Health Business Blog

Since the early 1980s, the Federal Government has provided Small Business Innovation Research –or SBIR—grants to fund research and development projects. In 2003, the Small Business Administration ruled that companies that were majority owned by venture capital firms would no longer be eligible for such funding.

The biotech industry and its supporters complained that the policy was choking off biomedical innovation, and now a bill that would restore eligibility of companies whose majority owners are VCs is before Congress.

The Office of Management and Budget, National Small Business Association and Small Business Technology Council have come out against the legislation, arguing that it would allow large businesses and universities in the door and deny funding for many deserving recipients. SBIR grants represent only 2.5 percent of Federal research dollars, they argue, and independently owned, non-dominant players should be entitled to all of it.

I spoke today with Alan Eisenberg, Executive Vice President for Emerging Companies and Business Development at BIO, the trade association of the biotechnology industry, to get his perspective.

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Interview with BIO's Alan Eisenberg Play Now | Play in Popup | Download

In yesterday’s post, I parsed Genentech’s open letter regarding its decision to stop selling Avastin to compounding pharmacies. Genentech implies that the FDA is forcing the company to crack down on Avastin distribution. Once I wrote that, I was alerted to an email that FDA sent to the American Academy of Ophthalmology on October 16, and which was posted on the AAO site. Here it is:

From: Kelly, Christopher
Sent: Tuesday, October 16, 2007 1:00 PM
To: [AAO Representative]
Subject: FDA statement on Avastin

Unlike Lucentis (ranibizumab for injection), Avastin (bevacizumab) is not approved for ophthalmic use. However, the Food and Drug Administration (FDA) did not ask Genentech to stop distributing Avastin to compounding pharmacies and FDA has not taken action to limit the off-label use of Avastin. FDA has discussed with Genentech developing Avastin for the treatment of macular degeneration and studying its use in ocular indications. Further, FDA continues to monitor adverse reaction reports related to this off-label use. To date, the adverse reactions reported to FDA following use of Avastin for ocular indications have been consistent with the adverse reactions reported for Lucentis. FDA notes that Avastin is a sterile product and that its off-label use for ophthalmic diseases sometimes involves repackaging Avastin into multiple smaller doses for administration. The agency is concerned about the manipulation of sterile products because of the increased risk of product contamination.

Christopher C. Kelly
Office of Public Affairs
Food and Drug Administration

I’ve followed up with emails to Mr. Kelly and to Genentech asking the following questions:

1. What are the specific FDA concerns that Genentech is referring to in the following statement? “In order to resolve the concerns raised by the FDA, we destroyed four batches of Avastin deemed unsuitable for use in the eye due to a higher visual inspection standard. (These lots would have been entirely suitable for its approved use as an intravenous cancer medication.)”
2. The same letter says, “Genentech also agreed that it would reinstate its supply of Avastin to compounding pharmacies if the FDA gave the company legal and regulatory authorization to do so.” Has Genentech requested this authorization or does it intend to? What would have to be done to obtain such authorization?
3. The Warning Letter sent to New England Compounding Center on December 4, 2006, states “we are in receipt of a complaint alleging that you are repackaging …Avastin…” Who filed that complaint?
4. According to the AAO’s letter, Genentech has agreed to “Not impede physicians or other legal agents (e.g., group purchasing agents) from ordering Avastin or using compounding pharmacies after the embargo is in place.” Is this in fact the case? If so, what is gained from putting an extra step between Genentech and the compounding pharmacists?

Stay tuned. I’ll be sure to let you know what I find out.

—–

PS –A Genentech representative left me a voicemail this afternoon and I hope to connect with her tomorrow.

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As posted earlier, Genentech has announced its intention to stop selling Avastin to compounding pharmacies, which turned the product into $40 doses of eye drug Lucentis (the same drug as Avastin), undercutting the usual $2000 pricing. Genentech has taken a good deal of flak for this move. In particular, physicians and patients worry that off-label ocular uses of the drug will become harder to arrange.

There are some interesting new communications out this week, but they don’t answer all my questions. Genentech is trying to place the onus for the changes on the FDA, but it’s not completely clear to me whether that’s fair. In addition, ophthalmologists and retinal specialists who met with Genentech seem to have taken slightly different understandings from their meetings.
Genentech posted an open letter explaining the rationale for its actions and announcing some changes.

