Life science and legislative convergence: 4 questions with Arbor Pharmaceutical CEO Ed Schutter

With the 2019 Georgia legislative session in full swing and potentially game changing recent comments from U.S. Health and Human Services Secretary Alex Azar, Paul Snyder, VP of Healthcare for Georgia Bio partner Write2Market spoke with Arbor Pharmaceutical CEO Ed Schutter about what the life sciences industry needs from state policy makers in 2019.

Paul: What does the Georgia life sciences industry specifically need from state policy makers in 2019?

Ed: The state’s investment in the state run capital fund, Invest Georgia, reached $40 million in 2018. To our knowledge, $20 million has been invested through the responsible partners to date. We need the state legislature and Invest Georgia leadership to designate some of that funding for medtech and bio innovation. If called upon, there are multiple resources here to help make decisions on where those investments should be made including the BioMed Investor Network, the Georgia Research Alliance and others.

Editor’s note: In August 2018, the American Cancer Society hired Bob Crutchfield as the managing director of BrightEdge Ventures, a philanthropic fund with institutional capital focus to find, value, structure, manage and exit cancer-focused investments with disciplined underwriting and operational excellence.

Ed: We also need the legislature to require transparency on rebates taken by PBMs. I have a personal experience that in the case of one generic cholesterol drug, the actual ingredient cost for 30 pills is $1.45. The PBM that Arbor uses (one of the top 3) charged me $97 for that fill, reimbursing the pharmacy $27 and keeping $70 as profit. This needs to change as employers and patients are assuming greater and greater responsibility for more these costs with zero transparency into where their money is going.

Our legislators would be shocked to know how much of our gross sales goes to the middleman (mainly PBMs and distributors) when these companies contribute nothing to R&D and in the case of PBMs, don’t even manage the  inventory for pharmaceutical therapies. From our internal assessment of the major PBM we use for our employees, they pass zero of the rebate back to us that we pay them for Arbor drugs (which is up to 38%). I don’t understand how they can say they pass the rebates on when in our experience, none was passed back to us as an employer group.

Paul: How does Arbor help patients access the medicine they need, but can’t afford?

Ed: We have co-pay assistance programs across all of our therapies. We also make them free for anyone who needs them with an annual income below the poverty line. But it is important to separate pharmacy benefit from medical benefit. Arbor has the most effective drug for hypertension in its class and the clinical data to back up that claim. Yet 30 percent of patients on therapies in that class remain hypertensive, which can lead to stroke and other acute conditions.

However there are step edits for patients to get access to our drug, which limits the use of our drug to many patients that may require this therapy.The healthcare system, especially including payers, needs to encourage the use of the most effective drugs in class to reduce potential downstream costs from events related to less effective therapy. We need to incentivize commercial plans to take a longer view of their members’ long-term health than just one year.

Paul: What are the most common misperceptions about the industry among policy makers?

Ed: I think they recognize our industry adds value to the economy generating educated, high paying jobs. I’m less confident they understand the complexities of FDA navigation and the cost of developing breakthrough medical therapies. We very recently received FDA approval for a new drug, wherein the FDA review process filing fee alone cost $2.5 million for a 10 month review. The approval occurred on precisely the exact last day of the 10 month process. It is an improved version of a product we already had on the market and it still took a total of six years and over $15 million to develop. For entirely new therapies, the development cost is double the time and hundreds of  millions of dollars and the development time consumes half of our patent life..

Paul: What is the most important thing you would like state legislators to know?

Ed: Georgia has generated a significant number of bio-pharma innovations particularly in HIV and hepatitis C therapies coming from scientists at Emory. Georgia Tech and GCMI have shown high levels of proficiency bringing medical devices out of the clinical or engineering mindspace and into commercial use. But we need stronger legislative support including tax incentives to ensure life science innovators and companies born here stay here and can access the right talent.

Industry growth is going to need to happen from within. We will never get 3M to move to Georgia, but the ecosystem elements exist to grow the industry with the right legislative support. The strength of the life sciences industry in Boston and Raleigh was not an organic occurrence. It was intentionally driven by legislative and industry partnerships.

If Invest Atlanta took a close look at the recent history and current healthcare innovation opportunities coming from the local ecosystem, and if the state created a more friendly environment for young life science companies including tax incentives, grants and low-interest loans, I am confident we would see the industry contribution to Georgia’s economy grow my meaningful amounts for decades.

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