by Haig Armaghanian
As the new year begins, it’s helpful to look back at 2018 for clues as to what might be ahead. 2018 was a good year for biopharma. Profits were strong, IPO activity was robust, and Takeda’s $62 billion bid for Shire Plc was the largest drug deal in more than a decade.1 Additionally, the Food and Drug Administration (FDA) set a record for new drug approvals. The Center for Drug Evaluation and Research (CDER) approved 59 new molecular entities and biologics. The Center for Biologics Evaluation and Research (CBER) approved two additional biologics, achieving 61 total approvals.2
While the industry seemed to be temporarily spooked a couple of times by loud rumblings from Washington, D.C., of coming drug pricing pressures, those moments quickly passed without much, if any, lasting impact. What lies ahead for the biopharmaceutical industry in 2019? There are four broad areas to consider: the political landscape, market expectations, FDA approvals, and emerging science.
To say that the political landscape for the biopharmaceutical industry is uncertain is a minor understatement. President Donald Trump campaigned about lowering drug prices and has encouraged his administration to work toward this goal. More concrete proposals began to manifest with the Department of Health and Human Services report, “American Patients First: The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs,” released in May 2018.
Also, Scott Gottlieb, Trump’s appointed FDA Commissioner, has made speeding up the review and approval of generics as a mechanism to control and lower drug prices an agency priority. In fact, the FDA approved a record-setting 781 generic drugs in 2018, up from 763 generic approvals in 2017. That said, list prices increased for about 397 drugs in 2018, whereas list prices decreased for a mere 32 drugs. Of the 397 drugs that experienced price increases, the average increase was more than 6 percent.3
Twenty-eight drug manufacturers declared that price increases are coming in January 2019 within California agency filings (required by California law 60 days before drug price increases are enacted). At this point, it is known that prices will be raised for 250 prescription drugs, including many top-selling drugs. More price increases are expected to be announced later in January, despite the industry’s self-declared pledge early in 2018 to halt increases under pressure from President Donald Trump.4
The incoming Democratic House might prioritize drug pricing issues within their legislative agenda, but limited clarity on this likelihood is currently available. Drug pricing pressure is a very real issue and one that will eventually wield its impact—most likely in the near future. However, all signs suggest that there will probably be no meaningful changes resulting in drug pricing decreases in 2019.
So, what about the market’s likely impact on the biopharma industry in 2019? In 2018, there was a strong demand for emerging biotech IPOs that allowed even quite early-stage biotechs to go public in very healthy evaluations. However, continued volatility in the market and an anticipated market correction continuation will probably affect the industry. A down year could be challenging for newer, less cash-rich companies. However, a correction might allow more established biopharma companies to buy assets at a discount. Mergers and acquisitions activity is expected to continue at a moderate level, but no megadeals are on the horizon.
Although the specific number of drugs the FDA will approve in 2019 cannot be accurately predicted, approval levels are expected to continue at a healthy rate. Significant drugs are slated for launch in 2019 and are expected to include therapeutics for treating certain cancers, diabetes, peanut allergies, HIV, rheumatoid arthritis, psoriatic arthritis, Crohn’s disease, and other conditions.5 In addition to launches for larger patient populations, the healthy rate of orphan drug launches is expected to continue. In 2018, approximately 42 percent of approvals were orphan drugs, and the percentage in this neighborhood is likely to hold.1
Although cell and genetic therapies have been dominating headlines, none were approved in 2018 except for one cord-blood, stem-cell product. This contrasts with 2017, a year in which three cell or gene therapies were approved. In my view, this merely reflects the relative immaturity of the cell and gene therapy market— many more products are coming; they just aren’t here yet.
What is coming down the pike in terms of 2019 scientific advancements? Of course, therapeutic and scientific innovations generally do not burst onto the scene fully developed within the span of a calendar year. But 2019 promises to continue to be exciting on the scientific front.
Many advancements enabled by synthetic biology will continue to materialize. Also, the Cleveland Clinic’s annual list of the top 10 medical innovations has some interesting insights for 2019. Some of the items on the Cleveland Clinic’s list of particular interest included furtherance of the use of pharmacogenomic testing, immunotherapy advancements, and RNA therapy advancements.6
Pharmacogenomic testing strives to determine patients’ genetic makeup and tailor prescribed medical treatments based on individual drug metabolism. For several years, experts have been divided on the benefits of pharmacogenomic testing, and clinicians have been slow to implement it. However, implementation seems to be picking up steam, and the establishment of supporting guidelines is taking place.
Immunotherapies have revolutionized cancer treatment by leveraging the immune system to fight tumors. Immune checkpoint inhibitors have demonstrated great potential in the treatment of solid-tumor types, such as melanoma and non-small cell lung cancer. There is reason to be optimistic that immunotherapy options will exist for all types of tumors at some point in the future.
RNA therapeutics curtail RNA genetic abnormalities before the abnormalities translate into malfunctioning proteins. Examples of this technology include antisense nucleotides and RNA interference, and they are applicable to rare genetic diseases, cancer, and neurological illness.
Although projecting what is to come in a new year is never a perfect enterprise, it seems that we are poised for another exciting and productive year in the biopharma sector. Yes, there will continue to be challenges, and many of the challenges the industry is grappling with have been in the works for a long time. However, the scientific progress the industry continues to make is breathtaking and is having a very positive impact on patient populations. This makes all the challenges worthwhile.
Here’s to a happy, healthy, and successful 2019!
- “FDA Set An All-time Record of New Drug Approvals in 2018,” Pharmaceutical Commerce, January 2, 2019
- “Pharma’s 2019 Prognosis Hinges on These Key Themes,” Max Nisen, Bloomberg, December 27, 2018
- “2018 in Review: The Good(Rx) and the Bad in Prescription Drug Prices,” Tori Marsh, GoodRx, December 21, 2018
- “Drug Companies Greet 2019 with U.S. Price Hikes,” Michael Erman, Reuters, January 2, 2019
- “Top Blockbuster Drugs for 2019,” Christine Blank, Managed Heathcare Executive, November 19, 2018
- “Cleveland Clinic Unveils Top 10 Medical Innovations for 2019,” Cleveland Clinic Newsroom, October 24, 2018