Me-Too Drug Sales Return Via Competitive Pricing Or Marketing

By Larry Gorkin, Ph.D., contributing writer

Between 1997 and 2004, launching a blockbuster drug by simply creating an undifferentiated match to an established market leader was relatively easy. During that time, 21 out of 33 such drugs shared a mechanism of action (MOA). Historically, the industry avoided competing on price within a branded drug class, with relevant drugs sharing in the commercial success. Starting in 2005, that all changed; among drugs launched in the U.S., only 21 achieved blockbuster results in 2012. What constrained blockbuster development in this time frame was the contrasting focus on innovative products, given no duplications among the blockbuster drugs in terms of MOA. Although, in terms of commercial success, a few drug classes proved to be the exception (e.g., injected GLP-1 drugs to treat type 2 diabetes, drugs to treat hepatitis C).   

Between 2005 and 2012, when faced with drugs in the same class offering similar pricing and comparable efficacy and safety, payers simply chose one drug for primary reimbursement. The remaining agents in the class were labeled pejoratively as “me-too” drugs. For example, Merck’s Januvia was FDA-approved as the first DPP-4 inhibitor to treat type 2 diabetes in 2006. By 2012, AstraZeneca’s Onglyza and Lilly/Boehringer-Ingelheim’s Tradjenta were approved as well. Only one head-to-head, double-blinded study of DPP-IVs was conducted — Onglyza versus Januvia — each in combination with metformin. Efficacy and safety were equivalent for the two drugs and assumed comparable to emergent agents in the DPP-4 class.

Januvia was launched at a price of just under $5/day in the U.S., and the other DPP-4s were priced similarly. In 2012, Januvia maintained its status as market leader with $5.7 billion in global sales, 23 percent above 2011. Januvia enjoyed >70 percent of global sales for DPP-4 drugs in 2012. Based on parameters of efficacy and price, a more random distribution of revenue would be expected. Instead, payers seemingly intervened, favoring Januvia and punishing the me-toos for not competing on price.

By 2014, U.S. payers noted a change in the biopharma landscape when manufacturers increased their use of discounts and rebates from drug list prices as a means of competing for market share. For example, discounts/rebates totaled $127 billion in 2016 versus only $43 billion in 2007. Sales of branded Januvia and its combination with metformin declined in 2017. This reflects competition in terms of rebates/discounts from DPP-4 alternatives and the successful launch of competitors. The market changes encourage payers to allow me-too drugs to flourish if their discounts/rebates lower costs relative to the discounted price of the market leader.

Multiple drugs with shared mechanisms have emerged since 2014.

Among most of these approved drugs, there remains little appetite to conduct appropriate head-to-head, double-blind trials by the manufacturers of drugs second-to-market. In contrast, several changes are noted among the new generation of shared mechanism drugs, including: (1) the time from first entry to a me-too approval has been reduced from the 2.5-year average noted previously; (2) price competition is a reality across several markets other than oncology; and (3) among cancer drugs, competition exists in terms of positioning products across a broad array of indications and earlier utilization. Three non-oncology and three oncology examples since 2014 point to higher rates of successful me-too drugs versus the handful of drugs noted from 2005 to 2012.

Non-Oncology

• Gilead launched interferon-free, 12-week curative regimens with Sovaldi and then Harvoni, priced at $84,000 and $95,000, respectively. The two drugs totaled $19 billion in sales in 2015 and dominated global revenue for hepatitis C. Since then, competition has been fierce, with U.S. prices cut in half. Merck’s Zepatier, was approved in 1Q16 at a cost of $54,000, and in 2Q17 it registered $517 million. Gilead’s Epclusa, approved in 2Q16, is similar in mechanism to Harvoni. Its pricing was reduced to $74,760, and it generated $1.17 billion in 2Q17, but only $882 million in 3Q17. Overall, Gilead registered $7.52 billion from hepatitis C medications in the initial nine months of 2017, significantly losing market share each year since 2015. This trend will likely slow but with no asymptote, with competition from AbbVie’s Mavyret, approved by the FDA in August 2017. Approximately 95 percent of hepatitis C patients are eligible for Mavyret, which AbbVie priced at $26,400 per 8-week treatment course, markedly lower than the competitive drugs in this highly lucrative market.

• Novartis’s Cosentyx, Eli Lilly’s Taltz, and Valeant’s Siliq are IL-17 therapeutics approved to treat plaque psoriasis. Efficacy is quite strong for all of them, as measured by the standard outcome, the Psoriasis Area and Severity Index (PASI)-75 (percent reduction from baseline). For example, Taltz registered 89 percent efficacy on the PASI-75, as compared to less than 55 percent efficacy for the active anti-TNF-alpha comparator, Enbrel. The Valeant drug was approved with a black-box warning regarding suicidal ideation and behavior. It was launched at $42,000 annually, about 10 percent less expensive than Consentyx. The Lilly drug is priced about 10 percent more than Cosentyx. The latter recorded $1.46 billion in global revenue in the initial nine months of 2017. In the corresponding 2017 timeframe, Taltz generated global revenue of $387 million. Due to the development of a risk evaluation and mitigation strategy (REMS) program related to the black-box warning, the Siliq launch was delayed until July 2017.

