Amino Weekly: New FDA Commissioner Criticizes Orphan Drug Act; Johnson & Johnson and MSD Announce Layoffs in China

Amino Observation - Original Production by the Innovative Drug Team

Author | Huang Kai

/ 01 /

FDA New Director Confirmed

In the Trump 2.0 era, the new FDA director has been confirmed — Marty Makary, a pancreatic surgeon and prolific writer.

Makary was born in Liverpool, England, and is currently the director of the Department of Transplant Surgery at Johns Hopkins University.

Based on his past statements, he does not share the same anti-vaccine stance as potential new Health Minister Kennedy. In an editorial published in 2021, he described himself as "pro-vaccine."

But he opposes broad vaccine mandates and has criticized COVID vaccination policies targeting young people and children. For example, in a journal article this year, he and other researchers argued that university requirements for students to receive a COVID booster shot in 2022 were "unethical" because the harms outweighed the benefits.

Makary has written numerous papers published in medical journals, with topics ranging from pancreatic surgery protocols to patient safety and healthcare costs. Among them is a 2016 critique of the Orphan Drug Act, accusing pharmaceutical manufacturers of "manipulating the system."

It is not difficult to foresee what changes Marty Makary will push for after taking office, which is highly anticipated by the pharmaceutical industry.

Trump said in a statement on Friday that the FDA "has lost the trust of Americans" and needs Makary to "correct the course and refocus the agency."

/ 02 /

Commercial Health Insurance May Become the Payment Increment

Regardless of how the FDA changes, the impact on China's pharmaceutical environment is limited, and the ecosystem continues to improve.

One thing is certain: the multi-layer insurance system seems to be advancing, especially as commercial health insurance may become a new avenue for incremental payment.

In 2022, the premium income of commercial health insurance accounted for 10.2% of total health expenditure, while the expenditure accounted for only 4.2%. In terms of insurance penetration and density, the development level of commercial health insurance in China is still insufficient compared to overseas.

The low level of development of commercial health insurance in China is due in part to the lack of data resource connectivity.

The comprehensive health information of the population is mainly held by medical insurance and public hospitals, which commercial health insurance companies cannot access. Therefore, the health insurance products they design cannot be priced accurately or have benefits set reasonably.

Since September, there have been frequent catalytic events in the industry regarding commercial health insurance, with participation from the National Healthcare Security Administration, the insurance industry, and medical institutions. The common thread among these events revolves around the sharing and interaction of information data, as well as practical implementation. With the catalysis of various policies and events, one of the core bottlenecks in the development of commercial health insurance is expected to be resolved.

Anyway, commercial health insurance is likely to bring about a certain increase in payment.

/ 03 /

AI Medical Revenue Generation Becomes More Difficult

However, the increase in payment may mainly focus on the pharmaceutical field, while the increase in medical services may be relatively limited.

On November 20, the National Healthcare Security Administration announced that, in response to issues such as "excessive, expensive, and repetitive examinations" in hospital radiology services, it recently issued the Trial Guidelines for Establishing Radiology Examination Price Items. The aim is to unify, integrate, and standardize current radiology examination items and promote reasonable pricing for radiology services.

Regarding the recent popularity of AI-assisted diagnosis, the National Healthcare Security Administration clearly stated: After collecting the fees for the corresponding diagnostic examination, it is not appropriate to charge patients an additional fee solely for AI-assisted diagnosis.

The core reason is that China's national medical insurance system believes that, although artificial intelligence technology currently plays a role in assisting diagnosis or improving efficiency to a certain extent in clinical practice, it still cannot replace physicians' diagnoses. There is no independent medical service output yet, and the quality and effectiveness of auxiliary diagnosis are difficult to determine.

This also means that although AI medical service products can improve efficiency, they are difficult to use as independent products in medical scenarios. This also requires participants in the AI medical field to continue exploring new models.

/ 04 /

Johnson & Johnson, Merck China Layoffs

It's not only AI healthcare companies that are facing difficulties, but also foreign enterprises. The latest news is that Johnson & Johnson and Merck are cutting jobs in their China divisions.

Bloomberg reported that Johnson & Johnson's layoffs are part of its restructuring of operations in China and affect employees in "multiple departments," with the most critical being the surgical products division.

In response to this move, Johnson & Johnson stated that the recent organizational changes are aimed at optimizing our business operations. To continue meeting the needs of patients around the world, Johnson & Johnson must adapt and develop our business in a complex and rapidly changing external environment.

The reasons for the layoffs are not hard to guess. In last month's quarterly conference call, Johnson & Johnson specifically mentioned that its business in China faced headwinds: the centralized procurement and anti-corruption measures impacted operations.

