When generic versions of Lilly's antidepressant Prozac (fluoxetine) were introduced in 2001, Prozac's volume fell precipitously—losing 73 percent of its share of new prescriptions within two weeks. Although that may be the most well -known example of the impact of generics, the Federal Trade Commission reports that between 1984 (when Congress passed the Hatch-Waxman Act) and 2002, generics' prescription share has risen from 19 to 47 percent. Today, the figure is widely reported to be more than 50 percent. Based on review of recent patent expiration data, such rapid losses of revenue for brand owners appear to be more common. Generic companies are stronger and more sophisticated, and payers are more effective in their efforts to influence the way prescriptions are written and filled. Review of data from recent expirations suggests that pharmaceutical brands are losing more share, on average, in the first 12 months after generic entry today than they did several years ago. Next year, products with combined US sales totaling more than $15 billion will face generic competition for the first time. (See "Soon to Expire,".) For brand companies, the difference between a more rapid and less rapid drop in product share could translate into a revenue difference of several hundred million dollars. 

Soon to Expire: During the next two years, US market will experience the patent expiration of a group of products with more than $ 15 billion in revenues. 

Not surprisingly, brand companies have aggressively pursued a variety of lifecycle-management tactics. Transferring brand equity (and prescriptions) to a follow-on product, reformulation, or new delivery system, can sustain the franchise. Switching the Rx brand to an over-the-counter product, when possible, is another way to retain revenue. 						

Despite these tactics—and the great effort devoted to them—the bulk of the expiring brand revenues will at some point give way to generics. The question for a pharma company is: How quickly? And a key corollary question is: If a company can predict how quickly brand revenues will erode, are there different tactics it should use depending on the rate of decline? 

Pharma brands are not all equal. The rapid erosion of Prozac's share can be contrasted with that of Intal (cromolyn), an asthma treatment, which fared much better. (See "Case Study Comparison.") Some products have obvious attributes that make rapid switching less likely. In this case, Intal has a complex metered-dose inhalant system that makes it more difficult for generics to copy and manufacture.

Case Study Comparison: Prozac and Intal demonstrate how brands can experience different market share patterns after patent expiration 			

The challenge, though, is not just to recognize a brand's potential loss to generics but also to forecast it effectively. Companies must account for the timing of generic launches as well as other circumstances that may affect postexpiration performance. Investment decisions—continued brand promotion or a clinical trial for a new formulation—depend on a reliable forecast. As generics enter, brand teams must grapple with planning and forecasting decisions that differ from those encountered during the patent's life and may include strategic options such as the possibility of an authorized generic.  

Determining a brand's intrinsic potential for share retention is critical to forming that strategy. Brand managers must pinpoint the key factors associated with share retention and figure out how to make the best estimates of a brand's potential. 						

Analysis Group research indicates there are several product and therapeutic class attributes that are most strongly associated with share retention. They can be grouped into two categories: product and class. (See "Retention Attributes.") 

Retention Attributes: Based on an analysis of 30 recent patent expiration, the following attributes were correlated with a better prescription retention 12 months after generic entry.

 Generally, products that are more difficult to manufacture have higher potential for share retention because there will be fewer generic entrants. This phenomenon has historically applied to certain advanced delivery systems—the osmotic pump technology in Procardia XL (nifedipine), for example—and it is likely to come into play more frequently during the next few years as biologic injectables, such as Epogen/Procrit (erythropeitin), begin to lose exclusivity. 

Another product attribute associated with share retention is the complexity or risk associated with administering the drug. Physicians are more conservative, payers less demanding, and generic entrants less aggressive about products with high risks or challenging titration (concentration) issues. The blood-thinning drug Coumadin (warfarin) has had few generic competitors and has sustained high sales for many years, in part because of the risks associated with its narrow therapeutic index.  

Attribute-Based Forecast: Forecast models that use product attributes to predict the number of generic competitors after patent expiration (and their estimated price) can be highly accurate. 			

One circumstance meriting special attention is whether the manufacturer has developed or licensed a follow-on product in the class. Follow-ons and OTC options are typically considered long before the patent expires and are crucial in determining the brand's potential. In most cases, a brand's share erosion is accelerated by the introduction of a new brand by the same manufacturer, for example, AstraZeneca's launch of Nexium (esomeprazole) to follow Prilosec (omeprazole).  

 The therapeutic class is also critical to the brand's potential for retaining share. For instance, if there has already been a significant number of generic entrants to a class, companies can expect a weak effect from a new generic, both on the brand and the class overall, because some degree of shifting to generics may have already occurred.  

Category conditions, in which a new brand or therapeutic class is about to enter the market, can override product attributes that might help retain share. The post-expiration share loss experienced by Pepcid (famotidine), a leading H2 agonist for treating acid reflux disease, was accelerated in part by the entry of proton pump inhibitors into the category.  			

In addition, the prescribing environment—including managed-care benefit structures (patient copay, prior authorization, and step edits), state Medicaid preferred drug lists (PDLs), and Medicare coverage/reimbursement—is constantly changing. Modeling these dynamics is an essential step in defining a product's optimal postexpiration strategy.

Another Analysis Group finding is that the more "retention" attributes a product has, the more prescription share it retains in the face of generic competition. (See "More Attributes=More Share.") The research also shows that brand managers can use these attributes to create powerful multivariate models that estimate brand share and allow scenario analysis of the brand's strategic options. Such models can be en- hanced if the brand team is able to approximate the number of generic entrants by determining the number of abbreviated new drug applications  that have been filed for the compound. 							

The graphic "Attribute-Based Forecast"  uses an Analysis Group model to demonstrate the estimated and actual share erosion of two products: one that has retained significant share (Coumadin) and one that has seen substantial share erosion (Prozac). In a second, hypothetical example, this model would suggest that Lovenox (enoxoparin), which poses many of the retention attributes, will be able to hold on to substantially more share than Cefzil (cefprozil), which has none. 

As with the share impact, the pattern of generic prices after patent expiration can be predicted as a function of the compound's product and class attributes. In response, brand managers can adjust brand prices, and the choices made for brands have varied widely. Two obvious strategies are: (1) follow the generic price (downward) and attempt to retain share through existing relationships with distributors and possibly through rebates to selected managed care plans; or (2) maintain or increase price while share erodes by maintaining margin on remaining sales. Evidence suggests that although brand price can affect market share after patent expiration for products with retention attributes, for others the relationship is weaker, and pricing at parity with the generics to retain share can backfire. Such was the case with Eli Lilly's heart failure therapy Dobutrex (dobutamine), which dropped its price in an attempt to retain share but instead lost as much share as would be expected with a steady price. 

Another important factor to consider is the interaction of generics with other brands and other therapeutic classes. Generics often expand a molecule's share of the class by drawing market share from other brand-name agents in the class or by drawing new, untreated patients to the class. Generics also may expand the class share of a broader therapeutic category. For example, generic ACE-inhibitors could expand the ACE-inhibitor share of the antihypertensive category. Knowing the degree to which a generic entrant could expand the molecule or class, versus gaining share from the brand, is essential to determining brand potential. Analyzing data from prior patent expirations by looking only at the share of molecule can result in underestimating the brand's true potential. 

			Among the set of decisions managers must make as they determine the right path for a brand losing exclusivity, there are two critical choices: 									

 whether to participate in the generic arena with an authorized generic product

 how aggressively—if at all—to support the brand with investments aimed at differentiating it from generic competitors (pricing, promotion level/mix, and clinical studies).

The authorized generic is a recent development that is generating some debate. It is negotiated when the manufacturer of a drug nearing patent expiry contracts with a generic company to sell an "authorized" version of the molecule, in some cases actually supplying the product to the generic company. Particularly in those instances in which a legal challenge (under paragraph IV of the Hatch-Waxman Act) creates the potential for the first generic to enjoy a 180-day exclusivity period, brand owners have begun to use this "join rather than fight" approach.  

