Street Cred Ep 9 | Ad Com for COVID-19: Vaccines Likely to Underwhelm

Rick Weissenstein, health care policy analyst at Cowen Washington Research Group looks at the latest in health care policy on Capitol Hill and the administration this month. In this episode, he speaks with Mike McCaughan, Founding Partner of Prevision Policy about what to expect from the FDA advisory committee meeting to discuss the COVID-19 vaccines on October 22nd, how the upcoming election could affect the FDA and the impact of executive orders on drug pricing.

Press play below to listen to their conversation.

Transcript

Speaker 1:

Welcome to Street Cred, powered by Cowen’s Washington Research Group. Each episode, Cowen’s policy experts drill down to bring you up to speed on key issue areas. We call the series Street Cred since Cowen’s Washington Research Group patrols the all-important intersection of Wall Street and K Street. Since we cover health and biotech, financial and housing, trading tax, as well as smart, political analysis, you could say that tuning into Street Cred will keep you healthy, wealthy, and wise.

Rick Weissenstein:

Welcome everyone, I’m Rick Weissenstein of Cowen’s Washington Research Group. Thanks for joining us on the latest episode of our podcast, The Monthly Checkup, we hope this makes a handy companion piece to our weekly checkup. The written product that Eric Assaraf and I collaborate on, The Weekly Checkup looks at the latest in healthcare policy on Capitol Hill and any administration each month. And we want to do the same with The Monthly Checkup, look at what’s going on at the FDA in the coming weeks, along with a breakdown of other issues of importance to drug makers and the drug supply chain. I’m overjoyed to be joined, once again, by Mike McCaughan, a founding member of Prevision Policy, which covers the FDA and all things biopharma, for a number of clients. Mike and his two partners, Cole Werble and Ramsey Baghdadi, all cut their teeth at the pharma bio newsletter, The Pink Sheet. Which I’m sure many of you have heard. Mike was the edited there for 30 … 20 years, I should say. Almost made you older than you are Mike, sorry.

Rick Weissenstein:

Cole Werble started The Pink Sheet in 1930-something or another and they’ve really, as I mentioned, covered the entire FDA and pharma world for, really, their entire adult lives. So nobody better to talk to about these things than Mike. So with that, let’s dive into our first segment, which we call the state of play at the FDA. The big event this month, and this really will be a big event, rare that you can say that this is probably something that’ll be talked about in people well beyond just geek circles of drug pricing type folks and FDA type folks. But there’s an advisory committee meeting to discuss the COVID-19 vaccines. And it’s probably not an overstatement to say that this may very well be the highest profile committee meeting in the agency’s history. So, Mike, what should I expect them? Am I going to come away with this, from this ad comm, knowing what vaccines are going to be available and when, so I can figure out when I’m going to be able to go back to bars and concerts and things? Is that how this was going to work out?

Mike McCaughan:

Well, I got some bad news for you there, Rick, probably not. And not just because I’m pretty sure that you’ve been banned from all the bars and concert venues in the greater DC area already anyway, and that will continue after COVID, I’m afraid. But more importantly, this particular meeting on vaccines set for October 22nd is, I think, designed, at least from FDA’s perspective … For them, it’ll be a victory if this is the most anticlimactic big event in the agency’s history. Where potentially thousands or even millions of people tune in to the webcast and it might even be televised and come away thinking, “Wow, that was dull.” Their goal at this first meeting is, I think, really just to get the committee to agree that the standards they’ve already articulated for COVID-19 vaccines are appropriate and should be used when it comes time to actually review a candidate that has data to support it.

Mike McCaughan:

Where are we, we’re October 5th, the meetings still 17 days away. Certainly it’s, given the state of play in 2020 where anything can happen, I guess you can’t rule out that one of the vaccine candidates will claim to have a successful trial that could be discussed at that meeting. Definitely not FDA’s intent, and that would definitely be a true shocker, on a lot of levels. So instead, I think the purpose of this meeting is really part of the pressure FDA has been under to show some transparency. They’ve actually been, for those of us who follow the agency, they’ve been quite transparent about their standards and expectations. But given the politics around all this, they’ve been under incredible, extraordinary pressure to prove that they’re following the science and not just going to approve anything they can before election day.