By way of explanation, Genentech offers the following:

• “We understood that some would disagree with our decision to stop supplying Avastin to compounding pharmacies and would accuse Genentech of making profit, not patients, its priority. Genentech’s decision was not motivated by a desire for increased profits.”
• “A series of FDA actions contributed to our decision,” including:
• A warning letter to a compounding pharmacy
• “…FDA… concerns related to the ongoing ocular use of Avastin, because it is not manufactured for that use. In order to resolve the concerns raised by the FDA, we destroyed four batches of Avastin deemed unsuitable for use in the eye due to a higher visual inspection standard. (These lots would have been entirely suitable for its approved use as an intravenous cancer medication.) The action resulted in the loss of more than 350,000 vials of Avastin with a market value of more than $200 million.”

Genentech has decided to make a few changes:

• Delaying implementation from November 30 to Jan 1 to give doctors time to make the transition
• Agreed to “reinstate its supply of Avastin to compounding pharmacies if the FDA gave the company legal and regulatory authorization to do so.”
• Step up support for reimbursement for Lucentis so doctors and patients are less likely to be left on the hook
• Streamline access to free Lucentis for wet AMD patients (that’s the approved indication) but also for “other ocular diseases that can lead to blindness,” i.e., off-label use

A letter from the American Academy of Ophthalmology largely echoes Genentech’s announcement, but includes a couple of other points not mentioned by Genentech. According to the letter, Genentech has agreed to:

• “Not impede physicians or other legal agents (e.g., group purchasing agents) from ordering Avastin or using compounding pharmacies after the embargo is in place”
• “Seek advance comment from the Academy and ASRS on any direct-to-patient or -physician communications on Avastin versus Lucentis”

First, let’s examine Genentech’s rationale.

• It’s a bit rich for Genentech to feign offense at being accused of “making profits, not patients, its priority.” Of course the company wants to make profits. It’s a commercial enterprise and if it’s not seeking profits it’s not fulfilling its charter or satisfying its investors. That doesn’t mean the company is heartless or that it doesn’t balance patients’ needs with financial goals.
• The warning letter to the compounding pharmacy isn’t quite as clear cut as it sounds. I found the warning letter Genentech is probably referring to on the FDA website. The letter, dated December 4, 2006 is addressed to New England Compounding Center (just down the road from me in Framingham, MA) and refers to an inspection conducted on September 23, 2004. The five-page letter covers a lot of ground. It is not primarily about Avastin. FDA’s basic beef is that the pharmacy is manufacturing drugs rather than performing typical compounding services, such as making a drug “for a patient who is allergic to an ingredient in a mass-produced product, or diluted doses for children.” The letter’s first complaint concerns trypan blue ophthalmic products. The pharmacy says this is a device, FDA says its a drug. The second complaint is that the pharmacy is making a 20% ALA solution, which is a commercially available product. The third complaint is that the company is marketing an “Extra Strength Triple Anesthetic cream,” providing samples, and otherwise acting as a manufacturer. FDA also thinks this product is dangerous, as its ingredients have been linked to serious adverse events.Finally, on page 4 of the letter, FDA addresses the issue of Avastin repackaging with some pretty strong words. “…[W]e are in receipt of a complaint that you are repackaging the approved injectable drug, Avastin, into syringes for subsequent promotion and sale to health professionals.” FDA states that, “[t]he moment a sterile container is opened and manipulated, a quality standard (sterility) is destroyed and previous studies supporting the standard are compromised and are no longer valid. We are especially concerned with the potential microbial contamination of Avastin –a single-use, preservative-free, vial– into multiple doses. When used intravitrealiy, microbes could cause endophthalmitis, which has a high probability for significant vision loss. The absence of control over storage, and delays before use after repackaging, only exacerbate these concerns.”I have two questions about this letter. 1) Who initiated the complaint? (Could it have been Genentech?) 2) If the inspection occurred in 2004 and the warning letter was issued a year ago, why is Genentech changing the policy now?
• The sentences about the FDA inspection of Genentech’s plant are curious. Apparently FDA held Avastin to a “higher visual inspection standard” since they assumed the product was going to be used in the eye. Visual inspection refers to things you can see, like crimping of the package or particulates floating around. But since the product is in a vial and anyway is intended for injection, what did they see that was different? I doubt the inspectors could have seen anything floating around. As for the $200 million of product that had to be destroyed, if you divide by 100 you won’t be far off from the actual manufacturing cost.

Finally, what did the doctors hear from Genentech about compounding pharmacies. If I understand their letter, it seems that hospitals and physicians will be allowed to buy Avastin and supply it to compounding pharmacies, presumably for repackaging as before. Did Genentech really agree to this? If so, what have they gained by this announcement?

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Check out this week’s Grand Rounds. It’s hosted at Paul Levy’s excellent blog, Running a Hospital.

