WEBVTT - Craig Burton on Inflation Reduction Act 0:00:13.920 --> 0:00:17.040 Hello, and welcome to the Votes and Verdicts podcast, hosted 0:00:17.040 --> 0:00:20.240 by the policy and litigation team at Bloomberg Intelligence, the 0:00:20.280 --> 0:00:25.040 investment research platform of Bloomberg LP. This podcast series focuses 0:00:25.120 --> 0:00:29.160 on the intersection of business policy and law. I'm Tishwalker 0:00:29.240 --> 0:00:33.839 and analyst with Bloomberg Intelligence covering healthcare patent litigation, and. 0:00:33.840 --> 0:00:38.360 I'm Doing Right, analyst with Bloomberg Intelligence covering government healthcare policy. 0:00:38.560 --> 0:00:41.879 Our topic for today is the Inflation Reduction Act, a 0:00:41.920 --> 0:00:44.720 part two of sorts, following a conversation we had in 0:00:44.760 --> 0:00:47.440 May with Ropes and Gray partner Margot Hall, where we 0:00:47.479 --> 0:00:50.040 discussed the impact of the law on R and D 0:00:50.159 --> 0:00:54.520 and regulatory strategy, among other topics. In the lead up 0:00:54.560 --> 0:00:56.880 to September first, the date by which we will see 0:00:56.920 --> 0:00:59.520 the first list of drugs to be negotiated under this 0:00:59.600 --> 0:01:02.040 new law. There's been a lot of focus on how 0:01:02.080 --> 0:01:05.120 the IRA will impact some of the high expenditure branded 0:01:05.200 --> 0:01:08.360 drugs and biologics, but less attention on how this new 0:01:08.440 --> 0:01:12.200 law could impact generic and biosimilar manufacturers, which we plan 0:01:12.319 --> 0:01:15.679 to tease out today. But before we dive into the details, 0:01:15.720 --> 0:01:17.520 I want to set the stage with a quick high 0:01:17.600 --> 0:01:20.120 level overview of the relevant parts of the law that 0:01:20.160 --> 0:01:24.160 we'll discuss today. It sets in place Medicare price cuts 0:01:24.160 --> 0:01:27.040 of at least twenty five percent for high expenditure drugs 0:01:27.040 --> 0:01:30.640 and biologics for which there is no marketed, generic, or biosimilar. 0:01:31.160 --> 0:01:34.720 It also shifts the Part D program's financial responsibility for 0:01:34.800 --> 0:01:39.160 drug coverage from Medicare and beneficiaries to drug manufacturers and 0:01:39.200 --> 0:01:39.880 health plans. 0:01:41.440 --> 0:01:44.920 And so to discuss these important issues, we have Craig Burton, 0:01:45.120 --> 0:01:50.000 Executive director of the Biosimilars Council and senior vice president 0:01:50.040 --> 0:01:55.160 at the Association for Accessible Medicines, which represents generic and 0:01:55.160 --> 0:01:59.680 biosimilar manufacturers. Craig has a long history and healthcare policy 0:01:59.680 --> 0:02:04.400 circle with private sector experience that includes strategy, health policy solutions, 0:02:04.840 --> 0:02:10.720 malancrost pharmaceuticals, and public sector experience as Deputies Assistant Secretary 0:02:10.760 --> 0:02:15.359 for Legislation at HHS and policy advisor for then Senate 0:02:15.400 --> 0:02:19.320 Majority Leader Bill Frist. So with all that, Greg, welcome 0:02:19.360 --> 0:02:21.320 to the votes in Verdicts Podcasts. 0:02:22.480 --> 0:02:23.919 Thank you guys for having me. 0:02:25.520 --> 0:02:30.880 So, Craig. For those who aren't in the Washington DC bubble, 0:02:31.360 --> 0:02:34.919 can you give us some background on the Association for 0:02:34.960 --> 0:02:36.680 Accessible Medicines. 0:02:36.840 --> 0:02:41.000 Yeah, I'd be happy to So. AM is a trade 0:02:41.040 --> 0:02:47.080 association representing manufacturers of generic and bisimilar medicines. Our work 0:02:47.160 --> 0:02:52.000 really is focused on expanding patient access to safe, quality, 0:02:52.040 --> 0:02:56.239 and effective generics and biosimilars. We do that by promoting 0:02:56.240 --> 0:03:02.280 a positive regulatory reimbursement policy environment. In addition, the Biosimilars Council, 0:03:02.520 --> 0:03:08.160 which is a part of AM, is focused specifically on biosimilars, 0:03:08.520 --> 0:03:15.560 advancing policy reimbursement solutions to encourage bisimilar adoption, as well 0:03:15.600 --> 0:03:22.679 as encouraging education and collaboration around the safety and effectiveness 0:03:22.720 --> 0:03:24.000 of biosimilar medicine. 