Wacky World of Generics: REMS Edition

Here's a "Catch-22": If the Food & Drug Administration prohibits sale of a drug outside of a tightly controlled restricted distribution program, how on earth is a generic company supposed to obtain supplies of the product to use as a comparator in bioequivalence trials?

If you are Dr. Reddy's, hoping to be first to challenge the patents on the anti-cancer agent Revlimid, you ask nicely. And if you are Celgene, apparently, you answer "no way." That, at least, is how Dr. Reddy's describes the situation in a citizen petition filed with the Food & Drug Administration earlier this month. (We have the full story in "The Pink Sheet" DAILY.)

This petition has all the markings of a test case. The goal is not so much to accelerate a generic challenge to Revlimid (the earliest a generic launch could possibly come is three years from now) but rather to define a process to assure that the new Risk Evaluation & Mitigation Strategies authority given to FDA in 2007 doesn't become a perpetual exclusivity award for sponsors.

The law (known as FDAAA) states unequivocally that restricted distribution programs are not to be used to block or delay generic competition. It's just that, well, it's one thing to say that, another thing to make it so.

Certainly, George Horner--the former CEO of Prestwick Pharmaceuticals--doesn't see any realistic way for generics to compete against products covered by REMS. He told us that in a story on the fascinating development program--and flurry of business development activity--for the Huntington's chorea therapy Xenazine. (You can read all about it in The RPM Report.)

In the petition, Dr. Reddy's is proposing a process that would essentially allow generic manufactures to obtain an authorization from FDA for studies, and then compel manufacturers to provide samples (at market prices) for use in bioequivalence trials. That certainly seems reasonable enough--and we bet (after much regulatory machination) FDA ends up setting a policy along those lines to eliminate the Catch-22 facing Dr. Reddy's.

But that still doesn't address the bigger issue: While it is presumably simple enough to create a bioequivalent version of the active ingredient in Revlimid, is it really possible to create a generic equivalent to the restricted distribution program for the drug? Celgene would argue no. In fact, the company has argued no in the context of the predecessor product--the notorious thalidomide. (Read more about that case here.)

Put another way: does FDA really want to make it simple for dozens of sponsors to launch versions of drugs like thalidomide, when the agency has already determined that the risks of inappropriate use are high enough to merit costly, burdensome post-marketing restrictions? Our hunch: products covered by restricted distribution programs will end up looking more like biotech therapies facing follow-on competition than they will like conventional generic drugs.

And, for now, there isn't even a clear-cut way for generics to begin the process of proving bioequivalence.

Wacky World of Generics: Thalidomide Edition

Even the title has to cause shivers or a good shake of the head. Thalidomide? Generics? The two words don’t belong together: it can’t be possible.

How can thalidomide (the infamous teratogen and source of the crisis that led to the 1962 FDA efficacy amendments) be the source of a debate about generic use? This is not wacky. This should be inconceivable.

But it’s not.

Celgene’s highly successful Thalomid brand of thalidomide, with sales last year just short of $450 million, has passed its tenth year on the market. And it faces a generic challenge from Barr Labs, which has an ANDA pending for the drug’s initial orphan indication, treatment of the cutaneous lesions of erythema nodosum leprosum.

Now, a struggle is developing on the ability of generic companies to replicate the tight risk management program that Celgene developed to make thalidomide a commercial product.

To get Thalomid to the market, Celgene developed a strictly controlled distribution and patient contact /education program called STEPS. The company devotes more than 175 employees to maintain its risk management programs. The program is so important to the commercial use of the product that Celgene has a patent on the program itself.

STEPS may represent a steep barrier to generic copies; at least that is what Celgene hopes. The company has laid out its arguments against FDA approving generics in a petition filed with the agency a year ago: Sept. 20, 2007. (For an anlysis of the Celgene petition, see our coverage in “The Pink Sheet.")

FDA’s eventual decision as to whether the thalidomide risk management program can be copied or mimicked will be of major significance to the entire industry.

As FDA begins to require more risk management programs (now called REMS – Risk Evaluation & Mitigation Systems) as integral parts of NDA approvals, these post-market controls have the potential to significantly lengthen the life of brands.

Or as Celgene pointedly argues to FDA: "In many ways, the survival of the company depends on the successful implementation of its novel restricted distribution plans." Give away its risk management program to another marketer and FDA will give away the core of Celgene’s ability to market thalidomide safely. The company notes that it has successfully prevented patients from experiencing the horrors of the teratogen. If another company is distributing the ingredient less carefully, it would hurt the public, the drug industry and Celgene’s brand.

But FDA was specifically instructed in the FDA Amendments Act (passed a year ago in September 2007) to prevent companies from using REMS as barriers to generic competition. Something is going to have to give.

