Vizient: Health systems should expect a nearly 5% spending jump on drugs

Health systems can expect a nearly 5% increase in the cost of their pharmaceutical purchases in 2020, according to a new report.

Based on a drug pricing forecast from Vizient’s pharmacy program, which compiled member participants’ purchases in hospital and non-acute care settings, pharmaceutical costs will far exceed both inflation and wage growth in 2020, making healthcare less affordable.

Other highlights from the forecast include a dramatic change in the approval and introduction of biosimilars into the U.S. market. Nine out of the top 10 drugs (by total spending) among Vizient members in 2020 will be branded biologics, meaning pharmacy and healthcare leaders should start supporting the biosimilars market.

Dan Kistner, PharmD, group senior VP of pharmacy solutions for Vizient, noted the changing landscape in the hospital market.

“Hospitals are no longer strictly focused on inpatient/acute care services,” Kistner said in a statement. “They are also offering numerous services in the non-acute setting such as outpatient infusions, home infusion, and most importantly specialty pharmacy services. Therefore, the spend profile of our members now includes the new, increasingly specialized medications approved by FDA, which tend to be among the most costly products introduced into practice.”

In addition, inflation is predicted to be more than 4% in the specialty drug market, which is significant for health systems since prices of these specialty drugs tend to outweigh those of nonspecialty medications.

The analysis also showed that drug shortages will end up costing health systems more money. During a national survey of Vizient members, 365 hospitals and health systems said that the total cost of increased labor was $359 million due to more than 8 million labor hours to manage drug shortages.

The report also predicts an increase in costs for providers treating leukemia patients, as new therapy combinations become the standard of care. While new advances promise choices and potentially improved outcomes, providers and patients will experience a higher financial impact.

In addition, immune globulin intravenous drugs will continue to see supply challenges to meet demand and therefore a steady rise in prices.

https://www.fiercehealthcare.com/hospitals-health-systems/vizient-expect-a-4-57-increase-drug-purchases-2020

Venture capital investment in AI and mental health startups surges in Q2

Investment in healthcare artificial intelligence startups and companies focused on mental health and wellness soared in the second quarter as both sectors hit funding highs, according to a new report.

Healthcare AI companies raised $864 million in the second quarter, compared to the $764 million AI startups raised in the second quarter of 2018, according to technology market intelligence company CB Insights’ global healthcare report released on Tuesday morning.

The $864 million in AI healthcare investment was led by a $200 million round to Tempus in May. Tempus develops an AI-enabled precision medicine software based on its collection and analysis of clinical and molecular data.

Patent applications for AI healthcare technology also continue to grow with GE, Philips, and Siemens among the top patent applicants, CB Insights said.

Mental health and wellness companies raised $321 million across 26 deals, in the second quarter of 2019, with large rounds going to Quartet and Talkspace. That compares to $227 million invested in mental health startups during the same quarter in 2018.

Top investors Centene, Google Ventures, Oak HC/FT, Norwest Venture Partners, and Y Combinator are flocking towards mental and behavioral health, the report said.

It’s been a record first half of the year with the amount invested in healthcare companies globally rising to $26.9 billion across 2,258 deals so far in 2019 compared to $26.5 billion in the first half of 2018.

In-demand sectors including mental health and healthcare AI could drive a record annual deal highprojected by the end of this year. CB Insights projects 4,516  deals by year’s end compared to 4,395 deals in all of 2018. The company is projecting global venture capital-backed healthcare deals and financing to reach $53.9 billion in 2019, a slight dip from the $59.5 billion raised in 2018.

Digital health funding is on the rise for the second straight quarter, reaching $3.5 billion, up 23% versus the first quarter of 2019. There were 371 digital health deals compared to 354 in the first quarter, according to the report.

CB Insights also identified 38 so-called unicorns, global VC-backed digital health startup companies valued at $1 billion or more. These highly-valued startups are worth a combined $90.7 billion, according to the report.

Among U.S. companies the list includes Oscar Health, ZocDoc, Proteus, Clover Health, One Medical, Calm, Tempus, 23andMe, and Hims.