0:03:24.040 --> 0:03:28.200 And so, when we think about the role of generics 0:03:28.240 --> 0:03:32.120 and biosimilars in the marketplace, what can we say about 0:03:32.120 --> 0:03:36.400 the cost savings for individuals, employers, and other players. 0:03:36.760 --> 0:03:41.960 Yeah, the cost savings are really significant. A couples stats 0:03:41.960 --> 0:03:46.840 that will throw out for you. If you look at 0:03:47.040 --> 0:03:52.160 our website, which is accessible meds dot org, you'll see 0:03:52.160 --> 0:03:56.200 that we publish an annual savings report looking at the 0:03:56.240 --> 0:04:00.880 impact of generic and biosimilars. Where I actually working on 0:04:00.920 --> 0:04:05.960 that right now on the most recent report that we 0:04:06.040 --> 0:04:09.600 hoped to publish later this summer. But if we look 0:04:09.640 --> 0:04:13.440 at twenty twenty one. For instance, using last year's report, 0:04:13.840 --> 0:04:16.640 in twenty twenty one, the use of generics and bisimilars 0:04:16.720 --> 0:04:22.280 saved three hundred and seventy three billion dollars compared to 0:04:22.680 --> 0:04:26.720 what would have been spent if generics and bisimilars were 0:04:26.720 --> 0:04:30.680 not on the market. Over the last ten years, the 0:04:30.800 --> 0:04:35.120 use of generics and bisimilars has resulted in the savings 0:04:35.120 --> 0:04:40.000 of more than two point six trillion dollars. So savings 0:04:40.040 --> 0:04:46.120 from generics and bisimilars is critical to the sustainability of 0:04:46.160 --> 0:04:50.240 healthcare and the affordability of healthcare in the US. To 0:04:50.240 --> 0:04:54.080 put it in another way, if we look at total 0:04:54.960 --> 0:05:01.280 spending on prescription drugs, generics and biosimilars it for ninety 0:05:01.320 --> 0:05:04.040 one percent, So more than nine out of every ten 0:05:04.160 --> 0:05:10.880 prescriptions were filled with a generic or bisimilar, but they 0:05:11.000 --> 0:05:15.680 were responsible for only eighteen percent of all spending on 0:05:15.760 --> 0:05:21.600 prescription drugs in the US. So high value to everyone, 0:05:21.680 --> 0:05:27.640 whether it's patients, employers, taxpayers, and payers alike. 0:05:27.960 --> 0:05:32.080 And who are the players that help derive some of 0:05:32.080 --> 0:05:35.800 those savings and access to generics and buy similars. What 0:05:35.800 --> 0:05:39.480 are the roles of physicians and PBMs and retail pharmacies 0:05:40.000 --> 0:05:43.960 in this healthcare supply chain is related to these products. 0:05:44.360 --> 0:05:46.840 Yes, I would say that everyone really has a role 0:05:47.120 --> 0:05:52.279 in creating those savings. And for years, generics have driven 0:05:52.320 --> 0:06:00.240 those savings as a result of a system wide alignement 0:06:00.680 --> 0:06:04.400 in terms of coverage and reimbursement that encourages their use. 0:06:05.400 --> 0:06:11.600 Put simply, historically, everyone uh wins when when a patient 0:06:11.720 --> 0:06:16.039 uses a generic because they've been more valuable to pharmacies, 0:06:16.160 --> 0:06:20.440 to providers, and to health plans and PBMs. And when 0:06:20.480 --> 0:06:24.560 you when you factored this along with state policies that 0:06:24.680 --> 0:06:29.800 require dispensing of generics when available, that's that's where you 0:06:29.839 --> 0:06:34.560 really get the magic of creating patient access and savings. 0:06:35.600 --> 0:06:39.440 What I would say is this incentive is weakening, and 0:06:39.520 --> 0:06:41.839 I think this is a result of changes in the 0:06:41.880 --> 0:06:48.200 marketplace as well as changes in the policy and coverage 0:06:48.279 --> 0:06:56.520 environment that unintentionally can can encourage the use of a 0:06:56.680 --> 0:07:01.719 higher cost medicine, of a higher cost brand drug. 0:07:02.000 --> 0:07:06.640 And so thinking about that, do you think that's playing 0:07:06.680 --> 0:07:09.920 a part in what we're seeing right now in the 0:07:09.960 --> 0:07:14.600 generic drug market. We heard recently that of Pharmaceuticals is 0:07:14.640 --> 0:07:19.400 scaling back its generic business. There was a notable bankruptcy 0:07:19.440 --> 0:07:23.640 filing impacting a drug on the FDA's drug shortage list. 0:07:24.560 --> 0:07:27.440 Does this signal challenges for the industry as a whole 0:07:27.720 --> 0:07:31.120 or is this a function of over supply in some 0:07:31.240 --> 0:07:35.040 cases or just broader dynamics playing out right now? 0:07:35.880 --> 0:07:42.560 Yeah? Absolutely, I think what you're seeing now is the 0:07:42.680 --> 0:07:50.640 result of years of shortsighted policy and market changes that 0:07:50.880 --> 0:08:02.280 have individually, perhaps not changed the equation for competition, but 0:08:02.440 --> 0:08:08.600 collectively have made generic competition both much more challenging and 0:08:08.760 --> 0:08:13.480 much less rewarding. So to give you give you a 0:08:13.520 --> 0:08:18.720 couple of examples, and maybe just to you know, as 0:08:18.760 --> 0:08:24.880 a reminder, most generic companies, a typical generic company, UH 0:08:24.920 --> 0:08:30.680 maybe actively marketing hundreds of different products. So with it 0:08:30.760 --> 0:08:34.280 with a generic what's what's always important is what that 0:08:34.480 --> 0:08:38.600 portfolio looks like. And they're and they're constantly assessing their 0:08:38.640 --> 0:08:48.000 portfolio and managing the balance between newer, higher value generics 0:08:48.679 --> 0:08:56.360 UH and and older commoditized you know, lower lower lower 0:08:56.360 --> 0:09:00.520 priced generics, and and the balance there's critical. And what 0:09:00.559 --> 0:09:07.760 we've seen is several years of slower coverage, slower than 0:09:07.960 --> 0:09:12.640 historic norms coverage of new generics. So what I mean 0:09:12.679 --> 0:09:17.640 by that is, for instance, in the Medicare drug program, UH, 0:09:18.080 --> 0:09:22.760 it takes three years or more for new generics to 0:09:22.840 --> 0:09:25.360 be covered on as many as half of all part 0:09:25.400 --> 0:09:31.120 y plan formulas. That's a huge shift. Plans are just 0:09:31.200 --> 0:09:36.360 taking longer to cover new generics, and and those are 0:09:36.559 --> 0:09:43.480 those are where a lot of companies remain sustainable on 0:09:43.679 --> 0:09:47.000 the back end of that portfolios. You think of the 0:09:47.160 --> 0:09:52.320 older generics, these products are facing years of price deflation. 0:09:53.600 --> 0:09:57.080 The generic marketplace has always been deflationary and that's part 0:09:57.120 --> 0:10:00.840 of what has driven the value. But we've seen over 0:10:00.880 --> 0:10:08.000 the past six plus years is a sustained period of 0:10:09.679 --> 0:10:16.839 greater than historical norms price deflation, far below any level 0:10:16.920 --> 0:10:22.400 of sustainable production. So the result is that whereas for 0:10:22.600 --> 0:10:26.520 years manufacturers may have been able to remain an older, 0:10:26.800 --> 0:10:31.040 low or negative margin markets because of the value of 0:10:31.160 --> 0:10:37.280 new generic launches, those with with slower adoption of new generics. 0:10:37.600 --> 0:10:41.360 That's putting more pressure on the entire enterprise. And so 0:10:41.679 --> 0:10:44.040 I do think, you know, we are, we are very 0:10:44.120 --> 0:10:51.160 concerned that there is a sustainability sustainability challenge. We think 0:10:51.240 --> 0:10:53.720 the shortages that we're seeing, we think some of the 0:10:53.760 --> 0:10:59.240 announcements that you see from different companies are indicators of that. 0:11:00.800 --> 0:11:05.240 As manufacturers are forced to revisit rationalize their portfolios. 0:11:05.600 --> 0:11:08.800 Adding on top of that, we now have the IRA 0:11:09.240 --> 0:11:11.800 in place, right, which is bringing in a whole new 0:11:11.880 --> 0:11:18.160 set of unknowns and questions and perhaps incentives or disincentives. So, 0:11:19.040 --> 0:11:22.360 turning to the IRA specifically, what do you think are 0:11:22.400 --> 0:11:26.640 the key changes for generic and biosimilar manufacturers under this 0:11:26.760 --> 0:11:27.200 new law? 0:11:28.040 --> 0:11:33.880 Yeah, so I would highlight a couple pieces in particular. 