According to the company, the new framework will apply to all products in the company’s current and future pipeline, including benznidazole the Chagas disease treatment.
“We’ve been thinking about setting out our commitment and philosophy very publicly, since we do have a lot of new things happening with the company now,” Cameron Durrant, MD, MBA, KaloBios' Chairman and CEO, told Outsourcing-Pharma.com.
The announcement follows a series of challenges – and scrutiny – after the now infamous Martin Shrekli was named CEO of the biotech company for a short period of time last year.
“It’s very public what happened during the very short tenure with Mr. Shkreli,” said Durrant, who also explained that it’s “astounding” how much can happen in one month – the period of time during which Shrekli was at the company before being fired after his arrest.
And while Durrant told us that he is happy to talk about the past, as there’s no point in trying to cover things up, he hopes that the new pricing model will serve as a turning point for the company, “a restart if you will,” he said. “There’s no time like the present.”
Defining ‘affordability’ and ‘reasonable’
With its new pricing model, KaloBios hopes to put a stake in the ground as it pertains to reasonable, and responsible, pricing for drugs. As part of this new commitment, KaloBios has promised not to engage in aggressive pricing or "price-gouging."
“We are committed to operating under the principles of affordability, transparency, and reasonable return,” said Durrant, who explained that employees, and investors, have been supportive in developing the model.
“The team at KaloBios all had input, as well as the board,” he said. And while the model is a new concept for the company, it’s an idea that Durrant – a physician by training – had been considering for quite some time.
The company has already begun the process of speaking with clinicians, NGOs, and patient advocacy groups, to help find the right balance between affordably and reasonable return.
However, the real difficulty is in defining “affordability” and “reasonable.”
“What might be reasonable for you might not be reasonable for me,” said Durrant.
Through its conversations, the company found was that while no one objects to affordability, no one objects to the notation of a reasonable return either – even not for profits.
“If those two [terms] are built on the bedrock principle of transparency, then you can start sharing information on what costs are in terms of manufacturing product, developing it, putting it through the regulatory process, distribution, and marketing,” explained Durrant. And the company plans on sharing these numbers with the public – they may even be published on its website.
“We’re a public company, so If we misrepresent financial information, I go to jail,” said Durrant, who has no intention of following in the prior CEO’s footsteps.
“I don’t believe that people yet think that this can be necessary done easily – and it won’t be done easily – but unless you try it won’t be done at all,” he added.
A shared burden
As Durrant explained, part of being transparent means sharing pricing as they are associated with development and manufacturing. With this, he explained, transparency will also apply to CROs and CMOs as well.
“KaloBios can’t be transparent, unless we also declare what it costs us to development these medicines,” he explained, “and a lot of pharma development is outsourced.”
Ultimately, drug pricing is not just a pharmaceutical company issue, “it’s everyone who’s associated with developing products and services for pharmaceuticals,” said Durrant.
“I think it requires leadership on all sides,” he added. “Without the genuine intent to do things differently it’s going to carry on the same way. It’s either going to happen in a way that the industry manages itself and to some degree regulates itself … or it will be imposed upon it.”
A new chapter
From a corporate point of view, the KaloBios has “a lot of wood to chop” as it pertain to emerging from bankruptcy, as it is still technically in Chapter 11, said Durrant.
The company is also dealing with various lawsuits and the fallout from Shrekli’s arrest, and is taking steps to reestablish a listing on the senior public exchange (Nasdaq). According to Durrant, the company hopes to emerge from bankruptcy at the end of June.
“If we’re fortunate enough to emerge from bankruptcy … We would want to expand portfolio with the support of investors to bring in additional projects that would be focused on neglected diseases, he explained.
“If we’re able to do that with new financing and the deal we’ve been working on in place then it’s going to be completely different company,” added Durrant.
The company’s current lead product is Benznidazole, an oral anti-parasitic medication used to treat Chagas disease, which has been submitted to the FDA for an NDA 505(b)(2) pathway.
“If we get approval then we hope that patients who currently are not able to easily access treatment for Chagas disease will be able to do so,” said Durrant.
Additionally, the company hopes to benefit from a priority review voucher from FDA, which if received, it intends to sell on the open market. It is also looking at developing a monoclonal antibody, which it would use to treat a number of rare leukemias.
However, the company still has to “march through a lot of challenges,”– of which there are plenty every day; yet, according to Durrant, “huge strides” have been made over the past few months.
“If we keep going with that momentum,” he explained, “we’re pretty confident that we’ll come out the other side as a strong company focused on doing some good things.”