Drug Industry Daily - April 21, 2011 Issue

Vol. 10 No. 79

IMS: Generics, Innovation Cycle Slow Down Drug Spending

Increasing use of generics and changes in the innovation cycle for new drugs are responsible for sluggish growth in consumption of prescription drugs, according to a new report from the IMS Institute for Healthcare Informatics.

“It became apparent in 2010 that the healthcare landscape is shifting in significant ways,” Michael Kleinrock, director of research development at IMS, said. “Physicians and patients have more therapy options than ever, and yet spending on medicines is rising at historic lows.”

Total spending on pharmaceuticals rose to $307 billion in 2010, a nominal increase of 2.3 percent over 2009. However, adjusting for population increase, actual per capita spending growth was closer to 0.6 percent — a decline in growth driven by slow gains in brand drugs, oral formulations and small molecules.

Spending on oral medications fell 0.3 percent, on a per capita basis, from 2009, though the smaller segments of injectables saw 5.7 percent growth.

Other segments that grew included biologics and generics, though not enough to offset the declines in larger market segments.

Branded-drug spending in general fell while generic spending rose. Both new prescriptions and continuing regimens shifted towards generics, with a total decline of 61-million brand prescriptions in 2010.

That shift could continue if more state Medicaid programs switched to generics, as a recent study by the American Enterprise Institute suggests (DID, March 29).

Meanwhile, average spending per new branded product — defined as treatments available 24 months or less — fell from $114 million in 2006 to $62 million in 2010. The decline “reflects a shift in the mix of new products toward orphan drugs and medicines with the same mechanism of action as existing treatments,” the report says.

Loss of patent protection also contributed to the fall in spending on branded products, with a reduction of $12.6 billion, according to the report. Individual products with the largest declines in spending were those facing patent expirations or patients transitioning to new therapies.

In addition, pipelines and patents for specific drug classes have seen changes that contributed to the decline in growth.

Despite a 2.3 percent increase in the use of lipid regulators, spending on those drugs increased by only 0.9 percent between 2009 and 2010, with many high-grossing treatments seeing sales decline as patients switch to generics.

Pfizer’s Lipitor (atorvastatin), in particular, will face generic competition as the drug approaches patent expiration later this year (DID, April 8).

Meanwhile, a rise in spending on branded antipsychotics and anti-asthmatics was offset by the slow growth of oncologics spending, as that therapeutic area is dominated by older treatments.

A decline in doctor visits may also have contributed to the slow growth in pharmaceutical spending. Visits fell by 4.2 percent from the previous year, possibly driven by high unemployment and rising healthcare costs, the report suggests.

“The Use of Medicines in the United States: Review of 2010” is available at www.imshealth.com/deployedfiles/imshealth/Global/Content/IMS%20Institute/Static%20File/IHII_UseOfMed_report.pdf. — Wilson Peden


J&J OTC Production Woes Delaying Product Return, Impacting Sales

A long string of OTC recalls and production issues has hurt Johnson & Johnson’s (J&J) bottom line and will further affect product availability, the company revealed Tuesday.

In its first-quarter earnings call, J&J disclosed the impact months of bad news — including signing a consent decree — has had on the company (DID, March 11).

“A broader portfolio of products” once produced at J&J subsidiary McNeil’s shuttered Fort Washington, Pa. plant may not be available until 2012, “due to a decision to upgrade and reformulate manufacturing and quality methods in the course of transferring the production to other sites,” Louise Mehrotra, J&J vice president of investor relations, said.

J&J does not expect to reopen the Fort Washington facility “until it has first completed the remediation efforts at the facility” and received certification of compliance from an independent expert and FDA approval, according to Mehrotra.

The company also acknowledged that implementing its comprehensive action plan to fix manufacturing issues, which the company announced last year, will take an even bigger toll on the company’s bottom line (DID, July 19, 2010).

“We have previously estimated $0.06 per share drag to implement the comprehensive action plan, and now we expect that it’s about a $0.12 per share hit to implement both the comprehensive action plan and the additional requirements in the consent decree,” J&J Chief Financial Officer Dominic Caruso said.

Also revealed was the enormous effect on sales the numerous recalls and production issues have had. “For the first quarter of 2011, sales for the OTC pharmaceuticals and nutritionals decreased 8.2 percent on an operational basis compared to the same period in 2010, with U.S. sales down 26.8 percent,” Mehrotra said.

As a result, Wells Fargo Senior Analyst Larry Biegelsen sees a risk to McNeil’s 2011 business, with few potential offsets, saying in a Tuesday note “we … prefer to stay on the sideline until there is some clarity.”

In 2010, recalls cost J&J approximately $900 million in sales (DID, Jan. 26).

The company’s most recent recall was of its anti-epilepsy drug Topamax, for odor-related issues (DID, April 15). Last year, J&J recalled 127,000 bottles of Tylenol 8 Hour for similar issues (DID, Oct. 20, 2010). — Kevin O’Rourke


Judge Throws Out ViroPharma Lawsuit Against the FDA, Cites Lack of Standing

A federal judge has dismissed ViroPharma’s lawsuit against the FDA that claimed the agency wrongfully changed its bioequivalence testing standards for generic drugs referencing its gastrointestinal antibiotic Vancocin.

In a move that could have implications on a drug company’s ability to sue the FDA, Judge Ellen Segal Huvelle of the D.C. federal court dismissed ViroPharma’s suit against the agency Friday, saying the company lacked standing in the case.

ViroPharma claimed in a lawsuit filed last September that the FDA changed its requirements for generic-drug makers by not making the follow-ons undergo additional human testing. Such a change, the company says, would demand a public comment period. Third parties filed amicus briefs earlier this year supporting both ViroPharma and the FDA (DID, Feb. 3).