0:11:35.520 --> 0:11:43.000 The two headliners, obviously are the negotiation provisions, which have 0:11:43.160 --> 0:11:47.560 the potential to be highly impactful to generic and bisolars, 0:11:48.640 --> 0:11:53.080 as well as the part D redesign provisions that were 0:11:53.240 --> 0:11:57.400 included as part of the legislation. I would also note 0:11:57.760 --> 0:12:03.199 there were other provisions affecting generics and biosimilars. The legislation 0:12:03.400 --> 0:12:08.960 created a temporary period of higher reimbursement for providers who 0:12:09.160 --> 0:12:17.480 use biosimilars the ASP plus eight provision, and I would 0:12:17.480 --> 0:12:23.600 say the inflation penalty provisions included inn IRA, even though 0:12:23.600 --> 0:12:28.360 they're they're they're much narrow narrower when it comes to generics, 0:12:28.800 --> 0:12:34.240 certainly certainly have the potential to impact generics in particular 0:12:34.360 --> 0:12:39.040 depending on how CMS implements those provisions. 0:12:41.120 --> 0:12:43.720 So, drug pricing reform has been a long standing goal 0:12:43.760 --> 0:12:47.079 of Democrats, with a variety of proposals introduced over the 0:12:47.640 --> 0:12:51.360 years to lower drug prices, and now we have the IRA, 0:12:51.640 --> 0:12:55.400 which has actually been implemented in past. Do you think 0:12:55.440 --> 0:12:58.200 the IRA was written with the generic industry in mind 0:12:58.280 --> 0:13:01.040 or do you find that it's two focused on branded 0:13:01.120 --> 0:13:01.880 drug prices? 0:13:02.280 --> 0:13:04.600 Yeah, thanks for the question. What I think? I would 0:13:04.679 --> 0:13:09.240 say that the legislation was very clearly focused on brand drugs. 0:13:10.120 --> 0:13:14.160 I think they attempted to take into account the needs 0:13:14.160 --> 0:13:17.800 of generics and biosimilars, but it's our view that they 0:13:17.800 --> 0:13:22.800 could have done more. So, for instance, tailoring how they 0:13:22.800 --> 0:13:29.640 did the negotiation provisions, teasing out the inflation penalty provisions 0:13:29.679 --> 0:13:35.720 to more extensively account for the unique differences in those 0:13:35.760 --> 0:13:39.880 markets I think would have been very worthwhile. 0:13:40.600 --> 0:13:44.679 So let's dig into that aspect of the law. We 0:13:44.720 --> 0:13:47.080 do know that first market generics can enter at a 0:13:47.160 --> 0:13:51.080 price point that's roughly a third of the brand drug. 0:13:51.720 --> 0:13:54.920 We also know that the negotiation process will lead to 0:13:55.360 --> 0:13:58.040 cuts for high expenditure drugs of at least twenty five 0:13:58.040 --> 0:14:01.800 percent with no floor, some drugs could see price cuts 0:14:01.840 --> 0:14:04.840 of more than sixty percent. So in what ways do 0:14:05.120 --> 0:14:09.120 the negotiation provisions of the IRA alter some of the 0:14:09.280 --> 0:14:12.800 incentives for generic and bi similar manufacturers. 0:14:13.160 --> 0:14:17.120 Yeah, good question. I think the key word is you 0:14:17.160 --> 0:14:21.400 were talking through how those price cuts, what those price 0:14:21.440 --> 0:14:26.560 cuts could be. The keyword is could. And you know, 0:14:26.800 --> 0:14:30.480 if I were asked asked to summarize the impact of 0:14:30.520 --> 0:14:37.040 this on generics and biosimilars in a word, I'd say uncertainty. 0:14:37.080 --> 0:14:43.160 This legislation creates a massive dose of uncertainty for future 0:14:43.240 --> 0:14:48.560 generic and biosimilar competition. What I mean by that the 0:14:48.680 --> 0:14:55.000 legislation again, they attempted to tailor this and take into 0:14:55.040 --> 0:14:59.720 account generics and biosimilars and not harm generic and by 0:14:59.760 --> 0:15:04.120 some or competition, so as in order to achieve that, 0:15:04.200 --> 0:15:09.560 they wrote the legislation so that a product is removed 0:15:09.600 --> 0:15:14.480 from negotiation or exempted from negotiation if a generic or 0:15:14.480 --> 0:15:19.920 a biosimilar is approved and marketed. But it's less than clear, 0:15:20.200 --> 0:15:22.920 and in some cases it's going to be quite challenging 0:15:23.560 --> 0:15:27.400 to ensure that a generic or biosimilar is actually on 0:15:27.440 --> 0:15:33.600 the market before negotiation kicks in. The timelines that they 0:15:33.720 --> 0:15:42.200 establish for exposing a brand drug to negotiation may or 0:15:42.240 --> 0:15:46.480 may not line up with realistic timelines for getting a 0:15:46.640 --> 0:15:52.880 generic or a biosimilar licensed or approved on the market. 