Pharma’s Cutting Edge

Well, it happened a bit later than I had originally predicted (I predicted in early 2005 that approval would occur in late 2005), but probably sooner than it would have happened if Sandoz hadn’t sued FDA. I’m speaking, of course, of the U.S. marketing approval of Sandoz’ Omnitrope (recombinant GH). Although FDA has downplayed the approval as not precedent-setting, it is, in fact, controversial and important to the industry, because Pfizer had fought to block it using the argument that Sandoz should not be allowed to reference public data on Genotropin in its NDA. This argument has also been used as a general reason why FDA should not approve “generic biologics” without additional statutory authority. It seems, once again, that FDA has rejected this line of argument, although they are standing firm on the need for additonal statutory authority before labeling a biologic as generically equivalent to a previously approved biologic. Omnitrope did not require such an equivalence rating, because it was approved under 505(b)(2) of FDCA, rather than 505(j). Other biologics (proteins/peptides) that could potentially receive approval via 505(b)(2) pathway include all recombinant insulins, Thyrogen (thyrotropin), Symlin (pramlintide), Somavert (pegvisomant), Natrecor (nesiritide), Iplex and Increlex (IGF-1), Follistim (follitropin beta), GnRH agonists/anatagonists, Calcitonins, etc. Note FDA’s arguments for approving a protein/peptide via 505(b)(2) found in the story’s link. Note also that the Orange book patent covering the 505(b) applicant’s product must have expired before a 505(b)(2) application will be reviewed by FDA.

I had kind of an “interesting” morning. I use that word because I don’t have a “nice day” anymore. Frankly, I don’t bother with them. I feel as if I’ve outgrown the nice day. Why should I be hogging all the really nice ones? –George Carlin

Let’s hope Pfizer was in the mood for a really crappy day on or about April 13th, because that’s what NICE delivered to them in the form of a technology evaluation report for the recently approved inhaled insulin, Exubera. The nice thing for readers of this blog is that this month I’ll review the NICE decision to see whether it was at least fair, if not nice, and what other companies might take away from it.

Readers, please note that I will put a PDF copy of this post on the PGS library, which will serve as a repository for selected blog posts of broad interest. Eventually, I’ll set up a mailing list, so that readers can receive notices of updates to the library.

One of the points that should strike any reader of the assessment report at the very outset is that Pfizer spends more than any pharma on R&D, and they didn’t slouch on the development of Exubera. Indeed, the development program was more than adequate for regulatory approval and was clearly designed with pricing and reimbursement in mind. Yet, Pfizer failed to make a positive impression with the hard-to-please NICE reviewers: Corri Black, Ewen Cummins, Pam Royle, Sam Philip and Norman Waugh. Skeptics will argue that NICE’s decision was pre-ordained and that they fudged the numbers in their evaluation to make the data fit their preferred outcome. I usually count myself among the skpetics, but I will instead argue that one of NICE’s mandates is to place the burden of proof for incremental cost effectiveness (ICE) squarely on the shoulders of the sponsor; they have no mandate to give sponsors the benefit of the doubt in their independent assessment.

To save time and space, I’m not going to summarize the entire NICE report. Instead, I’ll point you to the brief overview document and ask you to read that prior to continuing. I’m also not going to dwell on details of the economic arguments made by either side. Rather, I’m going to focus on reasons NICE used to accept or reject the assumptions and data from the sponsor for economic modeling, because these assumptions and data drive the modeling results and thus the final decision. Sponsors have control over the design, conduct, analysis and reporting of economic-supporting studies. They do not have control over the assumptions NICE or other independent agents use for their ICE models, but they do have the ability to adequately justify and support the choice of their own assumptions. So, did Pfizer spend their money wisely? Where could they have done more or better during study design and execution? What might they have done differently during reporting? Most importantly, is it feasible to demonstrate the ICE of new drugs prior to first launch, or should sponsors instead focus on approval and enough ICE evidence to get high co-pay (e.g. Tier 3) coverage in the U.S. and limited to no coverage in Europe?

NICE Conclusions and Arguments
Background Information from NICE of Special Importance to NICE Opinion

1. As Type 2 diabetes [N.B. Type 2 diabetes, because of its much higher prevalence than Type 1, accounts for roughly 80% of all insulin users in the U.S. and U.K. and an even higher proportion of insulin doses administered] severity (as reflected by HbA1c) changes, the relative significance of fasting and pre-prandial versus post-prandial glucose levels likewise changes. At low HbA1c levels, post-prandial glucose accounts for up to 70% of HbA1c elevation; at HbA1c levels above 8.4, fasting and pre-prandial glucose account for the majority of HbA1c elevation. This is important for Exubera, because it is a short-acting insulin that primarily affects post-prandial glucose. 
2. Type 2 diabetes progresses, and most patients will eventually require exogenous insulin. In the UKPDS (the largest prospective, controlled study of Type 2 diabetes), only a small proportion of patients who required insulin refused it.
3. Exubera has a short-acting profile and would not, therefore, remove the need for a long-acting insulin injection for nearly all patients who might require insulin (assuming a stepwise approach to insulin therapy, where insulin is a therapy of last-resort).
4. Use of Exubera would not obviate the need for self-monitoring of blood glucose.
5. Given above, NICE limited its review to just three clinical scenarios where the use of Exubera would be considered “reasonable”: as an alternative to short-acting injected insulin in Type 1 diabetes; as an alternative to injected insulin regimens in Type 2 patients failing maximal oral therapy; as an alternative to intensifying the insulin regimen in Type 2 patients failing once-daily long-acting insulin.

