Ep. 385 - MFN deals, Lilly takeout, FDA pick Overton

The episode opens with discussion of the Trump administration's MFN pricing initiative, where 17 mid-sized pharmaceutical companies including Alcon, Astellas, B1, and others have signed deals. Steve Usden explains that the deals offer two primary benefits: exemption from Section 232 tariffs set for September and exemption from mandatory MFN pricing models in Medicare Part D and Medicaid. The White House announced that participating companies will provide every state Medicaid program access to MFN-priced drugs and rebalance international pricing. Usden predicts these precedent-setting ad hoc negotiations with the White House using international reference pricing as benchmarks will likely persist beyond this administration, though the specific deals may disappear. He warns that if Democrats gain control of Congress, they will likely subpoena companies to publicize these agreements, potentially revealing deals structured to minimize company pain without major taxpayer savings. This could drive Congress toward more stringent price controls. Usden notes the list is heavy on non-U.S. headquartered companies, suggesting they're particularly motivated by tariff exemptions.

The conversation shifts to Eli Lilly's acquisition of Merida Biotech, a Cambridge-based startup founded in 2022 and backed by major VCs including Bain, BVF, and Third Rock. The deal is valued at nearly $2.9 billion and marks Lilly's 13th acquisition this year, with total acquisition spending exceeding $31.5 billion. Merida's lead asset is a Phase 1 FC-engineered binder targeting autoantibodies for Graves' disease and thyroid eye disease, with preclinical programs for IgE-mediated allergies and primary membranous nephropathy. This is Lilly's fourth immunology takeout of 2025, following recent CAR-T acquisitions (Colonia for $6.8 billion and Orna for $2.4 billion). The deal exemplifies Lilly's aggressive M&A strategy across multiple therapeutic areas.

The episode then addresses the nomination of Heidi Overton as FDA commissioner to succeed Marty McCary. Usden provides important context, noting that at 37, Overton has an M.D. and Ph.D. in clinical investigation, board certification in preventive medicine, and training at Johns Hopkins where she co-authored opioid research with McCary. However, Usden emphasizes the real question isn't her resume but how she defines the commissioner role. He contrasts her with previous commissioners like Mark McClellan, who served as a political heat shield protecting agency scientists from pressure. Usden reports that FDA staff and biopharma leaders are concerned Overton will function as a conduit for political and ideological directives from the White House and HHS Secretary RFK Jr., rather than as a protective buffer. Her nomination is contentious due to positions on vaccines and abortion drugs. Usden notes that while confirmation in the current Senate is possible but not probable due to time constraints and Senator Cassidy's opposition, the administration likely plans to pursue confirmation in the next Congress if Republicans retain Senate control. The nomination is risky given the extended timeline before voting, allowing opponents time to build cases against her.

Finally, the episode covers RevMed's FDA approval of Rason-Q for pancreatic ductal adenocarcinoma under the Commissioner's National Priority Review Voucher Initiative. The approval was remarkably fast: 35 days from filing to approval and 40 days total from submission. This is the second-fastest CNPV approval to date, behind only Merck's Lipfendra at 24 days. Rason-Q is the first targeted RAS-on inhibitor approved and the fourth new drug approved under the pilot program, with five previous approvals being indication expansions. The CNPV pilot has predominantly benefited larger biopharmas including Eli Lilly, Regeneron, Merck, and Vertex. Notably, much of the time advantage in CNPV approvals occurs before filing rather than in FDA's review process itself, suggesting companies are doing more pre-submission work. The episode also notes approvals from Takeda and Protagonist for a rare blood disorder therapy and from Pharmacentia for another rare blood disorder.