Category: Blog

On January 3^rd, Bristol-Myers Squibb
Co. agreed to purchase Celgene Corp. for approximately $74
billion. Once the deal closes, it will be the largest pharmaceutical
acquisition in history.
The acquisition is driven by Bristol-Myers’ expansion into immuno-oncology drug
manufacturing and the potential to leverage Celgene’s research pipeline to boost
Bristol-Myer’s pipeline in the future. It is expected with this deal that other
drug makers will begin looking at larger style acquisitions to remain
competitive in the evolving drug market.
Such business pickup, however, may draw increased government scrutiny, as
concerns about corporate consolidation and its impact on drug pricing may push
the government to intervene in some of these acquisitions.

With this acquisition, Bristol-Myers will acquire Revlimid, a drug that treats multiple myeloma. Revlimid currently accounts for a majority of Celgene’s profits, grossing approximately $5.8 billion in 2015. Although Revlimid continues to increase in sales each year, it has had to contend with a number of patent challenges. While Revlimid is set to expire in 2024 in Europe and 2027 in the United States, Celgene has agreed to allow India’s Natco Pharma Ltd. capped sales in the United States in 2022 and lifts that cap in 2026. Bristol-Myers’ acquisition of Celgene would make the new company less dependent on a single drug and would also enable Bristol-Myers to take advantage of Celgene’s immuno-oncology research. Bristol-Myers currently markets Opdivo, a drug used to treat metastatic melanoma and non-small cell lung cancer. Bristol-Myers has been working with smaller drug makers in several combination studies to expand Opdivo’s use, and the acquisition of Celgene could allow greater research opportunities.

The last five years have seen a great deal of consolidation within the pharmaceutical industry, as larger firms have been acquiring smaller firms to take advantage of certain “blockbuster” drugs these firms have created. For instance, in 2018, the French drug maker Sanofi purchased the hemophilia spinoff of Biogen Inc., Bioverativ Inc., for approximately $11 billion. With this deal, Sanofi attempted to improve its rare disease portfolio by acquiring a promising research pipeline. Larger scale acquisitions have been less popular than small scale acquisitions mostly due to Pfizer Inc.’s failure to acquire generic drug maker Allergan PLC in 2016.

In 2015, Pfizer announced a deal to merge with Allergan for approximately $160 billion. The deal would have allowed Pfizer to re-domicile for tax purposes in Ireland, commonly known as a tax inversion, and take advantage of Allergan’s generic drug pipeline to build synergies within Pfizer’s lagging production pipeline. Under the Obama Administration, the Department of the Treasury issued new guidance on structural requirements for tax inversions that were explicitly written to block the Pfizer-Allergan merger. Pfizer ultimately ended discussions with Allergan and has not made any new major acquisitions after both this, and the attempted acquisition of British drug maker AstraZeneca PLC in 2014, failed due to opposition by the British government. More recent large scale pharmaceutical consolidation has continued with primarily European firms taking the lead, such as Irish drug maker Actavis’ acquisition of Allergan in 2015 for $70.5 billion and Japan’s Takeda Pharmaceutical Co.’s acquisition of Irish drug maker Shire PLC for $62 billion in 2018.

If other pharmaceutical firms begin large scale acquisitions, as many pharmaceutical executives have spoken positively of, there is likely to be increased regulatory pressure on these deals. The Trump Administration has sought to lower the price of drugs on the market, specifically pointing to Celgene’s Revlimid, which currently costs $719.82 per dose. In 2017, Opdivo cost approximately $13,100 for a monthly dosage. There has already been some congressional scrutiny of the proposed deal, as many congressional representatives have petitioned the Federal Trade Commission and the Department of Justice to examine the acquisition, and whether the transaction will lead to higher drug prices. Neither agency has responded to the proposed deal as of yet, but either agency may intervene before the deal is expected to close later in 2019. Whether any potential antitrust concerns will be raised is still unknown as the Department of Justice declined to block CVS Health’s 2018 acquisition of the insurance company, Aetna. The government will likely look to the price increases that occur after the Celgene acquisition and whether further consolidation follows before they take a more definitive step in regulating pharmaceutical acquisitions.

We rang in 2019 with a federal government shut-down. The thirty-five day shut-down commenced at midnight on December 22, 2018.  On January 25, 2019, President Trump declared the government reopened and funded until February 15, 2019. In the wake of our country’s longest federal government shut-down to date, which might not even be finished, we are forced to examine the very real consequences  for citizens during such times.

            The effects of a long-term federal
government shut-down are insurmountable. The recent shut-down impacted the Food and Drug Administration (FDA) in many ways. The FDA is a crucial player when it
comes to medical products, drugs, and food safety. The recent shut down
certainly effected the FDA’s ability to operate wholly, and subsequently put
our country’s health at risk.