In recent months, several brand-name pharma companies, including Bristol-Myers Squibb, GlaxoSmithKline, Johnson & Johnson, and Pfizer, have drawn a great deal of attention for their launched or planned authorized generics. While regulatory opinion still evolves and long-term results have yet to be observed, evaluation of an early case offers useful insights. 

GlaxoSmithKline contracted with Par to sell a generic version of Paxil (paroxetine). In September 2003, Par launched its generic simultaneously in the market with a generic from Apotex, the company that had challenged GSK's patent under paragraph IV and been awarded a 180-day exclusivity period. By launching concurrently with Apotex, Par gained access to the higher generic prices of the first 180 days, although its presence may have pushed the prevailing generic price lower than it would have been if Apotex's version had been alone during that period. In addition, Par gained the opportunity to establish contracts and distribution with pharmacies that could help it sustain share after other generics entered the market. 

The arrangement clearly benefited Par. Apotex, by contrast, was forced to share what could have been a period of exclusivity. Not surprisingly, manufacturers in Apotex's position have objected to these arrangements. To date this year, generics companies have filed four citizen's petitions with FDA regarding authorized generics, all of which were rejected. In its most recent ruling, FDA stated that the entry of authorized generics and the resulting lower drug prices benefit US consumers. This situation will continue to evolve but regulatory sentiment at this time favors the benefit to consumers over any losses of generic exclusivity.  

As for GlaxoSmithKline, depending on the terms of its contract with Par, the authorized generic appears to give GSK a royalty stream from generic paroxetine that will supplement the postexpiration brand revenues from Paxil. But are there circumstances in which the loss of revenue from the brand name drug would outweigh the royalty stream from the authorized generic? Consider two hypothetical cases. Product A represents a fast-eroding blockbuster, while Product B is a comparably sized but slower-eroding product attracting fewer generics. Both would benefit from the royalty stream of an authorized generic. (See "Authorize or Defend?".) Product B's royalty stream, however, would be higher because of the presence of fewer generic companies. But managers must also evaluate incremental erosion of the brand revenue. In a case in which many generics will enter and the branded drug share will erode quickly (A), the addition of one more generic—the authorized one—will not typically erode the brand revenue much further. In this case, an authorized generic is likely to be financially favorable. 

Authorize or Defend? Product A: Fast Erosion Brand, Product B: Slow Erosion Brand

Product B illustrates a more complicated dynamic. In this case, (with fewer generics and slower erosion) the authorized generic materially affects brand sales. The additional generic and the greater generic price erosion have the effect of increasing total generic share at the expense of the brand. In such circumstances, it may take substantially longer for the authorized generic deal to break even for the brand owner. Or, depending on the contract terms, it may not be worthwhile. In addition, in cases where an authorized generic is warranted, the most effective brand pricing strategy is likely to involve maintaining or increasing the price. 

Before striking an authorized generic deal, companies must take into account all the circumstances surrounding the patent expiration. Following are the three most important factors that will lead to the success of an authorized generic:  

 The product has a predominance of attributes associated with fast erosion. 

 The product and market are substantial and possess characteristics likely to attract multiple generic entrants. 

 The product is able to attract a strong generic licensing partner. 

			In addition to deciding whether to participate in the generic arena, the innovative company must also decide whether to continue investing in the brand. Although the historical norm—and likely the right answer for many products—has been to withdraw all investment from brands at or before the patent expiration time, the decision should be carefully considered. When there are product and class attributes that correlate with high share retention, some amount of continued investment may be warranted. 			

The case of Fisons' Intal provides one example in which continued investment was likely merited. Intal is a mast cell stabilizer used primarily for asthma. The delivery mechanism was not a widely diffused technology at the time (1995), and relatively few companies were able to reproduce the product. The first generic entrant did not use an identical delivery technology, and Fisons invested in communicating these differences. Intal maintained more than 40 percent share 12 months after patent expiration and, as late as 2000, it was still generating significant revenue. 

There are other examples of manufacturers successfully differentiating and maintaining a branded product after patent expiration. Coumadin is a well-known example. Armed with several intrinsic attributes associated with share retention (mortality risk, dosing concerns, few prescribers) and supported by studies, DuPont, and then BMS, continued to promote the product and communicate the data to agencies and payers. Although such circumstances are relatively rare, there will be more cases in years to come, particularly as biologics lose exclusivity.

In the arena of more typical products, the question is likely to be whether any form of investment, such as a small study on therapeutic equivalence, should be undertaken. For example, if a delay with a planned follow-on creates a substantial gap between the original product's expiration and the launch of its successor, the brand owner needs to consider the merits of remaining engaged in the category during that period. 

The variance in appropriate responses is illustrated by examining the promotional activity in recent patent expirations. Three patterns emerge. (See "Patterns of Investment,".) The first, showing a sharp drop in activity beginning well before the first generic competitor enters, is typical but hardly universal. The other patterns are the burst of late-life activity and the sustained investment associated with a product like Coumadin. 

Patterns of Investment: Rapid pull back, Burst of late-life activity, Sustained investment 

An effective model for postexpiration performance should consider the effects of continuing brand promotion (after accounting for the attributes and category dynamics). Such a model can be highly valuable for a wide range of products, helping to assess underlying potential and customer responsiveness. 

More active, systematic management of brands facing loss of patent protection is essential for pharma companies. As more high-revenue brands, including biologics, lose exclusivity and as generic companies continue to grow in sophistication and strength, brand owners should look beyond traditional lifecycle management to ensure that postexpiration options are fully evaluated. 			

Understanding the intrinsic potential of a brand is an essential complement to the pursuit of the traditional lifecycle options of follow-on or reformulated compounds. A systematic, attribute-based approach to simulating product performance allows more informed consideration of appropriate options—both in terms of continued brand support and generic participation. This fuller picture should be the goal of all brand managers as their products advance toward inevitable patent expiration. 

Edward Tuttle and Andrew Parece are managing principals, and Anne Hector is a vice-president of Analysis Group (

), an economics, financial, and strategy consulting firm. The views expressed in the article are those of the authors and do not necessarily reflect positions of the firm or its affiliates.

Articles

Features

Sometimes the loss of revenue from a branded drug can outweigh the royalty stream from an authorized generic.

Your Patent is About to Expire: What Now?

One major accusation leveled at the pharma industry by media and the public alike is that it's very selective about the clinical trial information it disseminates—putting only the good stuff out. Now calls are being made for drug companies to publish all their clinical trials data—whether they show their products in a good light or not.

Speaking at the British Association Festival of Science in September, Richard Sullivan, Cancer Research UK's head of clinical programs, urged all biotech and pharma companies to follow the example of GlaxoSmithKline and Eli Lilly, both of which recently began to register and publish every one of their clinical trials. 

GSK announced its decision in June, and the first data appeared on its publicly accessible website at the beginning of September. The company has been under particular pressure in recent months following allegations that it hid unfavorable results of clinical trials containing harmful effects of its big-selling antidepressant Paxil/Seroxat (paroxetine).  

Lilly followed suit shortly after, making a similar announcement at the beginning of August. Its public registry will contain data on all trials from Phase I through Phase IV for its marketed products, plus announcements at the start of all Phase III and IV studies. Other companies thus far are resisting calls to follow suit, claiming that they don't want to give away commercially sensitive information to their competitors. But Sullivan believes they are wrong. "If GSK and Lilly can be open, so can the whole industry," he says. 

But the issue is not merely burying bad news. Sullivan says that data from more than a quarter of all cancer trials never see the light of day, making it difficult for doctors to decide on the best possible treatment for their patients. This figure comes from a study of more than 500 Phase III cancer trials presented at ASCO (American Society of Clinical Oncology) meetings over 10 years—26 percent of which were not published within five years of their presentation. Lack of time and money were the most common reasons given for nonpublication. However, the study found that trial results that did not show the investigational drug was better than the standard treatment were much less likely to get published than positive ones.  

"If only positive results are published, this can distort medical literature and leave doctors thinking a treatment is more effective than it actually is," Sullivan says. "This in turn can affect the validity and findings of subsequent reviews, treatment decisions, and clinical practice guidelines." 

