The Life Cycle of a Drug: Effexor XR

Pfizer's wholly-owned Wyeth subsidiary owned the original compound patent for venlafaxine hydrochloride (Effexor XR). This patent expired in 2008, but the company had filed a series of patents as explained in my post, Proprietary Drug Patents. with the aim of extending their patent monopoly to 2017. In 2002, Teva was the first generic manufacturer to file an abbreviated new drug application for the equivalence of their extended-release venlafaxine hydrochloride to the brand name product. In 2005, Wyeth entered into a pay-for-delay agreement with Teva to delay marketing of their generic until 2010. Among other things, Wyeth agreed to delay marketing an authorized generic until Teva's marketing exclusivity period for its generic ended. As is typical, this settled all the litigation between Wyeth and Teva. Wyeth also agreed to resolve any later litigation about the unenforceability or noninfringement of its follow-up series of drug development patents.

The above description is typical in the US. What is atypical is that a complaint in federal court alleging fraud by Wyeth and Teva has since been filed. Thanks to Don't trade out lives away for posting on this subject with links to the complaint and Reuters' announcement of the suit. The Incidental Economist's Kevin Outterson also has a post with links to the Federal Trade Commission's report on the consumer cost of pay-for-delay deals and an academic paper on the subject. Pfizer and Wyeth emphasize that they have engaged in a typical process that is lawful in the US. Perhaps the process is about to change?

The Life Cycle of a Drug: Over-the-Counter Sales

Finally leaving the bar graph that was the basis of the series of posts in the links below, an eighth possibility in the life cycle of a drug is non-prescription over-the-counter sales. The antihistamines in this post are a good example, Benadryl and Allegra were switched to OTC sales, but Seldane was not approved. FDA approval of a drug for OTC sales unleashes the marketing departments of the various pharmaceutical companies from many restrictions that apply to prescription drugs. There is a period of marketing exclusivity until generic forms of the drugs become available on pharmacy shelves. The drugs are accessible to the consumer without the time and dollar costs of a doctor's visit.

The Life Cycle of a Drug: Pediatric Exclusivity 

The Life Cycle of a Drug: New Indication

The Life Cycle of a Drug: New Formulation

The Life Cycle of a Drug: Patient Retention 

The Life Cycle of a Drug: Next Generation Product 

The Life Cycle of a Drug: Authorized Generic 

The Life Cycle of a Drug: Strategic Pricing 

The Life Cycle of a Drug: Strategic Pricing

Referring to the bar graph in the first of this series of posts, strategic pricing is a actually a series of decisions manufacturers make during the life cycle of a drug, all designed to maximize revenue. Overpricing and underpricing are both to be avoided. The price of a new drug with significantly greater efficacy is usually several times the price of a new drug that gives comparable results to others in a crowded market. As an example, here is a public report by Larry Gorkin of Gorkin and Cheddar Consulting on the result of the internal decisions made by Dainippon Sumitumo regarding the initial price of Latuda. Pricing throughout the life cycle of a drug is a balancing act with the drug's value. A drug which is useful in the treatment of multiple indications has more value. US legislation to promote the development of drugs for which there are relatively few patients affects the price/value balance. If public and private insurers won't reimburse patients for some of the cost of a drug, then that markedly impacts the drug's value. I think you can see that the above is only a sketch of a very complicated process.

The Life Cycle of a Drug: Authorized Generic

Referring to the bar graph in the first of this series of posts, the next most profitable strategy manufacturers can use in the life cycle of a drug is to authorize a generic version at the end of the patent life of a brand name drug. A current example is Pfizer's brand name drug, Lipitor (atorvastatin). As of last December 1st, Watson Pharmaceuticals has been authorized to sell a generic version of the drug for six months, as per current law. The Watson generic will be exactly the same as Lipitor and will be supplied to Watson by Pfizer, but will not bear the Pfizer logo or the Lipitor brand name. It is estimated that Pfizer will receive 70% of Watson's sales of the authorized generic atorvastatin.

