New Diabetes Therapy’s Failure Offers Valuable Lessons

For a long time, the prospect of a therapy that would deliver insulin without needles seemed like an impossible dream. So it’s no surprise that hopes were high when Pfizer launched Exubera, the first insulin — in the form of powder — designed to be inhaled.

But this dream may have been a little too good to be true. Despite a major marketing blitz aimed at healthcare professionals since Exubera was launched in August 2006, the drug has been a major sales disappointment. Although Pfizer acknowledges it used 2,300 sales representatives to launch the brand to 5,000 doctors, according to a February article from Brandweek, only one-fifth of those doctors have persuaded a single patient to opt for Exubera.

The situation has not improved since then. In July, Pfizer reported only $4 million in sales of the drug in the nine months since it was launched. During the four-week period ending Aug. 17, only 4,734 new prescriptions of Exubera had been written — less than .5 percent of the total new prescriptions for insulin overall.

Why such a colossal failure to date in a product that would seem to fill a major niche in the industry and among patients?  There are three big answers: problems in using the drug; problems in pricing the drug; and problems in market research.

Cumbersome and Expensive

The first reason Exubera hasn’t had the update expected is that it’s considered difficult and tricky to use, issues apparently miscalculated in the marketing effort. If the drug was designed and marketed as an easier or less painful regimen than needles, it certainly wasn’t perceived that way when it hit the market. The truth is that physicians don’t like complicated drugs any more than patients do.

This drug places a considerable burden on patients who are already accustomed to an existing routine, and when drugs are complicated to use, there is an assumption that compliance rates will be low. So if a new “improved” alternative requires an extra effort as well, physicians are skeptical that it will have much impact on the targeted population.

Not only does Exubera require lung functioning tests before therapy and at six and 12-month intervals, its delivery method is cumbersome and expensive. The product delivers insulin through a 6-inch inhaler and includes a replacement chamber, either a 1mg/180 blister pack or 3 mg/90 blister pack and two release units. The retail price for the 1mg/180 blister pack is about $150.  The inhaler needs to be replaced once a year, while the release unit needs to be replaced every two weeks and cleaned out once a week with warm water and mild soap.

After a decade in development, it can be assumed that the delivery system for this drug was as good as it was going to get, so that’s not the issue. But the difficulties associated with it should have been realistically assessed and appropriate adjustments made in the marketing strategy.

According to Indianapolis-based WellPoint, Exubera costs $300 more per year than Eli Lilly’s Humalog and Humulin insulin, and nearly $600 more per year than NovoLog and Novolin insulin made by Novo Nordisk. To aggravate matters, the required lung function tests also cost several hundred dollars each, making the additional costs associated with the tests as well as the training they require for professionals a determining factor tipping the scale of imbalance in cost between Exubera and existing therapies even more.

It is not surprising that Pfizer opted to charge a premium for a product it thought held out so much promise as a viable alternative to existing therapies. But this strategy did not go over well with managed care companies or health insurers. WellPoint Inc. and Minnesota-based United Healthcare, the nation’s two largest insurers, placed Exubera in the third tier of their drug formularies.  For United Healthcare, that means co-pays of $40 to $50 per prescription.

Marketing Mismatch

Recognizing that the medical field needed time and training to learn how to guide patients in using inhaled insulin, Pfizer decided not to pursue direct-to-consumer (DTC) advertising in the early stages, which is one strategy companies often turn to when they fear the professionals may be slow to accept a drug therapy.

It’s not that delaying DTC advertising was a bad idea. Creating a demand from over-excited patients for a product physicians were unprepared to prescribe would have been a disaster even harder to overcome than Exubera’s slow launch. Given the product profile, however, an entirely different pricing strategy might have worked better. Instead of premium pricing, a penetration approach — which keeps prices low initially to get the product circulating — would have been better received andmore successful. Such a strategy would have improved formulary status while also creating a solid base of physicians comfortable with prescribing the product.

According to Brandweek, Pfizer relied on consumer research data that suggested new diabetics would be more likely to get treatment if they could avoid using needles — and that if an inhalable device were available they would seek it out. This clearly was not the case when the product went to market. The question of how the company could have been mislead by its own research is simple: focus groups are notorious for providing faulty information, having a tendency to tell marketers what they want to hear. But even if more objective market research had been used, the outcome may not have been any different.

Diabetics are understandably anxious about their condition in general and about the need for multiple insulin injections in particular. The idea of any improvement would have probably raised their hopes, compelling them to respond favorably to the prospect of a new treatment. Given such a volatile set of circumstances, any drug could have fallen victim to this trap.

One thing that probably would have helped was a closer analysis of how clinical trial patients actually used and reacted to the product at hand. With a little bit of foresight, however, the next round of new generation launches can learn from Exubera’s “big three” lessons:

• Don’t be so swept away by apparent demand that you underestimate difficulties associated with new forms of therapy;
• Price products realistically and reasonably to spur greater use and market penetration; and
• View market research — in particular, focus group findings — with a grain of salt or at least healthy skepticism.

With the possible exception of competitors, however, no one should take comfort from Exubera’s marketing stumble.  Pfizer is not the first, nor will it be the last, company to make these kinds of miscalculations. — Todd Clark