The Wacky World of Generics: Risperdal Edition

They don't call them atypical antipsychotics for nothing.

Here are two things that keep Big Pharma CEOs up at night: (1) the growing power of payors—actively encouraged by the Medicare program—to drive therapeutic substitution in blockbuster product classes; and (2) the potential for government run comparative effectiveness studies to undermine the market position of newer medicines.

However, if two of the biggest players in the atypical antipsychotic market are to be believed, the impact of the first major patent expiration in that class will stand those fears on their head.

Johnson & Johnson’s risperidone (Risperdal) goes off-patent in June and generics are lining up to enter the market. That will clearly be a big hit for J&J to absorb: Risperdal sales in the US were about $2 billion in 2007.

In other blockbuster classes, a major patent expiration has meant big headaches for other brands in the class. Think of how Lipitor has seen its market share erode and discounts soar since Zocor went generic.

So Lilly’s $2.2 billion olanzapine (Zyprexa) and AstraZeneca’s nearly $3 billion quetiapine (Seroquel) are in big trouble, right?

Not so, say those two companies.

First off, the Medicare program’s overall generics-first emphasis is more than offset by the Centers for Medicare & Medicaid Services requirements that managed care plans cover all products in the atypical antipsychotic class (and five other protected classes). So plans will be free to switch Risperdal patients to the generic, but will find it difficult if not impossible to drive therapeutic substitution from other brands, as we wrote here.

Or, as AZ CEO David Brennan put it during the company’s January 31 earnings call, “the antipsychotic market is quite unique. A product is a product. There is not a history of therapeutic substitution in that area, and we expect to continue to grow our Seroquel franchise.”

Lilly CEO-designate John Lechleiter took it one step farther, telling investors during a January 29 earnings call that Lilly plans to “retain the broadest possible access for Zyprexa” by emphasizing the “superior efficacy evident in CATIE the longer the duration of therapy.”

You remember CATIE, right? That is the government run comparative trial completed in 2005, with headlines at the time declaring it showed that older off-patent antipsychotics are just as good as the atypicals.

That interpretation, needless to say, has not won out in the marketplace, since Lilly, AstraZeneca and the other companies in the market astutely anticipated the negative headlines and worked diligently to develop alternative interpretations.

How successful were they? Well, less than three years later Lilly will be using CATIE to help support continued use of Zyprexa over a generic from the atypical class itself.

And there is nothing typical about that.

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The Wacky World of Generics: Protonix Edition

Here is a headscratcher.

Wyeth decided January 30 to launch an authorized generic version of its blockbuster proton pump inhibitor pantoprazole (Protonix). The launch comes a month after generic manufacturer Teva shocked Wyeth by launching its own version at risk. Teva quickly halted shipments under a standstill agreement with Wyeth, and the company's investors assumed (prayed?) that a settlement would follow.

Apparently not. Wyeth decided to launch its own generic under a license to Prasco (more on them later). The announcement came the day before the standstill agreement with Teva was set to expire.

Wyeth's announcement was followed by a generic launch from a third company, Sun Pharmaceuticals, which under the complex rules governing these things shares six-months of generic exclusivity with Teva. Sun had not launched previously, presumably since it feared the potential for steep damages should it eventually lose the underlying patent litigation.

However, with two prior launches (Teva's in December and Wyeth/Prasco's the day before), Sun decided to take the chance.

And then Teva announced that it has no plans to relaunch its own.

Huh?

Did Wyeth really just finish off its biggest brand in response to a non-existent threat that Teva would re-enter the market for good? And why on earth is Teva sitting back and watching one of the biggest generic opportunities in history wither away?

Welcome to the wacky world of generics.

Believe it or not, there is a way in which this bizarre series of circumstances might make sense for all the players involved.

Bernstein Research's Ronny Gal and Tim Anderson suggested one possibility in a note sent Friday. Teva's decision not to launch reflects the fact that it already has significant inventory in the trade, so it has nothing to gain from contributing to a price war that would affect the selling price it can realize on the product already in distribution. And, by waiting until after Sun enters the market this time, Teva further minimizes the potential size of any damages it might owe down the road if it loses the underlying case.

If that is the case, expect Teva to launch sometime in the next quarter or so, once trade inventories of its product are depleted and it can come in at a new, more deeply discounted price.

There is another option, the Bernstein analysts say: that Teva gambled and lost. The at-risk launch was a bad gamble by Teva, intended to extort a settlement from Wyeth in litigation the generic company believes it will lose. In that case, Wyeth is calling Teva's bluff and will ultimately prevail in court, recouping at least some of its losses on the generic.

In theory, Teva could be on the hook for treble damages. However, because Wyeth has already lost a preliminary injunction ruling in the case, it is extremely unlikely that it would be awarded any damages above the actual losses incurred to Teva's product.