The decision on STEPS will be one of the important early precedents arising from FDAAA. It is significant that Celgene used ex-FDA general counsel Dan Troy to craft its arguments to protect STEPS and Thalomid.

Not only is Troy a prominent figure on the issue of FDA’s ability to control industry marketing practices, he has also recently become the general counsel of GlaxoSmithKline – assuring that the issue of the value of REMS as a way to block generics will get the attention of at least one other major pharma player. Indeed, GSK has been--by accident if not design--one of the most active early players in shaping how the REMS authority will be used, having already agreed to three programs for its new products, and with a fourth pending for Promacta.

In the wacky future world of generics, companies will have to learn how to replicate post-marketing control programs as well as how to replicate the chemical structures. The safety programs may turn out to be harder to copy.

FDA's Brain Drain Continues

Sometimes it just doesn’t pay to work at FDA.

Even as FDA bulks up its drug review ranks with new money from Congress, attrition continues to affect the agency—including high-level defections to industry. Indeed, drug sponsors are more than willing to bring former agency officials into their ranks and pay them much more than the average government salary.

Florence Houn is the latest to jump ship; as reported in “The Pink Sheet” this week, the FDA official has been hired by Celgene as VP-regulatory policy and strategy.

Most recently,Houn was involved in vaccines regulation: she was deputy director of the Center for Biologics Evaluation and Research’s Office of Vaccines Research and Review. But she also knows a thing or two about drug reviews, having served in leadership positions of two different Offices of Drug Evaluation during her 15-year tenure at FDA.

For Celgene, Houn couldn’t come at a better time: the company is working to comply with the Risk Evaluation and Mitigation Strategies provision of the FDA Amendments Act. Celgene is responsible for two of the most restrictive REMS: thalidomide (Thalomid) and lenalidomide (Revlimid), a thalidomide analogue.

In deciding to leave FDA for industry, Houn is taking a page from her husband, former Office of Antimicrobial Drug Products director Mark Goldberger, who left in early 2007 for Abbott Labs. Other recent high-level departures from within the agency include former ODE II director Robert Meyer, who joined Merck in late 2007.

The Office of Drug Safety has probably had the hardest time holding onto talent. Predecessors to current director Gerald Dal Pan left for industry within a year or two of assuming the top drug safety post: Peter Honig to Merck as VP-risk management and Victor Raczkowski to Cephalon as VP-regulatory affairs.

Dal Pan is showing no signs of leaving anytime soon (and given the Office of Drug Safety's new powers and authority, why would he?). But given the monumental changes in drug regulation under the Amendments Act, FDA expertise is surely fetching quite a premium these days. For the agency's sake (and all of industry's), let's hope few other agency officials take advantage of it.

Celgene and FDA’s New Drug Safety List

It’s over for Celgene. That’s it. Revlimid’s done. Investors should evacuate the premises immediately.

After all, a vital cog in Celgene’s cancer portfolio is on FDA’s first quarterly drug safety posting.

Sound too alarmist? Maybe a little extreme? Of course it is. But that’s how a good number of investors reacted to the posting.

Celgene lost about 3% of its value in the two days following the announcement. Not terrible. But if you look at trading the day of the announcement, volume more than tripled and the stock dropped 6% of its value in midday trading with a low of $63.00 per share before edging back up.

We’ve seen that investors and drug companies are finding it challenging to communicate and interpret risk, respectively. To read our take, click here.

FDA threw a new twist into the risk communication equation last week. In response to a specific provision in the FDA Amendments Act, the agency will be posting a list of drugs every three months that officials deem worthy of further risk evaluation following voluntary adverse event reports from patients and health providers. So for all of the FDA critics out there, this is something the agency had to do.

In a September 5 press release announcing the initiative, FDA tried to be as unalarmist as possible. “My message to patients is this: Don’t stop taking your medicine. If your doctor has prescribed a drug that appears on this list, you should continue taking it unless your doctor advises you differently,” said Janet Woodcock, M.D., director of FDA’s Center for Drug Evaluation and Research.

The agency was very explicit about what a drug showing up on the list actually means for that drug:

“The appearance of a drug on this list does not mean that FDA has concluded that the drug has the listed risk, or that FDA has identified a causal relationship between the drug and the listed risk. It is on the list only because FDA has identified a potential safety issue.”

In a media briefing prior to the official announcement, Office of Surveillance and Epidemiology director Gerald Dal Pan explained that a listing on quarterly report means FDA has begun an analysis of whether the drug needs further evaluation such as further information, clinical trials, epidemiologic study, need to conduct an epidemiologic study, and possibly the need to conduct a clinical study.