But it's not just the publicly known trials that aren't being published. Sullivan claims that a lack of regulation in the industry means that one-third of all clinical trials are never even registered, much less published. And, suggests Fran Balkwill, Cancer Research UK's head of translational oncology, all scientists have a responsibility to ensure that their data are accessible to the wider community. "If the results from trials never reach the public domain," says Balkwill, "researchers could waste time and unknowingly repeat lines of inquiry that have already been proven unsuccessful." 

Cancer Research UK believes that the only answer is a single, comprehensive database that would track the progress of all trials and ensure that results—good or bad—are published once trials are finished. "Registers for cancer trials exist, but they are not compulsory and are far from being complete," says Sullivan. "There needs to be one comprehensive database so trials can be monitored and a wealth of information can be accessed from a central place." 

And the editors of 13 of the world's most important medical journals, including 

Journal of the American Medical Association,

 have called for honest reporting of clinical trials, which would mean revealing the existence and results of all trials, regardless of outcome. Starting next July, their journals will require any trials they publish to have been publicly registered before patient enrollment commenced. 

This is certainly a step in the right direction, and it is hoped that the plethora of other medical journals follow suit. If nonregistration precludes publication in the more prestigious journals, it should also encourage other pharma companies to follow the lead of GSK and Lilly. By being open and honest about trial results—good and bad —pharma companies can begin to regain the trust of a public that is increasingly skeptical about their motives.

s global correspondent. She can be reached at 		

World News

If trial results never reach the public, researchers could waste time repeating lines of inquiry that have already proven unsuccessful.

Time for Transparency

Our goal when we started this company was to reach the point that when people think about pain management, they think of Endo," says CEO Carol Ammon.  

Carol Ammon, CEO of Endo Pharmaceuticals, received the 2003 Greater Philadelphia Ernst & Young Entrepreneur of the Year Award.			

If the company is not quite there, it should be very soon. Last year, Pennsylvania-based Endo Pharmaceuticals, maker of both brands and generics, experienced a 49 percent growth in sales—from $399 million to $596 million. Much of that jump came from Lidoderm, a lidocaine patch whose sales more than doubled and which analysts see as the company's most significant future growth driver. The product is indicated for post-herpetic neuralgia (neuropathic pain), a rapidly growing market in which Endo already has a 26 percent share. With two new launches and three products under FDA review, the company is also poised to grab a big piece of the chronic pain market. The greatest gains will come from Endo's: 				

 generic versions of extended-release oxycodone, which will cut into Purdue's $1.9 billion in annual revenue from OxyContin

 generic fentanyl patch, which will grab some of J&J's $1.3 billion in sales for Duragesic.

But Endo isn't relying only on short-term gains from generic copies of blockbusters. It also has a deep pipeline of patent-protected, in-licensed products and development deals that are setting it up for long-term stability in a global  pain-management market that's expected to expand greatly as the population ages. 

Most of those aging consumers will be US baby boomers, who are much less inclined than their Depression-era parents to be stoics about pain. "In the old school thinking, patients wanted to please their physicians," Ammon says. "They were willing to say they were okay when they were not." In the last ten years, there has been a vast change in that attitude, much of it a result of patient education—through the internet, direct-to-consumer advertising, and outreach efforts from patient groups and companies like Endo.  

Topical lidocaineÃ¢ÂÂs mechanism of action is to stabilize neuronal activity linked with Na+ channel accumulation, which reduces pain signal initiation and transmission. The patch acts locally on damaged peripheral nerve and soft tissue, but does not cause complete sensory block in the area of application.						

"We are not yet where we need to be, but there is a much better understanding of the need to aggressively treat pain," Ammon says. "There is now a whole specialty in the area of pain management, which was added in the early 1990s. Physicians have the opportunity to take their residency in pain management. And in the past, hospitals were never assessed on how well they were treating pain. Now all the new accreditation standards rate hospitals on how effectively they are assessing and treating pain. Every patient visit now must be accompanied by an assessment of the patient's pain. Patients are asked how they feel, on a scale of zero to ten. That has to be monitored and logged in their patient forms." 

This shift in the mentality of treating pain has driven the market into new territory, both in terms of revenue and products. According to Visiongain, the global pain-management market is expected to grow at an annual rate of 4.7 percent and will hit $29.7 billion in 2007. Patient convenience and compliance are also driving technology-based pharmas to develop novel delivery mechanisms. In fact, most of the compounds prescribed to treat pain have been around for decades, and the competitive edge in this market goes to companies that find novel formulations that are easy for patients to use. 

Endo, as a name in pharmaceuticals, has been around a long time, too. The company was founded in 1920 in New York as a family-run business. DuPont, whose pharma unit was primarily focused on pain management, bought Endo in 1969 and retired the name. Ammon, with degrees in biology and business, joined DuPont in 1973. Over the next two decades, she worked with and promoted the products that had come from Endo. 

But in the late 1980s and early 1990s, DuPont started to move into the cardiovascular therapeutic category and the AIDS market. Then in 1994, Dupont and Merck entered into a joint venture, and Endo Laboratories re-emerged as their generics division. It was short lived. In 1997, the joint venture took a hard look at the generics division and some nonpromoted brand-name products such as Percocet (oxycodone/acetaminophen), and decided to sell.  

"They decided to retire the pain-management franchise," recalls Ammon, who by that time was president of Dupont/Merck's US pharmaceutical business. Citing her "passion around pain management," Ammon decided to buy those products. Along with her coworker and cofounder, Mariann MacDonald, Ammon raised the $277 million needed to buy about 35 drugs (generics and brands) and launch an independent company.    

"When I saw the opportunity to buy these assets and the fact that most of them were in the area of pain management, the light bulb went off for me," Ammon says. "At that time, it was an underserved area. It certainly was not an area for Big Pharma any more, because it was not as big as some of those other therapeutic categories. DuPont did the right thing in pursuing cardiovascular and AIDS, but I saw an opportunity to follow my dream in terms of developing this area of pain management. Essentially, I have been doing the same thing and been involved in the same products for 31 years." 

Ammon and MacDonald revived the Endo name because of its brand equity. "Customers had a lot of respect for the original Endo company," Ammon says. In 2000, the new Endo acquired Algos (a drug development company in Neptune, New Jersey) and began trading on the NASDAQ exchange.  

After spending her entire career at one company, Ammon says what gave her the courage to step out on her own was a sabbatical she took in 1995. "DuPont sent me to the Advanced Management Program at Harvard," she recalls. "It was an opportunity to learn a lot about myself. When I came back from the program, I felt very confident  about my desire to lead an organization." 

The Endo name was not all that Ammon revived. The company's flagship product Percocet—an  analgesic that had entered the market in 1976 and quickly became the standard of care in treating acute pain—was off patent and facing generic competition. The good news was that over the years, despite new entries and, eventually, generic competition, Percocet retained its brand equity.  			

"Even though it has had generic competition since the mid-1980s, more than 80 percent of the prescriptions [for oxycodone/acetaminophen] are still written as Percocet, as opposed to the generic name," Ammon says. What the company needed was to find a way to expand brand usage. The solution was new formulations.  

"When we went back and looked at how Percocet was prescribed, we saw that physicians were prescribing it in such a manner that suggested they were looking for higher doses," Ammon says. "So we felt that if we could work with FDA to allow us to submit an application for higher doses, we would be successful in lifecycle management and some line extensions. And that is precisely what we did. We filed new applications for higher doses of Percocet. We got those approved, and we were successful in getting greater brand dispensing."  

From 1997 to 2003, the Percocet franchise enjoyed steady annual growth, rising from $40 million in sales to $214 million, despite the fact that it had no patent protection. But generic competition in 2004 led to a decline in the product's sales. "They've had a difficult 2004," says one analyst. "But what they've done during the year has strengthened the outlook for 2005, and the negatives of 2004 won't apply." In fact, Endo's lull this year will be fully compensated by next year's busy schedule. 

