In this episode of Influencers, Eli Lilly Chairman & CEO David Ricks joins Andy to discuss the latest in the pharmaceutical industry, new progress in the fight against COVID-19, and potential groundbreaking advancements for the treatment of Alzheimer’s.
ANDY SERWER: Longevity is tough to pull off in corporate America, but Eli Lilly has done it. Lilly is an American pharmaceutical company that's been making medicine for more than 140 years. Over that time, it's been at the cutting edge of the industry known for creating blockbuster drugs like Prozac, methadone, and Cialis.
David Ricks has been with Eli Lilly since 1996 and was named chairman and CEO in 2017 after more than 20 years at the company. Now David joins me for a special episode of "Influencers" as we discuss the latest in the pharmaceutical industry, new progress in the fight against COVID-19, and potential groundbreaking advancements for the treatment of Alzheimer's.
Hello, everyone, and welcome to "Influencers." I'm Andy Serwer, and welcome to our guest, David Ricks, the chairman and CEO of the pharmaceutical company Eli Lilly. David, nice to see you.
DAVID RICKS: Great to be with you.
ANDY SERWER: So let's start off and ask you a little bit about Eli Lilly and tell us about how it's differentiated from other pharmaceutical companies.
DAVID RICKS: Sure. I can think of several points of difference. But first, it's important people know we're very old American company. I'm sitting here in Indianapolis where we were founded. We just celebrated our 145th year of existence. And it's a company that is deeply entrenched in both the way of doing business and our values, which were really started with our founder, who was a Colonel in the Civil War, Colonel Eli Lilly. That's the name of the company.
His belief was to make medicines of the highest quality, to use science to make medicines, and to be very forthright in communication with customers. And that was in the time of snake oil salesmen and huge problems with the medical industry in the US in the 1870s. And those time tested business methods have proven to be pretty durable. And I think going through the pandemic period I think in particular were useful to use science to help people to make high quality medicines and be as forthright and high integrity as we can be. So we all come to work here today thinking about those things still after 145 years.
ANDY SERWER: A lot of history there. I want to jump to the immediate present. There's so many things to talk about. Maybe in the news this week is the FDA's approval of Biogen's Alzheimer's drug. What's your reaction to that? I want to talk about your efforts in that area as well. But what's your take, David?
DAVID RICKS: Well, to be honest, Andy, we're still kind of processing what occurred. I think it was surprising for a lot of people for a few reasons. One, the data set itself was pretty controversial. This happens in medical research where the gold standard for approval is you pick your-- you call your shot and then you hit your shot, like Babe Ruth pointing at the left field and then hitting his home run there. That's what is sort of on target, normal, what we call phase three or late stage success that leads to FDA approvals.
Here something different happened. And this happens pretty frequently in medical development where they call their shot and then they ended up stopping a study and then looking back and seeing something more encouraging and then worked with the agency to get an approval. That's not a normal process. And having worked ourselves in Alzheimer's for the last 34 years, we've had lots of failures too. And on look back, sometimes you become encouraged. But really, it's important that I think drug companies generate very solid evidence for the use of our products.
So we're processing this, because to approve this, the FDA actually in the end did not say that those results were solid evidence. What they said was that the drug moves what's known as a biomarker or a precursor to the disease in a very meaningful way, which I think is without dispute, but then said that that biomarker or precursor is enough for approval. So in a way, sort of shifting the bar or the policy for Alzheimer's approvals. I think this does a few things.
One, well, there'll be lots of discussion about Biogen's approval and Alzheimer's. We know there's huge unmet need. So in some sense, that's a hope for patients. I think it will also unleash a lot of investment from companies to prove the same thing with other drugs, because it is an easier task. And then researchers I think and Lilly and others are worried that, OK, well, we'll be able to prove the ultimate benefit, which is slowing the disease, prevention of death, and other serious medical consequences with all these products on the market. And that's something we're working through now.
ANDY SERWER: Your stock jumped on the news. Can you talk to us about what that means for your Alzheimer's drug and what's the status of that and how it's different from Biogen's?