0:15:53.760 --> 0:15:58.840 And so what this means is that a generic or 0:15:58.880 --> 0:16:01.760 a biosimilar manufactor is going to have to factor that 0:16:01.840 --> 0:16:05.880 into their decision making. And keep in mind, a generic 0:16:05.960 --> 0:16:08.760 or buy a similar manufacturer is making a decision on 0:16:09.080 --> 0:16:16.520 whether to invest in a competitive product years before negotiation 0:16:16.680 --> 0:16:23.040 kicks in. That decision on an investment is happening in 0:16:23.120 --> 0:16:27.720 the first one to three years after a brand drug launches. 0:16:28.880 --> 0:16:32.680 And you know, for some let's say it's a simple 0:16:32.720 --> 0:16:37.800 small molecule, maybe that's a relatively low cost somewhere between 0:16:37.840 --> 0:16:40.920 five and twenty five million dollars for a development program. 0:16:41.920 --> 0:16:46.240 But that's not the case for all generics, and certainly 0:16:46.280 --> 0:16:54.320 not for biosimilars. The development costs for specialty complex generics 0:16:55.080 --> 0:16:59.480 can be quite quite expensive. I think the generic ad 0:16:59.520 --> 0:17:03.480 Bere was reported to have cost or roughly eight hundred 0:17:03.480 --> 0:17:10.040 million dollars to develop. We consistently hear from BUYO similar 0:17:10.080 --> 0:17:14.480 manufacturers that the cost of developing a buy similar ranges 0:17:14.520 --> 0:17:18.840 between one hundred and three hundred million dollars. So now, 0:17:18.920 --> 0:17:21.800 all of a sudden, generic can buy similar manufacturers are 0:17:21.840 --> 0:17:27.720 having to make a decision on an expensive investment years 0:17:27.760 --> 0:17:33.320 before they know will the brand be negotiated or will 0:17:33.359 --> 0:17:35.679 they be able to get to market before that negotiation 0:17:35.840 --> 0:17:40.080 kicks in. And if they don't get to market, what 0:17:40.160 --> 0:17:44.200 will the negotiated price be? What will the addressable market be? 0:17:44.200 --> 0:17:50.040 Because the legislation provides guidelines, but it sets a ceiling price, 0:17:50.560 --> 0:17:55.160 it doesn't set a floor, and so how will CMS 0:17:55.359 --> 0:17:59.840 set that price? All of these are unknowns that are 0:18:00.080 --> 0:18:04.720 going to really affect the incentives and the decision making 0:18:05.119 --> 0:18:07.800 for future generic surviisi lars. 0:18:09.400 --> 0:18:12.399 So it feel like you've laid out well some of 0:18:12.440 --> 0:18:17.840 the potential disincentives here, and it's largely because of the unknowns, 0:18:17.920 --> 0:18:22.080 the uncertainty around how this is going to play out, 0:18:22.480 --> 0:18:24.920 not for the not just for those companies that are 0:18:25.119 --> 0:18:29.720 directly impacted through negotiation, but also some of the other 0:18:29.760 --> 0:18:32.159 players that would like to jump into the market, like 0:18:32.200 --> 0:18:37.280 the generic manufacturers and biosimilar manufacturers. So with that in mind, 0:18:38.320 --> 0:18:43.560 is there a realistic scenario where a manufacturer subject to 0:18:44.560 --> 0:18:48.800 a maximum fair price under the law ceases to produce 0:18:48.920 --> 0:18:53.280 that drug at some point but there isn't a generic 0:18:53.359 --> 0:18:57.280 alternative because of some of these disincentives we've talked about. 0:18:57.920 --> 0:18:59.920 Is that a possibility or is that far fetched? 