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THE CLINICAL AND FINANCIAL VALUE OF EVERGREENED DRUGS

August 31, 2011 By: Nadia Category: HealthCare, Medicine Advice, Medtipster, Prescription News

www.Medtipster.com Source: Navitus Clinical Journal, August 2011

Occasionally, when a patent on a brand drug is about to expire, the manufacturer will create what is unofficially known as an “evergreened” version of the drug. An evergreened drug typically is a metabolite (a substance normally resulting from metabolism of another substance in the body) or other very close chemical relative or a reformulation (extended release version) of a highly profitable, brand drug. For the purposes of this article, we will examine metabolites/close chemical relatives to discuss how a transparent PBM evaluates these drugs as they relate to their formularies.

What is an Evergreened Drug Exactly?
Evergreened drugs are slightly different chemically from their parent (original brand) drug. Some examples of parent brand drugs and their evergreened versions include the evergreening of Claritin to Clarinex, Zyrtec to Xyzal, and Prevacid to Kapidex. Because of the chemical difference in evergreen drugs, the Food & Drug Administration (FDA) considers these drugs to be new drugs. Therefore, the manufacturer is required to submit a New Drug Application, proving the new drug is not a placebo and that it is safe and effective.

Although evergreened drugs may be approved by the FDA, they rarely offer a distinct clinical advantage to the parent drug (occasionally, they are relatively more tolerable). In cases where the evergreen drug provides more tolerability, the clinical advantage dictates the value of the drug and it is placed at a preferred formulary tier. More often, however, there is no evidence that any efficacy or tolerability advantages exist with the evergreened drug over the parent drug.

What is the Financial Value of Evergreened Drugs?
Pharmaceutical manufacturers make a strong effort to maintain the market status of a drug in order to maintain a large share in the marketplace. Some steps used to promote the evergreened drug include:

  1. Increasing public awareness of the drug through direct to consumer advertising—This tactic is used to increase the number of claims for the drug, creating a perceived need for the drug in the marketplace.
  2. Setting the price of the new drug below that of the parent drug—The lower cost may appeal to plan sponsors.
  3. Aggressively rebating the drug—A high rebate may appeal to plan sponsors.

These financial incentives may be tempting, until one considers that the patent expiration of the parent drug is usually imminent, meaning that generic versions will soon be on the market. Generic drug versions typically cost about 20% of the total cost of the parent drug. While the incentives above may make the evergreened drug look financially viable compared to the parent, these incentives will typically be short-term. Even with price reductions and/or aggressive rebates, the evergreened drug rarely meets the low cost of the generic version(s).

How does a transparent PBM Evaluate these Drugs?
Since a transparent PBM manages its formulary to the lowest net cost, each drug is scrutinized for its clinical effect and overall cost. Drug cost becomes an important factor when the clinical advantage of the ‘new’ or evergreened drug over other drugs in its category is unclear. In these cases, where the clinical efficacy is the same for multiple drugs in a category, the PBM will maintain the lowest-net-cost product that yields the best drug therapy. This approach achieves the same clinical results with the lowest price for the client and member. As such, the PBM will often not include the evergreened product on its formularies or will include it on a non-preferred tier (with some exceptions).

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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