Bernstein believes Wyeth is pursuing the right course in either case: it is impossible to put the genie back in the bottle now that Teva's product is in distribution, and an authorized generic launch helps Wyeth hold on to a bigger share of pantoprozole revenues for longer. If the company wins the litigation and gets a bit more money back, so much the better.

The big winners in all this, however, are not the battling companies. Instead, they are the payors who will probably reap the biggest benefit, as generic competition in the PPI class intensifies. With Protonix once a $2.5 billion brand, there is plenty of savings to be had. But the opportunity is even bigger since it is sure to increase pressure on AstraZeneca to further discount esomeprazole (Nexium).

In fact, that pressure may already be showing. AZ reported last week that Nexium experienced a net price decline of about 8% in the US last year--but that came almost entirely in the fourth quarter. The company said US sales of the brand fell 18% in the last three months of the year, despite about a 2% increase in volume. Yes, its discounts really are that deep and getting deeper.

Oh, and then there is Prasco. In case you've never heard of them, they are a relatively new start-up (formed in 2002) by former Duramed CEO Thomas Arington to focus on--you guessed it--authorized generics. Duramed, incidentally, once took on Wyeth over the course of a decade in an unsuccessful battle to market a generic version of conjugated estrogens (Premarin).

If you can't beat 'em, join 'em.

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Momenta: Oh, Sugar!

Momenta Pharma said this morning that FDA had rejected the ANDA for its m-enoxaparin (Lovenox) generic antithrombotic because it doesn't address the potential for immunogenicity. The bad news was delivered to Momenta's partner, Sandoz (Novartis' generics arm) late yesterday.

It came as a shock, particularly given the confidence that Momenta's management had, until now, expressed in their relationship with the regulators. The immunogenicity concern "is the only issue in the letter. And it is the first time in 26 months we’ve been at the agency that they asked a question about this," Momenta CEO Craig Wheeler said on a conference call with investors today.

So is the company re-evaluating where it stands with FDA's office of generic drugs in light of this kind of ambush? "We are surprised in this question coming at this specific time. I don’t know what’s happening at the agency. But based on where we thought we were with the review … there are a lot of questions we have as well," Wheeler declared.

If FDA or the OGD was aiming to provide fodder for conspiracy theorists, their last-minute "oh-by-the-way" immunogenicity information request will probably be deemed a success.

Let's take a step back. The m-enoxaparin ANDA was in many ways a test case for whether or not it's possible to adequately characterize complex molecules--a question of particular relevance to the scope and nature of a future pathway for large molecule generics (even though, as a generic version of the complex sugar mixture Lovenox, this isn't quite a bio-generic--or should we say biosimilar...).

Momenta claims that its proprietary sugar characterization technology gives it a unique characterization capability that other would-be Lovenox generics purveyors lack. If it's right, the company might have had a more than decent shot at taking a large chunk of the low molecular weight heparin market. That's not pocket change: Sanofi-Aventis racked up more than €2.4 billion in Lovenox sales in 2006.


It's unclear whether other generix enoxaparin players like Teva have received similar letters from FDA, although Wheeler noted during today's call that FDA has communicated to the company that this was a general issue--one that would appear to concern all generic enoxaparin ANDAs, not just Sandoz/Momenta's.

Unlike a few recent high-profile snafus among biotechs in late stage clinical trials or at FDA (such as Novacea and GPC), Momenta isn't likely to collapse under the weight of this setback--though its market value was cut in half as of this morning. The company broadened its alliance with Sandoz last summer to include a handful of projects and has quite a bit of cash--approx $130 million at year-end, as predicted by analysts.

It's impossible to say what FDA will ask Momenta to do, or to show, to get back on track with m-enoxaparin until the company meets with the agency, Wheeler said today, and so the costs associated with the delay or future trials are as yet undetermined. But whatever happens, this issue may yet reverberate beyond Momenta and further delay biosimilars' already slow progress to market in the US.

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Generic EPO Should be a Big Deal. But Is It?

Novartis’ Sandoz division was on Friday granted European Commission approval for its biosimilar version of Johnson & Johnson’s epoietin alfa (Eprex). It’s not a huge surprise, given the positive recommendation earlier this summer, and given that Sandoz has done this before: growth hormone Omnitrope became the first biosimilar drug to gain European approval last year (and, after a long legal kerfuffle, got onto the US market, too).

But this should nevertheless be a big deal. We’re talking, after all, about a cheaper copy of EPO, the blockbuster anemia drug that made Amgen. A drug with sales that top $7 billion globally. Of all the biologics in generic firms’ sights, this has to be by far the most valuable--the "killer biologic," as one of you readers put it in a comment on a previous post. EPO is one of the most expensive drugs on many hospital formularies, and accounts for a huge chunk of payor expenditure.

