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Capitol Checkup: Novartis deal questioned; drug price disclosure mixed reactions

Two U.S. Democratic senators are demanding answers from Novartis AG about why it paid $1.2 million to President Donald Trump's lawyer, Michael Cohen, and a shell company he created at a time when the Swiss drugmaker was seeking U.S. approval of its gene therapy Kymriah and negotiating a novel payment arrangement with the federal government.

Sens. Ron Wyden, D-Ore., ranking member on the Senate Finance Committee, and Patty Murray, D-Wash., ranking member on the chamber's Health, Education, Labor and Pensions Committee, sent separate letters to Novartis seeking documents and information tied to the deal — an agreement CEO Vasant Narasimhan has called a mistake.

Novartis' $100,000-a-month payments over a year to Cohen and his company, Essential Consultants, came to light after Los Angeles lawyer Michael Avenatti who is representing actress Stormy Daniels in a lawsuit against Trump — revealed documents May 8 showing the U.S. president's personal attorney had offered insight into the new administration in exchange for the cash.

Those payments, however, sparked the interests of lawyers from the office of U.S. special counsel Robert Mueller, which is investigating whether there was any coordination between Trump's 2016 presidential campaign and Russian interference into the election.

Novartis said it "cooperated fully" with the special counsel's probe and it considered the matter closed to itself.

But Wyden and Murray made it clear Capitol Hill's probes into the Novartis-Cohen deal were just getting started and said they wanted answers about what Trump's lawyer — who is not a registered lobbyist and has no healthcare expertise — promised the biopharmaceutical company in exchange for the $1.2 million.

Wyden raised concerns that the U.S. Food and Drug Administration approved Novartis' $475,000 chimeric antigen receptor T cell medicine Kymriah and the Centers for Medicare and Medicaid Services entered into a special payment arrangement with the company while the Essential Consultants contract was ongoing.

He also noted that a substantial portion of Novartis' U.S. business is with the federal government's insurance programs for the elderly and the poor — Medicare and Medicaid, respectively.

The two Democratic lawmakers called on Novartis to provide copies of its contract and other documents related to the Cohen deal, such as emails, letters and other communications, and information about how the payments were made.

Wyden also demanded a list of all Novartis personnel who approved the business relationship with Cohen and his company.

Novartis has declined to answer S&P Global Market Intelligence's questions about when Narasimhan became aware of the Cohen agreement and why the company did not report the year-long arrangement and the $1.2 million payments last year to investors.

Murray noted that Cohen, whose New York office was raided last month by the FBI, is under federal criminal investigation for potential bank fraud, wire fraud and violations of campaign finance law.

In a separate letter to Cohen, Wyden not only asked for copies of the contract and other documents, but wanted to know how the relationship began, the services the lawyer and Essential offered to the drugmaker and the identities of persons who interacted throughout the contract's period.

In addition, Wyden sent a letter to the U.S. Treasury Department requesting financial information about any suspicious activity reports on Cohen, his firm Essential Consultants LLC and Novartis.

The consumer advocacy group Public Citizen last week also filed a complaint with the U.S. Justice Department saying Cohen's deals with Novartis, AT&T Inc. and other companies violated federal ethics and lobbying laws.

"This appears to be far more than Cohen simply selling political intelligence to corporate clients," Craig Holman, government affairs lobbyist for Public Citizen's Congress Watch division, said in a May 10 statement.

Price disclosures in TV ads

While some groups praised a request by Trump for the FDA to look into whether it can require drugmakers to disclose their list prices in direct-to-consumer, or DTC, television commercials, Leerink Partners LLC Equity Research analyst Geoffrey Porges said such an action is unlikely to ever happen.

"Adding a statement about the potential for 'pocketbook toxicity' to the already lengthy disclosure about safety liabilities and risks in DTC advertising for drugs is likely to be harder to implement than to describe or imagine," Porges said in a May 11 analyst note. "Manufacturers will fight hard to avoid such disclosure, and advertisers, fearful of a retreat from such advertising, are also likely to oppose its implementation."

"Ultimately, this would require the creation of even more bureaucracy, to capture drug prices from manufacturers at the FDA in a standard way, and then to keep such disclosure up to date," he added.

The measure was part of Trump's blueprint to bring down drug prices, which he unveiled May 11. However, Wall Street was unimpressed, and there appeared little for brand-name manufacturers to fear — as evidenced by the jump in biopharmaceutical companies' shares that day.

The American Medical Association, or AMA, said it hoped the administration would "bring some transparency — and relief — to patients."

Last year, the group voted to adopt a policy calling for drug manufacturers to disclose their list prices in the DTC TV ads.

In 2015, the AMA called for an outright ban of DTC ads, saying the commercials were driving demand for expensive treatments, despite the clinical effectiveness of less costly alternatives.

For now, it is unclear whether the FDA has the power to mandate that list prices be disclosed in DTC advertising. It may need Congress to change the law for such a requirement, which could take years to accomplish.

Anti-right-to-try 'forces'

Trump's May 11 drug pricing speech gave Sen. Ron Johnson, R-Wis., another opportunity to talk about his right-to-try bill, which would give critically ill patients greater access to experimental drugs beyond the FDA's current compassionate-use process.

The bill is stalled on Capitol Hill.

"Right to try is happening, right? You have that moving?" Trump said while pointing to FDA Commissioner Scott Gottlieb, who the president said had "done a fantastic job."

Gottlieb initially criticized the Senate right-to-try legislation, but later appeared to fall in line with Trump, telling reporters in February that he thought his agency would be able to find some sort of a solution with Congress.

He also posted a series of tweets that seemed to support the Republicans' right-to-try effort, saying the FDA was "committed to working closely" with lawmakers to advance the legislation.

The House passed a bill in March in a 267-149 vote, with 35 Democrats joining 232 Republicans to pass the measure.

But it varied from the version that passed the Senate in August 2017.

Johnson made a middle-of-the-night move in March to try to get his chamber to adopt the House-passed bill by unanimous consent, but he was blocked when Senate Minority Leader Chuck Schumer, D-N.Y., objected.

Johnson has also tried to get the House to adopt the Senate-passed bill but has been unsuccessful.

So far, the Republican leadership in the Senate and House — Majority Leader Mitch McConnell of Kentucky and Speaker Paul Ryan of Wisconsin — has shown no signs of wanting to bring either of the passed bills to their respective chamber floors for a vote.

"There are forces in the House, I can't identify them, that are trying to undermine this," Johnson said May 13 speaking on the Sinclair Television Group program "Full Measure." "I'm afraid that every day that goes by, those forces might become more and more successful."

FDA chief perturbed by old news

Meanwhile, Gottlieb was busy over the weekend sending out a series of tweets expressing his annoyance over the circulation on Twitter of a year-old CBS News article about the administration requiring the FDA to show only Fox News on its common area TV monitors.

Gottlieb told one national security news reporter on Twitter that before he retweeted an article as breaking news, "why don't you check the date. It's 2018 now."

He said that if the reporter wanted to know what the FDA was playing on its TVs, to "swing by. You'll find they're tuned to all different channels."

The reporter deleted his tweet.

In another tweet, Gottlieb emphasized for all Twitter users that the FDA's TVs provided a variety of news sources.