Regeneron: New York State of Mind - Pharmaceutical Executive

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Regeneron: New York State of Mind


Pharmaceutical Executive


Culture as incubator

An old industry yarn holds that doctors make lousy CEOs. Schleifer heard it repeated after he started Regeneron. "I always used to respond by saying, 'Well what about Roy Vagelos over at Merck? Isn't he an MD?'" Vagelos joined Regeneron as chairman of the board in 1995, and Schleifer says he talks to him almost every day.

Regeneron is no Merck, and Schleifer and Yancopoulos are fine with that. There's a sign on the wall in the Tarrytown headquarters that reads, "We won't let bureaucracy block good ideas." Schleifer says Big Pharma has it's own challenges, including a hugely expensive sales and administration base, making it difficult to grow organically. "And they don't have an obvious way to connect people to the success of the organization," says Schleifer. "We connect our employees to the success of our organization by having the opportunity to be involved and watch a product go from beginning to end...and of course, being rewarded by being an owner in the company."

In 2012, Regeneron was voted the number one biopharmaceutical employer in a Science magazine survey (Genentech came in third), and was named Biotech Company of the Year by Scrip Intelligence. Bob Terifay, Regeneron's SVP, commercial, began his career at Searle Pharmaceuticals, headed up oncology sales and marketing for Millennium, and bounced around a couple of small start-ups, before joining Regeneron. He says it's a place where people want to come to work. "The offices are intermingled with the labs," says Terifay. "We're there with the scientists, we work with them. If you want to ask something about a drug, you can walk down the hall and find the person who discovered the target."

Schleifer rejects the idea of virtual biotech companies. "I thought [virtual companies] was the dumbest idea I'd ever heard of," says Schleifer. "The weaknesses in much of what we do are the transition points; discovery to preclinical, preclinical to clinical, process development to manufacturing, clinical to submission, and then to commercialization. Each of these handoffs is inherently inefficient because the knowledge has to be transferred. If you don't control all of this, you're going to create greater inefficiency, and expand timelines."

Scaling up, moving out

In the wake of Eylea's breakout success, and to prepare for what Regeneron hopes will be a steady stream of new antibodies hitting the market in the coming years, the company is expanding its headquarters in Tarrytown—formerly a Union Carbide site—as well as its manufacturing facilities in Rensselaer, NY. Schleifer is the co-chair on Gov. Andrew Cuomo's Mid-Hudson Regional Economic Development Council, and he scored an $8.5 million tax credit from the state to keep his company in New York. Just five years ago, Regeneron employed 682 people; in the spring, it surpassed the 2,000-employee mark, and continues to grow.

Regeneron has a sales force of 75 to support Eylea in the United States. Terifay says the company's emphasis on technology in R&D carries over into the commercial realm. "All of our material is on iPads, so the reps use iPads in promotion, and then at conventions, we've moved toward interactive digital panels," says Terifay. Regeneron isn't doing branded DTC for Eylea as of yet, but "we have a lot of direct-to-patient materials...and general disease awareness programs on wet AMD," says Terifay.

Since the primary US payer for Eylea is Medicare—due to the age of most wet AMD patients—much of the company's reimbursement activity is focused on the physician's office, to "ensure that patients get access to therapy, that the right claims forms are used, and that claims are processed in a timely fashion," says Terifay. "Right now, we have no access problems with Eylea."

Undercutting your competitor on price goes a long way with payers. "I think the fact that we came in at $100 less per injection than Lucentis, and that we're dosed less frequently, has met with great success in terms of the physician's image of the product, and also in terms of the commercial payers' receptivity to the product," says Terifay. Commercial payers make up roughly 20 percent of the market for Eylea, he says.

Terifay adds that Bayer "has no say about anything we do in the United States," and that the Eylea pricing decision was made independently of Bayer, although Bayer is responsible for determining the price outside of the United States. Regeneron approves the final ex-US price on a joint committee, says Terifay.

Pricing backlash

Regeneron's adventures in commercialization have not all come up roses, however, particularly with respect to Zaltrap's price. In keeping with the terms of its 2003 deal with Aventis (now Sanofi), Regeneron has co-commercial rights to Zaltrap worldwide, except in Japan. Last fall, the Memorial Sloan-Kettering Cancer Center in New York City announced that it would not prescribe Zaltrap due to price, and publicized its decision with an op-ed in the New York Times. The op-ed authors—three doctors from the cancer center—said their decision was a simple one: "The drug, Zaltrap, has proved to be no better than a similar medicine we already have for advanced colorectal cancer"—Avastin—"while its price, at $11,063 on average for a month of treatment, is more than twice as high." Arguing that ignoring the cost of care has become untenable, the authors write that "when choosing treatments for a patient, we have to consider the financial strains they may cause alongside the benefits they might deliver."

The article got a lot of press, and a few weeks later, Sanofi announced that it would offer a 50 percent discount on the Zaltrap product. Terifay declined to comment on the Zaltrap decision specifically, but said that "pricing is not just a quantitative exercise...you can do a trade-off analysis with market research with physicians, and determine that you can command such and such a price," he says. "But there's also a qualitative reaction that comes from the healthcare community and from payers, and I think, more and more, you have to take that into consideration."

Terfiay said that in the case of Zaltrap, "we determined that Sanofi already had a pre-existing infrastructure for oncology, and given the size of the second-line colorectal cancer marketplace, it didn't make sense for Regeneron to field it's own sales force." As the distributor of Zaltrap, Terifay says, "Sanofi is ultimately responsible for pricing decisions," and Sanofi also led the decision to offer the discount, he said.


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