At last!, we should be saying, the long-threatened generic biologics revolution has come to pass. Injectables will get cheaper, patient access will improve, originators will be forced to innovate and move on.

The reality isn’t quite so revolutionary. Sandoz is one of the few companies with the resources to persevere with biosimilars; many smaller firms dropped out as it became clear how onerous clinical trial and regulatory requirements would be.

Commercialization ain’t a slam dunk, either. Sure, a 20% discount counts given the prices of these drugs. But it’s up to individual countries to decide on whether docs may substitute the originator drug with a biosimilar. Innovators have done a good job lobbying against interchangeability. Questions and concerns over safety standards mean that biosimilar firms have an uphill struggle on the marketing and educational front, ensuring that these products are perceived as equivalent, not potentially dangerous cheapies.

Still, Sandoz will be helped considerably by the fact that its biosimilar has been granted the same international non-proprietary name (INN) as the reference drug, epoietin alfa (to the delight of the European Generic Medicines Association, since this goes some way at least to proving their case for scientific equivalence). Sandoz’s EPO will be available under three different brand names, though, likely in order to leverage locally-recognized and trusted generic brands across the various European markets.

Stada, another surviving biosimilars stalwart, had to settle for a slightly different INN for its generic EPO--epoietin zeta, filed in June 2006. That probably helped drive their decision to hand over commercialization to US-based specialist hospital marketer Hospira last November. The move was about “curbing financial risks” associated with the project, whose approval, as the press release optimistically states, “is still possible in late 2007”. Also last year, Mayne Pharma pulled out of a marketing deal with Pliva (now part of Barr Pharmaceuticals) on generic EPO. The product was approved in Croatia in 2005 but hasn’t got past the EU regulators.

In sum, Sandoz's approval in itself isn’t much of a threat to J&J, even less to Amgen, which sells epoietin alfa as Epogen in the US. But it is symbolic, at least in its timing, of an end to the monopolies that innovators have enjoyed on hard-to-make biologics like EPO, a topic we discussed in more detail in this IN VIVO feature.

Sandoz’s head of Biopharmaceuticals Ajaz Hussain knows that biosimilars’ take off will be slow; he told IN VIVO Blog about it earlier this summer. But take off they will, eventually—and when they do, this approval may well be looked upon, if only retrospectively, as one of the most important steps along the way.

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While You Were Running with the Bulls

That's gonna leave a mark

A few notes from the weekend that was ...

• Satisfaction Gauranteed! Can pharmaceutical firms profit with variations on the no-cure-no-pay strategy? The New York Times takes a look. Incidentally, if that sounds familiar you may have read another take on that issue on the IN VIVO Blog about six weeks ago ... and there'll be more in the next issue of IN VIVO.
  
• Accept No Substitutes! The San Francisco Chronicle reviews the pros and cons of generic biologics. Biosimilars? Biogenerics? Whatever you're calling them these days.
  
• For Refined Tastes! Tom Wolfe won't be reading this. And IN VIVO Blog thinks white suits look pretty damn silly, so we're even.


• Breaking Hearts Since 1883! The Philadelphia Phillies, favorite baseball team of a few of us at the IN VIVO Blog, lost their record 10,000th game last night, falling to the Cardinals 10-2. That ignominious milestone got us thinking ... is there a parallel in the pharmaceutical world, a company with a particularly striking blend of poor luck and staying power (and bad pitching)?

(AP Photo/ Inaki Porto)

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Sleep Tight, Kids!

Well, all that insomnia prescription/revenue growth had to come from somewhere.

According to research released today by Medco Health Solutions, the children are feeling verrrry sleeeepy. Just don't let them drive:

... use of prescription sleep medications by children under age 19 surged 45 percent between 2001 and 2006; and 52 percent among adults age 20 and older. ... Yet, with those increases have come increased scrutiny on some safety concerns of the medications in this class. In March 2007, the FDA requested that all manufacturers of sedative-hypnotic drug products, a class of drugs used to induce and/or maintain sleep, augment their product labeling to include stronger language concerning potential risks. These risks include severe allergic reactions and complex sleep-related behaviors, which may include sleep-driving, the FDA report stated.

Medco's release is of course designed to raise awareness of generic zolpidem; Sanofi's last Ambien patent expired on April 21st. The most recently available IMS data through April 20th shows Ambien holding onto nearly 41% of new insomnia prescriptions (Ambien CR, Sanofi's extended-release replacement, had nearly 20%), but generic competition from 13 companies means it shouldn't be long before that plummets.

As we wrote last year, market share in insomnia is known to shift quickly--and reliably--in response to DTC advertising. And as the IN VIVO Blog pointed out last month, those DTC ads have gained their share of admirers, and FDA attention.

Medco anticipates saving upwards of $150 million per year thanks to generic zolpidem. And they just might get away with it without the antics of Abe & the beaver, the butterfly, and those meddling kids.

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