Is the era of the blockbuster drug gone?

Companies are having a tough time convincing doctors, patients and insurers to give new treatments a try.

By MSN Money Partner Dec 16, 2013 3:41PM

Image: Prescription medicine expenses © Don Farrall, Photodisc, Getty ImagesBy Jonathan D. Rockoff and Ron Winslow, The Wall Street Journal


After years of anemic productivity, pharmaceutical companies are launching new drugs at the fastest pace since the 1990s, including 39 last year alone.


But there is a problem: selling the new drugs.


New medicines, including blood thinners from Johnson & Johnson (JNJ), Pfizer (PFE) and Bristol-Myers Squibb (BMY) and autoimmune-disorder drugs from Pfizer and GlaxoSmithKline (GLAXF), are encountering a skeptical and cost-conscious marketplace.


Drug makers are finding it hard to convince doctors, patients and insurers that the new advances are worth their typically premium prices. Skepticism is particularly steep for drugs aimed at conditions that already have effective treatments.


Of 271 drugs launched since 2006, only 13 have notched yearly U.S. sales of more than $1 billion, down from 33 of 257 drugs introduced during the previous five years, according to ZS Associates. The sales and marketing management consultant to drug makers analyzed about 500 drug launches.


"Blockbusters are not going to be that common anymore," said Ganesh Vedarajan, who leads ZS's oncology and specialty therapeutics practice.


Drugs launched between 2006 and 2010 averaged $143 million in annual U.S. sales three years after going on the market, down from $208 million in the previous five-year period. 


As a result, it likely will be more difficult for drug makers than expected to overcome the big hit they are suffering from generic competition for previous blockbusters. Drugs with nearly $100 billion in U.S. sales are expected to lose patent protection between 2011 and 2015.


Pfizer had hoped that two pills approved late last year -- Eliquis to prevent strokes and Xeljanz to treat rheumatoid arthritis -- would help the drug maker overcome $12 billion in yearly revenue lost from generic competition to its top cholesterol drug, Lipitor. So far, though, both Eliquis and Xeljanz have lagged analysts' expectations.


When Xeljanz was approved in November 2012, analysts predicted sales of $350 million this year, according to Thomson Reuters Cortellis for Competitive Intelligence. But sales totaled just $68 million in the first nine months of 2013.


Pfizer executives say the arthritis drug's launch is in line with the company's expectations, and efforts to educate doctors are starting to pay off with rising prescriptions. "There is a lot of pressure to use generics first. That does slow up the penetration of new classes" of medicines, Pfizer Chief Executive Ian Read said in an interview.


When multiple treatments are available, insurers can be aggressive in trying to steer prescriptions to less-expensive options, especially generics. Earlier this year, 34% of payers surveyed by Zitter Health Insights said their default for a new product is to reject coverage or impose tough restrictions like prior authorization.


Pfizer's Xeljanz competes with established treatments such as Humira, Enbrel and Remicade, some of the biggest-selling drugs in the world. Analysts thought Xeljanz would be an attractive option because it is a pill, rather than an injection like its rivals.


But insurers say they took steps to keep doctors prescribing older treatments because Xeljanz's pill form isn't enough of a benefit to overcome the proven track record of existing drugs.


Aetna Inc. (AET) requires doctors to document that a patient has moderate to severe rheumatoid arthritis and didn't respond well to initial treatment with a generic called methotrexate and subsequent treatment by two preferred agents, such as Humira, Enbrel or Remicade, known as TNF inhibitors.


Xeljanz works well, but isn't an "enormous breakthrough," said Edmund Pezalla, Aetna's national medical director for pharmacy policy and strategy. Many doctors also prefer to stick with tried-and-true treatments for a few years after a drug launches.


Alan Matsumoto, a rheumatologist in Wheaton, Md., said he has concerns about side effects such as liver-function abnormalities and elevated cholesterol levels seen in some patients during Xeljanz's clinical testing.


The risk of those side effects is known and mentioned on Xeljanz's label. Pfizer says many doctors are reacting favorably to Xeljianz's clinical profile, and the company is continuing to educate doctors about the new drug.


Some drugs have taken off swiftly, such as Biogen Idec Inc.'s multiple-sclerosis pill Tecfidera and Regeneron Pharmaceuticals Inc.'s Eylea treatment for vision loss. A hepatitis C pill from Gilead Sciences Inc., approved earlier this month, is expected to become a blockbuster quickly. But other launches have been hindered by cost concerns and stiff competition from existing treatments.


A new class of stroke-preventing blood thinners is facing such challenges. For decades, doctors relied on warfarin, sometimes sold as Coumadin, in patients with a heart-rhythm disorder called atrial fibrillation. But patients required frequent monitoring to make sure the dose prevented blood clots while avoiding bleeding episodes.


