A bit of a side discussion tonight as I’d like to talk about one of the more interesting topics of last week; Phlow Corporation and Dr. Eric Edwards.
Phlow is a new company formed in Richmond Virginia that recently received a very large grant (potentially $812M) from the Federal agency BARDA (Biodefense Advanced Research Development Agency) in HHS. The plan is to have Pflow make generic drugs in the United States. Dr. Edwards is its CEO and was formerly the R and D head of a company called Kaleo which made epinephrine (Auvi-Q) and naloxone (Evizio) autoinjectors.
I knew Dr. Edwards and Kaleo well from my time as the CEO of the national food allergy foundation. Dr. Edwards and his twin brother impressively set out to design and manufacture a brand-new type of autoinjector that was easy to use and effective in treating allergic reactions to food using epinephrine, as well as treating opioid overdoses with naloxone. The device was preferred by many patients because it was also small and easy to carry.
Dr. Edwards has come under fire because Kaleo use very aggressive pricing techniques for both its epinephrine and naloxone autoinjectors. At one-point they raised the retail price of the naloxone autoinjector from $980 to $4,700. The company was in a very difficult situation competing with the large and well-funded Mylan pharmaceuticals. Mylan used aggressive pricing of the EpiPen to push Kaleo out of the market. Because of this Kaleo’s Auvi-Q was not on the formulary for many of the large pharmacy benefits managers that control the drugs available through your health insurance. Kaleo’s efforts to sell their device wound up forcing them into pricing decisions that were very hard to understand. It was a very difficult situation for all involved.
Knowing Dr. Edwards, I can tell you that he is a very smart and talented physician scientist, who is very dedicated to his work. He had a personal reason to develop the autoinjector because of his own issues with allergies. I don’t believe that Dr. Edwards was personally responsible for this pricing decisions at Kaleo. He has always struck me as a decent guy trying to do the right thing.
Given that, I don’t know what to make of Phlow Corporation. Clearly there is a need to develop generic manufacturing in this country. Over the past several years US health care has been unable to provide standard medicines, including chemotherapy, because these generic drugs were not available. This is because they came from outside the US. Often, because of decisions made by large pharmaceutical benefit managers, only one foreign generic manufacturer produces the world’s supply of a particular drug. Therefore, a reliable, US manufacturer of crucial generic drugs would seem to be a good idea.
On the other hand, the exact mechanism by which Phlow will decide which drugs to manufacture is not clear. In addition, how Phlow competes with other manufacturers including lower-priced manufacturers outside the US is not defined. Will pharmaceutical benefits managers be willing to buy a more expensive generic from Phlow when the drug is cheaply available from Asia? Is it a good idea to have the government in the pharmaceutical business?
These many questions need to be answered about Phlow. While the concept seems reasonable the devil will be in the details. It will be important to see how things go forward in the next few months.