In fact, Endo sales reps should have their bags full of new products by the end of 2005. The first new product is Frova (frovatriptan), a treatment that has been marketed in the United States since mid-2002 for acute migraine in adults. It was launched by Endo this September after the company acquired the North American marketing rights from UK-based Vernalis. The second new product, DepoDur, is launching now. The sustained-release morphine injection, which was licensed by Endo for North American distribution in late 2002, was developed by London-based SkyePharma and approved by FDA this past May for pain following major surgery." 			

"SkyePharma is currently validating and preparing launch quantities," Ammon says. "But we just kicked off a dedicated hospital force. We started with 25 reps and will add another 45 after the first of the year when we commercialize the product. We are now in the hospital with these reps, building advocacy, teaching anesthesiologists how to use the product, and working with pharmacists to understand what the product is about and to get it onto formulary. We will begin shipping by the end of this year." 

For abdominal surgeries, C-sections, and hip and knee replacements, anesthesiologists can now inject DepoDur into the epidural space (before or during the surgery) and give their patients 48 hours of postsurgical pain relief. Ammon believes the product has the potential to change the standard of post-surgical care. Some analysts concur with that potential but believe it will take some time for physicians to "get comfortable" with long-acting morphine. 

 Presently under FDA review, this product is one that "we are very excited about," says Ammon. The compound was originally developed in the 1960s but never really received much attention as other opioids came on the market. Now Endo, in a co-development deal with Penwest, has reformulated the product as an extended-release tablet for patients who need around-the-clock pain relief for extended periods of time. Endo has also developed an immediate-release tablet for acute pain. 

"Because we already have an injection and suppository on the market [Numorphan], this will be the only controlled-release, oral opioid with four different formulations—injection, suppository, oral-controlled release, and an immediate release for breakthrough pain," says Ammon. "What's nice about that is that patients can be started in the hospital environment on the injection and can be sent home to use the controlled release. And in end-of-life situations, a suppository can be used. We feel it's going to be a very useful product in terms of all the different patient needs." 

FDA issued Endo an approvable letter last October and then asked the company to do another study. Two of the Phase III studies had been done with opioid-naive patients, and there was a significant number of dropouts because of side effects, which is common with opioids. Endo has met with FDA about the design of a new study, and it expects to begin the trial soon. 

 This generic version of Purdue's OxyContin received FDA's green light in March, but Endo is waiting for a final court ruling before it launches the product.  

"We were the first to file on the 10-, 20-, and 40-mg strengths of OxyContin, which we were very pleased about," Ammon says. "If we choose to wait for the appeal, the exclusivity stays with us. After looking at several different factors, we decided to wait for the appeal. We are confident about our case, and if that appeal is ruled in our favor, then our exclusivity kicks in that day and we'll launch immediately after." 

(The hearing was scheduled for November 3, after this story went to press. The final decision in the case is not expected for another three to six months after that.) 

The abbreviated new drug application (ANDA) for a generic version of Johnson & Johnson's Duragesic—the most frequently prescribed product for cancer pain—was submitted by Endo's development partner, Novena Pharmaceuticals, in July 2003. Analysts expect this drug to be Endo's greatest source of new revenue (up to $150 million a year), even though it will have multiple competitors. 

Ammon describes her strategy: "We entered into a relationship with Novena to be able to be market its AB-rated generic equivalent of Duragesic. We are waiting for approval of that product, and we hope to be in the market at the same time as anybody that gets there in January 2005. It competes in that strong opioid market." 

In addition to the products that are now under FDA review, Endo also has pipeline projects and licensing deals that will not only expand its pain-management franchise but will also permit Endo to enter complementary therapeutic areas such as neurology, peri-operative care, and supportive-care oncology. One late-stage product is propofol, an anesthesia licensed from SkyePharma. And in Phase II is a development project with Durect that is intended for patients with chronic pain.  			

"Chronogesic (sufentanil) is a very strong opioid, contained in a small, implantable pump about the size of a matchstick," Ammon explains. "It is implanted in the subcutaneous tissue of the arm in a very quick procedure—a couple of minutes in a doctor's office. Over a course of three months, it is intended to deliver relief for chronic pain."  

In another Phase II development, the company is testing its Lidoderm patch in patients with both acute and chronic lower-back pain. The market for this indication could be substantial, because low-back pain is the most common chronic pain condition, affecting an estimated 36 million Americans. Endo is also evaluating another licensed product, LidoPAIN BP from EpiCept, for acute low-back pain. And in very early stages is a deal with MakScientific to develop cannabinoids, a promising new way to treat pain. Several other companies are working on cannabis-based drugs, and the future market for these products could be very competitive.  

Endo also recently signed two new licensing agreements. One is with Swedish Orexo AB to develop and market Rapinyl, an oral, fast-dissolving fentanyl tablet for breakthrough cancer pain. The other deal (previously mentioned), in which it licensed marketing rights to Frova, is projected to generate $50 million in sales next year.  

"What we saw in Frova was that it seems to be differentiated from all  the other triptans in that is has a very long half-life—26 hours," Ammon explains. "The next longest half-life of any of the products out there is four or five hours. The other interesting piece about this product is that Vernalis had completed a successful Phase III study looking at a potential indication in prophylaxis for menstrually associated migraines. If you look at the migraine market, about 70 percent of the sufferers are women. And the majority of their migraines seem to be of greater intensity and greater occurrence during the menstrual cycle." Endo hopes to file a supplemental new drug application for that indication in the first half of 2006.  

Because the basic compounds used to treat pain are mostly off patent, this market is particularly competitive, and the distinction between brands and generics is a little blurry. Endo, which has both brands and generics and an aggressive in-licensing strategy, seems geared to be a strong competitor. "Now is the time investors should be revisiting the stock," says one analyst. "As we move into 2005 it becomes far more interesting." And C.E. Unterberg, Towbin rates Endo a "buy," even if it loses its court case involving the generic version of Purdue's OxyContin.  							

"Essentially we are looking for growth opportunities," Ammon says. "We could in-license products that basically give us cash flow but do not have opportunities for further development. But we are really looking for products that will meet unmet medical needs and will allow us to invest in and grow the products. The other factor is that we are looking to stay focused. We started out with a mission to be totally in pain management. Now we want to expand that focus—not broadly, but a little bit—to be in some of the near-pain areas. CNS [central nervous system] and migraine are a perfect example of that. And we are launching DepoDur, which gave us an opportunity to move into peri-operative care. So we are in that postsurgical, hospital environment; but we are still in pain."  

In the pain market that is. As a business, Endo is feeling quite well.  

Lifecycle management and line extensions helped the Percocet franchise generate steady annual growth, rising from $40 million in 1997 sales to $214 million in 2003, despite the fact that it had no patent protection.

Feeling No Pain

 drug Vioxx (rofecoxib) from the market, the  action has been called a corporate disaster, a regulatory failure, a crisis in public health, and even a death blow to the blockbuster model. Is it?  

 spoke with a range of experts—an investment analyst, life science consultant, plaintiff's attorney,  physicians, former FDAers, and authorities on drug safety, pharmacoeconomics, and pharmacovigilance—to find out. David Wofsy, MD, president of the American College of Rheumatology, believes "there are lessons in the Vioxx recall for everyone," and Lou Morris, PhD, past acting director of FDA's Division of Drug Marketing, Advertising, and Communications and president of Louis A. Morris & Associates, says "people will be studying it for a long time."   

With and without Vioxx Merks Estimated 2004 & 2007 Strategic Performance 

"Momentous, shocking," is how Barbara Ryan, managing director and pharmaceutical analyst with Deutsche Bank Securities, describes the Vioxx recall. Albert Wertheimer, PhD, founding director of the Center for Pharmaceutical Health Services Research at Temple University School of Pharmacy, is more sanguine: "These things happen, unfortunately, now and then," he says. And according to Morris, there have been about a dozen withdrawals in the last 12 years. 