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I don’t much care for sports analogies but today I can’t help myself.

• The US health care system is like the New York Yankees: spending more money than anyone else, under-performing its peers that spend less than half of what it spends, and constantly looking to reform itself with expensive new programs.
• The ideal system would be like the New England Patriots: achieving unprecedented superiority (the headline after yesterday’s 52-7 victory over the Redskins: “Washington slapped here“) despite spending roughly the same amount as everyone else thanks to the salary cap, emphasizing teamwork over individual performance, and constantly innovating. It helps to have a Wesleyan grad at the helm.

We’ll never get to the ideal state in health care, but I’d be more than satisfied with something like the 2007 Boston Red Sox: spending the second most of any team and achieving the best results.

Well, we can dream.

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Hey, remember that President who balanced the budget and reformed welfare? Must have been a Republican, right?

NPR is a little confused about President Clinton, according to Media Matters (NPR’ Simon falsely asserted that SCHIP began “under a Republican president”)

Discussing President Bush’s threat to veto a bill expanding the State Children’s Health Insurance Program, NPR Weekend Edition Saturday host Scott Simon stated: “The president vetoed the last one, but lawmakers said they’ve made some important changes to the bill, which, as Senator [Mitch] McConnell often reminds interviewers, began as a program under a Republican president.” In fact, in a September 27 statement, McConnell credited a Republican Congress — not, as Simon said, a Republican president — for the program, which was signed into law by President Clinton.

With Republicans nationwide scared to death of having to run on President Bush’s record, it wouldn’t be surprising to hear them trying to take credit for President Clinton’s initiatives. But how will the Republican leadership reconcile their traditional antipathy toward NPR with this helpful slip of the tongue? Those “liberal elites” are pretty sneaky, aren’t they?

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Well the Sox have just swept the World Series again. I can hear the helicopters and celebrating fans from my home now, a big difference from 2004 when I saw the Sox win the series from a hotel bar deep in Yankees territory. It felt different this time, too. I was finally able to enjoy the games without thinking too much about 1986 and all the rest. The cursed Red Sox team is gone, perhaps forever. That’s a good thing overall.

The only problem is it will be impossible for the next generation to relate to what my grandfather, father and I experienced collectively over an 86 year period. I guess we’ll have to find another way to connect.

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There’s a history in health care of taking a good concept and perverting it, undermining the original meaning. Here are a couple examples:

• Disease management –which was initially turned into a marketing tool for pharmaceutical companies
• Consumer directed health care –which has been used as a euphemism for shifting costs to employees and for mini-med plans

“Personalized medicine” is another good concept that’s under threat for similar reasons. To me, personalized medicine is mainly about matching the right treatment to the right patient. It has the potential to improve outcomes and safety while reducing costs. Examples of drugs and companion diagnostics already exist, especially for cancer therapy. In the future we’ll have companion diagnostics in more areas. There will be tests to help determine what drug(s) to prescribe for depression and tests to determine whether a given drug will pose a cardiac risk for a specific individual.

The danger is that personalized medicine could be lumped in with genetic profiling. People are rightly concerned about being excluded from insurance and employment (maybe even marriage) if their genetic profile shows something disturbing. In addition, people may take tests showing their predisposition to one disease or another, which may add stress without providing much useful to do about one’s fate.

There’s evidence that this blurring is already happening and people are getting worked up, according to a new study. In my view it would be best to limit the term personalized medicine to companion diagnostics, a worthwhile application that’s not especially controversial. Call the other stuff genetic testing or screening.

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I don’t watch TV except around World Series or Super Bowl time, so I’m blissfully ignorant of the details of pharmaceutical DTC advertising. But the last couple of nights I’ve had the pleasure of watching the Series and checking out some of the ads. Watching with kids, I was braced to explain 4-hour erections like I did last year, but at least during the part of Game 1 I watched with youngsters, that wasn’t an issue. The Flomax ad, featuring men happily holding it in despite their BPH, didn’t spark any questions even when the “reduced semen” side effect was mentioned.

No little ones were about when the Levitra ad came on tonight. Like Viagra, this drug features the 4-hour erection warning. No surprise there. However, I was mystified to see a little white text pop up in the corner during part of the ad. It said that Levitra doesn’t prevent AIDS or HIV. No kidding. Why would it? And hasn’t Pfizer been criticized because Viagra is widely used as an MSM party drug, potentially increasing HIV transmission?

Can someone explain this to me?

PS –The Cialis ad toward the end of the game had the same message.

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Check out the latest Cavalcade of Risk at Hill’s Personal Finance.

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