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Slow Uptake Of New Drugs Clouds Industry Outlook

April 22, 2010 By: Nadia Category: Medicine Advice, Medtipster, Prescription News, Prescription Savings

www.Medtipster.com Source: Dow Jones Newswires – Philadelphia Bureau, April 22,2010

New prescription drugs just don’t fly off the pharmacy shelves as quickly as they used to. That’s a problem for an industry facing a wave of patent expirations for its current blockbusters.

Drug makers are having a tougher time convincing drug-benefit plans to provide favorable reimbursement soon after the introduction of new drugs. While several factors have contributed to slow launches, a big hurdle is insurers’ insistence that manufacturers prove the cost-effectiveness of new drugs, in addition to efficacy and safety.

One example is Effient, a new blood-thinning treatment for heart patients co-marketed by Eli Lilly & Co. (LLY) and Daiichi Sankyo Co. (4568.TO). A prominent warning about bleeding risks on the drug’s prescribing label and less-than-ideal reimbursement by insurers have hampered its growth.

From its introduction last year through March 31, Effient has generated only about $36 million in sales for Lilly–an inauspicious start for a drug once viewed as likely to exceed $1 billion in annual sales. The gold standard anticlotting drug, Plavix from Bristol-Myers Squibb Co. (BMY) and Sanofi-Aventis SA (SNY), seems immune to Effient’s challenge.

“It’s getting increasingly difficult for new products to demonstrate value to a broad set of stakeholders,” said Rob Harold, senior principal with IMS Health Inc.’s consulting unit, which advises drug makers on product-launch strategies.

Other numbers from prescription-data provider SDI help tell the story: From 2000 through 2004, five drugs exceeded 700,000 monthly prescriptions each within a year of their respective U.S. launch dates. These included AstraZeneca PLC’s (AZN) Nexium heartburn pill, now the third best-selling drug in the world. But from 2005 through 2009, only one drug reached that threshold so quickly: Teva Pharmaceutical Industries Ltd.’s (TEVA) ProAir HFA asthma inhaler.

“I do think there’s a little bit more rigor around what constitutes value in health care,” said Tim Heady, chief executive of UnitedHealth Group Inc.’s (UNH) Pharmaceutical Solutions unit.

The UnitedHealth unit has placed Effient on the third tier of its preferred-drug list, which means members pay a higher copay for Effient than for other drugs listed on the first or second tiers, partly because of the bleeding risk.

Ronika Pletcher, head of Lilly’s investor relations, acknowledged Monday the uptake of Effient was slower than planned, but told analysts on a conference call the company was encouraged by recent signs of demand. The company has honed its marketing pitch to focus on certain patient populations for which Effient is a good choice, such as diabetics. Lilly also has conducted research to support its cost-effectiveness.

In some cases, new launches are hampered if a drug isn’t the first of its kind to reach the market. That appears to be the case with Onglyza, a diabetes drug launched last year by Bristol-Myers Squibb Co. (BMY) and AstraZeneca. Its modest sales since launch have contrasted with the quick uptake for Merck & Co.’s (MRK) Januvia, which was the first of its kind and had a three-year head start.

“It’s increasingly challenging to successfully differentiate your next-in-class product,” said BMO Capital Markets analyst Robert Hazlett.

Drug makers have adjusted, shifting resources from sales representatives who call on doctors to reps who pitch to insurers. Some have narrowed the focus of their research-and-development efforts to searching for treatments for diseases with high unmet medical needs, like Alzheimer’s disease and cancer. Breakthroughs in these areas are less likely to face obstacles to brisk launches.

“All the drug companies are experiencing the same phenomenon,” Bristol-Myers Chief Executive James Cornelius said in a recent conference call with reporters. “We, with others, are experimenting with our marketing mix to get faster product uptake.”

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