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Why Pharmaceuticals Are So Complicated In The U.S. | CNBC Marathon

CNBC・46 minutes read

The United States faces exorbitant drug prices due to complex insurance and pharmacy relationships, impacting millions of Americans struggling to afford medications. Biontech collaborates with Pfizer to develop an effective COVID-19 vaccine with 95% efficacy, leading to a significant financial success and FDA approval.

Insights

  • The United States has the highest drug prices globally due to complex insurance and pharmacy relationships, impacting nearly one in four Americans who struggle to afford medications.
  • Biontech's successful pivot to mRNA technology for COVID-19 vaccines, partnering with Pfizer, resulted in a highly effective vaccine with 95% efficacy, distributed globally, and marked by significant financial success.

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Recent questions

  • Why are drug prices in the United States so high?

    Drug prices in the United States are exorbitant due to complex insurance and pharmacy relationships. The system allows for high prices, with pharmacies like CVS, Walgreens, and Rite Aid being major sources of prescription drugs for millions. Additionally, discount card vendors negotiate with pharmacies to offer discounts to customers, collecting fees from the pharmacies when the card is used. This intricate network of relationships and negotiations contributes to the high cost of medications in the U.S.

  • How did Biontech pivot to develop a COVID-19 vaccine?

    Biontech, primarily focused on cancer treatments, redirected resources to develop a COVID-19 vaccine in early 2020. The company pivoted to mRNA technology for a rapid vaccine response and partnered with Pfizer to develop mRNA-based vaccines. By starting clinical trials and scaling production quickly, Biontech was able to enroll over 43,000 participants in Phase three trials to measure vaccine efficacy against COVID-19. This strategic shift in focus and collaboration with Pfizer led to the successful development and distribution of the Pfizer Biontech vaccine.

  • What led Johnson & Johnson to split into two companies?

    Johnson & Johnson is splitting into two publicly traded companies to separate its consumer business from pharmaceutical and medical devices. Legal battles and liability issues, such as a $5 billion settlement over nine years for its involvement in the opioid crisis, have prompted this decision. By cutting products and facing lawsuits related to talc-based baby powder, Johnson & Johnson aims to streamline its operations and focus on core business areas while addressing legal challenges and financial implications.

  • How did Biogen's drug Aducanumab for Alzheimer's disease fare?

    Biogen's drug Aducanumab for Alzheimer's disease faced mixed reception due to questions on efficacy, prescription, monitoring, access, and insurance coverage. Despite proceeding with an FDA application for Agile, concerns arose about the drug's effectiveness, with a small observed effect size and associated risks like brain swelling and bleeding. The FDA used accelerated approval for Agile, focusing on removing amyloid from the brain rather than slowing dementia, leading to resignations from the FDA committee post-approval and ongoing debates on reimbursement by insurers like Medicare.

  • What impact did the Pfizer Biontech vaccine have on the COVID-19 pandemic?

    The Pfizer Biontech vaccine played a significant role in combating the COVID-19 pandemic by showing 95% efficacy in activating the immune system against the virus. With over 1.75 billion doses distributed globally, the vaccine gained full FDA approval in August, marking a step towards normalcy. Pfizer also submitted data showing that a booster shot six months after the second dose restores immunity to 95%, with plans for emergency authorization for children ages 5 to 11. Biontech's success in developing the vaccine and advancing oncology work alongside COVID efforts has been instrumental in the fight against the pandemic.

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Summary

00:00

US Drug System: Profits, Prices, and Evolution

  • The United States pays more for drugs than any other country, profiting from a broken system.
  • The virus has spread worldwide, not just regionally.
  • Johnson and Johnson plans to split into two publicly traded companies.
  • U.S. retail pharmacies made a record $465 billion in revenue in 2020.
  • Drug prices in the U.S. are exorbitant due to complex insurance and pharmacy relationships.
  • Pharmacies like CVS, Walgreens, and Rite Aid are major sources of prescription drugs for millions.
  • Pharmacists are crucial healthcare providers, often the last point of contact for patients.
  • A dynamic pharmaceutical delivery system helps consumers save money.
  • Nearly one in four Americans struggle to afford medications, per a March 2019 poll.
  • The history of pharmacies evolved from compounding drugs to retail models with soda fountains in the late 1800s and early 1900s.

12:34

Discount card vendor aids consumers, pharmacies, and Biontech.