0:19:00.600 --> 0:19:04.959 No, I think it's a real possibility. I don't think 0:19:05.000 --> 0:19:09.760 that we can expect a manufacturer of a brand drug 0:19:09.880 --> 0:19:15.760 that is negotiated and it receives an MFP. I don't 0:19:15.880 --> 0:19:20.760 think it's reasonable or realistic to expect that manufacturer to 0:19:20.800 --> 0:19:25.199 stick around producing that drug and perpetuity, particularly as the 0:19:25.680 --> 0:19:32.719 MFP goes down over time. And I think it is 0:19:32.760 --> 0:19:36.880 our concern that you're going to see fewer and slower 0:19:36.920 --> 0:19:43.280 generic entrance. Yeah, you know what that looks like is 0:19:43.320 --> 0:19:45.880 going to depend on a number of factors. Right, It's 0:19:45.880 --> 0:19:48.359 going to depend on the cost of IP litigation, the 0:19:48.400 --> 0:19:52.080 cost of the development program. It's going to depend on 0:19:52.119 --> 0:19:56.000 the market size. It's going to depend on what is 0:19:56.040 --> 0:19:58.560 the medicare share of a market. Right, It's going to 0:19:58.600 --> 0:20:01.720 be different if you're talking about a about entering a 0:20:01.800 --> 0:20:06.840 market where Medicare accounts for two thirds of the market opportunity, 0:20:07.400 --> 0:20:11.480 all of a sudden, the m p IS is is 0:20:11.520 --> 0:20:14.720 even more impactful. There. There's just a few of the 0:20:14.720 --> 0:20:17.960 things that that I think generics and biosimilars are going 0:20:18.000 --> 0:20:22.359 to be to be looking at in terms of whether 0:20:22.440 --> 0:20:25.240 to come to market. And and I think there there's 0:20:25.280 --> 0:20:30.000 some some UH certainly some academics out there have highlighted 0:20:30.040 --> 0:20:36.880 the concern you raised, Wayne, that that a brand isn't 0:20:36.920 --> 0:20:40.720 necessarily going to stay in a market in in perpetuity. 0:20:41.320 --> 0:20:45.600 They're going to look for uh new opportunities, for new innovation, 0:20:45.960 --> 0:20:52.280 for new ways to UH realize a higher return on capital. 0:20:54.000 --> 0:20:57.239 That's that's a natural and frankly a good thing that 0:20:57.280 --> 0:20:59.280 we ought to be ought to be encouraging. 0:20:59.840 --> 0:20:59.919 UH. 0:21:00.840 --> 0:21:05.720 A lot of the markets today the generics are serving, 0:21:06.440 --> 0:21:10.040 have been long abandoned by the brands, and so as 0:21:10.080 --> 0:21:12.840 we talk about shortages, I think there is a risk 0:21:12.960 --> 0:21:20.000 that over time, if done poorly, you could drive greater shortages. 0:21:20.119 --> 0:21:25.560 I like what you said about uncertainty and timing considerations 0:21:25.600 --> 0:21:28.640 and challenges because I know when I think of, for example, 0:21:28.720 --> 0:21:32.560 small molecules, and you're looking at when that patent litigation 0:21:32.720 --> 0:21:35.600 is going to kick off in those decisions, that litigation, 0:21:35.760 --> 0:21:38.800 if it's a new chemical entity, is likely to get 0:21:38.920 --> 0:21:42.040 kick off about four years after that product was approved, 0:21:42.640 --> 0:21:46.480 Whereas you're going to have to be making those decisions 0:21:46.520 --> 0:21:50.119 for the branded and the generic well before that drug 0:21:50.240 --> 0:21:52.560 is even on the negotiated list, or you know, what 0:21:52.600 --> 0:21:56.560 that negotiated pricing could be. And then I'm thinking about 0:21:56.600 --> 0:21:59.520 an example I'm looking at now where you have a 0:21:59.560 --> 0:22:03.920 litigation in where there were eighteen generic applicants. They're sort 0:22:03.920 --> 0:22:06.280 of trying to sort out right now what that generic 0:22:06.520 --> 0:22:10.200 entry date is going to be. Perhaps it'll be after 0:22:10.280 --> 0:22:12.719 twenty twenty six, But now you also have the IRA 0:22:12.920 --> 0:22:18.560 coming in potentially to cut that drugs Medicare price ahead 0:22:18.560 --> 0:22:21.680 of when those eighteen generics might enter the market, right, 0:22:21.720 --> 0:22:24.040 And so I'm sure that they're thinking about what that 0:22:24.160 --> 0:22:28.600 cost means to them. But you know, thinking about you know, 0:22:28.640 --> 0:22:33.240 the Hatch Waxman litigation system and the BPCIA litigation system, 0:22:33.400 --> 0:22:36.480 which is what we've used now to bring forward generics 0:22:36.480 --> 0:22:39.439 and biosimilars to the market. How do you think this 0:22:39.560 --> 0:22:44.520 disrupts that current system such that there could be disincentives 0:22:44.560 --> 0:22:48.760 for those generics or biosimilar manufacturers. And is it different 0:22:48.880 --> 0:22:53.280 for generics versus biosimilars given how the law has treated 0:22:53.320 --> 0:22:56.800 the timing for when price cuts could happen based on 0:22:56.840 --> 0:23:00.439 whether you're you know, a small molecule generic know or 0:23:00.680 --> 0:23:02.480 you know a large molecule. 