

Other than extending the time in which this medication can be prescribed from seven weeks to 10 weeks, the new labeling reflects a change in dosage and procedure that, according to some sources, was adopted by physicians that prescribed Mifeprex off-label long ago. “The change brings the direction for taking the drug . . . in line with what has become standard medical practice in most states: reducing the dosage to 200 milligrams from 600 milligrams, decreasing the number of visits a woman must make to the doctor to two from three, and extending the period when she can take the pill to 10 weeks of pregnancy from seven weeks,” according to the New York Times. There is also evidence that fewer side effects accompany the lower dosage. The same article notes that while the new labeling might be applicable to all states at the moment, at least one state is already working to pass a law that would hold provider’s to the stricter standards imposed in the past.

Context

This FDA approval came at an interesting time for the abortion and contraceptive coverage controversy as, the day before this announcement, the Supreme Court issued an order asking for supplemental briefing in a case on which it had heard oral arguments the previous week and which challenged the contraception coverage mandate of the ACA. Some experts see this as the eight-Justice Court potentially looking for an avenue to strike a compromise on an issue and avoid a 4-4 vote, which would effectively result in the continuation of a circuit split and different laws applying in different jurisdictions on this issue. In this context, pro-life proponents argued that the FDA announcement is a politically fueled move to satisfy the “abortion industry” and pro-choice groups. Others defended it as unrelated to election year politics and as simply part of the FDA’s regulatory responsibility in the face of a supplement drug application.

TPP: years in the making, years to go

The Trans-Pacific Partnership (TPP) was signed by the trade ministers of 12 nations on February 4, 2016, in New Zealand, and thus, the world’s largest trade deal is now waiting for ratification of the treaty’s text in each nation. Here in the United States, President Obama has called upon Congress to vote on and pass the TPP before he leaves office in early 2017. In 2009, the U.S. began negotiating the TPP, seeking to boost U.S. economic growth with Canada, Mexico, and several Asian and Pacific countries considered key destinations for U.S. manufactured goods, agricultural products, and services suppliers. As a group, the TPP countries are the largest goods and services export market of the U.S., accounting for $698 billion in 2013, or 44 percent of total U.S. goods exports. U.S. exports of agricultural products to TPP countries totaled $58.8 billion in 2013, 85 percent of total U.S. agricultural exports. The TPP seeks to slash tariffs and trade barriers in this region, but pointedly does not include China.

At the core of the debate over the TPP, concerns have been raised about its application and impact on countries’ regulations—in particular the TPP’s key feature of regulatory coherence for the promotion of trade. For the pharmaceutical industry, issues concerning intellectual property (IP) protection in the TPP have focused primarily on patents, but there are concerns that the patent protection schema is not as effective for some classes of drugs such as biosimilars because these products do not require exact identity with the reference product. The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) established a pathway for biologics that employs a 12-year exclusivity period, which is in stark contrast to the five years for generic small-molecule drugs.

A difficult question to answer is whether an inventor of a new drug measures the cost of invention against the revenue that might be made in the “poor” world in calculating whether to undertake the research and development of the drug. Supporters of the TPP argue that the greater cost and difficulties involved in research and development of biologics required a longer exclusivity period as incentive for innovation. Critics look at the TPP as an attempt to use trade law and treaties to extend the “rich” world IP protections to the “poor” world.

In addition, there is strong opposition from many congressional Democrats and some Republicans, which could mean a vote on the TPP is unlikely before President Obama leaves office. These concerns and a myriad of others will still require years of tough negotiations before the TPP becomes a reality.

Big pharma gets bigger: Pfizer and Allergan in $160B deal

In one of the largest corporate deals ever, valued at approximately $160 billion, U.S pharmaceutical giant Pfizer Inc. and its Irish rival Allergan plc announced a merger that would create the world’s largest pharmaceutical company. Under the terms of the proposed transaction, the businesses of Pfizer and Allergan will be combined under Allergan plc, which will be renamed Pfizer plc. According to both companies, the deal is expected to be completed by the end of 2016 and predicted to have more than $25 billion in operating cash flow beginning in 2018.

Pfizer, based in New York, has the blockbuster cholesterol-lowering drug Lipitor® and erectile dysfunction drug Viagra® amongst its many offerings. Allergan, based in Dublin, Ireland, is best known as the manufacturer of the cosmetic drug Botox®. The merger will create some angst amongst politicians, as the combined company’s headquarters will be in Dublin. In a process known as corporate tax inversion, where bigger American companies buy smaller foreign ones and then relocate their headquarters to the location of the smaller company, the move would slash the combined company’s U.S. corporate tax bill substantially.

The U.S. Treasury Department recently unveiled new rules to make it harder for companies to do inversions. However, the Treasury rules alone will likely not stop the merger because former Pfizer stockholders will hold approximately 56 percent of the combined company and Allergan shareholders will own approximately 44 percent of the combined company. The Treasury rules require that an inverted company be tax-resident in its new home country under that country’s rules, not just U.S. law, to pass a test of whether it has 25 percent of its business activity in the new country. A company can be recognized as foreign-based by passing the threshold percentage.