For drugs not absorbed into the bloodstream such as Vancocin (vancomycin HCl), ViroPharma claims FDA regulations require bioequivalence to be demonstrated through human — not lab — testing, the former being a higher and costly burden of proof.

The FDA can waive the in vivo testing requirement in certain limited circumstances, but ViroPharma says no generic competition would have qualified (DID, July 14, 2006).

The FDA revised bioequivalence recommendations in early 2006 to include data generated by in vitro testing. But the company filed a petition for a stay of action in 2006, which the FDA has yet to respond to (DID, March 22, 2006).

In December 2008, the agency revised the rules and requested public comment. The draft guidance hasn’t been finalized and comments are still being accepted.

One of the several reasons Huvelle cited for dismissing the case was that ViroPharma lacked a serious financial impact from the FDA’s actions.

Pharmaceutical companies are typically granted standing when they sue the FDA, said Richard Samp, chief counsel at the Washington Legal Foundation, which filed an amicus brief in support of ViroPharma. “If this decision were followed elsewhere, it would make it much more difficult for pharmaceutical companies to sue the FDA.

“The question then becomes how imminent does the financial threat have to be before you have standing,” he added, noting that if a company doesn’t have standing until after the regulatory action is finished, then the damage is done with generic competition on the market.

Vancocin, a drug that treats life-threatening gastrointestinal infections, is one of only two drugs marketed by ViroPharma and is no longer subject to patent protection. The company said in its complaint last year that the FDA has received at least 11 ANDAs for generic Vancocin, but none have been approved.

ViroPharma did not return calls seeking comment. — David Pittman


Watson Seeks To Make Generic Welchol; Genzyme, Daiichi File Lawsuit

Genzyme and Daiichi Sankyo filed a patent infringement lawsuit against Watson Pharmaceuticals seeking to block the generic drugmaker from marketing a generic version of the cholesterol drug Welchol.

In a complaint filed Monday in Delaware federal court, Genzyme and Daiichi seek to protect patents ’669 and ’675, claiming Watson wants to launch a 625-mg generic tablet of Welchol (colesevelam HCl) before exclusivity expires.

Genzyme developed Welchol, which is approved to treat high cholesterol and Type 2 diabetes. Daiichi markets it in the U.S. Watson informed the two companies earlier this month it filed an ANDA with the FDA.

Daiichi and Genzyme took similar action against Impax early last year when it filed an ANDA to make generic Welchol (DID, Jan. 18, 2010). Litigation in that case is still ongoing.

The drug gained FDA approval in 2000, but when it added Type 2 diabetes as an indication in 2008, Daiichi said it was the first medication to be approved to lower both blood sugar and cholesterol levels (DID, Jan. 21, 2008).

From March 2009 to February 2010, Welchol earned $336 million in U.S. sales, Watson says, citing IMS Health data.

The lawsuit now delays FDA approval of Watson’s ANDA until late September 2013, or until the litigation is resolved. — David Pittman


FDA Approves Genentech, Biogen Idec’s Rituxan to Treat Blood Vessel Diseases

The FDA has again extended the indication for Genentech and Biogen Idec’s Rituxan to treat adults with Wegener’s Granulomatosis (WG) and Microscopic Polyangitis (MPA), in combination with corticosteroids, making it the first approved medicine for the two rare blood vessel diseases.

WG and MPA, orphan diseases afflicting three of every 100,000 people in the U.S., are types of a rare autoimmune disease that affects the small blood vessels of the kidneys, lungs, sinuses and other organs, Roche said.

Tuesday’s approval is based on the Phase III RAVE study that showed Rituxan (rituximab) was not inferior to the current standard of care, cyclophosphamide (CYC) in inducing disease remission at six months in 197 adults with WG and MPA.

CYC is currently the standard of care for WG and MPA, but doctors wanted an option for patients that works differently and has a different safety profile, according to Genentech.

Patients were randomized to receive Rituxan once a week for four weeks with corticosteroids or daily oral CYC with corticosteroids for three to six months to induce remission.

After six months, 64 percent of patients receiving Rituxan reached the primary endpoint of complete remission, while 53 percent of patients who received CYC reached complete remission.

Retreatment with Rituxan was not evaluated. Therefore, the safety and efficacy of retreatment will be further evaluated in a required post-marketing study, the FDA said.

Rituxan has a boxed warning for infusion reactions as well as rashes, sores in the skin and mouth and progressive multifocal leukoencephalopathy.

The most common adverse events reported during the RAVE study were infections, which occurred in 62 percent of Rituxan patients and 47 percent of CYC patients. The most frequent type of infection was upper respiratory tract.

Other serious adverse events, including deaths, development of certain cancers, blood disorders, infections, cardiovascular events, hospitalizations and infusion reactions occurred in 33 percent of CYC patients compared to 22 percent of Rituxan patients.

Rituxan was developed by Biogen Idec and received its first FDA approval in 1997 for relapsed or refractory, low-grade or follicular, CD20-positive, B-cell non-Hodgkin’s lymphoma.

The product received another FDA approval, for rheumatoid arthritis, in 2006 in combination with methotrexate (DID, March 2, 2006). Last year the FDA approved Rituxan plus chemotherapy to treat chronic lymphocytic leukemia (CLL) (DID, Feb. 22, 2010).

Earlier this year the FDA approved Rituxan for first-line maintenance use in patients with advanced follicular lymphoma (DID, Feb. 1). — Molly Cohen

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Reporters: Virgil Dickson, Wilson Peden, Molly Cohen, David Pittman, Kevin O'Rourke, Sarah Karlin

President: Cynthia Carter; Editorial Director: Pamela Taulbee; Executive Editor: Jonathan Block

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