The Life Cycle of a Drug: Next Generation Product

Referring to the bar graph in the first of this series of posts, the next most profitable strategy manufacturers can use in the life cycle of a drug is to produce the next generation of a proven drug that is more effective and/or safer. The antihistamines (H1-antihistaminergic drugs) are a good example. The first generation provided relief from various allergic reactions leading to the release of histamine, but they also made people drowsy because of their effect on the brain. The second generation solved this problem because the chemical structure was modified so that they could not enter the brain. The transition from a second generation drug, terfenadine, to a third, fexofenadine occurred because researchers discovered that the human body changed terfenadine to fexofenadine. After that discovery, they gave people only fexofenadine and discovered that they were less likely to have heart rhythm problems.

In terms of the pharmaceutical industry, the patent for Benadryl (diphenhydramine) was held by Parke-Davis. This first generation drug is still popular because the sedating effect on the brain can help you sleep when your allergy symptoms are making you miserable. Hoechst Marion Roussel brought terfenadine to market under the brand name Seldane, and then bought the development rights for fexofenadine from Sepracor and sold it as Allegra.

Lipitor Patient Retention Plan

 As of this morning, there are three sources of atorvastatin approved for the US market - Pfizer's brand name drug Lipitor and generics from Watson Pharmaceuticals and Ranbaxy Laboratories. Pfizer has a strategy for maintaining its market share for the next six months that includes a patient co-payment card. See my earlier post on the rising popularity of this strategy, The Life Cycle of a Drug: Patient Retention. The card Pfizer is offering can be ordered at LipitorForYou.com, and allows its customers to pay only $4 of any co-payment up to a maximum of $50. Here is the link to Pfizer's FAQ for the co-payment card, including details of the terms and conditions of their offer. Pfizer's overall goal is to sell Lipitor at or below generic prices until May 2012.

Pfizer is also using a new strategy involving contracts with UnitedHealthcare, Coventry Health Care, Express Scripts, Medco Health Solutions, CVS/Caremark and Catalyst Rx, which substitute Pfizer's brand name Lipitor for generic atorvastatin. It is clear that these contracts contain discounts that allow the profitable sale of Lipitor at reduced prices. The other terms of the contracts are unavailable to the public. Since it is unclear whether private and public insurers will be charged the discounted price or some other, higher price, the Federal Trade Commission has begun an investigation and Senator Herb Kohl, Chair of the US Senate Special Committee on Aging, has requested information on the contracts in letters cosigned by Senators Max Baucus and Charles Grassley.

The Life Cycle of a Drug: Patient Retention

Returning to a series I started earlier this year, I refer you to Patient Retention Plan in the bar graph found in the first post of the series. For a brand name drug, an increasingly popular patient retention plan consists of financial assistance, communications, and data analysis. Prescription abandonment becomes evident at a co-payment of about $30, and a $50+ co-pay roughly doubles the rate. This means that the pharmaceutical company is not receiving money from either patients or their insurers. A Cutting Edge Information report from 2006 estimated these losses at $30 billion for the industry and $8 billion for pharmacies. Industry financial assistance via co-pay card programs has since been the fastest-growing method to combat these losses, from 31% in 2008 to 54% in 2009, as per this Cegedim white paper. (See all of Figure 8, PDF p. 10, for other methods.)

Brand loyalty is very important to a company when alternative brand name drugs or generic drugs are available at a lower cost, so once a patient is enrolled the pharmaceutical company makes the most of their opportunity to build loyalty to their brand by direct, two-way communication. Patients are encouraged to report side effects and ask questions and will also be the recipients of information and refill reminders. All this information becomes part of a pharmaceutical company's database, which is used to calculate how many dollars the company receives for every dollar spent on the program.