We didn't think, even before Vioxx got pulled, that Arcoxia would ever get approved because we thought it had cardiovascular signals-and because of the debate over Vioxx for the last five years. Now, unequivocally, we don't believe it will be approved. Barbara Ryan, pharmaceutical analyst, Deutsche Bank Securities   						

Still, the Vioxx recall stands out. The largest ever by sales, it also clearly "couldn't have come at a worse time for Merck," Wertheimer says. But it could also be said that Vioxx is less than the disaster that's been depicted, precisely because the company has been faltering. While surely a blow to Merck's earnings and prestige, it is far from a stunning reversal. It's also been years since the company was most admired. Jim Hall, president of the life sciences practice at consultancy Wood Mackenzie, says it was already losing its preeminence as a science-driven pharmaceutical company. Adds Ryan: "Merck hasn't grown its earnings for the last four years, and is not likely to for the next several." The implication is that investors who dumped the stock overreacted, as investors frequently do. An analysis by Tracer Analytics (see below) bears this out. Merck's prospects, either way, are not much changed.  

The withdrawal of Vioxx, however, makes Merck's road to recovery steeper. Most obviously, Ryan says, it puts management "in a very precarious position." But she doesn't blame CEO Ray Gilmartin for the Vioxx mess, saying, "I think the company did the right thing." And Wertheimer says, "This was a pretty tough call. You can't just blame it all on Merck." Indeed, Morris offers praise. "How many companies," he asks, "would sacrifice a $2.5 billion product without trying to keep it on the market? It's consistent with Merck's history, taking that kind of perspective on healthcare. From what I can tell so far, they've been incredibly decisive and responsible."  

But Ryan reminds us that the recall "follows a lot of other disappointments associated with management decisions," and Hall says there's a real question "whether Gilmartin's the right person to pull them through this." Gilmartin, he thinks, "is going to go. He announced he's retiring in 2006, so he has between zero and 12 months left now. From a patient-customer point of view there are enough questions about Merck and its leadership that announcing a new leader would help restore confidence."  

Some say the Vioxx recall makes Merck an acquisition target, or at least narrows its options. More likely, it just makes Merck's existing strategy more urgent. Says Hall: "They're going to have to pump a fair amount of money into R&D, either into the discovery end, which probably won't pay off for a while, or into licensing products. The problem is that to fill the gap in their pipeline, they're going to have to license-in Stage III products, and those are very expensive." While the precipitous drop in their market capitalization may make them more attractive to a buyer, Hall says the downside is that they come with a rather large legal liability. 

For FDA, there's a lesson: independent of who the company is, their reputation, or size, they have to look more carefully and communicate more forcefully.    Albert Wertheimer, PhD, Temple University School of Pharmacy			

With all the uncertainties surrounding the Vioxx recall, "One thing's for sure," Ryan says. "There will be enormous litigation." But the heart of that affirmation is hollow. The big question is how much will it cost, and that, Ryan says, "won't be known for some time." Stuart Talley, an attorney with Kershaw, Cutter, Ratinoff York in Sacramento, California, has a notion about that. If there were 27,000 serious cardiovascular events—the number projected by one FDA-sponsored study—"they're probably looking at somewhere between 5,000 and 10,000 cases," he says. A lot of people are comparing Vioxx to fen-phen, which has cost Wyeth $16 billion so far. But fen-phen, Talley says, "was about people with leaky heart valves but no symptoms. In this case the damages are going to be much worse—a lot of wrongful death cases, people with strokes—a lot of serious damages." The final price tag? Few would be surprised if it surpassed $10 billion.  			

Talley says plaintiffs' attorneys are competing to get cases because "the firms with the most cases have more control over what happens, and more juice with the defendant." At the same time, Merck will jockey with plaintiffs' attorneys over jurisdiction. "A lot of case law has come down on the side of drug manufacturers," Talley explains. "The premise is because the drug was approved by the FDA, plaintiffs who were injured can't sue on the grounds it is unsafe or had inadequate warnings. The theory is if the FDA approved the drug, they've made the decision it is safe and the label is adequate. So a lot of cases have had problems on the state and federal level." But it varies from place to place. "In some jurisdictions these rulings have no effect," says Talley. "In others, you're completely out of court." That's why there's destined to be a battle over where the cases are heard. Talley believes most "will gravitate to where cases are now filed—Los Angeles and New Jersey."  

Talley says the best argument "to get around the 'drug was approved by the FDA so we can't be  liable' defense has been, 'Yeah, but you lied to the FDA. It wouldn't have been approved if they had known the truth.'" A big piece of this puzzle, Talley says, "is whether Merck did anything to mislead the FDA—are there smoking gun memos or studies that weren't provided to the FDA?" But a recent Supreme Court decision known  as 

seems to undercut that argument. It appears to say you cannot sue someone simply for lying to the FDA because, as Talley says, "it's the FDA's job to punish people who lie to them." Defendants have tried  to expand 

—which involved a consultant to a medical device company—to pharmaceutical companies. They want to claim, "'You can't sue us because you're preempted by the FDA's decision to approve the drug, and you can't sue us for lying to the FDA to get it approved because the Supreme Court says so.'" But the fallacy of 

, says Talley, is the FDA "doesn't have the manpower or time to know when they're being bamboozled or things are being spun."  

The real question in the public's mind now—not to mention the minds of Merck's competitors—is "to what extent are problems identified with Vioxx applicable to all COX-2 inhibitors," Wofsy says. He predicts FDA "is going to move very slowly in the area of approving new drugs with similar biology." Ryan agrees, saying, "the bar for new COX-2s has been raised," and adding, "There's no data yet for the existing drugs to come off the market. As the placebo controlled trials for Celebrex (celecoxib) come in, that data will be very important."  			

What about the next-generation COX-2s? Says Ryan: "We didn't think, even before Vioxx got pulled, that Arcoxia (etoricoxib) would ever get approved because we thought it had cardiovascular signals—and because of the debate over Vioxx for the last five years. Now, unequivocally, we don't believe it will be approved." She's also dubious about Pfizer's Prexige (lumiracoxib), which, she says, "has liver and kidney issues."  

From a public health perspective, the Vioxx recall "won't have a major impact," Wofsy says. "There were no medical conditions for which it was the only option." But if Vioxx is not an essential medicine, don't its risks—in conjunction with its widespread usage—constitute a public health problem of some sort? Says Wofsy: "It is fair to ask if this could have been recognized and stopped before people were hurt." Ryan is doubtful. "I'm not sure that the kind of data existed prior to this to suggest a move such as what happened," she says. "It is easy to say that there were many hints. By the same token, the data that existed in the public domain since 1999 on Vioxx left even experts arguing both sides. I don't think you can go back and say it was clear and we should have done this or that, because I don't think it was clear. We live in an imperfect world and we know what we know when we know it."  							

Wofsy takes another tack: "FDA announced the problem so patients and physicians could be aware of it but didn't require the companies to do anything. They left it to further studies to clarify the issue—accidentally. There probably should have been more insistence at an early stage on looking directly at the cardiac issues posed by these drugs. There were enough clues two or three years ago to force a more thorough evaluation. Fortunately, the findings came up in a subsequent study by chance. But it would have been a good idea for Vioxx to have been systematically evaluated." Wertheimer is on the same wavelength. "For FDA there's a lesson: independent of who the company is, their reputation, or size, they have to look more carefully and communicate more forcefully," he says.  

But keep in mind, Morris says, "You can't know everything about a drug before it's approved for marketing or else you could never approve any drug." Even Wofsy concedes that, "You have a dilemma, which will always exist in public health.  At what point in the understanding of the long-term consequence of a new agent is it acceptable to release it to the public who might benefit from it? And at what point do you withhold a potentially valuable medication because you don't have enough long-term follow-up for possible late adverse effects?" 

