Live From ASCO: Time To Cool Down?

It's day three of ASCO and the meeting is at a fever pitch, as the National Cancer Institute's Antonio Tito Fojo wryly observed during a panel on designing randomized controlled trials to achieve meaningful benefits. Not that it's an unusual state for the world's largest meeting on the largest field of drug development.

There is the typical fervor surrounding promising early data, a few major advances to report (for instance, the melanoma data from Roche and BMS covered by among others, the NYT, WSJ, Reuters, and, of course, "The Pink Sheet" Daily), and the meeting halls are packed with clinicians, investors, and journos. (Saturday's clinical science symposium on ovarian cancer had such throngs waiting for it to start that McCormick Place called in bouncers, from "Armageddon Security," nonetheless. And if you weren't in the initial crush, you probably got diverted to an overflow room. Or the second overflow room.)

Still, compared to other years, analysts aren't finding much to write home about. And, increasingly, the importance of the data being presented before packed meeting halls is being questioned. "We need to get away from things that add cost but not value," UnitedHealthcare's Lee Newcomer noted during a panel on health care reform.

Defining what value means, however, is a trickier subject.

Most clinical trials don't mean much for clinical practice, Ralph Meyer of Queen's University asserted at the plenary on randomized clinical trials. With all the controls and standardization, they represent the ideal – not real world practice. And registration studies are intended for that purpose.

In a talk called "Raising the Bar for Efficacy In Cancer Therapeutics," Alberto Sobrero, Head of the Medical Oncology Unit at Italy's Ospedale San Martino, took on whether or not those trials produce clinically meaningful data, or just go after statistical significance. Looking at the 15 pivotal Phase III trials for 9 biologics covering 8 different cancers approved over a 5-year period, he found that the hazard ratios (a statistical metric for calculating risk reduction) for progression-free survival and overall survival looked good at (respectively) 0.57 and 0.73. But when you considered the absolute gains of 2.7 and 2 months, the data were far less clear. Or as Sobrero put it, "Hmmm."

It's a complicated situation, he acknowledged. In an aggressive cancer like metastatic melanoma, a 0.8 HR would mean a 1.5 month gain – not really meaningful. But in breast cancer, that same 0.8 HR becomes worthwhile with a 6 month gain. So, both hazard ratios and absolute gain need to be considered --as well as the context of the specific tumor type-- when making a value judgement about a clinical benefit.

NCI's Fojo also questioned the significance of statistical significance. Paraphrasing an earlier researcher, he noted that if you torture data long enough, you can get it to confess to significance. Fojo found much of the clinical benefit shown in studies has marginal value. By definition, clinical benefit rate (CBR) is what you get when you add stable disease to partial and complete responses. Or, as Fojo put it, it's what you report when you have a drug that underperforms. It's "the corruption of an endpoint," he said.

Shrinking a tumor is good, he agreed, but unless it correlates with survival, stable disease does not mean anything. In prostate cancer, for instance, where some novel drugs have been reporting CBR, objective response rate (PR+CR) correlates highly with overall survival. But when you include patients that met stable disease criteria, the average benefit drops by more than half. "Because you're adding a parameter that has no value at all," Fojo said.

Of course, part of the concern is that these absolute gains aren't coming without costs. It's one thing for a drug to provide 2 months of life, quite another if it costs thousands of dollars and comes with toxicities. And given the proliferation of oncology drugs, there's more room for payers to actively manage the disease, benchmarking more expensive newer agents against cheaper, older ones, and using the ultimate metric --survival -- as the measuring stick. That's playing out at ASCO too, as Newcomer's comments indicate.

Unlike in the past, the skepticism of therapeutic value outlined in posters and abstracts isn't limited to the back corridors or the marginal sessions on clinical trial design and practice issues -- it's coming from the podium at scientific sessions. For instance, a review of recent Phase III trials in upper GI malignancies was organized around the theme of whether the findings were clinically meaningful or just statistically significant, and included a talk about the health care economics of treatment. (Hint: It wasn't pretty.)

It's all part of a larger trend toward more concentration on value, cost and payer issues as IN VIVO covered recently in the May 2011 issue.

It's great to see researchers and industry execs coming out of the convention with excitement about promising new pathways and the potential for combinations. But they should also start thinking harder about raising the bar. Otherwise climate change (of a reimbursement and/or regulatory nature) could spark a cool down in one of the hottest therapeutic areas of the industry.

Image courtesy of flickrer Joe Seggiola through a creative commons license.