CDER associate director for Safety Policy and Communication Paul Seligman said two things have to happen to get on the quarterly list: first, a provider submits an AER report to FDA’s voluntary AERS reporting system. Second, our FDA staff have judged that further follow up or review is warranted.

Seligman highlighted that the work FDA is doing to support the quarterly list isn’t anything new. “This is work we’ve been doing for decades.” What’s new is, he says, FDA is telling the public what it’s working on in postmarket surveillance at the “earliest stage.”

FDA’s new initiative is not without some irony. The first quarterly report, which is supposed to represent FDA’s work at the “earliest stage” is for January 2008-March 2008, not the just passed April 2008-June 2008 quarter. That is understandable since FDA has a seemingly limitless number of FDAAA provisions to implement and a very limited number of resources to get it done. We’re just pointing it out. There were similar issues with FDA’s “early communication” initiative, which appeared to be anything but early. To read more, click here (also one of our favorite blogs and blog pictures.)

Here’s the first list of 20 drugs on the quarterly post:

Potential Signals of Serious Risks/New Safety Information Identified by the Adverse Event Reporting System (AERS) January - March 2008

Product Name: Active Ingredient (Trade) or Product Class	Potential Signal of Serious Risk/New Safety Information
Arginine Hydrochloride Injection (R-Gene 10)	Pediatric overdose due to labeling / packaging confusion
Desflurane (Suprane)	Cardiac arrest
Duloxetine (Cymbalta)	Urinary retention
Etravirine (Intelence)	Hemarthrosis
Fluorouracil Cream (Carac) and Ketoconazole Cream (Kuric)	Adverse events due to name confusion
Heparin	Anaphylactic-type reactions
Icodextrin (Extraneal)	Hypoglycemia
Insulin U-500 (Humulin R)	Dosing confusion
Ivermectin (Stromectol) and Warfarin	Drug interaction
Lapatinib (Tykerb)	Hepatotoxicity
Lenalidomide (Revlimid)	Stevens Johnson Syndrome
Natalizumab (Tysabri)	Skin melanomas
Nitroglycerin (Nitrostat)	Overdose due to labeling confusion
Octreotide Acetate Depot (Sandostatin LAR)	Ileus
Oxycodone Hydrochloride Controlled-Release (Oxycontin)	Drug misuse, abuse and overdose
Perflutren Lipid Microsphere (Definity)	Cardiopulmonary reactions
Phenytoin Injection (Dilantin)	Purple Glove Syndrome
Quetiapine (Seroquel)	Overdose due to sample pack labeling confusion
Telbivudine (Tyzeka)	Peripheral neuropathy
Tumor Necrosis Factor (TNF) Blockers	Cancers in children and young adults

That’s it. That’s all you get. No numbers of reports and no nature of the seriousness of the adverse events reported.

So back to Revlimid. The drug was associated with reports of the serious skin rash Stevens Johnson Syndrome. As you may recall, SJS was the reason the COX-2 inhibitor Bextra was taken off the market.

We’re not doctors (we don't even play them on TV), but two observations which should quell any investor jitters based on the very little we know so far.

First, if you’re taking Revlimid, a drug used for MDS and multiple myeloma, the potential for SJS is likely the least of your concerns. Second, Revlimid carries one of the most comprehensive, thorough risk management plans (RevAssist) of any drug on the market managed by a company that revolutionized the efficacy of risk management plans for thalidomide, arguably the most dangerous drug ever marketed. If there are more cases, FDA can rest assured RevAssist will catch them.

So what do you think? Is this quarterly list a good idea or a bad one? Are we getting in too deep and too early when it comes to FDA’s postmarket responsibilities? Per usual, we’d love to hear your take.

Acceleron Deals ACE-011 and More to Celgene

Privately held Acceleron yesterday announced a broad co-development/co-promotion alliance with Celgene on Phase Ib lead project ACE-011 in bone disease and a further three discovery-stage compounds.

The upfront money looks good, given the compound's stage of development: Acceleron will receive $50 million, including a $5 million equity investment. That's close to the total upfront average for Phase II deals in 2007--$58 million, according to Windhover's Strategic Transactions Database. Celgene has also committed to a further $7 million minimum investment in a potential Acceleron IPO.


Development, regulatory and commercial milestones could reach $510 million for the ACE-011 program, and $437 million apiece for the three discovery-stage programs. (Since they're not split out into pre-and post-approval, we won't comment on size.) Acceleron will shepherd the projects through Phase IIa, and then hand them off to Celgene for later-stage development.