• Sanofi/ Regeneron’s Praluent and Amgen’s Repatha, both PCSK9 (proprotein convertase subtilisin/kexin type 9 enzyme) inhibiting biologics, were approved by the FDA in 2015 to treat the rare genetic disorder heterozygous familial hypercholesterolemia, which causes cardiovascular disease to develop early in life. Both drugs were priced above $14,000 annually, dramatically higher than the cost of generic statins. An analysis in JAMA in 3Q17 revealed that payer’s strict prior-authorization guidelines have contributed to nearly half of all scripts being refused for reimbursement and high co-pays being responsible for dissuading patients from filling about 1/3 of approved scripts. Not surprisingly, Repatha registered only $89 million and Praluent only $49 million in 3Q17. Following the failure to establish a mortality benefit in a clinical cardiac trial, Amgen is offering a 30 percent discount in price and value-based contracting, including reimbursing for patients who suffer a heart attack or stroke. With only a $6 million increase in global revenue from 2Q17 to 3Q17, this marketing campaign is having a trivial impact on sales.

Oncology

• Checkpoint inhibitors marshal the patient’s immune system to treat non-small cell lung cancer (NSCLC), the leading cause of cancer-related mortality and the largest commercial market for these agents. The focus is on antagonist antibodies to programmed death receptor 1 (PD-1) and programmed death ligand 1 (PD-L1). Bristol-Myers’ Opdivo and Merck’s Keytruda each improve overall survival among patients with chemotherapy-refractory metastatic NSCLC. Each biologic was priced $150,000 annually at launch. In 3Q17, Opdivo recorded $1.26 billion and Keytruda registered $1.05 billion in global revenue.    

Despite the approval of additional similar checkpoint inhibitors, including Merck KGaA/Pfizer’s Bavencio, AstraZeneca’s Imfinzi, and Roche’s Tecentriq, pricing hasn’t changed much for these agents. Moreover, discounting for these innovative cancer drugs is much lower than the average branded drug, at less than five percent in 2Q17, according to IMS.

•  Three poly (ADP-ribose) polymerase (PARP) inhibitors gained FDA approval for the treatment of ovarian cancer within a 27-month period starting in late 2014. Among women with BRCA-mutation-positive ovarian cancer, the median PFS was 21 months for Zejula, as compared with 5.5 months for placebo in second-line treatment. AstraZeneca’s Lynparza costs $12,450/month, Clovis’ Rubraca costs $13,470/month, whereas Tesaro’s Zejula depends on the dose prescribed, with an effective price estimated at $10,800/month. The most advanced of the three, Lynparza, generated $197 million in the initial nine months of 2017. Merck is a partner on Lynparza, but revenue was not provided in the 3Q17 earning release. Although ovarian cancer is a relatively small indication, a novel PARP inhibitor, Pfizer’s talazoparib, extended progression-free survival (PFS) by three months among patients with advanced BRCA-1 or BRCA-2 mutations. Reported in December 2017, the survival data are not yet available. The approved parp inhibitors are being tested currently in ovarian cancer in combination with PD-1/PD-L1 checkpoint inhibitors.

Pfizer’s Ibrance is used for the treatment of postmenpausal women with advanced breast cancer. The combination of IBRANCE plus letrozole reduced the risk of disease progression by 44 percent and improved median PFS by more than one year compared to letrozole plus placebo. Ibrance was approved in 2015 and is currently facing competition from Novartis’ Kisqali. Ibrance was launched at a price of $9,850/month, whereas Kisqali has been “flex-priced” — discounted about 20 percent versus Ibrance, based, in part, due to safety concerns. Ibrance has been prescribed to >50,000 women since launch, with $878 million generated in 3Q17. Kisqali registered $26 million in 3Q17. Lilly’s Verzenio was FDA-approved as the third drug in this class in 3Q17 and priced at $10,948/month.

Conclusion

Since 2014, increasing discounts/rebates have allowed U.S. payers to leverage drugs with a shared MOA to shape reimbursement strategies for all in the class. Twice as many me-too drugs exist currently, versus the years from 2005 to 2012, with the potential to flourish commercially.

BIO: Larry Gorkin, Ph.D., currently president of Gorkin & Cheddar Consulting, was employed at Pfizer/health economics at the company’s Manhattan world headquarters from 1996 to 2009.