Lilly/Imclone: Hedging Payor Risk

Imclone’s Erbitux is a quintessential example of a high priced cancer medication of the type routinely cited by advocates for some form of national comparative effectiveness project in the US.

So it may seem odd to argue that Lilly’s decision to step in and buy Imclone away from Bristol reduces the company’s exposure to a potentially tougher pricing climate in the US.

But in one important sense it does: It gives Lilly about $400 million in annual revenues that are sheltered from any impact of the upcoming debate over price negotiation under the Medicare Part D program in the US.

Like most Big Pharma companies, Lilly’s product line is heavily tilted towards the types of products paid for under the new Part D program: chronic, oral medications like Zyprexa and Cymbalta. And, like most Big Pharma’s with mature product lines, that means Lilly has benefited from a de facto price increase, thanks to the transfer of a lot of use of those medicines out of the price-controlled Medicaid market and into the managed care plan-administered Part D program.

And, like most Big Pharma companies, Lilly is concerned that the US government is about to do something about that.

Here is what Lilly SVP-corporate policy and strategy had to say during FDC-Windhover’s Pharmaceutical Strategic Alliances Conference about the potential impact of a price negotiation model in the US.:

“Eliminating the non-interference clause in the Medicare program could have a significant impact….When the government starts to enter into direct negotiation and they pay for the majority of the drug in the county, inevitably the political pressure and budget pressure will end up damaging the ability of the industry to continue to innovate. So I do have a concern, and I’m not sure that the whole of the biotech industry is perceiving that danger. But we, the big large companies that have experience in working in those countries where indeed there are price controls, I think we have a better perception of what that will mean. And in my opinion it might hurt the willingness of investors to continue to put money into research.”

Erbitux, like most infused biologics, is paid for under the Medicare Part B program. Now there are plenty of opportunities for the government to meddle then—but it isn’t on top of the agenda at the moment.

Interestingly, a lot of Big Pharma companies are modeling the impact of government price negotiation under Part D as about a 3%-4% hit in the US. Lilly’s US business is about $10 billion. How nice to have about $400 million in new revenue coming from a product that isn’t touched by price negotiation…

For some background reading on how price negotiation may translate into real price pressure, start here. For more on how companies approach the two different payor models in the US, start here.

Dollens: Reimbursement Uncertainty May Slow Innovation

Ron Dollens knows a little bit about innovation, and he’s worried.

In a keynote address that opened our In3 East Conference, the former president and CEO of Guidant Corp. warned that the instability of the current reimbursement system is threatening innovation in the life sciences sector.

“Health care policy is the strategic issue,” warns Dollens before a packed room at the Westin hotel in Boston. “If health care policy is not right, this sector will not be able to attract the financing capital required for early-stage companies, and those are the companies where breakthrough things happen. And if the financial capital is not available then the intellectual and human capital won’t follow, and it’s the human capital that is the source of all the creativity.”

Dollens says the Centers for Medicare and Medicaid Services (CMS) needs to work more closely and cooperatively with industry as well as with the Food and Drug Administration. A green light from the FDA means considerably less without a reimbursement code with which a company—and ultimately its investors—get paid.

In his address, Dollens says “risk capital” aka venture capitalists pay for 20% of all innovation in life sciences and medical devices. The figure goes up if you factor in private equity firms, he says. If private equity and venture capital investors don’t see the potential for “above average return” on their investment, they’ll walk.

“Do VCs have to invest in life sciences? Are there any barriers to where the money flows? The answer is obvious. They are not,” says Dollens. “They’re not tied to health care. They are not tied to life sciences.”

Dollen holds Guidant up as a prime example of the power of innovation. The company was built around its ability to discover and develop new products. At any point in time, two-thirds of Guidant’s sales came from products that were less than 12 months old, and Dollens says that ability to innovate was an asset its suitors sought to acquire (along with its existing businesses, of course).

The Eli Lilly spin-off grew from a $1 billion company in 1994 to a $27 billion company in 2006 when Boston Scientific outbid Johnson & Johnson to buy the company. (For BSC CEO James Tobin's take on the integration of Guidant, go here.)

In a question and answer session with colleague David Cassak and the audience following the address, Dollens questioned whether Guidant’s rapid rise could be recreated today. “I think you could,” he says. “But I don’t think you’ll have the market capitalization because of the health care policy concerns.”

Patients and physicians have an appetite for new technologies, but Dollens wonders where there's an equal desire to pay for them. He suggests the primary purpose of Health Care Technology Assessments—the extensive study of a device's technology and impacts on health care—is to keep a lid on costs.