DAVID RICKS: Well, maybe now looking prescient, but last summer we made a decision to initiate a confirmatory study. We have a product called Donanemab. It works in a similar way to Biogen's although we think a little faster, a little deeper clearance of plaques. We had a phase two, a middle phase study going.
And before that even concluded, we started a confirmatory study at risk, worried that the FDA would approve Biogen's drug and it would then be hard to recruit patients into a study. Because in a study, you're randomized to placebo or drug. Whereas if there's a drug on the market, you can just get the drug. And so it is more difficult to find subjects for studies when there's an approved drug. So we had accelerated that. That's well underway. It's not finished recruiting but getting close. We're glad we did that now.
In the meantime, we read out the phase two results, this middle sized study, which were very positive. We slowed cognition decay. We slowed functional decay. And we made a big difference in this biomarker, this precursor protein of the amyloid plaques. So we're strongly encouraged. I think that's why the investors were excited on this news for Lilly. We still have a lot to prove, though.
And one thing that's to be clear is we are deeply committed to prove the ultimate value of the therapy, which isn't to reduce some protein in people's brains that they haven't heard of. It's to affect their lives, to slow the decay that seniors experience with Alzheimer's. We aim to prove that. And this study, which we started last summer, should conclude in '23. So that seems like a long way away but in drug development time is pretty short. We'll have the answer whether Donanemab slows Alzheimer's, and that's something we're very much looking forward to.
ANDY SERWER: I want to switch over and ask you about your work with COVID-19. Because my understanding is you have an antibody, essentially a cocktail treatment, that was approved in February. But last month, the FDA halted distribution in some states over concerns over its efficacy with variants. Is that accurate, and how is the company responding, David?
DAVID RICKS: Yes, it is accurate. We developed two different antibodies in the early days of the pandemic. The project started in mid March, and by June we were in clinical trials, and by November we had the first approved made for COVID drug on the planet shipping in the US. In doing this, we pursued maybe a different strategy. We weren't focused on what would be the ultimate best medicine and looking for that for what would have taken years and then making that, improving its worth.
We were in the middle of a pandemic. So we were trying to find something useful, and we were accelerating at maximum speed, unheard of speed, frankly. I mean, normally drug development's a 10 year process. We just talked about Alzheimer's. We've been at that for 30 years. This one inside of a year we discovered, developed, made at a huge scale, and deployed monoclonal antibodies. So we weren't going for perfect. We were going for useful.
And as the variants have evolved, we always knew there'd be a risk of escape from our antibodies. What antibodies do is they're like laser guided missiles against a specific part of the virus. The good thing about that is they're highly potent when on target. The bad thing is if the virus evolves slightly, the laser can be refracted and miss its target. So the precision is the strength and the weakness. We developed two because then you have two lasers kind of going at the target. And even with that, there are viral variants that escape our two.
Fortunately, another drug company, Regeneron, makes a combination that seems a little more resistant. But I think we're happy with our choice. Our choice was to go fast and make a lot. And to date in the US, by our estimates, 80% of all antibody treated patients have been treated with Lilly antibodies because we had so much production. And during the worst, the teeth of the surge in both the fall and the winter, we were broadly distributed and available, and that wasn't true for other solutions. The Department of Health and Human Services has estimated that we probably saved more than 10,000 lives with Lilly antibodies, and that's why we did it.
Of course, we're working on other variant resistant medicines, antibodies, and have some promising ones there too. But we were sort of taking this as it goes versus trying to solve for perfection just because of the public health circumstances.
ANDY SERWER: Do you have a timeline for getting those new medicines approved for the variants?
DAVID RICKS: So we started the clinical program for another one we call 1404. It's a new variant resistant antibody. It'll be months away but not years. It can move quickly now. Some of this depends on what the FDA wants to see and perhaps even the background risk. Because unlike normal diseases where more people every day get diabetes and cancer and Alzheimer's, of course, we hope fewer people every day have COVID.
And so that makes finding people to put into research studies harder and harder in the US. Of course, we can go to India and Brazil and other places where there are surging epidemics. But the better we do with vaccination, the harder it is and the slower it'll be to study new medicines. That's probably a good thing in total, although it makes our job a little harder. But we're progressing that project as well, and we'll be months away, I would predict.