“The cohort’s total valuation in 2019 continues to grow as a result of continued mega-rounds to existing unicorns, such as Tempus and Doctolib, among others,” the report said.

Other healthcare segments also saw strong investment growth including women’s health startups.

Women’s health venture capital funding totaled $284 million in the second quarter of 2019, compared to $129 million in the same quarter last year. Companies like Kindbody and Modern Fertility are disrupting traditional fertility services with technology-enabled platforms. Startups Elvie and JioVio are targeting maternal care with pregnancy trackers and wearable breast pumps connected to mobile apps, the report said.

Genomics startups saw a slight dip in venture capital investment in the second quarter of 2019 but still raised $638 million.

Cannabis startups raised $1 billion in 107 deals in the second quarter of 2019. Of those deals, startups with a hemp and/or CBD business took a record 25% of cannabis funding. Investment in this sector was led by a $420 million round to Pax, a company that provides internet-connected vaporizers that allow users to track the potency of consumed cannabis.

https://www.fiercehealthcare.com/tech/venture-capital-investment-ai-and-mental-health-startups-surges-q2-report

Pentagon eyes tainted ‘sartan’ ingredient from China as trade war grows

A series of FDA recalls on “sartan” active ingredients made abroad has shaken the drug industry’s confidence in the manufacturing process used for the generic blood pressure medications. Now, with trade pressure ramping up, the Pentagon is eyeing China’s API production as a potential health crisis.

The Defense Health Agency (DHA) is scrutinizing increased Chinese production of the API behind a range of popular “sartan” drugs, including losartan and valsartan, as a health threat for military members who use the drugs. The worldwide recalls stemmed from API made by a Chinese supplier.

“The national security risks of increased Chinese dominance of the global API market cannot be overstated,” Christopher Priest, acting deputy assistant director for healthcare operations and Tricare for the DHA, told a U.S.-China advisory panel last week in Washington.

The Pentagon’s heightened focus on Chinese API production comes as the two countries engage in an increasingly acrimonious “trade war” that has become a hallmark moment in President Donald Trump’s term in office. With a new round of tariffs on Chinese goods likely, the National Security Council is looking into Chinese drug manufacturing and trying to identify the most at-risk medications, according to Stars & Stripes.

The FDA launched a global recall in 2018 after a U.S. drug manufacturer found high levels of N-nitrosodimethylamine (NDMA) in the valsartan active ingredient it had bought from a Chinese supplier. Since then, the FDA discovered that NDMA, N-Nitroso-N-methyl-4-aminobutyric acid (NMBA) and NDEA—all considered unsafe at certain levels—can be created during sartan drug manufacturing under certain conditions.

In early April, the FDA cleared 40 angiotensin II receptor blockers that are free of those three potentially carcinogenic compounds as a worldwide shortage in losartan continues to pinch the global market.

That losartan shortage led the FDA to back off its own impurity standards for losartan active ingredients in late March, freeing drugmakers to sell products with impurities above the prescribed level for six months.

The FDA argued that scientists believe the risks associated with the impurities are low to begin with and six months of patient exposure likely wouldn’t pose any new health concerns. The relaxed rules only applied to losartan and the impurity NMBA.

https://www.fiercepharma.com/manufacturing/pentagon-eyeing-chinese-production-tainted-sartan-api-as-trade-war-grows

Radius Health up 6% on advancement of wearable patch for osteoporosis

Radius Health (RDUS +6.2%) is up, albeit on below-average volume, on the heels of the launch of a Phase 3 clinical trial, wearABLe, evaluating its abaloparatide transdermal patch for the potential treatment of postmenopausal women with osteoporosis at high risk for fracture.

The primary objective is to demonstrate the patch’s non-inferiority to TYMLOS (abaloparatide) injection as measured by the percentage change in lumbar spine bone mineral density at month 12.