The Life Cycle of a Drug: Pediatric Exclusivity

The Life Cycle of a Drug: Pediatric Exclusivity - Update

The Life Cycle of a Drug: New Indication

The Life Cycle of a Drug: New Formulation

Prescription Abandonment by People with Private Health Insurance

 

 

Compulsory Licensing of Proprietary Drugs

Compulsory licensing is the process by which a country such as India grants a license to produce a patented proprietary drug without the consent of the patent holder. A provision of Indian patent law is that a compulsory license may be granted three years after a patent has been granted. The first case involves Natco Pharma, an Indian generic drug manufacturer, and Pfizer, the patent holder for maraviroc. As far as I can tell from searching the Internet, this case is still at the stage in which Natco requests a voluntary license from Pfizer. There was supposed to be a response from Pfizer by May 2011, and a negative response is expected. If someone has factual information on the status of this case, please share it.

Since this first case, it is now a matter of public record that Natco has applied for a compulsory license for Bayer's sorafenib. If you like you can skip to PDF p. 16, item 7 of the application.

Today's post is a continuation of my post Proprietary Drug Patents.

Proprietary Drug Patents

Drug life cycle management involves the US patent system, since sales of brand name drugs are mostly increased by patent extension strategies. These strategies work because the number of items related to a proprietary medicine that are considered novel and therefore eligible for patent monopoly protection increased from five in the 1980s to 18 in the 1990s. After the initial patent grant, the patent holder immediately starts work on these items, resulting in a series of overlapping 20 year intellectual property monopolies that delay the market entry of lower-priced generic versions of the brand name drug. People who see this as an abuse of the patent system's intent view it as one of the legal and business strategies that are included under the title evergreening. The pharmaceutical industry has strong objections to even the use of this term, and you can read them in the PDF version of GlaxoSmithKline's policy position paper of August 2011. Judge for yourself, I will only add a link to a couple of case studies that present more common scenarios than the case study presented by GSK.

Patent law is an international affair of numerous agreements, but the patent systems of other countries nevertheless illustrate alternatives to the US system. India is a country with a strong generic drug industry noted for sale of inexpensive medications to poorer nations because their patent law is designed to prevent patenting minor changes in medications or patent extensions. Novartis has been battling the Indian system and is about to go to trial again in the Indian Supreme Court because a patent for a new salt form of its cancer drug Gleevec has been denied because of patent office and court rulings that the new form of the drug is not any more effective than the old form. This is an entirely different standard than those applied in the US. The Indian court system has already ruled that this standard does not conflict with The Agreement on Trade Related Aspects of Intellectual Property Rights.

The Life Cycle of a Drug: Pediatric Exclusivity

The Life Cycle of a Drug: Pediatric Exclusivity - Update

The Life Cycle of a Drug: New Indication

Off-Label Drug Use: The Good, The Bad, and the Inexcusably Ugly

The Life Cycle of a Drug: New Formulation

 

 

The Life Cycle of a Drug: New Formulation

Referring back to the bar graph in my original post for this series, the next industry strategy to be addressed is extension of the life cycle of a drug by production of a new formulation. Nucynta was approved in 2008 and Nucynta ER [extended release] is the new formulation just approved. There are people in chronic pain who are best served by an opioid narcotic analgesic that can be taken once daily.

Some controversy attends this approval because previous members of this class of very addictive drugs have been abused by crushing them so that immediate uptake of a large dose becomes possible. Nucynta ER has been formulated to make this kind of abuse more difficult.

J&J Gets FDA Approval Of Potentially Addictive Opioid Nucynta

Nucynta ER Approved For Moderate To Severe Chronic Pain Control

The Life Cycle of a Drug: New Indication

Referring back to the bar graph in my earlier post, a second profitable strategy is developing a new indication. In medicine, an indication is defined as a valid reason to use a medicine. There are many examples, and that of Cimzia just happened to catch my eye today. The FDA approved it for people with Crohn's disease, but in 2009 the company also received approval for the treatment of rheumatoid arthritis. One reason UCB Pharma sought approval of Cimzia for this second indication is that the market for drugs to treat rheumatoid arthritis is much larger. "UCB is also developing Cimzia® in other autoimmune disease indications"

 A new indication can also be developed for drugs that are not protected by a patent. Finnish researchers screened 5,000 candidates in a relatively inexpensive manner looking for any that would inhibit the growth of prostate cancer cells in the laboratory. They found that monensin, an antibiotic used in the dairy industry, inhibited the cells. Next they discovered that monensin plus anti-androgens already in use for prostate cancer treatment were even better together in inhibiting cancer cell growth. These are just the first of many steps before monensin can be declared safe and effective for use in humans.