More ominously, Dollens recalled a meeting Guidant officials had with CMS “a couple of secretaries ago” seeking reimbursement for a new device that already had received FDA approval. The Guidant officials presented the data showing that the company's device improved mortality rates in a certain patient profile.

He said the secretary’s first question was, “`Well how many patients are we talking about?’”

“He can ask that question for one of two reasons: one because he could be concerned about how many lives we were potentially going to save…”

“Or,” Cassak offered, implying CMS was concerned more about how much the new device would cost.

“And I think it’s the 'or’,” Dollens concluded.

Can a Sleep Drug Awaken Demand from European Consumers?

Superficially, it’s paradoxical.

Sepracor wouldn’t sell US marketing rights to its sleep drug Lunesta, even though it could probably have gotten a great deal. And then last week it goes and sells European rights to GSK for just $20 million upfront and another $135 million in milestones?

OK, that’s by no means a true yawner. But it’s hardly a wake-up call in this age of colossal licensing fees and milestones. VX950, the barely post-proof-of-concept hepatitis C candidate from Vertex, fetched $165 million upfront, and $380 million in pre-commercial milestones for merely European rights. Why didn’t Lunesta, with US sales approaching $600 million, do at least the equivalent?

Because the comparison isn’t at all fair. Hep C is a life-threatening disease currently treated with a couple of inadequate, problematic therapies. Insomnia is probably just as big a market -- but is less important to doctors than it is to patients (for some background on the insomnia markets and related dealmaking, see our coverage here and here).

And that’s precisely the challenge. In the US, Sepracor sets its own price and then can spend hundreds of millions of dollars getting its message out to consumers. In Europe and Japan it can do neither.

Which means that Lunesta will have a lot more commercial risk outside the US than something like VX950. GSK’s $20 million bet on the product isn’t exactly trivial, but it isn’t a huge vote of confidence that European insomniacs and their doctors will clamor for Lunivia (European for Lunesta) in the face of a host of generics like racemic zopiclone, Ambien, and a number of benzodiazepines.

And it’s why so much of the deal’s $135 million in milestones apparently depends not merely on getting a centralized approval, but on getting reasonable levels of pricing from various European countries. Sepracor could still make plenty of money: we estimate that it’s getting what might, on a blended basis, work out to a 15% royalty (the rate increases with sales) plus another 10-15% profit on selling the material to GSK. But Sepracor will only make money if the drug is successful.

Thus the $20 million upfront fee represents a cautious gamble that Lunesta’s data package will not only pass muster with the EMEA, but will convince the national reimbursement groups that they should pay a premium for a drug that can be used chronically and which comes with a host of data showing its beneficial effects on insomnia-associated co-morbidities, like depression.

Same thing in Japan, where a pricing milestone on Lunesta is also a key part of the value in the deal Sepracor signed in July with Eisai. The upfront in that deal was probably considerably smaller than what GSK paid: not only is the market about half the size of Europe, the product has to jump through more clinical hoops before it can be approved. In any event, the Eisai terms were undisclosed, which means they weren’t material.

Financially material that is. Sepracor is certainly hoping they’ll be seen as strategically material. The company has recently been a punching bag for investors, taking particularly heavy punishment when new CEO Adrian Adams lowered revenue expectations for 2007 during the company’s July earnings call.

Thus the biggest value to the deals may yet be validation for Sepracor’s ability to take a product developed in the US and convince leading CNS companies they can rely on the company’s US clinical and marketplace work to win approval for, and successfully commercialize, a consumer-driven product in markets where consumers don’t rule.

EPO’s Future Back in FDA’s Hands

FDA Commissioner von Eschenbach: Whose Side is He On?

That sigh of relief you heard on Tuesday came from Amgen and Johnson & Johnson, when an FDA advisory committee declined to recommend significant changes in the labeling for EPO products in renal failure patients. As a commenter put it in response to our preview of the meeting, “history didn’t repeat itself.”

Probably just as important for the companies was the tone of the meeting. It was a tough meeting—any advisory committee focusing on safety concerns with your biggest products is going to be tough—but in general FDA officials avoided making inflammatory comments or otherwise suggesting that they are going to somehow make life even tougher for the anemia therapy sponsors.

After the meeting, a bunch of Wall Street analysts did something they haven’t done in a long time: they raised their forecasts for 2008 revenues from Aranesp, Epogen and Procrit, and Amgen’s stock responded accordingly.

So is the worst over?