ACE-011 is an activin receptor IIa mimic that inhibits activin, a negative regulator of bone mass--you can read more here, and more here in our profile of Acceleron. The company specializes in the regulation of bone and muscle growth to treat a variety of diseases, and has raised nearly $100 million over three venture rounds and a debt placement since 2004.

IPOs are a rarity these days, but just in case, the Celgene deal sets Acceleron up nicely. And the young company still holds some cards: muscle loss, neuromuscular, and metabolic programs remain unpartnered.

image from flickr user bk-robat used under a creative commons license

Lesson from the JPMorgan Conference: Exceptions That Prove the Rule

Look both ways before you cross The Street

Roger Longman's earlier post about biotech hype got us thinking about a few conversations we had and presentations we watched last week, the way the financial markets respond to--or don't respond to--the optimism of chief executives, and how sometimes that optimism turns out to be quite warranted.

For example it seems like every year we sit down at the St. Francis on Day One and listen to Celgene chairman/CEO Sol Barer, PhD, promise the world to the room chock-full of investors. This year that promise was more stratospheric growth for the company's blockbuster Revlimid, even in the face of competition from Millennium's Velcade.

And you know what we thought to ourselves this year when a once-again upbeat Barer suggested that "in many ways we are at the beginning of Revlimid's commercialization," then threw up a slide crammed with ongoing or planned studies of the blockbuster and guided that sales at the firm would jump to $1.8 billion from $1.4 billion? We thought well why the hell not? Celgene keeps delivering. Barer didn't even have to mention the company's acquisition of Pharmion to get investors excited; that deal, and Pharmion's products, barely registered during his spiel.

That said, skepticism has to be the default view when countered with the overwhelming optimism that characterizes the hype Roger wrote about last week. And in today's R&D and regulatory climate (the results of which we've well documented) it's relatively easy to be a skeptic. Technologies may be fascinating and drugs may be promising (we heard about our share of fascinating technologies and promising drugs last week, for sure), but in the end most technologies don't end up churning out dozens of drug candidates for one reason or another and most drug candidates themselves fail. That's simply just the way it is.

But then there are the Celgenes of the world. And maybe the Vertexes? We sat down with Vertex Pharmaceuticals CEO Joshua Boger, PhD, at the JP Morgan conference to talk about telaprevir (née VX-950), its leading HCV protease inhibitor. (We won't go into the specifics of the massive HCV opportunity here, but note we've covered the area pretty extensively in the past in this IN VIVO feature and this shorter piece on Vertex's landmark ex-US deal for telaprevir with J&J's Tibotec, among other pieces.)

Vertex's stock has been pummelled by Wall Street in recent months following the interim analyses of its first two large Phase IIb trials of telaprevir last November. Those trials have so far established telaprevir, which is further along than any other experimental direct antiviral in HCV, as a potential breakthrough therapy in HCV. The company's stock fell because even though the interim look suggested the drug would find a place in first line HCV therapy (SVR rate at 24 weeks was 61% in the first trial, 65% in the second), given the confidence Vertex displayed in the molecule's prospects--and the sheer size of that J&J deal--one could be forgiven for thinking telaprevir was going to do better. And then make you a sandwich and wash your car.

And then there are the concerns about the drug's thrice-a-day administration that we have heard from other observers, who suggest that even if Vertex is first to market by a couple years, HCV patients might wait for something more convenient. They've waited for years already, in some cases, why not another year or two?

Boger seemed weary of explaining the fallacy of this argument but gave it a go for us anyway. "There are a lot of amateur market opinions," he said, and people are confusing HCV treatment with HIV treatment: the latter is a chronic, for-the-rest-of-your-life regimen, but the former could be shortened to less than six months with the addition of telaprevir to existing interferon and ribavirin standard of care (currently a 48-week therapy). Vertex's critics "couldn't be more wrong," he said. "This isn't a chronic condition where you take the drugs forever--this is a cure."

Vertex hasn't seen a compliance issue in its clinical trials, Boger maintained, and even if it would be nice to have a protease inhibitor with twice-a-day or once-a-day administration, he said, it wouldn't be as a means to boost compliance. Rather it would be easier to combine a twice-a-day drug with other direct antivirals that could follow telaprevir to the market, such as an HCV polymerase inhibitor.

And as for patients waiting for a better drug, Boger bristled and chalked that up to wishful thinking from competitors. HCV is a case where a drug that makes the first leap in patient benefit will define future drugs' clinical and regulatory pathways, he said, plus take the lion's share of pent-up market demand that will never exist again. "I've never seen a field where the potential of being first to market is this big," Boger said.

Is that more hype? And has Vertex's own hype come back to bite it recently? Maybe, but that doesn't mean they won't succeed with telaprevir. We wouldn't bet against them.