Mike McCaughan:

So at this point it seems like things are on track for that to be a review of the standards FDA has already articulated, the advisory committee will no doubt say a bunch of fun and exciting things along the way, but I don’t think anyone seriously disagrees with FDA’s approach to these vaccines. And then things will get exciting if and when some of these ongoing phase three trials actually reach enough events to have data to review. At that point, FDA will start bringing the committee back. They’ve promise now, very clearly, that each vaccine that has data and could potentially be either formally approved or given an Emergency Use Authorization, will get a separate review and discussion by the same committee.

Mike McCaughan:

But that’s going to happen after October 22nd and not on October 22nd. So it should be a meeting where a lot of people will come away, probably bored and confused, overly stimulated by the discussion. The Trump Administration, there’s always the possibility that someone else could step in and take over the agenda at the last minute. I do think honestly, with the president himself now being diagnosed with COVID-19, they probably got too many other things to worry about than to try to hijack the agenda of this particular meeting at this point.

Rick Weissenstein:

So what you’re telling me is that chances of me getting back to bars and concerts anytime soon, regardless of the fact that the police might be stopping me from doing it, are low?

Mike McCaughan:

Yes. And then unfortunately, of course, there is actually a great deal now that I think it’s pretty clear for folks thinking ahead here, we still do have the scientific uncertainty about whether any of these vaccines actually work. And I hate to be a downer about that. But there are, at this point, four of them in phase three trials, but one of those four is technically on hold in the US. So three candidates that are actively enrolling subjects here. And the hope is that at least one of them actually works, if not all of them.

Mike McCaughan:

But even so, that would lead you to finding out for sure, potentially in November, having it be technically approved or authorized in December, but in quantities that are very limited. And Rick, unless you’re a frontline healthcare worker or far sicker than I realize, you’re probably not in that initial pool that’s going to get vaccinated. I think if all goes well, by this time next year, anyone who really needs a vaccine … Anyone who’s eligible for the vaccine can get it. And we can start talking about a vaccine having restored something like normal life. But that’s not going to happen soon.

Rick Weissenstein:

And I think those are points that some people may be surprised to hear at the ad community, because what the FDA has said, and they’re looking to get 50% efficacy or 60% efficacy, and that might not be something that people realize. They’re not even at all talking about this being something like the polio vaccine or the measles vaccine, which I think most people believe that’s what they know about a vaccine. You take the vaccine, you’re good to go for an extended period of time, maybe forever.

Mike McCaughan:

Yep. And there’s so many uncertainties about just the performance of the candidate vaccines that we’ve all gotten ahead of ourselves based on the, oh, will it be available by election day? When the reality is that even if one of these candidate vaccines is actually as close to a perfect vaccine as you can get, it’s super effective and long lasting, there won’t actually be any way to know that for quite some time. You can’t tell that immunity lasts for years until people have had the vaccine and had immunity for years. So we’ve got a ways to go before we’re sure exactly where we are with vaccines.

Mike McCaughan:

Certainly everyone involved in the development feels optimistic about what they’ve seen thus far. That one or more of these candidates will actually work at a level that’s meaningful. And then to get back … the flu vaccine varies from year to year in how protective it is, but it makes a huge difference. And we … our normal lives with some risk of getting the flu. So hopefully we’re at least in that situation by this time next year.

Rick Weissenstein:

Well, and your point about the distribution issues is one that I think probably most people don’t understand. I mean, I’m going to preemptively be outraged by the fact that I am probably number 253,000,978 to get the vaccine but I think [crosstalk 00:09:22]

Mike McCaughan:

At your ripe old age, you might be able to get it sooner. You might get lucky, based on … I know you’re …

Rick Weissenstein:

I don’t think I’m that lucky, but I think most people will believe that when they hear that there’s a vaccine, that they should be able to go and get it in the near future.

Mike McCaughan:

Line up and get it, exactly.

Rick Weissenstein:

We know that’s not how this is going to work.

Mike McCaughan:

And that will definitely not be the case in, say, the next three to six months. Even if the vaccine is approved tomorrow there will be some … And the way this entire pandemic has played out will also probably be considerable variability depending on where you live and who’s in charge of making those choices. So one part of the country, a certain group of people might be getting vaccinated who can’t get vaccinated in a different state or region.