"People have to be realistic," says Edward Langston, MD, a member of the American Medical Association's Board of Trustees. Langston, a geriatrician and pharmacist by training, believes FDA's rigor in screening new medications is the most severe in the world. "Medications are available in Europe or Asia that aren't here," he says. "We take a very hard look at things. It's difficult and costly. Some people say it's a failed system. It's not. It's working. Everyone wants the perfect answer—the perfect drug—and it isn't out there." It's just not a simple matter to balance risks, benefits, and costs. "We're still learning," Morris says. "It wasn't until thalidomide that we understood the teratogenicity of drugs."  

That's not to say improvements aren't needed. "The type of drugs developed today have a much longer-term effect on patients," Hall says. Information needed to understand long-term side effects cannot be obtained in even a multiyear trial. Hall also thinks trials may have to be more specific. Say you treat trials for broad-based indications, such as Vioxx, as more of a specialty. "Then you want to target the 65 and older population that will probably take it for chronic problems," says Hall, who believes clinical transparency should help a lot. "People will have to understand what their strategy is and where the risks are," he says. Langston suggests that "FDA needs more manpower. They have a very challenging job."  

"It says a lot about the power and danger of direct-to-consumer (DTC) marketing that the COX-2 inhibitors achieved a popularity in the market that far exceeded their benefit," Wofsy says. Fellow physician Langston agrees, saying, "I think there are some unreal expectations generated from advertising. Patients always put pressure on you to try something they may not totally understand." Wofsy say doctors in general are very strongly opposed to DTC marketing of new drugs, and Vioxx is a good example of why. "You have a chronic condition here—arthritis—that we can't cure," he says. "What we do for people is ameliorate their  symptoms. We help them cope. You settle on a certain level of symptoms that the patient tolerates because pushing more aggressively to control them is more worrisome than the symptoms themselves. If a new agent comes along and is directly and aggressively marketed to patients, what's the physician to do? It becomes a tremendous pressure against sound medical judgement." 							

Hall wonders if Vioxx was overpromoted compared to what the alternatives are. While fingers are being pointed at pharma and FDA, he says, "There's a basic question about how we reimburse for drugs. Your insurance company reimburses you for prescription drugs—Nexium, Vioxx, what have you—while many over-the-counter drugs have to be paid for out of your own pocket. The patient really has no choice after a while." Another  thing: "If you have a $3 billion to $4 billion drug and you're spending a quarter of a billion dollars on advertising, you've got to believe that it's being used beyond what the strict indications warrant," says Hall. 

Will the Vioxx issue spur tighter regulation of DTC marketing? Says Morris: "The Democrats are interested in putting some limits on DTC. It does provide them with ammunition."  

The Vioxx recall underscores the need to do better postmarketing surveillance of drugs, says Sandy Schwartz, MD, professor of medicine, health care management, and economics at the University of Pennsylvania School of Medicine. "We all recognize that initial clinical trials are not designed to pick up unanticipated side effects," he says. "Unanticipated side effects are just that—unanticipated. But statistically we know they're going to happen. And we don't have an adequate system in place to detect them."  			

Morris says pharmacovigilance was a hot area before Vioxx.  "The FDA just last May came out with new guidance for good pharmacovigilance planning, for risk communication, for good premarket risk assessment," he says. "The recall will contribute toward that. I suspect there will be a round of politicking, finger pointing, and lawsuits. But major change? I doubt it." 

Schwartz says, "We're looking at the risk-benefit of drugs—something the public doesn't understand and the lay press doesn't do a good job with. We're not talking about things that are good or bad. With all these drugs, it's a question of how good, in which patients, under what conditions. Every drug, if enough people take it in pharmacologic doses, is going to have some adverse events. The real question is whether the benefits of the drug are sufficient to significantly outweigh the risk. To the degree a drug is used in the highest-risk patients, then even its chance of doubling the risk of a cardiovascular event might be acceptable if the benefits are sufficiently high. However, to the degree it is used in people for whom the expected benefit is minimal—people who don't really need it—then even a very small risk is unacceptable. FDA—the staff and advisory committees—does an excellent job dealing with that. But it's not always appreciated by the general public. The public thinks a drug's either good or bad."   

But, he adds, "There's a tendency to use some of these new drugs rather indiscriminately instead of targeting them to the people who would benefit the most. I don't think there's any question that overprescribing has been going on in this class of drugs. Drugs should be used where there's a significant benefit. We have to recognize there are always going to be unanticipated and unmeasured adverse events, what we call a Type 2 error. There's a chance you'll miss something because you're not looking for it. In this case, we were lucky it was found."  

We didn't think, even before Vioxx got pulled, that Arcoxia would ever get approved because we thought it had cardiovascular signals-and because of the debate over Vioxx for the last five years. Now, unequivocally, we don't believe it will be approved.

AfterShoxx

It's been a tough season for drug safety: FDA's long-awaited analysis of antidepressant use in children found that there were indeed safety issues; one of the world's best-selling drugs was pulled from the market; and the United States lost half of its flu vaccine supply when a plant was shut down over manufacturing concerns.

	Finger pointing has already begun in earnest, as Congress tries to decide who ignored what warning, who silenced what staff scientist, and who, if anyone, broke what law. But the trio of events raises some important issues that government officials and industry leaders will be dealing with for a long time to come. Chief among them:

		"Why don't US adverse-event reporting and postmarketing surveillance systems do a better job of identifying looming safety problems?

		"How much safety data should be required for products that patients may use for years?

		"Do policies offering manufacturers incentives for conducting pediatric studies actually encourage sloppy research?

		"Is direct-to-consumer advertising luring patients to dangerous drugs?

		"How can the US vaccine supply system be reformed to prevent shortages and inequitable access?

	Behind these questions looms a larger one that promises to become a central issue for policymakers: Have efforts during the past decade designed to accelerate drug approval and streamline research requirements been a mistake? If that is the case, is it then time to return to a tougher, older-fashioned approach to safety?

	The debate over antidepressants has escalated all year, since evidence surfaced that FDA and manufacturers had failed to make public adverse event data on the use of selective serotonin reuptake inhibitors (SSRIs) by children. The issue grabbed public attention in June when New York Attorney General Eliot Spitzer brought a civil suit against GlaxoSmithKline for withholding data on Paxil (paroxetine).

	In Congress, the Senate Finance Committee, which was already investigating FDA, focused on the question of whether the agency acted improperly in withholding information about SSRI adverse events. The House Energy and Commerce Committee grilled manufacturers and FDA officials at two hearings in September. A joint meeting of FDA's advisory committees for psychopharmacologic and pediatric drugs recommended that antidepressants carry a black box warning on the possibility of suicidal behavior in young patients. In October, FDA carried out the recommendation, requiring that 32 antidepressants carry a black box warning and provide MedGuides through unit-of-use packaging. The policy rules out DTC broadcast promotion and reminder ads for these products.

	The SSRI debate has raised genuine concerns about the conduct of clinical research and FDA oversight of the process. One troubling set of questions emerged over FDA's program to grant additional marketing exclusivity to companies that perform certain pediatric trials. Robert Temple, director of FDA's Office of Medical Policy, explained to the House panel that sponsors generally design studies "with good intent and according to high standards," but he noted that the failure of a supplemental pediatric study to show efficacy is not nearly as devastating as failure in a similar trial pre-approval. As a result, companies may sponsor too few studies to obtain clear results or recruit too few patients who fully meet enrollment criteria.

	Temple says FDA will require future pediatric studies of antidepressants to have three arms that compare the test drug to both placebo and fluoxetine. This will show more clearly if poor results arise from an ineffective drug or a poorly designed study. FDA and other regulatory authorities also are reviewing adverse-event databases to see whether the SSRI effects found in children also show up in adults. Until now, researchers have not found data indicating increased risk of suicide in mature patients but don't know why there should be an age-based difference.

	Congressional analysts expect to use their experience probing antidepressant safety in investigating Merck's decision to pull the COX-2 inhibitor Vioxx (rofecoxib). Legislators have already pounced on FDA for not being quicker to disclose concerns about side effects and "silencing" an agency staffer who was studying the issue.