ANDY SERWER: I want to follow up on that point you just made about trials, David. You recently said you move some portions of your trials remotely during the pandemic. How have trials changed? Let's dig into that a little bit. And could this bring cost savings going forward? Would it be a permanent kind of change?
DAVID RICKS: We hope so. Like a lot of things in our lives, things changed during the pandemic. One of the common themes is this format we're working together here, Andy, is that things went video and virtual. And kind of self-help became a big part of the scenario even in health care. We saw a surge in telehealth visits and people assessing their own situation, explaining to their doctors.
Clinical trials are much like a little health care system we set up to study very specific things, and we randomized patients to drug or no drug in that system without them knowing it. And we traditionally have relied on the regular health care system to do all the ancillary things, testing and assessments by doctors and patients reporting symptoms and so forth, but with a lot of intensity. So in a clinical trial, it's not unusual to go to the doctor every month if you're in the study, for instance.
Here with the pandemic, we paused everything for a while, and then we deployed a lot of digital solutions to replace the normal health care system during the worst parts of the pandemic and avoid the risk of infection. I think many of those things will stick around, because we found people like it. It's more convenient than getting in the car and driving to the hospital. And it's probably not necessary, the intensity of the visits we had.
I predict in the future most studies will be more hybrid, a combination of some digital and self-care, like a test you can mail in, and some in person doctor visits. And for some diseases, it could be more digital, and for others, it will be more in person. But we can use these tools to lower cost, but more importantly, Andy, reach people who wouldn't volunteer otherwise, because of the burden of being in a clinical trial. And that's something we need to do. Both people of color, women are all underrepresented in clinical studies and we can improve that.
ANDY SERWER: David, the Department of Justice has launched a criminal investigation into Eli Lilly about alleged manufacturing irregularities and records tampering at a factory in New Jersey that produces some things, a couple of medicines, including the COVID-19 treatment, Reuters reported last month. What is the latest on that?
DAVID RICKS: Well, I mean, that's the facts. The DOJ asked us for some records related to this. The FDA has been at the plant several times and inspected it and found some gaps, which we're very committed to close. As I said at the beginning, the most important thing in our company is making medicines with quality. We're not perfect. But when we find things that are broken, we fix them. The FDA has pointed out some opportunities. We're committed to fixing those.
The allegations about data being manipulated or whatever are unfounded. I'm not aware of those problems. We're investigating them deeply, because if that did happen, I would be as concerned as anybody about that, and we would want to get that corrected. So that's all in process to get to the bottom of that. But the main thing to leave investors with and your viewers are the company's committed to product quality. We don't believe anything that we've made at that plant has a problem with quality. And if there were problems, we're going to fix them. That's our commitment.
ANDY SERWER: Just to follow up there, do you know what DOJ is essentially alleging in layman's terms, then?
DAVID RICKS: It's not really clear. The way these things happen typically is they ask for a broad swath of information. That's where we are in the process with them is they've asked for information. So it's not clear what they're concerned about.
ANDY SERWER: OK. Let's talk about reopening. You guys are committed to doing that next month. Or is it partly now or fully next month? Talk to us about what you guys are doing [INAUDIBLE].
DAVID RICKS: Yeah, so here where we are in the Midwest, on March 9 of last year we closed our offices. And we were the first major employer in our state to do so, having seen the waves of pandemic sweep over Europe and Asia. We were ready for that. And also to make sure that our employees didn't infect each other for those that had to come in, those working on the COVID therapies, which had to use our labs to research and develop those, or those in our plants. Here in Indianapolis, we make insulin, one of the largest insulin sites in the world, and we could not stop making insulin. That would have been a public health disaster by itself. So we had to protect the workers who were doing those essential activities.
Now we're at the other end of it, and it's interesting, because I think a lot of employers are seeking, OK, what's the trigger to do something to get back to what we used to call normal. We've looked at this carefully, and we believe a high percentage of our employees are vaccinated already. And the background rate of infections where we live is dropping pretty dramatically.
So we are in June inviting 25% of our staff back to site. I'm in my office here at the corporate center today. And asking that everyone who comes back is vaccinated and we wear masks in public spaces and apply the common sense distancing rules. We will then shut down for the 4th of July week, which is a tradition we have, and then come back on July 12th, inviting everybody back to campus at that point.