Rick Weissenstein:

Because they left it up to the states to figure out how they plan to do that, and as you said, that’s going to vary from state to state. So, all right Mike, let’s move on to our next segment, diagnosis. Which we will look at an issue a little bit more in depth. With an election coming up, how do you think the election will affect the FDA? I mean, maybe looking at it, both a potential Biden Administration or a continuation of the Trump term. We’ve gone through a number of FDA commissioners, whether they be confirmed or interim, in the first Trump term. Who do you think we might be looking at potentially, or the type of person we might be looking, if Biden takes over? And do you think we continue to have that turnover in a second Trump term, were there to be one?

Mike McCaughan:

Yeah, that’s a great question and obviously an important one. And one of the oddities I would suggest, as you try to think about what FDA is going to look like in the future, to me it’s easier to get an image of what FDA under a Biden administration might look like than it is what it would look like if Donald Trump is reelected. Which is [inaudible 00:11:28] when you think the current administration is coming back, you say, “Well, it’s just going to be the same.” So I’ll just start there with a scenario where President Trump comes from behind here and is reelected. As you mentioned, we had Scott Gottlieb as the commissioner, originally, and he left at the start of 2019. And there was an interim commissioner for six months, another interim commissioner for about a month, Steven Hahn was finally confirmed in December of last year.

Mike McCaughan:

I’m not sure what Dr. Hahn’s hopes and dreams were in taking the job, but I would be astonished if he stays on into a second Trump term. The way things have gone I think it’s pretty clear that there’ll be a lot of turnover in HHS. I very much doubt that Secretary Azar will be back for a second term. And I very much doubt Commissioner Hahn will come back after the election, or after the inauguration, for a second term. And that then leaves open the question of who Donald Trump might have running HHS and who they might have running FDA. And the range of possibilities is really quite astonishing in that scenario.

Mike McCaughan:

But even leaving aside the leadership, I also would speculate that a reelection of President Trump, particularly after how in the media partisan fray the FDA has suddenly found itself, I think would also have a … The potential that a lot of folks within the agency, who probably didn’t vote for Donald Trump the first time, and were definitely not excited that he won, but have soldiered on for four years, there might be a real lack of interest in continuing to do so for the next four years, in the event of a reelection. So I will be keeping an eye on a lot of the more senior, established career leadership who really built the culture and climate in FDA, and whether they would just decide that enough is enough and they’re going to move on in the scenario where President Trump is reelected.

Mike McCaughan:

At the risk, honestly, either way, because there’s a bunch of folks who have been at the agency a long time and one way or another will move on eventually. So I guess I would think, in a weird way, I’m sure the reaction in the short term for Donald Trump winning is, it’s business as usual at FDA. And to a certain extent it will be. But I would be actually quite nervous about whether the climate we’ve had at the agency, really for the last almost 10 years now, but certainly the last five, would be sustainable for much longer in a second Trump term. A Joe Biden victory obviously brings tons of changes, new leadership across the department, and certainly at FDA. I think the immediate reaction, appropriately for most investors, would be to be a little skittish and things are going to change or get tougher.

Mike McCaughan:

And that’s not entirely wrong headed. For me, I feel similar to the way I did four years ago, when I thought, if you were going to guess what a new FDA Commissioner would look like under a Republican, I said just think about Scott Gottlieb and I said, “That’s the kind of person,” and it turned out to be exactly the person. But I think that’s the sort of individual that a Republican would have chosen. And maybe even surprisingly, Donald Trump, who is an unconventional Republican, ended up making a somewhat conventional FDA commissioner choice. For a Democratic administration, I think folks should look at someone like Josh Sharfstein who, like Scott Gottlieb, had previously been the deputy commissioner at FDA. He was there the very start of the Obama Administration and, kind of like Scott Gottlieb, he was following FDA before he joined it and he’s been following and involved and and engaged in policy issues since he left the agency.

Mike McCaughan:

And again, it’s not to say he will be the commissioner, but someone like him or who thinks like him would be the kind of profile I would be looking at. And I think the reason it might, at least initially … I don’t want to overstate it, but it might be troubling to some biotech investors is, I’m sure there would be some conversation or discussion around things like, has accelerated approval gone too far? Have we gotten too easy? Should we demand more prior to approval of some of these therapies? And I bet there would be a sense that some of these closer calls that have tended to go in favor of sponsors would really start to trend against them. But I guess I would argue that probably, just thinking about the long-term health of the agency and the credible and confident regulator, that probably ends up actually being better over the medium term.

