Biotech in the Balance with Dr Jeremy Levin, author and Chair of Ovid Therapeutics

Kevin, what a great pleasure. And here you have your your audience going to hear two different accents, but both from the South. Mine originally from South Africa and yours from Texas. This is great.

We'll we'll hang in there with the English. How's that?

I'm born on a farm and raised on a farm in the Cape, South Africa. Came here for one year in 1987 and was kidnapped by my wife and uh now raised two wonderful daughters. Uh and we live on a farm in northwestern Connecticut. We raise cattle. Uh but my professional life is really I did a couple degrees, an MD and a PhD at Oxford, Cambridge in England. Came here and started as a uh in the world of biotech in its early days. 87's a long time ago and grew up in that and then went from a small company to a giant company, Novartis, and from Novartis where I was really involved in research, development and business development, went to Bristol-Myers Squibb after that and progressed up the ladder. It was really a wonderful experience there in cancer therapies and then from there was uh picked up and asked to run a giant generic company called Teva and moved to Israel for a while to do that with my wife and experienced actually quite a lot of uh very interesting experiences there and then returned to the United States uh in the end of 2014 with the intent to focus the rest of my life on finding medicines and diseases of the brain and I've done that during that and that's what I'm really interested in. Then had the good fortune during that period of time I joined the Biotechnology Innovation Organization, sorry, and became its chairman. Spent a lot of time during COVID helping uh the administration and our industry to work on vaccines and try and push back that terrible monster that swept over our borders. And boy, we did not we, but the industry and the administration did a good job there. And since then have spent my time just building the company and it's been a lot of fun, a great honor to do that and that's what I've been doing. But the best thing of all, to raise two great daughters.

Well, I kidnapped her, but it's probably the wrong way.

That is for sure.

It's a really important question for a couple reasons. Uh I'm not sure my answer will satisfy everybody but it's if I can just for a second come Kevin and say why it's important. This is one of the great industries of all time. This is the industry that affects everybody and oddly enough its products is something we don't want to take. We don't want to take a pill. We don't want to take a medicine. We want to be healthy all our lives. But in that moment of need we need to be there. And so your question is deep. Your question is important because what do we get right? Well, we find great medicines. We we find innovation. We do the right thing about them. We build them through. We invest a tremendous amount. Um what do we do wrong? Well, I think the most important thing, the single fundamental thing that we have done wrong is to lose the trust of the populace.

This is something which is quite remarkable. You don't find it in other parts of the world where people are desperate for a medicine and then they just sigh a deep sigh of relief. Here we have a rich, profoundly important society. And unfortunately over the years, the average person in the street has developed a view of the industry that says, 'This is an industry that exploits my sorrow. This is an industry that reaches into my pocket, that takes money from me when I'm sick, when I'm already being treated for something that I don't want, but I have to now pay out of my pocket.' Much of this I can refute and I take you through that. But that is the perceived loss of trust. And I think if you drew one one criticism of the industry that I think we allowed this to happen, it's not an easy thing to say, but we allowed it because the industry forgot something important.

We have a covenant with the patient. When you give a medicine to somebody, you change their life forever. And in many ways that early industry that was set up looked at itself kind of like selling automobiles, kind of like selling product. It is not. We are changing people's lives fundamentally. So if you had to say what we do right, boy, we dig into magical new therapies. We are curing cancer. We are hopefully will cure Alzheimer's. What we did wrong was just not gripping that incredibly important thing of that covenant and retaining the respect, really the support of the American public.

So I you know there are two different industries and I think we should start with that. On the one hand, you have these giant incredible companies, the Pfizers, the Mercks, the J&Js. These are giants. They are global giants. They make revenues. They support themselves. Actually, they never sell their stock ever. They basically are out there. People get earnings from it. That is a viable ongoing global industry. And that industry has a couple things that I think it could do. Let's come back to that. But then the biotech industry is very different.

And I think in order to address what they need to have to be viable and and significant and address what you're talking about, I think it's important to understand what are they? What is biotech? I mean, it's so interesting. You and I have worked in hospitals. We know what it's all about. We know what what a surgeon is. We know what a doctor does. What does biotech do? Well, you have to go back to 1973 when Swanson in San Francisco had a crazy idea that he could unpack a cell, unpack its pieces, know what the genes are, know what the proteins are, and then maybe, just maybe, make a medicine from that. Crazy idea. Completely nuts. And a venture capitalist came in and said, you know, that's a crazy idea. I'm going to give you some money and let's see. This was heroic. But what that says was you had a conjunction of innovative daring thinking with daring capital. Amazing moment. From that moment it took about three four years until they founded a company called Genentech, one of the early four or five companies that founded the biotech industry all about unpacking the cell.

Take fast forward now. We're many years later, but that industry is still largely invisible to the person in the street, but there are about a thousand companies and they generate 70% of all new medicines. That's the industry that solved hepatitis. That's the industry that brought you new cancer treatments for melanoma. That's the industry that actually was responsible for the ability to build vaccines quickly that did do a lot of good in that and that time. But all of that was novel innovation. Now most of those companies make no money. They invest huge sums to find their drugs. Most of those companies fail and most of those companies that are successful are just bought by the giants and the giants now act as distributors, get them to the patients. So very different problems on either side.