The impact of centralized procurement is greater, with an increasing number of local suppliers offering products at lower prices, causing pharmaceutical companies from the West to lose contracts. Under this logic, layoffs are inevitable.

MSD's layoffs mainly involve its diabetes team in China. The company sells the diabetes drugs Janumet, Januvia, and Steglatro in the Chinese market. Global sales of these treatments are declining due to competition with generic drug rivals in certain markets.

Of course, for Merck, the layoffs also come as the company deals with a sharp decline in China's demand for the HPV vaccine Gardasil, which led to an 11% year-over-year drop in sales of the blockbuster vaccine in the third quarter.

In the past few years, foreign enterprises have faced increasing business pressures in their China operations, leading to a rise in layoffs. Johnson & Johnson and Merck are not the first, nor will they be the last.

/ 05 /

The World's First Innovative Diabetes Drug Fails to Sell Well

Just because foreign companies are struggling doesn't mean that local pharmaceutical companies can rest easy.

On November 22, Huamei Pharmaceuticals announced that its collaboration with Bayer on the hypoglycemic drug Dorzagliatin has been terminated, and the received 1.5 billion yuan will not be refunded. This also highlights a fact: drugs with limited efficacy cannot rely solely on sales to drive success in China.

The selling point of Dorzagliatin is that it is the first original new drug with a completely new mechanism in the diabetes field in the past decade, and also the world's first original new drug for type 2 diabetes launched in China.

However, it is barely satisfactory in terms of efficacy. On one hand, it is slightly insufficient in its blood sugar lowering effect; on the other hand, it does not have an advantage in terms of safety. For example, regarding hypoglycemia, although the company repeatedly claims it is lower than other drugs, clinical data does not support this:

According to its Phase 3 clinical data, the incidence of hypoglycemia in the combination therapy group was 0.8%. Compared with drugs such as dapagliflozin, it is basically at the same level. In the registered clinical trial of dapagliflozin combined with metformin, the incidence of mild hypoglycemia at 10 mg was 0.7%. From real-world feedback, the proportion of hypoglycemia also appears to be very common.

In addition, dorzagliatin has two limitations. First, although it shows short-term benefits, it may be ineffective in the long term, lacking sustained efficacy. Second, it does not reduce risks such as cardiovascular and cerebrovascular events. Dorzagliatin not only fails to lower high-density lipoprotein cholesterol or increase low-density lipoprotein cholesterol but instead raises triglyceride and total cholesterol levels. High-density lipoprotein cholesterol, triglycerides, and total cholesterol are key factors contributing to a significant increase in major adverse cardiovascular events.

Because of this, even a powerhouse like Bayer has struggled to achieve satisfactory results in promoting dorzagliatin. For other competitors, the challenge will only become more daunting. This further drives pharmaceutical companies in China to focus on product differentiation.

For more detailed content, click to read."Bayer Stumbled"

/ 06 /

New Changes in Psoriasis Treatment

Products with differentiation naturally attract attention from the global pharmaceutical community. Last week, Johnson & Johnson's clinical success with the oral IL-23 receptor (IL-23R) targeted antagonist icotrokinra sparked widespread discussion worldwide.

In terms of efficacy, icotrokinra does not have a complete advantage. For example, the proportion of patients achieving PASI 90 after 16 weeks of using AbbVie's risankizumab reaches 65.6%, which is comparable to the effect of icotrokinra after 24 weeks of treatment.

However, the advantages of oral formulations can still complement Johnson & Johnson's existing pipeline. Liza O'Dowd, Vice President of Johnson & Johnson, stated that Icotrokinra may help address the needs and preferences of patients with plaque psoriasis.

A simple comparison of competitiveness in the field of oral preparations for psoriasis shows that Icotrokinra has significant advantages.

Globally, in the field of plaque psoriasis, only Amgen's Apremilast and Bristol-Myers Squibb's Deucravacitinib are oral medications. Among them, Deucravacitinib is regarded as a rising star in this field.

But for now, if Icotrokinra is approved, it will inevitably deal a blow to it.

In terms of efficacy, the PASI 90 response rate for Deucravacitinib at week 16 is around 27-36%, and the PASI 90 response rate at week 24 is only between 32%-42%. As the saying goes, when the gods fight, Deucravacitinib suffers.

From the introduction of Ustekinumab to the current iteration of Icotrokinra, the IL-23 target has fully demonstrated the core of competition: not only internal competition but also external expansion.

In the future, pharmaceutical companies in China will also participate in the competition in the IL-23 inhibitor field. It is expected that they will also be able to secure a position through differentiated breakthroughs.

For more detailed content, click to read."The 'Involution' Standard Answer Provided by MNC"

PS: Welcome to scan the QR code below to add Amino's WeChat for communication.