Well, that depends. After the meeting, FDA officials said they plan to finalize the new labeling for the EPO therapies in a matter of weeks. The new labeling will address use of the drugs both in the renal failure/dialysis setting and in oncology.

And right now at least, the oncology setting is where the action is. Amgen, J&J and the oncology profession are waging an all fronts campaign to reverse the restrictive coverage policy put in place by the Centers for Medicare & Medicaid Services in that setting.

A key point of contention is whether CMS’ policy contradicts the FDA-approved labeling for the drugs. (The RPM Report has just published its latest coverage of that issue online. Not a subscriber? You can read the story for free by registering for a 10-day trial here.)

The argument that CMS is restricting access to FDA-approved uses of EPO clearly resonates politically. ASCO’s point about the conflict between CMS’ policy and the EPO label was cited in a “sense of the Senate” resolution urging reconsideration of the coverage decision.

So when FDA issues final labeling plenty of people will be paying close attention. The sponsors hope that FDA will reinforce their view that CMS’ treatment model is ridiculous—in particular, by repudiating the ceiling that CMS has set on hemoglobin levels for chemo patients. If that is how the final labeling reads, the pressure on CMS to reconsider its policy is sure to intensify.
Of course, there is another possibility: FDA could back up CMS instead.

FDA is not likely to insist on labeling that requires treatment exactly along the lines proposed by CMS, but FDA could try to tweak the labeling so that it more clearly states that treatment should maintain hemoglobin levels at the lowest level to prevent transfusions.

Or the agency could support CMS less formally, simply by stating publicly that the coverage policy is consistent with FDA approved labeling. FDA Commissioner Andrew von Eschenbach is an oncologist by training, the former head of the National Cancer Institute, and a prostate cancer survivor. With the political pressure on CMS ratcheting up, the Medicare agency is surely rooting for some show support from the commissioner of FDA.

But will they get it?

So far, there has been nothing. An FDA spokesperson says she is unaware of any plans for the agency or the commissioner to weigh in on the coverage policy, saying that falls outside the agency’s “central mandate to review drugs for safety and efficacy.”

The head of FDA’s Office of Oncology, Richard Pazdur, participated in the September 11 advisory committee review of EPO use in renal failure, but he did not use that forum to make any comments about the CMS coverage policy.

But stay tuned. The September 11 advisory committee review is definitely not the last word on EPO.

Has Sanofi-Aventis Lost its Friends in Government?

Sanofi-Aventis may have fallen out of bed with the French government.

When Sanofi-Synthelabo gobbled up its larger peer Aventis in 2004 after a prolonged struggle, it was widely believed that Sanofi's president Jean-Francois Dehecq had received a little help from his friends in high places (read: the French president Jacques Chirac). The government wanted a large, national pharmaceutical flagship just as much as Dehecq wanted to crown his M&A record with his biggest acquisition to date.

They don't seem that friendly any more, though.

Far from embracing its national champion's new fat-buster drug with open arms, the French reimbursement authorities today gave it a distinctly lukewarm approval.

Acomplia (rimonabant, approved in the EU in June 2006 but reimbursed so far only in a handful of countries, including Sweden and Denmark) is relegated to the lowest tier reimbursement--35%--which corresponds to treatments of 'minor therapeutic value'. What's more, only obese patients with diabetes will be eligible for the 35% reimbursement (and even then, docs have to fill out the prescription on a special form--an "ordonnance d'exception"). The overweight lot with risk factors, though included on the label, will have to stump up the full €70 per month if they want the drug.

Yet it's not as if France can any longer claim to be a nation of slimmies, even though in the past their red-wine and foie-gras lifestyle was known as the "French paradox" because it didn't make them fat. These days, 1.2 million French people eat in McDonalds each day, and childhood obesity is growing at 17% annually. At this rate, reports the Roubaix journal in Northern France, the French could be as fat as Americans by 2020.

Still, despite initiatives such as National Weighing Day for French children on January 7, and significant political involvement (the Socialists in particular are jumping on the healthy eating bandwagon to try to muster support ahead of May's elections), the French government doesn't see Acomplia as a big part of the answer to bulging waistlines. Nor, incidentally, do the Germans: they refused point blank to reimburse Acomplia at all, dismissing it as a life-style drug.

Is there a trend here?

Either way, the pressure's on the Acomplia reps to get friendly with docs and persuade them to prescribe the drug anyway--but only for, er, patients with that particular combination of cardio-metabolic risk factors (that docs all know about and have time to measure).

Sanofi executives have always claimed that "this isn't an obesity drug". The authorities appear to agree.