0:23:03.640 --> 0:23:06.760 D Yeah, so let me react to the second half 0:23:06.800 --> 0:23:09.720 of that first, I think what I would say is 0:23:09.760 --> 0:23:14.160 the details, the specific details are going to differ between 0:23:14.680 --> 0:23:17.240 you know, the generic and bisimilar, and you know, but 0:23:17.280 --> 0:23:22.280 the fundamental analysis is going to be very similar, which 0:23:22.359 --> 0:23:28.399 is what is the incentive? What's what's the Now, all 0:23:28.440 --> 0:23:31.120 of a sudden, you you have a much bigger range, 0:23:31.880 --> 0:23:36.000 if you will, in what your addressable market might look like, 0:23:37.600 --> 0:23:42.120 because now you you you have to you know, today 0:23:42.200 --> 0:23:45.159 you account for what do we think the growth of 0:23:45.200 --> 0:23:47.679 that product over time is going to be? What are 0:23:47.720 --> 0:23:51.000 we what brand competitors do we think will come in? 0:23:51.800 --> 0:23:53.320 You know, these are some of the things you think 0:23:53.359 --> 0:23:56.080 about in that market. Now, all of a sudden you 0:23:56.119 --> 0:24:00.639 have to throw in that additional wild card of if 0:24:01.920 --> 0:24:06.720 the drug gets a negotiated price, what will that price 0:24:06.800 --> 0:24:12.840 be and how will that address the return? And oh, 0:24:12.880 --> 0:24:18.760 by the way, how will commercial payers respond? Will commercial 0:24:18.800 --> 0:24:23.040 payers try to adopt that price? And how's all that 0:24:23.080 --> 0:24:29.280 can play out? So you're certainly changing the incentive. And 0:24:29.359 --> 0:24:34.320 so if you're thinking about in under hatch Waxmen, for instance, 0:24:35.400 --> 0:24:37.960 if you're thinking about the incentive of one hundred and 0:24:38.000 --> 0:24:43.639 eighty days exclusivity for the rewards a generic for challenging 0:24:43.680 --> 0:24:51.560 a patent and entering earlier than expected. Maybe that incentive 0:24:51.600 --> 0:24:57.360 is still there, but maybe it changes the equation when 0:24:57.359 --> 0:25:01.560 it comes to whether to to take on the time 0:25:01.880 --> 0:25:10.040 and expense of a lengthy patent litigation. That, oh, by 0:25:10.080 --> 0:25:13.200 the way, impacts not just that first filer, but all 0:25:13.320 --> 0:25:17.600 those guys who typically are not first filers but draft 0:25:17.680 --> 0:25:22.880 on the entry of the first filing generic who does 0:25:22.960 --> 0:25:25.719 do that patent litigation? I think you have a similar 0:25:25.800 --> 0:25:29.560 dynamic in the biosimilar space. To give you a sense 0:25:29.600 --> 0:25:33.399 of it, keep in mind, the legislation says that small 0:25:33.480 --> 0:25:38.280 molecules are eligible for negotiation at year seven and biologics 0:25:38.280 --> 0:25:43.560 are eligible for negotiation at year eleven, and then if 0:25:43.600 --> 0:25:49.600 they're chosen, the negotiated price goes into effect two years later. Okay, 0:25:50.800 --> 0:25:54.240 but there was As we were working through this, I 0:25:54.320 --> 0:25:58.680 came across a study i'd forgotten about some academics. We're 0:25:58.720 --> 0:26:00.919 looking at the generic market, and they found that the 0:26:00.920 --> 0:26:05.880 most common time frame for a generic launch was somewhere 0:26:05.960 --> 0:26:08.920 between year twelve, years twelve and a half and fourteen 0:26:08.960 --> 0:26:15.600 and a half. So it doesn't really align with that 0:26:15.720 --> 0:26:23.239 year seven. Similarly, I mean for biologics, they're eligible at 0:26:23.320 --> 0:26:27.520 year eleven and it kicks in at year thirteen, but 0:26:27.640 --> 0:26:34.800 biosimilar face twelve years of brand biologic exclusivity. So you know, 0:26:35.680 --> 0:26:37.800 I guess, and there are folks who know this stuff 0:26:37.840 --> 0:26:41.840 better than me. I guess there is it is theoretically possible, 0:26:42.280 --> 0:26:45.760 perhaps to go through and check all those boxes and 0:26:45.800 --> 0:26:49.920 get approval and get the IP resolved and get to market. 