	Analysts estimate that about 20 million US patients have used Vioxx since its approval in 1999, and almost 100,000 individuals had some cardiovascular event after taking the drug for more than 18 months. Liability claims could exceed $10 billion.

	Ironically, COX-2s dominated the pain relief market in the last five years because they don't cause the ulcers and gastrointestinal bleeding that aspirin and ibuprofen sometimes do. But FDA approved COX-2 inhibitors based on clinical trials running less than a year, and the serious side effects, including elevated blood pressure, cardiovascular events, and liver toxicity, did not appear until months later.

	The fallout from the Vioxx issue may be extensive. Industry critics point to Merck's aggressive DTC advertising for boosting Vioxx use despite safety concerns. Pfizer and other COX-2 marketers are trying to distance their products from Vioxx, but medical experts in the United States and Europe are calling for a thorough examination of the whole class. Congress plans hearings next year on drug safety issues; they are likely to revive proposals to establish a post-marketing safety agency separate from FDA's product approval process.

	The larger question is how much long-term safety data is needed to confidently market a therapy that patients are likely to use for years. Merck obtained conclusive data on Vioxx's problems only after sponsoring a three-year post-approval study to test the product's efficacy in preventing recurrence of colorectal polyps. The company halted a trial of 2,600 patients after 18 months, when preliminary results revealed that 3.5 percent of patients taking Vioxx experienced thrombotic events, compared to 1.9 percent in the placebo arm.

	Although the Vioxx experience may spur calls for more long-term safety data on new COX-2 drugs coming down the pipeline, proposals to increase the length of studies and number of patients tested always create a dilemma. Overly extensive data demands can block a new drug from the market if trial costs escalate too much, but new drug approvals based on limited data can subject FDA and marketers to criticism if safety problems later emerge.

	For some time now, the US healthcare system has been plagued by shortages of vaccines during flu season. Observers describe the nation's vaccine supply system as "very fragile" and "unreliable," characteristics that have escalated with the departure of major pharma companies from the vaccine business. Flu vaccine shortages in 2000 and 2003 prompted the Centers for Disease Control and Prevention (CDC) to ramp up supplies for this year, particularly to meet growing demand generated by the government's own campaign encouraging more patients to get a shot.

	A key element in CDC's efforts involved signing up San Francisco-based Chiron to provide 40 million or more doses of flu vaccine this fall from its newly acquired Liverpool plant. The plan fell apart when British regulatory authorities suspended the facility's license because of "issues with systems and processes" designed to ensure product quality. While Britain stood to lose less than 20 percent of its flu vaccine supply-an amount that other manufacturers could fill-the shutdown is devastating to the United States, which had relied on Chiron for about half of its order of 100 million doses.

	FDA officials, caught by surprise, rushed to England to see if there was some way to salvage any vaccine. Agency investigators had inspected the Liverpool plant in June 2003 and found what they thought were correctable manufacturing problems. At that time, there was no evidence of contamination in finished vaccine, and Chiron said it would fix the quality-control shortcomings. But the British plant had a history of manufacturing problems, and although Chiron spent $75 million to upgrade the facility after buying it from PowderJect Pharmaceuticals in 2003, it may have been pouring money down a sinkhole.

	In August, Chiron acknowledged contamination problems with actual vaccine lots, but it assured FDA that the situation was easily remedied. In fact, just days before the shutdown, CEO Howard Pien told a Senate committee that Chiron had addressed its contamination issues and would deliver vaccine as promised. Agency officials were awaiting a Chiron report when Britain's Medicines and Healthcare Products Regulatory Agency closed the plant for three months because inspectors felt Chiron couldn't ensure product quality.

	The debacle spotlighted serious problems with the US vaccine supply system. Only two other manufacturers produce flu vaccine for the huge US market, a situation that limits how officials can respond to emergencies. Critics regularly propose that the federal government take over US vaccine distribution and production, and this latest incident is unlikely to encourage private sector investment without added incentives and liability reform.

	The Chiron crisis may spark interest in proposals to spur more flu vaccine production, including those that would:

		"expand government purchase guarantees to cover unused doses.

		"provide grants and support for manufacturers adopting modern production techniques. NIH officials are offering up to $150 million in financial incentives to encourage pharma companies to develop modern flu vaccine production technologies such as cell-based cultures and DNA engineering. Everyone agrees that it's vital to shift away from today's old-fashioned egg-based systems, but that could take years.

		"expand vaccine production through regulatory and market reforms. A report from the National Vaccine Advisory Committee, which appeared in October as the flu vaccine crisis was emerging, recommends dropping price caps on vaccines for children, improving vaccine coverage by payers and insurers, and seeking more harmonization in US and foreign vaccine approval requirements to increase supplies in an emergency.

Washington Report

Finger pointing has begun in earnest, as Congress tries to decide who ignored what warning, who silenced what staff scientist, and who broke what law. But recent events also raise real long-term issues for industry.

New Questions on Safety

Even with $20.6 billion in 2004 estimated prescription sales, pain management remains one of the most widely researched yet undertreated therapeutic areas. That leaves plenty of room for growth, and industry experts predict that revenue from pain-management therapeutics will reach almost $29.8 billion by 2008.  

Much of that growth will be fueled by an aging global population—suffering from arthritis, cancer, diabetic neuropathy, and postoperative pain. But those patients—and, in fact, most patients—will receive more palliative care than in the past because of society's changing attitude toward pain management.  

"In the old school of thinking, patients were hesitant to ask for more analgesics," says Carol Ammon, CEO of Endo Pharmaceuticals, a specialty pharma with a focus on pain products. "Patients were socialized to accept a certain amount of pain. I think a lot of that has gone out the window now. Patients realize that they can appropriately have their pain treated and that they are not bad patients for asking to have it treated." 

The biggest growth potential is in the United States, which had sales of $12.3 billion in 2003. That figure should balloon to an estimated $21.8 billion in 2008. Leading players—including Pfizer, Purdue, Johnson & Johnson, Merck, and Novartis—account for approximately 60 percent of the US pain-management market. Yet because there are still unmet needs in pain management, there is room for many other companies, such as Abbott Labs, Durect, Eli Lilly, Endo, and Forest Labs, to  gain market share.  

Global Market Growth, Global Market Share			

The International Association for the Study of Pain (IASP) defines pain as "an unpleasant sensory and emotional experience in association with actual or potential tissue damage, or described in terms of such damage." For patients, it's just a big hurt, but for doctors and pharma companies seeking FDA indications, pain is typically categorized by duration: acute (postoperative pain) or chronic (low-back pain). Chronic pain is defined as pain that lasts more than six months, and acute pain is a condition experienced for less than six months.  			

Another category, neuropathic pain, is usually chronic and is caused by lesions in the peripheral or central nervous system. Various medical conditions and external factors, including diabetes, herpes zoster (shingles), cancer, exposure to toxic substances (including chemotherapy), alcoholism, stroke, HIV, and multiple sclerosis can all lead to neuropathic pain.  

Breakthrough pain refers to intermittent flares experienced by patients who are already on a fixed, around-the-clock pain therapy regimen. An episode can last anywhere from just a few seconds to several hours and can be triggered by a specific activity (coughing or moving) or may start unexpectedly and for no reason. 			

Available therapeutics for pain can be classified in three categories: nonopioids, opioids, and adjuvants. The nonopioids include nonsteroidal anti-inflammatory drugs (NSAIDs) and acetaminophen (Tylenol). NSAIDs constitute the majority of this category; they range from traditional,  over-the-counter pain relievers (including aspirin, ibuprofen, and naproxen) to newer, prescription COX-2 inhibitors (including celecoxib, rofecoxib, and valdecoxib).  

NSAIDs act by inhibiting the conversion of arachindonic acid to prostaglandin, a substance produced by the body that plays a role in inflammation and pain. Although traditional NSAIDs are considered relatively safe, COX-2 inhibitors have fallen under increased scrutiny following Merck's voluntary withdrawal of Vioxx (rofecoxib), because of research showing increased risks of heart attacks and strokes.  

