Day 1 at JP Morgan: Pricing is top of mind for pharma CEOs
J&J CEO Alex Gorsky spoke Monday at the JP Morgan Healthcare Conference. File photo
Fortune described the annual JP Morgan Healthcare Conference as the biopharmaceutical industry's Burning Man. From what I can tell so far, that's the perfect way to characterize this sprawling, crowded event.
An estimated 9,000 people arrived in San Francisco this week, with plans to attend the conference as well as the myriad supporting events filling the city. About 450 companies are expected to present over the next four days, and the Westin St. Francis hotel on Monday was crowded with a mix of Secret Service personnel preparing for Vice President Joe Biden's talk and a sea of blue and gray suits.
There are lines everywhere — to enter a room, to leave a room, to get on the elevator, to buy a coffee, to throw away your coffee cup, to check your coat. People push a little when it's time to board the elevators.
There is also a general feeling of camaraderie. “Do you want a coffee?” asked the CFO of the small Finnish biotech I happened to be sharing a table with in the packed hotel lobby. “Are you going to the tweet-up?” asked a reporter at The Wall Street Journal.
No one is here to make friends, though. They came because the CEO of every major (and minor) pharma, biotech, PBM, pharmacy retailer, and public and not-for-profit health system is here, as are their investors, their venture capitalists, and the journalists who cover them.
And if one theme emerged for drugmakers on day one of the 35th annual JP Morgan Healthcare Conference, it was this: The questions being asked about how drugs are priced are weighing heavily on pharma CEOs, and they know that the issue is not going away anytime soon.
Novartis CEO Joe Jimenez went so far as to remind investors that the drugmaker generates one-third of its business in the U.S., unlike many of its competitors that get half of their revenue from the U.S. “The changes we have made internally and externally will position us well,” he said Monday. “We have a lower risk profile.”
Later in the day, Johnson & Johnson CEO Alex Gorsky made similar remarks, noting that at the same time that the demand for healthcare services and goods is growing there is “increasing vigilance” and “increasing scrutiny” around drug prices, particularly for cancer therapies. “It's our responsibility to be responsible actors,” he said.
1. It should come as no surprise, then, that Novartis's Jimenez is not one to mince words. “Entresto was a bit of a disappointment,” he said.
Sales of the closely watched heart-failure drug, approved in mid-2015, have been slower than expected, despite the range of initiatives — including numerous risk-sharing deals with insurers and a handful of campaigns, including a direct-to-consumer ad — put into play by Novartis. But favorable treatment guidelines in the U.S. and Europe are promising, Jimenez said, and Novartis has invested in a primary-care field force in the U.S. market that is up and running. “Entresto is back on the right track,” Jimenez said. “It's not going to be a rocket ship like Cosentyx, [but] it will become a blockbuster.
2. If drugmakers have any lingering doubts about the purchasing power and influence of integrated delivery networks, it's time to think again.
Kaiser Permanente, a not-for-profit health plan and hospital network mainly serving California, is one such example. Kaiser Permanente CEO Bernard Tyson said last year the hospital system employed 18,000 physicians, who wrote 78.3 million prescriptions and delivered 101,000 babies. Its members and patients refilled 19.3 million prescriptions in 2016. But the stat that got the most attention in the elevator after Tyson's talk was this one: Of the 100 million primary-care visits conducted each year, 52% were done virtually.
3. Gilead Sciences' Truvada for pre-exposure prophylaxis is next in line for a commercial-support boost in 2017.
Gilead Sciences CEO John Milligan told a standing room-only crowd that a U.S. sales force team would be deployed in support of the preventative HIV drug later this year. Between 80,000 and 90,000 patients in the U.S. are currently taking the drug as a preventative tool against HIV. But that's not all Gilead has in store on the marketing front. Milligan noted the mix of advertising support Gilead plans to put behind its HCV franchise — which includes the blockbusters Harvoni and Sovaldi — with plans for unbranded and branded campaigns in the U.S. and Japan.