The Life Cycle of a Drug: Pediatric Exclusivity - Update

One paragraph in Keven Outterson's post at The Incidental Economist relates to my previous post on pediatric exclusivity. As you can see from the title of his post, his approach is quite different from mine, and I recommend reading it in its entirety.

How should we buy and use efficacy data on drugs?

The government could offer alternative regulatory carrots and sticks for creating these public goods. Existing models include paying companies for conducting pediatric studies by granting six additional months of marketing exclusivity. Just this month, Merck won an additional six months for Lipitor, worth more than a billion dollars in profits, by studying atorvastatin in children. What is missing from this program and similar ones is any sense of cost-effectiveness. The government delayed generic approval of Lipitor, at a huge cost to public and private payers, in order to “purchase” pediatric studies that might have cost a small fraction of that amount. Direct funding of pediatric studies by the NIH would make more sense, and we’d get studies on drugs that kids really need instead of drugs that happen to sell well to adults.

The Life Cycle of a Drug: Pediatric Exclusivity

Cutting Edge Information has produced a report containing this graph reporting the return on investment of what the pharmaceutical industry calls life cycle management strategies. As you can see, pediatric exclusivity is a top performer. Pediatric exclusivity is a specific type of marketing exclusivity which adds six months to the time that a brand name drug may be sold to adults. This privilege is attained by conducting relatively inexpensive clinical trials with children. Not all drugs qualify for pediatric exclusivity, e.g., a drug for Alzheimer's is very unlikely to qualify. The FDA maintains a list of drugs for which it is willing to grant pediatric exclusivity and will take requests from industry for drugs that aren't on the list. In practice, this marketing exclusivity in adults has only been claimed for bestsellers.

Someone I know, call her Jane Doe, has taken Plavix since having coronary stents installed. Plavix is the second best-selling medication in the world, so the six month extension of marketing exclusivity from November 2011 to May 2012 will result in  2.5-3 billion USD in sales for partners Bristol-Myers Squibb and Sanofi-Aventis. 

The pediatric clinical trials tested for a "reduction of the incidence of thrombosis in children born with systemic to pulmonary artery shunts for palliation of cyanotic congenital heart disease." See item 38 in this list from the FDA (pdf). The clinical trial was inconclusive and FDA Medical Officer Mark Rose, MD, JD, twice recommended against granting pediatric exclusivity (pdf, pdf) because two of the formulations used were not tested for bioavailability. Why the grant was made is explained by this FDA FAQ.

Q14. If a sponsor submits a pediatric study that meets the terms of a Written Request but the study is not adequate for inclusion in the labeling, will the sponsor get pediatric exclusivity?
A14. Yes. Pediatric exclusivity is not dependent on whether information from the requested study is included in the labeling.

In his reports, Dr. Rose acknowledges that "The studies performed by the sponsor in its pediatric development meet the literal requirements of the PWR [pediatric written request]. However, the sponsor ignored one of the advice terms in the PWR: 'Bioavailability of any formulation used in the studies should be characterized, and as needed, a relative bioavailability study comparing the approved drug to the age appropriate formulation may be conducted in adults.'”

Setting aside the technical issues, however, it is unclear why sick adults must exclusively bear the financial burden of testing in sick children. "Drug companies routinely conduct such tests, even when success is not expected, to receive the six-month patent extension" (Ed Silverman, Pharmalot).