Enrollment should be completed by year-end.

https://seekingalpha.com/news/3487613-radius-health-6-percent-advancement-wearable-patch-osteoporosis

Stemline’s Elzonris nabs increased US reimbursement for leukemia type

The U.S. Centers for Medicare & Medicaid Services (CMS) has approved a new technology add-on payment (NTAP) for Stemline Therapeutics’ (STML+2.6%) ELZONRIS (tagraxofusp-erzs) for the treatment of patients at least two years old with a rare type of leukemia called blastic plasmacytoid dendritic cell neoplasm (BPDCN). The additional payment will go into effect October 1.

The specific amount of the NTAP is not provided, but it will be paid over and above the usual DRG-based amount.

https://seekingalpha.com/news/3487569-stemlines-elzonris-nabs-increased-reimbursement-u-s-bpdcn-shares-3-percent

Early-stage data on Evelo’s EDP1815 fails to excite investors

Thinly traded micro cap Evelo Biosciences (EVLO -10.2%) is down on average volume in early trade following its release of preliminary data from a Phase 1 study of EDP1815 in patients with mild-to-moderate psoriasis.

12 patients were randomized 2:1 to receive either 550 mg of EDP1815 or placebo once daily for 28 days. Those in the treatment group showed a statistically significant reduction in mean lesion severity score (LSS) compared to control. Specifically, the mean reduction in LSS was two points versus an increase of 0.25 points for placebo (p<0.05). Investors appear unmoved with the results considering that LSS is a lower bar for psoriasis assessment.

The company plans to advance the candidate into Phase 2 development in early 2020 in the same patient population over a 24-week treatment period.

The safety profile was on par with placebo.

EDP1815 is an orally administered monoclonal strain of a gut bacterium called Prevotella histicola that has also shown potential to ameliorate other inflammatory conditions, including multiple sclerosis.

https://seekingalpha.com/news/3487603-early-stage-data-evelos-edp1815-fails-excite-investors-shares-10-percent

FDA reviewer backs Gilead’s Descovy for PrEP, but not in women

Gilead Sciences’ Descovy, its successor to HIV pre-exposure prophylaxis (PrEP) therapy Truvada, is heading into an FDA advisory committee meeting on Wednesday with a mostly-positive verdict from the agency’s reviewer.

On the plus side, the briefing document published ahead of the meeting suggests that the clinical evidence puts Truvada and Descovy on a par when it comes to reducing HIV transmission in men and transgender women who have sex with men (MSM/TGW).

However, the reviewer notes that there isn’t much data available when it comes to cisgender women and adolescents, suggesting Gilead may struggle to get a label that covers the entire range of people who might benefit from Descovy for PrEP.

Gilead has argued that extrapolating the data from the DISCOVER trial that was filed in support of the application means that adolescents and women should be included.

The FDA reviewer agrees with the company when it comes to adolescents, but in the case of cisgender women says that pharmacokinetic data supposed to demonstrate Descovy reaches high enough concentrations in the vagina and cervix to provide protection is “compromised.”

That could be a big deal for Gilead, as it is trying to position Descovy(emtricitabine/tenofovir alafenamide) as a direct replacement for Truvada (emtricitabine/tenofovir disoproxil fumarate) with a more favourable side-effect profile – specifically on bone and kidney toxicity – before Truvada loses patent protection in 2021.

Truvada is currently the only FDA-approved drug for PrEP, meaning it can be given to individuals who are HIV-negative but at risk of being infected with HIV by a partner. It is estimated that two-thirds of Truvada’s $3 billion sales last year came from this use, and the threat of generic competition is why Gilead used a valuable priority review voucher (PRV) to speed up its FDA review time.

Gilead could already face a challenge convincing payers that Descovy’s more benign adverse event profile is worth the additional expense when Truvada generics appear on the market, although as PrEP is given to healthy individuals over a long period a cleaner safety profile could be a big asset.

However, its job could be made tougher if the new drug doesn’t have the same patient reach as its predecessor.

The reviewer is asking the advisory committee to discuss whether the DISCOVERY and other studies “allow for expansion of the Descovy PrEP indication to include cisgender women,” according to the briefing document.

It also wants the panel to tackle whether the data from the trial “are relevant to at‐risk men who practice insertive vaginal sex with cisgender women.”

FDA reviewer backs Gilead’s Descovy for PrEP, but not in women