Mike McCaughan:

You’re much more likely to retain some of the talented people at the agency now, who are excited about their mission, and ultimately it’s really about having confident and credible regulators that works out the best for the drug industry. Even if it feels like a little period of the pendulum swinging back a bit from where it’s been the last few years. So a long and quasi-vague answer. I suspect the investor reaction would be a Trump reelection is really good news, things are just like they have been, and a Biden victory is a little more unsettling. And it’s not an unreasonable action in the short term, but I would certainly argue, as you think two, three years out, there’s probably less risk to the agency if Joe Biden is the victor.

Rick Weissenstein:

And Mike, I don’t think it’s possible to even overstate just how important the leadership at the FDA right now is. And how much credibility they’ve built up on the Hill and in the administration. And just how … I mean, they’ve been there a long time but they’ve also gotten to the point where, honestly, Janet Woodcock can, for all intents and purposes, make a drug happen on her own and nobody even complains about it. Nobody looks twice. That’s a type of autonomy that very few regulators have and it’s been questioned a bit of late, with the president and some others stepping in there. I mean, do you think that they’re that concerned, that they might leave?

Mike McCaughan:

I mean, the big issue has been that this group of leaders, and Dr. Woodcock mean key among them, but there’s a relatively large group of them who’ve been together for quite a long time. But you [inaudible 00:18:35], at some point, all of these people will be leaving the agency. And the question is, are the people who are stepping in behind them, [inaudible 00:18:47] in the oncology group, for example, is another one who hasn’t been at the agency anywhere near as long as Janet Woodcock. But he’s been there for 20 years. And so, when they leave, do their successors step in and just continue as they have and feel the same level of self-confidence to keep doing it? And have that same credibility with, as you mentioned, folks on really both sides on the Hill?

Mike McCaughan:

Or are they stepping in and finding themselves facing, for the first time, the type of criticism that both Dr. Pazdur and woodcock used to have to deal with and overcome. And how do you react to that if you’ve never had it before? So the climate where the transition happens will be really important. And, again, I don’t have any particular knowledge about what anyone will do after the election. To me, there is a large group of folks there who probably were shocked and astonished that Donald Trump won and they weren’t really excited about it. But they soldiered on. And I just wonder if the odds of them signing up for another four years of trying to soldier on, how great that will be after the last few months, and thinking about the potential of this kind of climate continuing indefinitely.

Rick Weissenstein:

With that, let’s move on to our last segment, which we call prognosis. We’re going to look at upcoming events outside the FDA that could have an impact on the drug sector. Mike, I wanted to ask you to revisit a topic that we’ve talked about in the past. The president, since we last did our podcast, has issued even more executive orders. He released several over the past month. Do you really think we’re going to see any details more than what we’ve seen? Are any of them going to be implemented? By my count, you’ve got one for reimportation from Canada, you’ve got one for Medicare part B, part D, you’ve got the rebate rule. I’m probably missing one or two here. Are these all for show or do you really think anything comes of them?

Mike McCaughan:

Yeah, I mean, it is remarkable how many headlines the president has been able to make out of fixing drug pricing. And not to say that there’s been nothing that’s happened as a result, because there actually has been, over the four years, a fair number of changes around the margins in different programs. But you mentioned the part B and now part D. Most favored nation rule, as you said, the president refers to it now. By my count, it’s been national news that the president is getting international level prices for US drugs and Medicare. At least four times, based on the same proposal. Which at this point is still not even issued as a proposed rule, much less a final rule, much less as an operating program that will involve vendors signing up physicians and so forth.

Mike McCaughan:

So it’s been an amazing source of headlines that seem, again, to give people the impression that the president has done a great job on drug pricing. If you look the polling data, it’s one of the few issues … it might be the only issue in healthcare where he polls better than Joe Biden. But the headlines are what the president, and the follow through is there, he’s great at signing an order and then campaigning on the policy that implies having already happened and had the result that he intended. Which is usually about eight steps later and not always where things go did. The one where you didn’t mention was something on 340 B pricing, the drug discount program, focusing specifically on insulin. It’s a very esoteric issue that, if implemented, would mean federally qualified health centers would have to charge no more for insulin than what they pay ford it.