So that's the plan. And it looks like the data is holding up that will allow us to do that. High vaccination, low community infection rates. Those are both required for that plan to work, but we're like a big ship, 11,000 employees here. If we don't put a line in the sand somewhere, it's hard to know how to get to that destination. So we've said July 12th, and it looks good right now.
ANDY SERWER: Where do things stand right now with the pandemic, David? I mean, I think you said something like we're going to have an undersupply of vaccine in the beginning and then an undersupply of patients in the end. And we're kind of closer to that endpoint where we're looking for people to vaccinate.
DAVID RICKS: I don't think we're closer to it. I think we're in it. I spent a lot of time with our state government on their program just as a leader in the state. And I said from the beginning to them that by Easter, we're going to have more vaccines than we will have people to accept them. And that's roughly what happened in this state and to a little lesser extent on the coast where the willingness or the hesitancy is lower. But I think everywhere now we're looking for people, not looking for new vaccines. More vaccines.
That's, unfortunately, I think something that was a little bit under planned at the beginning, that people were focused on the allocation and distribution of a limited resource versus thinking about how do we reach people with an unlimited resource, which is sort of where we stand today. Work to do. Employers can play a role, both by creating policies like I just described and strongly encouraging workers to be vaccinated. Universities here in our state and around the country have insisted on vaccination. And I think you'll see good uptake among youth for the vaccination. And the elderly, I think it's important to protect them.
So we're making our way forward. But where this will leave us, I think, for the balance of the next year is still more unvaccinated people than we need to reach this herd immunity threshold. And so we'll still have circulating coronavirus in the US although at a much, much lower level. And the good news is-- and really, the world is lucky in that we produced a very effective vaccine so quickly, record time. I mean, the previous record was four years. Can you imagine us planning into 2023 right now with the pandemic? I mean, just talk about challenging.
And that that vaccine on the first instance, both the RNA vaccines here I'm speaking from Pfizer and Moderna, are so effective. It's reducing your risk to 1/20 of non-vaccination of getting infected at all and much, much less than that of getting very sick. So really it's a miracle of modern science, to be honest.
ANDY SERWER: So with us not achieving herd immunity in the fall, is that going to stop our economy or change our way of life?
DAVID RICKS: I don't think so. I think what it does is an ever reducing number of people will retain the risk of a COVID infection. I think the concern that public health officials worry about is theoretically possible that then those groups that are sharing the infection, because they're unvaccinated, harbor a new variant that can break through the vaccine. But we've already seen, I don't know, hundreds of millions of people exposed to the infection and probably a lot of variants emerge and not sustain themselves in the presence of the vaccine.
So the probability that, as explained to me, is dropping. But that's a risk as well. What we need to do is encourage everyone to get vaccinated. It's safe, it's effective, it's proven to work down to age 12. That's how we get back to normal permanently. But I think enough people, now I think we have 60% of adults with at least one shot, are back that the momentum is clear. And depending on where you live in the country, masks are coming off and people are back to their daily lives. Thank goodness. And safely, because the vaccine is so effective.
ANDY SERWER: It's a fascinating point you made, though, about us not being prepared enough for a vaccine hesitancy. That's interesting stuff. I want to shift gears, David, and ask you a little bit about politics. You said recently that the Biden administration's support for an intellectual property waiver for COVID-19 vaccines was, quote, "an unfortunate turn of events," unquote. So the administration did the wrong thing here?
DAVID RICKS: Yes, they did. I mean, I think if the-- when I guess I say that, thinking about the goal of vaccinating the world. If the goal is to vaccinate the world, I believe this is a counterproductive move. Of course, in a world where each country would believe they need to have their own version of a vaccine for their people, this would kind of make sense. But we don't need to do that. And I think in pursuing that pathway, it will take maybe a decade or more.
Rather, what we should do is make as much of the vaccines we have in the places where we can make them. When we start a new production facility for a complex product like RNA vaccine is, or in our case a monoclonal antibody, it takes about four years to build, staff, train, and validate that factory. So the idea that giving away the so-called recipes from Moderna and Pfizer would somehow solve this pandemic is mythology.