            Thousands of FDA employees considered non-essential
were furloughed and the FDA had to pause routine regulatory and compliance
activities. For instance, during the shut-down, the FDA was unable
to accept new medical product applications that required payment or to review drug
applications that were not user-funded. Applications
typically take several months to review. The FDA’s
Center for Drug Evaluation and Research was forced to put all non-emergency
over-the-counter monograph drug activities
on hold because they were determined not
to address immediate threats to human life and safety. More
than ten drug makers were expecting  FDA
decisions in March, weeks after the agency was expected to run out of money. During the shutdown, the FDA used carryover
“user fee” subsidies to resume review of
certain applications that required a user fee, such as New Drug Applications,
Biologics License Applications, and Premarket Approval applications for medical
devices if the fee had already been paid. Still, the FDA was unable to accept
new user fees during the shutdown. If fee payment was required, sponsors had to
postpone review until the government reopened. Some companies and industry
segments, such as allergenic products, discussed  excepting user fees and chose to rely on
budget authority. Thus, when budget authority lapsed, assessment for those
products ceased, unless review was warranted because there was an emergency
involving the safety of human life.

FDA foreign food inspections continued, almost normally, because they were considered essential. But the FDA basically had to stop inspecting domestic food production facilities during the shut-down. This means threats to the public, like bacteria outbreaks, were potentially going undetected. Much of FDA’s funding appropriated by Congress was put on hold. Therefore, decisions had to be made based on an analysis of importance and imminence. The most urgent inspections would be at facilities with prior safety issues, such as factories with listeria, salmonella contamination, or other hygienic problems. Next came foods that were more prone to contamination. For example, cheese might be a high-risk food, and a facility that manufactures crackers would be low risk, according to Scott Gottlieb, commissioner of the FDA.

Besides the logistical issues of ranking tasks by importance, he went on to explain how difficult the circumstances were for the employees. “We are trying to build accommodation in for people who have unusually difficult circumstances,” Gottlieb said.

            As we
approach mid-February, time will tell how President Trump’s three-week plan
went, and what is in store for the FDA and our health moving forward.

DNA testing companies, like 23&me, Ancestry.com, and
MyHeritage, have gained popularity. In 2017, 12
million people tested their genealogy, doubling the number of people
tested from the previous year. An estimated 1
in 25 American adults have had their DNA tested. Indeed, there are DNA
testing companies for animals, such as Wisdom panel, which is a canine
DNA testing site.

Recently, a genealogy service was used to catch the Golden
State Killer, a serial killer who has been linked to more than fifty rapes and
twelve murders from 1976 to 1986. The case has been cold for decades, but
interest in the case was revitalized with Michelle McNamara’s book entitled I’ll Be Gone in the Dark. The California
police had the Golden State Killer’s DNA in a preserved sample and uploaded his
DNA sample to GEDmatch. GEDmatch is a
website that provides genealogical analysis (such as discovering unknown
relatives) using DNA profiles generated by larger commercial DNA testing
companies. The Golden State Killer’s DNA was matched to the Killer’s distant
relative, allowing the police to narrow down the suspect to Joseph James
DeAngelo, a 72-year-old former police officer.*

The Golden State Killer is not the first case where law
enforcement has used a genealogy site to narrow down or find a suspect. One of
the first cases solved using familial DNA searches was the mutilation and
murder of Lynette White in England in 1988. The White murder was a notorious
unsolved case until the early 2000s when the police found a new DNA sample,
which they matched to a 14-year-old boy whose DNA was on file. The 14-year-old
boy led to his uncle, who confessed to the murder.*

Since this is a new technology, it is unclear how and what
type of Fourth Amendment protections the courts will provide to DNA data
obtained through commercial genealogy testing. The courts may apply the third-party
rule, which allows police to search—without a warrant—information given to a
third party because a person does not have a reasonable expectation of privacy
in information he voluntarily turns over to a third party. The courts have
applied this doctrine to allow warrantless searches of bank records, U.S. v. Miller, 425 U.S. 435 (1976),
phone numbers dialed, Smith v. Maryland, 442 U.S. 735 (1979), and
email addresses, U.S. v. Forrester,
512 F.3d 500 (9th Cir. 2008). Courts might rule that, like historical cell site
information from a suspect’s cellphone, genetic information provides an
“intimate window into a person’s personal life.” But this is unlikely since the
courts allow law enforcement to obtain DNA samples from suspects and analyze
the sample by running it through criminal databases. Maryland v. King, 569 U.S. 435 (2013).

The American Civil Liberties Union stated in an op-ed
piece that uploading a suspect’s DNA profile on a public site, like
GEDmatch, infringes on the suspect’s privacy right because the penalty for his
crimes does not include releasing information about his entire genetic makeup.