Mike McCaughan:

And at least for some [inaudible 00:23:06] that would be a penny. And I think that’s why, during the debate, if anyone remembers that, seems like a lifetime ago, the president said insulin is now cheap like water or it’s just like water. And people were baffled, they had no idea what he was talking about. But he was talking about that executive order, which he did sign, but not only has it not been implemented, it was supposed to come out as a final rule. Which would take effect relatively quickly. And instead based on a lot of pushback from the health centers and others, it came out as a proposed rule. So it’s now subject to comments that go past the election and if were to be implemented, next year at the earliest, it already served its purpose. I mean, he’s telling people insulin is now as cheap as water and that was the intent of the rule, not the reality.

Mike McCaughan:

So there’s an awful lot of that, translating the headlines, which repeat policy ideas that have not gone anywhere in this first term. And there’s no reason to think they’re going to get done before election day. I guess I would say there’s one policy that has advanced, at least in the regulatory reform, which is the reimportation rule. That is an FDA rule, as a matter of fact, but it is intended to address drug pricing by allowing states, like Florida and others, to create programs that import drugs from Canada and make them available to their consumers at Canadian level prices. And that’s an issue that’s been talked about for 20 years now, that there’s no reason why people in the US shouldn’t be able to access drugs at Canadian prices.

Mike McCaughan:

There’s a lot of reasons why it’s not a very smart way to get to that goal but now the reg has come out, and again, it’s actually a final rule. It actually is on the books. And it actually still doesn’t mean that anyone is importing drugs from Canada just yet. The rule has a 60 day delay before its effective dates. And I believe that puts it right at December 1st, when the rule actually, formally takes effect. And that is when Florida and those other states can actually submit an application, essentially, to FDA to get permission to run an importation program. And FDA is supposed to consider that application and make sure that it can be done safely and save money for consumers. Both of which are not obvious that they’re going to be all that easy.

Mike McCaughan:

And with no specified deadline, FDA is supposed to respond to Florida and say, “Sure, go ahead and do it.” Or if they disagree, they say, “It’s not good enough, you can’t do it.” So again, we have something that won’t have an impact until well after election day. The caveat being that importation is very popular with Democrats, so this one’s on the books, and I suspect that it’s real future will depend on litigation as well as … I would almost argue that a Joe Biden victory makes it more likely that the administration will continue down this path. I think a Donald Trump reelection, it’s possible they’ll just lose interest in the whole thing and forget that it was even on the books. But that’s where we are. The headlines are terrible for the drug industry. The ability of Donald Trump to get this attention is definitely not helpful, but the substance so far has not matched up to anything like what the president describes as having been accomplished.

Rick Weissenstein:

And the Canadian reimportation is really interesting because the Canadian health minister has said that they will not allow the Canadian pharmacies to participate in this because there aren’t enough drugs left over to return to the US in any sort of bulk. And New York is another state that wants to do this, and I think I mentioned this on the last time, that I looked it up, and when you add Florida and New York together, it’s bigger than Canada. And we use a lot more drugs per person. So I can understand why the Canadian minister would think that that was not the best idea. However, I assume you would agree with me that just the fact that the federal government is moving in a direction, it appears they’re going to say that reimportation is safe and can be done safely, is a bad precedent for the industry. That this would be the first administration that’s even entertained that in any way. So I think, as a precedent, it’s very bad. But I think you’re right, as a actual thing to lower drug prices, it’s probably less interesting.

Mike McCaughan:

Yeah, exactly right. And of course, I always highlight Florida, and as do you, because we know that’s very near and dear to the president’s mind when he thinks about this proposal. It’s really, for him, all about the electoral votes in Florida. But plenty of other states want to do it.

Rick Weissenstein:

I think, were it to work, most states would. But I think we’re [inaudible 00:28:24] work that way. Well with that, I think we’re bumping up against our time. Mike, thank you as always. Always fascinating and always plenty going on. And every time we do one of these, we think, “Oh well, I wonder what we’re going to talk about next time?” And lo and behold, we never have any problems. So hopefully everyone enjoys this and we’ll get back to you. Maybe about a month or so from now, we’ll be right up against the elections or maybe shortly thereafter, we’ll figure out what the best way to do it is at that point. And I’m sure there’ll be plenty to talk about. So, Mike, I can’t thank you enough, as always. And thanks everyone, be well and hang in there and we’ll talk to you soon. Bye now.

---