There are no RNA production facilities in India, South Africa, or other countries that have pursued this waiver. They don't exist. They have to be built from whole cloth, staffed, trained, et cetera. And on top of that, I think the know how for this new technology is limited. It's really American and German biotechnology inventions. That's where the expertise lies.
A much better path would be to say let's do two things. Let's free up supply chains in a way that the RNA vaccine makers and other vaccines, because we have adenovirus from AstraZeneca and J&J, could really have a clear path, sort of like the lane we drive in when we have more than two passengers in our car. We can fly down the highway with maximum availability of resources in the plants that are already making those. That still needs some help. We've read about AstraZeneca running out of supplies, et cetera. So that's step one. And governments can coordinate across each other to make that happen, because their supply chain is global. It doesn't all sit in one country or another.
The second thing to do is then create an appointment schedule by country. I think a lot of the anxiety here has to do with the fact that leaders in some of these countries are unsure if they'll be left on the sidelines or they'll get their chance to vaccinate their people. Of course, the wealthy countries went up and bought up most of the supply that was early. But by my calculations, there'll be something between 10 and 12 billion doses in 2022, which is more than enough to vaccinate the adult world. And the inefficiency of just letting the market figure that out is kind of what we're suffering from.
What would be better if the US took a leadership role to say, OK, based on risk factors of outbreaks and infection as well as demographics like age, let's allocate these extra vaccines to the best places to allocate them. So older, higher risk countries get them first, and those politicians can rest at ease that their appointment is coming. They'll know when they exit the pandemic.
ANDY SERWER: David, was there any talk of the waiver also applying to therapeutics?
DAVID RICKS: There was talk, and there was an ask there. Fortunately, the US didn't support that. And I should say fortunately both Angela Merkel and EU in total are opposing this waiver. And I think they're doing it for the reasons I just mentioned. They're unconvinced that it will affect the trajectory of the pandemic, as I am. And they believe that the better way is to actually just make more in the plants we already have running, which is, again, what I'm advocating for.
ANDY SERWER: And just last quick follow up on the waiver. Does it look like it's going to actually ever happen then?
DAVID RICKS: I mean, that's another matter is that-- and I think Dr. Fauci and others commented on this, that the process through the World Trade Organization to get a waiver is a consensus driven process of the council of the WTO, which is slow. Because anything that is a three letter agency in Geneva is slow by definition and requires a broad consensus. Already European Union's opposing it. So that tells you this is not a weeks or months thing. It's going to be more.
ANDY SERWER: Right. And the longer it takes, the less need, perhaps, there is for it.
DAVID RICKS: By next summer, we'll have enough vaccines to vaccinate the world anyway. Why don't we just focus on that? It just seems self-defeating.
ANDY SERWER: Democrats in Congress have reintroduced a bill that would give Medicare the power to negotiate lower drug prices. Are you for that or against that?
DAVID RICKS: We're not for that, largely because although we're for lower prices for patients, we think the fundamental problem is a little bit different in the US. There are clear affordability gaps for medicine. And we make insulin, as I mentioned. That's been spotlighted product where there are big gaps in coverage. But in the United States, our challenge isn't primarily the affordability of medicines to the health care system. It's the affordability of medicines to people with insurance products that are really substandard.
And so the total system, just by background, in the US we spend about 13%, $0.13 on the dollar, on medicines for the whole out of our health care dollar. Other developed nations are in that range. I think it's not an unusual range. The reason for that number being that low in the US is we have a very vibrant and competitive generic marketplace, much more so than other countries. At the same time, we enjoy the benefits of new medicines coming always first to the US and a vibrant biotech economy, which is a large employer and really one of the premier industries in our country. That's what we get in return for that.
What we have, though, is also a variety of insurance products. And many of them dramatically underinsure expensive chronic medicines. And what this ends up doing is shifting the cost from the system to the individual, which seems patently unfair in many, many cases. So we're promoting a different path than that one you describe, which would lower the price for everything but only marginally for the consumers in need. What we want to do is target any savings to drug pricing directly to the consumers out of pocket, not to the US Treasury. And that's because we think 13% of health care seems reasonable to us.