Although nonopioids are generally used for mild to moderate pain, opioids— such as morphine, fentanyl, hydrocodone, and oxycodone—are used to manage moderate to severe pain and chronic pain. Opioids bind to opiate receptors that are located in the central nervous system and decrease the transmission of nociceptive input (pain caused by irritation or injury) —reducing the perception of pain in the brain. 			

Adjuvants include antidepressants, anticonvulsants, and other therapeutics that are used off-label or in combination with nonopioid and opioid therapies. (See "Off-Label Controversy,".)  

Worldwide, there are few options that effectively address neuropathic pain, with only eight drugs approved for such conditions. (See "Global Neuropathic Pain Growth" and "Neuropathic Market Share,".) Only three are marketed worldwide: Lidoderm (lidocaine patch), a topical analgesic, and Neurontin (gabapentin) and Tegretol (carbamazepine), both of which are anticonvulsants with undefined mechanisms of action. Tegretol is a rarely prescribed drug indicated for trigeminal neuralgia (a rare form of neuropathic pain), leaving Pfizer's Neurontin and Endo's Lidoderm as the only substantially viable options for most US patients. 

Global Neuropathic Growth, Neuropathic Market Share 			

FDA, however, has approved those two drugs for the limited indication of neuropathic pain associated with herpes zoster (postherpetic neuralgia), which means most US prescriptions are off-label. In Europe, Neurontin is indicated for the broader category of neuropathic pain, allowing Pfizer to legally market it there for various types of painful neuropathy. 			

Hartaj Singh, managing consulting at Navigant Consulting, explains why FDA is so strict. "It is hard to design clinical trials around neuropathic pain, as clinical endpoints for neuropathic pain are not well defined and are difficult to measure, with the exception of postherpetic neuralgia." But until FDA becomes more lenient in the indications granted to neuropathic pain treatments, growth in the US market will be somewhat hindered.  

Fortunately, there are products in the pipeline that hold promise for the near future. New drugs entering the pain market include four products under development specifically for neuropathic pain: Pfizer's Lyrica (pregabalin), Elan's Prialt (ziconotide), GW Pharmaceuticals' Sativex (cannabis extract), and GSK's Lamictal (lamotrigine), which, like Tegretol, is already on the market for epilepsy. Of these, Lyrica, a follow-up product to top-selling Neurontin, may hold the most potential. Not only has Lyrica demonstrated superior clinical efficacy over Neurontin, but Pfizer has sought a broader neuropathic pain indication for the second-generation drug.  

On September 2, FDA issued three approvable letters for Lyrica to treat neuropathic pain associated with diabetic peripheral neuropathy and postherpetic neuralgia, and as adjunctive therapy in the treatment of partial seizures. (The drug did not receive approval for treating generalized anxiety disorder.) In addition, Lyrica was recently approved in the European Union for peripheral neuropathic pain and as an adjunctive therapy in the treatment of partial seizures. 

Although Lyrica's approval in the European Union and approvable status in the United States is good news for Pfizer, another drug from rival Eli Lilly recently received a lot of press when it became the first medicine to be approved by FDA specifically for neuropathic pain associated with diabetic peripheral neuropathy. Cymbalta (duloxetine), a serotonin and norepinephrine reuptake inhibitor, had been given a six-month priority review and had also been approved one month earlier for major depression in adults. In the past, antidepressants were often prescribed off-label as first- and second-line pain treatments. 			

Despite Cymbalta's first-to-market edge in the United States, Navigant's consultants predict that after it gets FDA approval, Lyrica will eventually lead expansion of the worldwide neuropathic pain market, a segment expected to reach $3.5 billion by 2009. Last year, Neurontin, Lyrica's predecessor, alone accounted for $2.7 billion in sales, and Lyrica will likewise achieve blockbuster status.   

Although opioids and NSAIDs—which have been around for decades—are the standard treatments for most pain indications, there are several emerging therapeutics with new mechanisms of action. This is particularly true in the neuropathic pain segment, an area in which opioids and NSAIDs have shown limited efficacy.  			

Elan's Prialt (ziconotide) is a synthetic form of a Conus snail venom peptide (conotoxin M-VII-A) and acts as an N-type neuron-specific calcium channel blocker. Under clinical development for chronic pain relief—including cancer, neuropathic, and postoperative pain—it is expected to provide an important new treatment option for neuropathic pain sufferers. 

GW Pharmaceuticals' Sativex, a cannabinoid receptor agonist (similar to the compound in marijuana), is being developed for the UK (cancer pain, neuropathic pain, postoperative pain) and Canadian (pain, neuropathic pain) markets. Consisting of a whole plant medicinal cannabis extract, Sativex is administered as a mouth spray. 

GlaxoSmithKline's Lamictal is an anticonvulsant with a novel chemical structure measured against other available drugs in its class and is thought to act as a glutamate antagonist. It is currently approved for the treatment of bipolar disorders, partial seizures, and Lennox-Gastaut syndrome in various countries and is in Phase III for neuropathic pain in the United States.  

Other novel drugs expected to enter the pain market during the next five years include Novartis' Aredia (pamidronate), DOV Pharmaceutical's bicifadine, and Allergan's Botox (botulinum toxin A). Aredia, a bisphosphonate, is currently used off-label for cancer pain when cancer has metastasized to bone. Aredia is a potent inhibitor of bone resorption, thereby maintaining bone mineral density.  It is thought to prevent the attachment of osteoclast precursor cells to bone. It is currently marketed for osteoporosis and other bone disorders, and is in Phase III in the US for the management of malignant bone pain. It is also under development for similar indications in Japan (Phase II) and Switzerland (unidentified clinical phase).  

Bicifadine is a novel analgesic with an unidentified mechanism of action. It is understood, however, to enhance and prolong the activity of norepinephrine and serotonin and is a functional antagonist at a subset of excitatory glutamate receptors. It is under development for a broad pain indication and has been under clinical investigation for several different pain conditions, including moderate to severe postsurgical dental pain and chronic lower-back pain. 

Botox, a botulinum toxin injection that paralyzes the underlying muscle, is undergoing Phase III trials for back pain (Europe and United States) as well as Phase II trials for migraine (United States) and tension headache (Canada, Europe, and United States). Although there are some novel drugs in development, most pipeline pain therapeutics are opioids and NSAIDs, which often are reformulations of products with advanced delivery systems. Therefore, new classes of drugs in the pain-management segment are limited. (See "Soon to Launch,".) 

Soon to Launch : Heres a sampling of new drugs (or indications) that should be approved in the next four years. 

Ronald Burch, MD, PhD, the CEO and founder of AlgoRx, explains why there are so few advances in pain management. "Pain was the first accomplishment of pharmacology, with aspirin and opiates," he says. "Therefore, little research [in this area] has been done over the last 30 years. There is more emphasis on delivery than on novel mechanisms of action."  

AlgoRx is an emerging pharma company that is focused on developing products to treat pain. It has two lead products in development. The first, ALGRX 4975, is an injectable capsaicin. The compound, which is what makes chili peppers taste hot, is already used in some topical analgesics. Its second project, ALGRX 3268, is a dermal lidocaine that uses powderject technology.  

Adolor is another company with a novel pain approach. Its pipeline projects  target kappa opioid receptors located outside the brain rather than the mu receptors targeted by most opioid drugs, thus minimizing side effects. Adolor's Entereg (alvimopan) is under FDA review for the treatment of postoperative ileus, a painful bowel condition caused by excessive use of opioids.  

Advances in pain management are not limited to new drug classes or indications, but can be seen in the many ways that treatments are administered. 			

The global pain market will reach nearly $29.8 billion in 2008, of which $21.8 billion will come from the United States.

Pharmaceutical Executive-11-01-2004

Your Patent is About to Expire: What Now?

Time for Transparency

Feeling No Pain

AfterShoxx

New Questions on Safety

New Gains for Pain

Struggling to Take One Step Forward

TOC

Creativity Without Borders