Saturday, 1 December 2012

Kalydecogate (Part I)


As I sit in the Cystic Fibrosis ward of my hospital doing my IV antibiotics this morning, I feel increasingly angry about the on-going inability of the Government and Vertex Pharmaceuticals, Inc. to get Kalydeco into the hands of patients who desperately need it. This drug works, it is cheap to make and it should not be this difficult.

Kalydeco, Vertex's new drug for Cystic Fibrosis, was approved by regulators in the EU in July 2012. While treatments to date have sought to control symptoms, Kalydeco is able to target the underlying cause of the disease. It is not gene therapy but it does correct the action of the defective CFTR protein which is what causes the symptoms. Kalydeco is a kind of “small molecule” drug; these are small enough to get into the right parts of cells and then bind to and correct specific proteins. For patients, it means significantly improved lung function, weight gain and improved sweat chloride levels. It would be difficult for a physician to make a CF diagnosis on a patient taking Kalydeco without doing a DNA test.

Unfortunately Kalydeco only works on people with a certain mutation of CF; people with at least one copy of the G551D gene. This is approximately 4% of the 70,000 people in the world who have been diagnosed with CF. For these people, it has the potential to transform their daily lives and give them a fundamentally different future. In some cases, it will save their lives. 

The Cystic Fibrosis Foundation in the US has provided $75m to back the “small molecule” drug development programme which produced Kalydeco and this on-going programme may well lead to similar drugs for the other 1,500+ CF mutations identified to date including delta F508 which accounts for approximately 80% of the global CF population.

If you want to hear some of the personal accounts of the impact Kalydeco can have, follow these quick links:


Vertex is currently seeking to sell Kalydeco fully into the major EU markets but finding that “payers” or reimbursement authorities such as the NHS in the UK are resisting the $294,000 per patient per annum list price. The drug companies set the list price based on what they know the US health insurance companies will pay. The problem is that this sets the bar at a level which is not necessarily appropriate for other markets.

Patients at various centres in the UK took part in Vertex’s clinical trial programme earlier in 2012. I am aware of one case at my centre where a young patient with G551D who is very poorly and ineligible for a lung transplant (due to the particular bugs colonizing his lungs) took part in the trial and saw some big improvements. At the end of the trial, the drug was withdrawn and now he is going downhill again since nothing else comes close to Kalydeco in treating his CF. Despite Vertex’s “compassionate use policy”, there are other such stories. I was not aware that a drug company could withdraw treatment in this way after clinical trials. I had naively assumed that if a patient took the risk of participating in a clinical trial (partly to help a drug company prove the value of a new drug) and it worked, the drug company would have a clear ethical obligation to continue supply post-trial. It raises some major ethical questions.   

Discussions with reimbursement authorities are on-going, including with the NHS Clinical Priorities Advisory Group (CPAG), a group established to provide reimbursement advice to the four specialist commissioning groups (SCGs) in England. These SCGs will make the final decision on whether the drug should be funded in the UK. The result of the last CPAG meeting on 22 October was a request for further analysis of the cost-effectiveness of Kalydeco.

Following completion of that analysis, more discussions and negotiations have taken place between NHS representatives and Vertex. A final decision had been expected to be announced by mid-December but this week we learned that it has now been delayed until January 2013. The implication is that Vertex is being urged to come back to the negotiating table offering Kalydeco to the NHS at a reduced price and that the additional time will give both parties a chance to reach an agreement.

It is bad enough to see many young lives being put at risk, and in some cases deteriorating with each day that passes, when there is an effective treatment available. However, a look into Vertex as a company puts an even more tawdry complexion on things. 

Vertex is quoted on NASDAQ and has a market capitalisation of $9 billion. The company recently announced that it had overstated May 2012 results from clinical trials involving a combination therapy (Kalydeco combined with another “small molecule” known as VX-809) aimed at people with the delta F508 mutation of CF.

Before the company released the original data in May 2012, the share price was just over $37. This announcement showed significant improvements in lung function among adults with delta F508. It claimed that 46% of patients experienced at least 5% absolute improvement in lung function (FEV1) from baseline and that 30% of patients experienced at least 10% absolute improvement. The share price jumped 55% on that day closing at $58.

A couple of days later the share price reached $66 and Vertex executives (namely Chief Commercial Officer Nancy Wysenski, Chief Scientific Officer Peter Mueller, and Senior Vice Presidents Lisa Kelly-Croswell and Amit Sachdev) sold shares valued at over $20 million. They sold more shares in the next weeks and cleared a total of $38m between them. Nothing irregular so far.

Then on May 29, Vertex announced “amended” results from the Kalydeco/VX-809 combination trial for delta F508. The amended release stated 35% of patients (down from 46%) experienced at least 5% absolute improvement in lung function and 19% of patients (down from 30%) experienced at least 10% absolute improvement.

The amended trial results were released the same week the Food and Drug Administration highlighted violations by Vertex relating to an advertisement that was deemed “misleading because it overstates the efficacy, omits material facts, and minimizes important risk information about the drug product.”

About a week later, Vertex announced the retirement of 54 year old Chief Commercial Officer, Nancy Wysenski. Of the $38m proceeds from the mid-May sale of shares by executives, Nancy Wysenski took away $22m. In the announcement the company said “after more than 30 years in health care, she has chosen to move on to the next chapter of her life, and we wish her all the best in retirement.” 54 is obviously a relatively early retirement age.

