This week we highlight how big pharma is grappling with potential challenges surrounding drug pricing and the Inflation Reduction Act of 2022. We also look at Labcorp’s proposed spinoff of its clinical development business, progress toward the $100 genome, the return on investment of decentralized clinical trials, and Moderna’s substantial write-off of COVID-19 inventory in the second quarter of 2022.
Each week we highlight five things affecting the life sciences industry. Here’s the latest.
Big pharma companies could face significant drop in Medicare prices
The U.S. Senate could soon pass legislation that would allow the federal government to negotiate the price of high-cost drugs covered under Medicare. Top-spending brands and biologic drugs without generic or biosimilar equivalents that are covered under Medicare Part D and Part B, and are a minimum of nine or 13 years away from Food and Drug Administration approval, for small-molecule drugs and biologics, respectively, would be eligible for negotiation. If passed in its current state, the bill would allow Medicare to control pricing for 10 drugs in 2026 and 60 drugs by 2029. Oncology and diabetes treatments manufactured by Eli Lilly, AstraZeneca, AbbVie and Johnson & Johnson are expected to see the largest impact from this bill. Bloomberg forecasts that Astellas and Bristol-Myers Squibb will see the largest single company impacts with (12%) and (9%) revenue impacts in 2026, respectively.
Labcorp to spin off clinical development business, formerly Covance
Labcorp announced plans to spin off its clinical development business, formerly known as Covance. Through June 30, 2022, the clinical development business delivered revenue of $3 billion to Labcorp’s bottom line. Labcorp is targeting completion of the spin-off in the second half of 2023.
Progress toward a $100 genome and what it could mean
Starting at $10 million in 2006, the cost of reading a single human genome is currently hovering around $500, with some biotechs claiming that they have a $100 solution. Whether that price is accurate, it is clear that prices are trending downward. Lower prices could lead to greater availability and possibly increased opportunities for early identification of diseases.
Tufts study finds significant savings from decentralized clinical trials
Decentralized clinical trials continue to be touted as a way to increase patient centricity and reduce clinical trial cost. In a study performed by the Tufts Center for the Study of Drug Development, studies implementing wearable devices and apps saw a total trial duration decrease of 360 days. Using an average $3.1 million investment into decentralized technologies for phase 3 studies and several scenarios of cycle time reduction, the CSDD estimated an astounding return on investment ranging from $17.3 million to $77.8 million.
Over-estimated COVID-19 vaccine demand leads to large Moderna writeoffs
Amid falling COVID-19 vaccine demand, Moderna wrote off $499 million in inventories related to COVID-19 products during the second quarter of 2022. In addition, the company recorded $184 million in charges related to changes in purchase commitments and $131 million related to unutilized external manufacturing capacity. The company continues to expect strong COVID-19 vaccine revenue with a projection of $21 billion for fiscal 2022.
