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Ten years ago, the US pharmaceutical group Merck bought $ 41 billion to acquire Schering-Plow, consolidating and removing thousands of jobs in a context of crisis of innovation and trust. The companies touted their cholesterol and HIV treatments, briefly noting a "promising pipeline" in oncology.
Keytruda, an antibody that helps the body's immune system fight cancer, is hidden in this pipeline. It was an accidental acquisition, initially ignored by Merck and almost abandoned, but now its main blockbuster, sales to be estimated by JPMorgan reaching $ 16 billion a year by the mid-2020s. It extends the lives of patients longer than chemotherapy alone, but at a high cost.
The rapid innovation in oncology drugs such as Keytruda and genetic medicine has caused a new wave of mergers. Bristol-Myers Squibb has agreed to acquire Celgene for $ 90 billion in January, GlaxoSmithKline has agreed to buy Tesaro's US biotech for $ 5.1 billion in December and Eli Lilly announced last month that Acquisition of Loxo Oncology for $ 8 billion.
This is an exciting time for an industry that has long struggled for research and development to produce results. It is also a welcome change from the mbad marketing of primary care pills to drugs for the critically ill. This week, Keytruda has proven to improve the health of patients with kidney cancer or glioblastoma, an aggressive brain tumor.
But this raises questions about the future of pharmaceutical companies. One is to know if they are more innovative than before, despite this activity. The second is how long the interest in advanced oncology can convince insurers and health systems to pay already high bills and likely to go up.
Keytruda illustrates the current operation of the sector: a Dutch pharmaceutical company discovered that Schering-Plow had bought in 2007, rather than in one of the research laboratories of one or the other group. Merck's role in finally understanding what was happening (after seeing Bristol-Myers feed a competing drug called Opdivo) was to test and develop Keytruda.
Keytruda and Opdivo are extremely important drugs in the developing field of cancer immunotherapy. These are "checkpoint inhibitors" that prevent the body from blocking an immune response to cancer cells. Since Keytruda's first approval in the US in 2014, it has been used to treat a growing number of cancers, sometimes alone, but often badociated with other drugs.
This success has prompted other pharmaceutical companies to acquire biotechs or form partnerships to develop similar drugs, as well as others that can be used together. The biotech start-up is in the midst of drug discovery – the McKinsey consulting firm estimates that 69% of the portfolios of high-growth pharmaceutical companies come from acquisitions or licenses in 2015.
This avoids the risk of working for years with a drug that fails, but it creates other problems. A pharmaceutical group that outsources its research early in the career may suffer a brain drain. There may be a lack of scientists who can properly badess markets to deal with biotech. It can also be difficult to make the most of the drugs it acquires by expanding its applications.
This way of managing the industry inflates prices. The discovery of biotech drugs is a risky business, so investors (and scientific researchers who leave safe jobs) want to be greatly rewarded for their success. The wave of innovations in oncology raises the fear of leaving out the drug manufacturers – the recent agreements show how much they will pay the price for their future.
In the end, the patient pays. In November, Keytruda was approved for use by the National Health Service of the United Kingdom. The list price for each three-week infusion is £ 5,260 and the average cost of treatment is £ 84,000, although the NHS enjoys a discount. The official price of Kymriah, a Novartis personalized leukemia drug, is £ 282,000 per treatment.
Innovative medicines are not only expensive to develop, but difficult to ignore. An oncologist may have a chance to save a patient's life and will choose the drug with the best shot. This limits the pressure to reduce prices, unlike pills with generic competition or, for example, a hepatitis C drug with a rival that could also be effective.
In some ways the market works – this is the ferment of innovation boosted by these rewards, which make competitors of drugs like Keytruda appear faster than before. If the cancer was less complex, we could expect a fall in prices; US President Donald Trump's campaign against Medicare-paid "high price injustice" will produce results.
But we are far from anything that looks like a "cure for cancer" and a drug is rarely enough: many pharmaceutical companies are working on drugs to be used in combination with Keytruda or Opdivo. Not only will this make benefit-sharing difficult, but the overall price will rise rather than fall. It is difficult to deny a patient an extra year of life, but the bill will be daunting.
For now, the industry is experiencing a return to profitability and bargaining, with high prices justified by an innovation that saves lives. He knows one thing of the story: the halo will fade.
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