Around this time, Senator Chuck Grassley approached the US Securities and Exchange Commission asking them to look into the executives’ share sales. By selling when they did the executives made about $13m more than they would have done had they sold after the amended announcement.

Since then the share price has fallen back to $40 on the back of questions over this episode as well as weak trading results and important progress made by competitors such as Gilead in the company’s other main market, Hepatitis C.

Several groups in the US have now commenced litigation in relation to the way trial data was announced and insider share sales.

Perhaps the Cystic Fibrosis Foundation has realised that the shit is about to hit the fan. Last week the CFF announced a commitment of $58 million to support Pfizer’s small molecule research programme with a particular focus on finding a drug candidate for delta F508.  

As John LaMattina highlights (Should the Cystic Fibrosis Foundation Invest $58 million in Pfizer Research?, 28 November 2012, Forbes.com) big pharmaceutical companies have traditionally avoided research and development for rare diseases but, with recent commercial successes, that has started to change. Pfizer underlined its new commitment to rare diseases with the 2010 acquisition of FoldRx, a small company focused on developing treatments for diseases such as CF caused by the improper folding of proteins. In acquiring FoldRx, Pfizer inherited its partnership with the CFF to find drug candidates for CF. When Pfizer decided to take this step, without any commitment of additional funds by the CFF, it must have made an assessment of the commercial potential and signed off on the investment that would be required to work the FoldRx portfolio. As LaMattina points out, it is therefore surprising that the CFF has now agreed to fund the next stage of the FoldRx work to find new CF drug candidates. Surely, Pfizer would have done this research anyway without the CFF funding. It raises questions over the deployment of the CFF’s funds.

As LaMattina says “by requiring the CFF to pay for it, Pfizer is diverting precious research funds that the CFF could be using to fund numerous other programs in universities, research institutes, and small start-up companies. In the life sciences eco-system, $58 million can go a long way. Should the world’s largest pharmaceutical company have its hand out to the CFF? Couldn’t Pfizer have found the less than $10 million/year needed to fund this research?”

So what is going on here? Vertex is a tiny company compared to Pfizer and it has nothing like the same level of resources. Kalydeco would surely not exist if the CFF had not provided financial backing. However, the Pfizer deal is very different and doesn’t seem to add up. It looks like the CFF are providing capital that Pfizer were prepared to invest themselves. While the CFF typically seeks to leverage off private capital to enhance impacts, it looks here as though the CFF capital is simply allowing Pfizer to avoid using its own capital. Perhaps the CFF are so concerned about all the issues at Vertex that they felt the need to back, and be seen to back, another horse. That way, when Kalydecogate breaks things will not look as bad as they might have done if all CFF's eggs had still been in the Vertex basket.

Whatever the outcome of the Vertex litigation and any longer term fall-out for the company, the $38 million received by Nancy Wysenski and the other three Vertex executives from their well-timed share sales, would pay for 130 kids to get Kalydeco for a year. If these shares had been sold at $40 (i.e. the market price prior to the “later-amended” announcement of the clinical data) rather than the elevated price, the executives would have cleared only about $25 million. The extra $13 million they did in fact receive, arguably made possible by the “later-amended” announcement, would pay for 43 kids to get Kalydeco for a year.

Some of these kids are going to die without Kalydeco and every day that passes without action puts them in greater jeopardy.   

Call to Action:

Read why leading UK medical scientist David Grainger and thousands of others have signed the petition to get the NHS to agree a deal with Vertex and, while you are there, sign it yourself.

Read & Sign: Campaign for Kalydeco Petition - Comments by David Grainger

David Grainger is a Venture Partner at Index Ventures; former Director of the Translational Research Unit of the Papworth Hospital NHS Foundation Trust; and former Principal Investigator in the Department of Medicine at Cambridge University. He is also part of TCP Innovations Ltd, a leading life sciences consultancy; founder of a number biotech companies; and author of the widely-read DrugBaron blog on pharmaceutical and biotech industry news and @sciencescanner twitter feed.

Click here to read more of David's views on Kalydeco and pricing of new drugs for orphan diseases


Please also read my follow-up post on the lessons we can learn from Kaydeco and the bigger picture:

Spit It Out!: The Case for a Global CF Foundation?


Reference:
Should the Cystic Fibrosis Foundation Invest $58M in Pfizer Research?, John LaMattina, Forbes.com, 28 Nov 2012

8 comments:

  1. Oli - I respect your passion and agree that patients should have access to disease modifying innovative drugs. One small correction - the price of Kalydeco in the US is set *in part* by what the insurers will pay. But that rather over-simplifies the equation. Another factor is the cost of development (which was significantly more than the $75M spent by the CFF) divided by the number of potential patients (which, as you note, for Kalydeco is relatively small). Another factor is balancing the total costs of bringing the drug to market against cost of 'standard of care.' I am not at Vertex or know the formal clinical economics, but I bet there is a calculus that a 'standard' CF patient in the US costs an insurance something close to $250K/yr without Kalydeco. So substituting Kalydeco for all the other costs is a net wash for the insurance company AND also gets the money back to Vertex so it can come up with the drug to treat the F508 mutation. In the EU, permitting a company to recoup costs is considered inappropriate, so NICE would rather not provide the drug to patients than pay "too" much to the drug developer. If there were more CF patients, the drug would cost less and there would be greater political cost for NICE to deny market access. Good luck to you, Oli. I hope Vertex gets something to help you soon!

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