Safety and Effectiveness of Inhaled Insulin

1. Inhaled insulin is clinically effective, and is as good as short-acting soluble (i.e. regular) insulin in controlling blood glucose. 
2. The frequency of hypoglycaemia is similar to regular insulin.
3. Long-term studies are needed to rule out uncommon but serious adverse effects of inhaled insulin on the lung.
4. None of the published trials have compared Exubera with short-acting injected analogs.
5. Clinical trial subjects used combinations of short-acting, and either long or intermediate-acting insulin, and both were changed, making it more difficult to assess the change from soluble (i.e. injected) to inhaled. 

Patient Preference

1. Most patients preferred inhaled to injected short-acting, but bias due to trial design could have impacted this finding
2. The sponsor provided no evidence to support the assumption that a switch to insulin would be more acceptable if inhaled insulin was an option, yet used this assumption in their models. 

Cost-Effectiveness

1. Sponsor’s model is high-quality, but their key assumptions (QOL improvement size and acceptability of switch to insulin—see #2 under “Patient Preference) are not supported by the evidence; the ICE results depend more on the assumptions than the model. 
2. The cost of inhaled insulin will be much higher than injected.
3. Inhaled insulin is unlikely to be cost-effective. Read the rest of this entry »

Folks…I’ll say this until I’m blue in the face, because it’s really important. Don’t let ignorance of FDA’s approval decision-making processes and recent history be an excuse for an NME approval delay. Investor’s–who’ve crushed Neurocrine’s stock by well over 50% as I write this–will not give you any slack, as well they should not. Ignorance of facts is never an excuse for failure to achieve the best possible regulatory outcome. That’s why I’ve authored FDA’s Approvable and Related NDA/BLA Actions. It’s a comprehensive look at the hows and whys of relatively recent FDA approvable decisions that shows you where FDA dings for program deficiencies and how to manage a program to maximize chances of a first-cycle approval. Learn from past failures, so you’re not destined to repeat them. Enough proselytizing for now. If you’re an investor long in NBIX don’t panic yet. Consider selling at least a portion of your long position to lock in a capital loss and re-buying the stock after the situation becomes clearer (and after at least 30 days have elapsed to avoid a wash sale).

A couple of points to be made about this development. First, you’ll recall my recent PCE post discussing Anormed and it’s hedge fund troubles. In that post, I predicted that hedge funds will increasingly actively manage their pharma/biotech investments, by taking board seats and using influence with other investors to force change on management. In this story, the large CRO, Quintiles, has received significant new fund commitments from a single hedge fund, TPG-Axon, suggesting that CROs too will be actively managed by hedge (and also private-equity) funds.

It’s a shift in the financing landscape that could spell trouble for established firms looking to seed new-growth businesses (either through internal NBU investments, spin-offs, licensing or acquisitions). Funds like these typically put pressure on management to show stock-price returns quickly; they don’t have a record of being patient and waiting the multiple years it might take for new-growth businesses to establish themselves. Interestingly, I don’t see Quintilies having this potential problem with TPG-Axon, since Quintiles is using the money to fund a spin-off called NovaQuest. It’s a very targeted investment towards a new-growth business. So TPG-Axon should know what to expect.

The other point to make relates to NovaQuest itself. Here, we see evolution in the CRO industry away from modularity (i.e. providing development outsourcing as a stand-alone business) towards re-integration. In other words, CROs like Quintiles (via NovaQuest) are becoming more like pharmaceutical firms and less like outsourcing vendors. Re-integration is what happens when outsourced functions become commoditized, as the drug development function has become. Major CROs need a new source of growth business, and they realize that integration of functional expertise and processes, like in major pharma, creates efficiencies and competitive barriers that can lead to new growth. Eventually, of course, already-integrated pharma clients will take their business away from Quintiles, which they will increasingly view as a direct competitor, rather than an outsourcing vendor. Quintiles will be fine with this, so long as they can find companies willing to partner with NovaQuest. If I were an investor in Quintiles, though, I’d worry that they will have a tough time competing with big pharma for these deals. Pharma’s been at it a lot longer, has just as much at stake and has deeper pockets.

With PDRP scheduled to go into effect July 1st, Pharmaceutical Executive has published the attached overview of the program. For anyone not overly familiar with PDRP (I was not until very recently), I’d recommend reading the article. Undoubtedly, anyone on the front line of sales knows all too well about PDRP, or at least they should. It will have a dramatic effect on the way most drugs are marketed directly to physicians, essentially eliminating a sales manager’s ability to target physicians based on their individual prescribing patterns (at least for those who elect to participate, which I suspect will be most eventually). It’s a bold experiment in the ability of pharma to police its sales activities. Knowing what’s at stake and the tremendous pressure for sales personnel to make their numbers, I would be surprised if we don’t learn of at least one pharma scandal involving PDRP within a year after its launch.