But for some patients, they're paying 20%, 30%, or 40% of their out of pocket health care dollars for medicines. Let's bring that back in line with targeted benefit redesign starting with the Part D program, which is built for our seniors. And there's real ideas on the table. Some came out of the Senate, a bipartisan effort called Grassley Wyden came forward. We would support something like that. There's other efforts like that that we support instead.
ANDY SERWER: I want to switch back to COVID and ask you about China. You lead Eli Lilly in China. Is it plausible to you that COVID-19 leaked from a Chinese lab, and is it important for us to figure that out?
DAVID RICKS: Yeah, obviously that's a controversial and important topic. I think on your second question, it's critical we know the origin of COVID-19. It's the worst pandemic in our lifetimes, probably the worst the world's seen since 1919. And the key to controlling future pandemics, which we will have with absolute mathematical certainty, viruses will emerge that will threaten humankind, the best chance to stop them is early.
So an early detection system like we have in California for earthquakes or in Iceland for volcanoes, using technology to know when things are starting, we can then elevate our responses, contain the virus where it started, and extinguish it as quickly as possible. That's really something we need to work on. And as we saw with this very vivid pandemic, there is no version of border control that can really control this kind of spread. We really need to work together as humankind. So we need the answer. How did it start? And where should we put our sensing and detection for the future pandemic?
As relates to specifically could it have started in a lab, whatever it is, it could have. And there have been lab errors where new viruses escaped labs. Laboratory practices are something as a drug company we spent a lot of time on to avoid the kinds of accidents where infections can occur. And it's certainly plausible. Now, the experts will need to dig in on this and see what actually occurred, and I think we all need that answer so that the next pandemic can be brief and highly contained and we can move on with our lives in a matter of weeks rather than having what we just experienced globally.
ANDY SERWER: A couple of final questions about, David. You've worked at Lilly for more than 20 years. What's the most significant change you've seen in the company and in the pharma industry writ large since you've come on board?
DAVID RICKS: Yeah. I just celebrated my 25th anniversary last week. I mean, I'd mention two things. One, the underlying science-- what our industry does is we take advantage of scientific breakthrough to make products that are useful to people. The scientific breakthroughs, which is really a product of companies, industry, government funding, research, has been amazing. And probably we can go back to the human genome mapping project as kind of a key turning point.
The next decades will be the decades we talk about biologic, the unleashing of harnessing biology. And that includes medicines to conquer the worst diseases we can think of. I'm confident that's what we're going to be talking about for the next 20 years, and this industry is at the forefront of that. So that's super exciting. What we can do now and the speed at which we can do it is incredible. We talked about making a whole new medicine for an unknown pathogen and shipping hundreds of thousands of doses inside a calendar year. I mean, that's just incredible.
The other thing, though, that's really changed is corporate culture since I joined. I was joking in a blog I posted to employees that the rule here was you had to put on your suit and tie to go to the cafeteria when I joined. There was tons of layers of bureaucracy and memo writing for executives. And I mean, now I mean, I hang out with all kinds of people in the company. We're much flatter, faster moving, more casual, and I think a better company because of our inclusiveness of all kinds of ideas. And I suspect that's not just Lilly. I think it's every company. I think working in a corporation like this is now a lot more fun and engaging than it was in 1996.
ANDY SERWER: Final question. What do you see as your legacy?
DAVID RICKS: Oh, I'm not in the legacy moment yet, to be honest. I'm not contemplating that. I did do an exercise when I took the job of writing what I want to leave behind, like a competent successor. I wrote, actually, at that time I wanted to have a medicine for Alzheimer's by this company, which had put so much into it. I think we're getting closer to that.
And you want to leave behind something better than when you started. The founder of our company when he handed the keys to his son to run the company said, "Take what you find here and make it better and better." I mean, I want to be that-- that to be my mantra. It was better when I left than when I started.
ANDY SERWER: Some wise words there. David Ricks, CEO Eli Lilly. Thank you so much for your time.
DAVID RICKS: Thank you.
ANDY SERWER: You've been watching "Influencers." I'm Andy Serwer. We'll see you next time.