Before the courts start hearing cases on familial DNA
searches, Maryland and the District of Columbia have banned familial DNA
searches. Md. Code Ann. Pub. Safety § 2-506; D.C. Code § 22-4151. Other states,
like California,
Virginia,
and Colorado,
regulate the police’s use of DNA searches.

Companies have also released policies on providing data to
law enforcement. 23andme announced in a Privacy Statement that
the company will not provide information to law enforcement unless required by
a court order, subpoena, or search warrant.

Police are likely going to keep pursuing suspects through
familial DNA searches since, overtime, it will become more fruitful. Currently, 60%
of white Americans can be identified through genetic testing services,
whether or not they have themselves gotten the genetic test, and researchers
predict that within two to three years, 90% of white Americans can be
identified through genetic testing services.

*Information for this paragraph of the post was obtained from
two sources: Avi Selk, The ingenious and
‘dystopian’ DNA technique police used to hunt the ‘Golden State Killer’ suspect,
Wash. Post (Apr. 28, 2018), https://www.washingtonpost.com/news/true-crime/wp/2018/04/27/golden-state-killer-dna-website-gedmatch-was-used-to-identify-joseph-deangelo-as-suspect-police-say/?noredirect=on&utm_term=.c3d45ee09344;
Gina Kolata & Heather Murphy, The
Golden State Killer Is Tracked Through a Thicket of DNA, and Experts Shudder,
N.Y. Times (Apr. 27, 2018), https://www.nytimes.com/2018/04/27/health/dna-privacy-golden-state-killer-genealogy.html.

Health care was the number one issue on voters’ minds in last week’s midterm elections. Throughout the country, state and local ballot initiatives focused on health care issues such as Medicaid expansion, access to abortions, medical marijuana legalization, and more. On the campaign trails, the overwhelming majority of Democratic candidates touted popular provisions of the Affordable Care Act and made promises to offer continued protection to patients with pre-existing conditions. In the face of the ACA’s growing popularity among constituents, some Republican candidates made first-time pleas to protect such patients, but many avoided stumping on health care after failing to repeal the ACA last year.  

Over the next two years, Americans should expect two things concerning federal health care legislation. First, a Republican-controlled Senate and Democrat-controlled House will likely prevent the passage of any meaningful, sweeping health care legislation. Second, that same gridlock will likely prevent remaining key ACA provisions from being repealed by legislation. As a result, states and localities are the likely battlegrounds on which health care policy debates will be fought. This much was revealed on election night itself. 

Voters in Idaho, Nebraska, and Utah joined 34 other states and the District of Columbia by expanding Medicaid coverage to more low-income individuals. In fact, an estimated 325,000 people are expected to gain access to Medicaid as result of the passage of those three ballot initiatives. Though Kansas, Maine, and Wisconsin did not feature Medicaid expansion as ballot initiatives, each state elected a Democratic governor who campaigned on the issue. Prospective legislation to expand Medicaid in those three states would provide access to coverage to an additional 325,500 individuals.  

Marijuana legalization was on the ballot in four states this past election. Voters in Michigan made the Wolverine State the 10th in the country and 1st in the Midwest to legalize recreational marijuana. Voters in Utah and Missouri legalized medical marijuana, raising the total number of states that allow medical marijuana to 33. However, a similar medical marijuana initiative failed in North Dakota. Notwithstanding, Democratic governors-elect such as J.B. Pritzker in Illinois, Laura Kelly in Kansas, and Tony Evers in Wisconsin joined colleagues in expressing desire to introduce legalization legislation during their terms.  

Voters in Alabama and West Virginia, a state which re-elected Democratic Senator Joe Manchin, passed ballot initiatives which will explicitly ban abortion in their state constitutions with 59% and 51.7% of support, respectively. Although these initiatives passed, the Supreme Court precedent set in Roe v. Wade precludes a constitutional ban on abortion. Nonetheless, such support may indicate further legislative challenges to the landmark case in those states’ legislatures and courthouses. In contrast, 64% of Oregon voters rejected a proposal to prohibit the use of public funds for abortion. 

Voters across the country should not hold their breath if they are waiting for federal single-payer health care or the repeal of the ACA. Those prospective legislative proposals will not disappear during the next two years of bifurcation in our legislative bodies, but they are very unlikely to materialize. What is far more likely, and what we already witnessed on election night, is that state action and debate concerning health care reform promises to be robust and gritty. After these midterm elections, 45 million additional Americans find themselves under Democratic governance. The success or failure of each party to enact meaningful health reforms on state and local levels could very well inform this country’s next election, and by extension, the federal health care landscape.