0:26:50.080 --> 0:26:55.240 But I can say that so far in the bisimilar space, 0:26:55.280 --> 0:26:58.880 no one has done it, certainly not in that time frame. 0:27:00.600 --> 0:27:03.240 Is it is certainly a challenge that folks are going 0:27:03.280 --> 0:27:09.800 to face and that will affect for future investments. 0:27:11.119 --> 0:27:14.040 Yeah, and I think to that point too. You know, 0:27:14.520 --> 0:27:17.800 some of it is well because we have patents that 0:27:17.840 --> 0:27:22.800 were protecting longer than this seven year, nine year, eleven 0:27:22.920 --> 0:27:26.199 or thirteen, and so I'm certain it could be a 0:27:26.240 --> 0:27:29.320 conversation for a whole other podcast about whether this is 0:27:29.359 --> 0:27:34.359 a direct assault or indirect assault on our patent system, 0:27:34.880 --> 0:27:37.479 you know. But I do think that those are some 0:27:37.560 --> 0:27:40.040 of the issues to be worked through, and you know 0:27:40.080 --> 0:27:42.960 that for generics to consider in brands and whether it's 0:27:43.000 --> 0:27:45.199 worth the time, as you said, to really do that 0:27:45.280 --> 0:27:48.840 expensive patent litigation if you're going to be subject to 0:27:49.400 --> 0:27:52.359 negotiated prices, and if you're a generic entering in the market, 0:27:52.400 --> 0:27:54.720 what that's going to look like for your market once 0:27:54.760 --> 0:27:59.080 you enter if the brand drug does have price negotiation. 0:28:00.280 --> 0:28:02.320 But going back to also when we were talking about 0:28:02.320 --> 0:28:06.520 the timing for generic or biosimilar you know, launch and 0:28:06.560 --> 0:28:10.639 affecting the ability to be negotiated, the IRA does allow 0:28:10.720 --> 0:28:15.800 biosimilar manufacturers to request a negotiation delay for potentially eligible 0:28:15.840 --> 0:28:19.920 biologics if there's a high likelihood of biosimilar market entry. 0:28:20.920 --> 0:28:23.840 And you know, we've seen some of the guidance now 0:28:23.840 --> 0:28:26.919 come out from CMS about what this high likelihood could be. 0:28:27.880 --> 0:28:30.879 So in your view, you know, how has this policy developed, 0:28:31.160 --> 0:28:33.040 how do you think it's going to play out, And 0:28:33.080 --> 0:28:36.360 do you think that these policy makers and regulators got 0:28:36.400 --> 0:28:39.200 it right or perhaps is the bar too high for 0:28:39.280 --> 0:28:43.000 biosimilar manufacturers because I know when I think of this 0:28:43.080 --> 0:28:46.320 sometimes I wonder, for if you're at least you're on 0:28:46.440 --> 0:28:49.080 you know, the branded side, is there incentive to just 0:28:49.520 --> 0:28:52.240 stand back and let the biosimilar come on the market 0:28:52.360 --> 0:28:56.280 so you don't get negotiated, But you know, the biosimilar 0:28:56.360 --> 0:28:59.080 is the one that holds the hand to really request 0:28:59.360 --> 0:29:03.600 that you know, biosimilar exemption, so they'd have to show 0:29:03.640 --> 0:29:05.400 a high likelihood. So I think this is going to 0:29:05.440 --> 0:29:08.400 be a very important provision, you know in the IRA, 0:29:08.680 --> 0:29:10.560 that we you know, see play out, and we'd be 0:29:10.600 --> 0:29:11.840 interested in your thoughts. 0:29:12.400 --> 0:29:17.760 Yeah, that's a great question. I think that I think 0:29:17.840 --> 0:29:22.760 the best answer is in terms of the core question, 0:29:22.880 --> 0:29:25.440 is the bar too high? I think it remains to 0:29:25.480 --> 0:29:28.280 be seen. I think this is like some of these 0:29:28.320 --> 0:29:32.000 other things, that we're going to have to see how 0:29:32.040 --> 0:29:38.840 it plays out. And those biosimilar those two year delay 0:29:38.920 --> 0:29:46.000 requests are confidential between the biosimilar developers and CMS. The 0:29:46.400 --> 0:29:51.640 deadline for the first set of delay requests was earlier 0:29:51.680 --> 0:29:56.719 this summer. I believe it was in June, so I 0:29:56.800 --> 0:30:02.360 don't know if there were any delay requests put in 0:30:02.640 --> 0:30:07.160 or how those are going. I do think that there 0:30:07.280 --> 0:30:13.680 is there aspects of the standard that are valuable and 0:30:14.080 --> 0:30:16.959