I think if I dissect through all of that, the innovation side of this industry, the biotech industry has a really important thing to do. It needs to explain itself to the person in the street. It needs to explain itself to the legislators so they understand that this is totally strategic. If you don't have a biotech industry, then 3 to 5 years from now, we're going to be having to go to China and say, uh, can we have your new medicine for cancer or Alzheimer's? Because China has already made that decision that biotech was strategic 25 years ago. Every five years they've renewed their thinking and continued with one objective that in 2035 they become the dominant provider of novel new medicines in America. We've kind of hoped that this industry would grow up in our big market. We kind of hoped that it would be continued to be successful. But what we failed to do was say, 'Wait a second. This is like this is much like the building industry, much like defense. This is a critical aspect of our society.' Unfortunately, that is something that we now have to do because if we don't, it will collapse. And let me explain to you why Kevin and I believe it is at risk.

This whole innovation, the idea that a scientific fact could lead to a potential cure for a disease, even though many of times the experiments fail, is not something that comes out of the air. It comes out of having fundamental great scientific institutions. It comes out of the scientific method that says I'm going to try an experiment. The fact will tell me will it work or won't work. And then the science says, well, okay, it looks like it's working. Let's take it a step further. Let's try this on an animal. Let's try this on or in a cell-based model. Let's try this in a computer. And if that works, let's try it on a human being based on the FDA. Well, the scientific facts are being questioned right now. Then when you test it in a human, you must go through what we created, which is the FDA. The FDA was the Food and Drug Administration, a portion of the government, which was remarkable, truly remarkable over decades. It is the gold standard. Clumsy as heck at all times. I know that it needs revision. But it was the gold standard and the world copied it. China copied it actually. And over the last two to three years, unfortunately, it has become a political piñata. And that piñata now says that we're not exactly sure how it's working. We fired 20% of them. The leadership is all changing. This is not good. American greatness comes from having some high degree of certainty of how that great institution can work and allow that flow of amazing science to come through.

So what can the biotech industry do? I think the biotech industry needs to address itself to those two constituencies. One, the person in the street. We are their partners. We need to be out there saying this. And I think we need to be linked very tightly to the patient advocacy organizations that really do the hard work. 160 million Americans actually are associated with these patient advocacy organizations. Huge numbers. The second is we need to go and knock on the door of the legislators on the hill and tell them guys if you let this industry go, innovation won't stop, capital won't stop. It's just not going to be in America. It's going to go to China. It's going to fund it there. And then we're going to be in a position where one day we're going to say, as I said to you, you got a new cure for Alzheimer's. Can we please have it? That's not a great situation.

they've had five five-year plans. Each one, the first one said, 'We're going to build chemicals.' The second said, 'We're going to build testing capabilities and improve our FDA.' The third said, 'We're now going to copy old drugs and we're going to do them better.' The fourth said, 'Now we're going to make new ones and we're in number four.' Number five is it's now going to become our national policy. That's where we have to really face it. By 2035, we can out-compete them. I have no doubt of that. We just need some recognition in Washington that this is what we want to do.

Boy, that again one of the more obscure and tightly guarded secrets by not the pharmaceutical industry mind you. This is really a dark state in my opinion. It is very very uncomfortable to even talk and try and unpack it because it's intricate and in its intricacy and its complexity it hides the facts. You as a hospital administrator knew you could put your finger on every single dime. You knew exactly where it went, where it came from, and how you were going to spend it. Now, when you start talking about drug pricing, that's a whole different story. A pharmaceutical company, not the biotech. Most biotechs don't set price. They sell the drug to the pharmaceutical company. So, it's largely, this is an issue of the giant companies and a few of the small companies. But when they set a price, they then have to go through a set of intermediaries.

One of these is the insurance company. Well, you have to ask the question, why is the insurance company making a person pay for a drug? Well, that's kind of strange because you've paid your premium, you should be covered. Why are you paying for a drug? But our system has said that they have to have quote unquote skin in the game. This is not a good process. You're already sick. Why do you want skin in the game? You've paid your insurance. You should be paid. You shouldn't be paying anything but we do. But then there's another intermediary in that and the intermediary there is something completely different that is the PBMs. These these are the pharmacy benefit managers. Now there were many of them when you and I started in this business there were dozens of them actually. They they got smaller, they got smaller, they got smaller and then they were bought by the insurance companies. What do they do? You can ask yourself a real hard question there. You would imagine when it said pharmacy benefit manager says they're trying to benefit the patient. That's not accurate. They are actually negotiating the price for a package of drugs that will then be insured by the insurer.

But when you look at that a little bit more carefully, what you find out suddenly, we call them rebates, but it's a different there's a different terminology. They get a percentage of the price of the drug. This is really not acceptable. A percentage of the price of the drug that they're now saying that the pharmaceutical that the insurance company will pay for. That means they are incented to raise the price. It's not the hospitals, it's the PBMs who are doing this. It's the insurance companies now say that's great. They're I own them, so I'm going to get more profitability. And who suffers? It's the person that goes to Walmart. It's the person who goes to CVS. It's the person who goes to Target and goes to the pharmacy. And when they get to the end, out comes a credit card and they have to pay for their drug. And if they don't have insurance, the costs of that drug is enormous. And the percentage of that cost is upwards in many cases of 50% of the drug cost is the middleman. 50%. It's extraordinary.

So, it's a complex, invisible system that the patient when they end up at the pharmacy desk never sees, but they reach into their pocket, pay their co-pay, or if they're very unlucky and they don't have insurance, they're suddenly hit with a huge amount of costs. So, our system needs to address that. We don't need those middlemen. We need the hospital pharmacies. We need the pharmacies that are in the direct arm, but we do not need the intermediaries. We don't they are not helpful and they're adding to the cost of American healthcare.