  • Discount card vendors negotiate with pharmacies to offer discounts to customers, collecting fees from the pharmacies when the card is used.
  • GoodRx X, a discount card vendor, collected over $488 million in fees from its discount card programs in 2020.
  • GoodRx X works with major PBMs and pharmacies to provide consumers with better pricing options than their insurance.
  • Discount cards are often used by people with health insurance to access network or discounted rates bypassing their insurance.
  • Pharmacies benefit from discount cards by receiving revenue from customers who might not otherwise fill prescriptions due to high prices.
  • GoodRx X aims to help consumers navigate the complex healthcare system by finding better prices through their marketplace.
  • Biontech CEO and co-founder redirected resources to develop a COVID-19 vaccine in early 2020.
  • Biontech, primarily focused on cancer treatments, pivoted to mRNA technology for rapid vaccine response.
  • Biontech partnered with Pfizer to develop mRNA-based vaccines, starting clinical trials and scaling production quickly.
  • Over 43,000 participants were enrolled in Biontech's Phase three trials to measure vaccine efficacy against COVID-19.

26:04

"Pfizer Biontech Vaccine: Efficacy, Approval, Success"

  • The Pfizer Biontech vaccine has shown 95% efficacy in activating the immune system against the virus.
  • Over 1.75 billion doses of the Pfizer Biontech vaccine have been distributed globally.
  • Biontech has seen significant financial success, with a market cap of nearly $60 billion and over $4.5 billion in profit in the first two quarters of 2021.
  • The Pfizer Biontech vaccine gained full FDA approval in August, marking a step towards normalcy.
  • Pfizer submitted data to the FDA showing that a booster shot six months after the second dose restores immunity to 95%.
  • The Pfizer Biontech vaccine is authorized for children 12 and older, with plans for emergency authorization for ages 5 to 11.
  • Biontech is advancing its oncology work alongside COVID efforts, initiating clinical trials for cancer vaccines.
  • Biontech acquired Kite Pharma Cell Therapy platform to accelerate novel cell therapies in the US.
  • mRNA technologies have raised billions, with over 150 mRNA-based vaccines and therapies in development.
  • Johnson and Johnson is splitting into two publicly traded companies, separating its consumer business from pharmaceutical and medical devices.

39:28

Johnson & Johnson's Turbulent Business Landscape

  • Johnson & Johnson has cut 100 products from its assessment due to the COVID-19 pandemic, including all talc-based Johnson's baby products.
  • Legal battles and liability issues have plagued Johnson & Johnson, with a $5 billion settlement over nine years for its involvement in the opioid crisis.
  • More than 20,000 lawsuits allege Johnson & Johnson's baby powder caused mesothelioma and ovarian cancer.
  • Johnson & Johnson ceased selling talc-based baby powder in the US and Canada in May 2020, facing a $2.1 billion fine in June 2020 for a baby powder cancer case.
  • The company reported profits of over $15 billion in 2019 and $14.7 billion in 2020, with free cash flow increasing from $19.9 billion to $20.2 billion.
  • Johnson & Johnson separated its consumer business due to changing business models and different synergies with pharma and medtech.
  • The company put talc claims into a separate entity that filed for bankruptcy protection, aiming to focus on the core business.
  • Johnson & Johnson's segments offset each other, but potential issues in pharma or medtech could impact the consumer business.
  • Concerns exist about the smoothness of the consumer business separation process, including stand-up costs, dis-synergies, and tax implications.
  • Biogen's drug Aducanumab for Alzheimer's disease faces mixed reception, with questions on efficacy, prescription, monitoring, access, and insurance coverage.

52:00

FDA Approves Controversial Alzheimer's Drug Aduhelm

  • Biogen proceeded with an FDA application for Agile despite a lack of benefit found in a previous trial.
  • The Alzheimer's Association supported Agile's approval based on existing science.
  • The drug's effectiveness was questioned due to a small observed effect size and associated risks like brain swelling and bleeding.
  • The FDA used accelerated approval for Agile, focusing on removing amyloid from the brain rather than slowing dementia.
  • Harvard University's Dr. Aaron Kesselheim and others resigned from the FDA committee post-approval.
  • Biogen's stock rose significantly after FDA approval, with expectations of high revenue from Aduhelm.
  • Biogen faced criticism for the high price of Aduhelm, leading to a price cut in 2022 and ongoing debates on reimbursement by insurers like Medicare.
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