GlaxoSmithKline Reaffirms Its Commitment To Oncology Research But The Strategy Is Unclear

On occasion I get criticisms from companies or institutions that I discuss in my posts. This happened most recently in response to a piece about GlaxoSmithKline CEO Sir Andrew Witty and his concerns about the sustainability of high drug pricing, particularly with regard to specialty drugs. As part of my discussion, I alluded to Witty’s stance on positioning the company to focus more on drugs whose profitability would be based on high volume sales and not high prices, a strategy that presumably drove GlaxoSmithKline to trade its oncology products to Novartis in exchange for the latter’s consumer healthcare and vaccine businesses. This move suggested a de-emphasis at GSK in oncology and rare diseases, areas that command high–and controversial–prices. I closed my piece by saying that it was unfortunate that the company’s scientists would be steered away from working on these important areas.

Well, I was mistaken in that view, as I was told by Ms. Sarah Alspach, the vice president of U.S. communications at GSK:

It is absolutely not the case that we have stopped research in areas like oncology and rare diseases. These are two of our core areas of research and we have a number of projects in development with great potential, including our investigative gene therapy to treat patients with the very rare immunodeficiency disease ADA-SCID which, if approved by regulators, would be the first corrective gene therapy approved anywhere in the world. In oncology, we have an industry-leading epigenetics pipeline and a number of potential next generation immune-oncology therapies for the treatment of cancer.

It is great that this work is going on at GSK and I apologize for my error. But, I must say that I am confused by GSK’s overall strategy. If it is encouraged by its pipeline of new cancer drugs, why did it trade the cancer assets it already had to Novartis for the latter’s consumer healthcare and vaccine franchises? Without oncology drugs to sell, presumably the oncology sales force has moved on to other products. If and when the new cancer drugs reach patients and physicians, will they be reunited or will the sales team need to be rebuilt? Doesn’t it behoove a company to have a portfolio of drugs to create a presence and drive the use of its products? In addition, what message does the trade-off of the oncology portfolio send to the scientists working on the new programs? Will they leave to go work for companies like Novartis and Roche that have a bigger presence in oncology both in R&D as well as commercially?

It is great to hear about the excitement in GSK surrounding its ADA-SCID gene therapy. This will be wonderful for the hundreds of patients with this disease. But there have been concerns raised about how such therapies should be priced, with speculation being that gene therapies might cost $1 million. Given GSK’s philanthropic nature, as well as Witty’s aversion to high prices, it seems unlikely that GSK would ever entertain such a price. He might even consider providing the drug at cost. While this would be wonderful for patients, should the company benefit financially as well for such a treatment, especially as higher sales fuel more R&D investment?

Finally, GSK, like all big pharma companies, competes to license drugs discovered and developed from outside its own walls. But, if you were a small company with a breakthrough medication, wouldn’t you seek to maximize your returns with a partner who would be willing to price a drug based on the value it brings to patients and the healthcare system? This would not likely be GSK.

Drug pricing is a difficult subject that is getting a lot of focus. That’s a good thing. And I think Witty’s position on pricing is noble. It’s just that I am not sure it is in the best interests for the future of his company.