Boehringer Ingelheim GmbH, Johnson & Johnson, Pfizer and other companies raced to develop replacements and enter what is expected to be a giant market. Three drugs have been approved since 2010: Eliquis from Pfizer and Bristol-Myers Squibb, Xarelto from J&J and Bayer AG, and Pradaxa from Boehringer Ingelheim. Daiichi Sankyo Co. (DSKYF) is developing a fourth drug called Edoxaban.


"Studies demonstrate in general that these are at least or probably more effective than Coumadin with a lower bleeding risk," said Neal Shadoff, a cardiologist at Presbyterian Heart Group, Albuquerque, N.M. "How could you go wrong with that?"


Yet among 83,000 atrial fibrillation patients taking anticoagulants in a database maintained by the American College of Cardiology, just 27% were on one of the new drugs in this year's third quarter.


One concern slowing adoption of the new treatments is lack of an effective antidote to quickly reverse the new therapies if a patient develops major bleeding.


Makers of the new drugs say they are seeing more new patients start treatments using the new drugs than warfarin. The companies also say that bleeding antidotes are being developed.


Still, Anthony Pearson, a cardiologist in St. Louis and medical director of St. Luke's Hospital's anticoagulation clinic, said about 75% of his atrial fibrillation patients who take warfarin choose to stay on it.


Warfarin costs pennies a day, compared with $7 or $8 for the new drugs. Insurance copayments often are higher for new drugs. When patients hear about the price gap, Dr. Pearson said, "They say, 'I'm doing fine on the warfarin.'"


More from The Wall Street Journal

30Comments
Dec 16, 2013 5:38PM
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To me it seems that we have three years of TV commrcials telling us to "talk to our doctor" as this drug make life all better. Followed by five years of -Attorney ads saying If you took "that drug" you are due compensation due to drug .....

In a capitalistic society I need more the TV Tim telling the drug is O.K. before I use it. Not that corporations would mislead us for profit or anything.

Dec 16, 2013 5:52PM
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After nearly 15 years of patent protection, the retail price for a 30 day supply (30 capsules) of the 40 mg GERD treatment medication, Nexium, is still $410.00. Even with the patent due to expire in 2014, the parent company has stated it intends to keep the drug out of the hands of generic manufactures thru legal maneuvering for as long as possible. Many drug companies also PAY generic manufactures not to produce the generic equivlant of their drug. The intent of these companies is to create a demand then turn the sick upside down and shake every penny out of their pockets. Many in the medical profession are wary and rightfully so, of  the real need/benefit versus the outrageous cost of many new drugs that hit the market each year.
Dec 16, 2013 6:31PM
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"Talk to your doctor".
If only you could actually do that.
The best most people can do is talk to a barely qualified physician's assistant,  and that's with a appointment,  in person,  and you've got under 2 minutes to do it.
 

Dec 16, 2013 5:56PM
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In a era leading to more managed care, it makes sense that Doctors don't jump on the bandwagon to prescribe the newest drugs that merely increase the overall costs without substantial benefits to their patients.  Blowback from unknown side effects from drugs rushed to market also makes those who have alternative medications leary of early claims of efficacy.  Not everyone wants to be a guinea pig to drug companies.
Dec 16, 2013 5:45PM
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Doctors are afraid of lawsuits for doing anything out of the norm.

Tort Reform Now!
Dec 16, 2013 6:35PM
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There are also times when the doctor really does want someone on a medication... but an insurance company - yes, I'm looking at you Aetna - says that the doctor must first supply three items of peer review before they will consider the doctor's appeal.

For some reason just saying "the patient responds well to..." just isn't enough.

Dec 16, 2013 8:24PM
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My, what bitching "its all about the money". Even the complainers are "all about the money" also.
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All of it is garbage, live, then die, don't let the quacks and pharmies take all your money first.

Dec 16, 2013 9:01PM
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Why not learn to eat health; we could put 90% of the drug companies out of business by making that one change.   You would be surprised how fast your body will heal itself when you start eating fresh fruits and vegetable instead of all that processed garbage, sugars, and animal protein.

Here is an excellent video to get you started, you can even watch the whole movie on-line with a Google search:   "healing cancer from the inside out".  Or how many people know that type 2 diabetes can be completely managed with a proper diet (in something like 5 days), see "Simply Raw - Reversing Diabetes in 30 Days".   
Dec 16, 2013 5:37PM
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If its not covered by insurance, they can stuff them. But if its a better drug and insurance won't pay for it, let the lawsuits begin!
Dec 16, 2013 6:41PM
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Maybe because big Pharma has proven time and time again that they can't be trusted.
Dec 16, 2013 6:46PM
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I have bipolar disorder...the last script the doc prescribed for me was $700 a month...hell, I just quit taking it....and I cant afford my lyrica for my diabetic nerve pain, its $400 a month...I am on a limited income, and I don't get subsidies here in texas....I just do without....they need to provide medications that people can afford! the days of the insurance companies covering the cost of extravagant research for all these new drugs is gone...obamacare sure aint going to pay for it!
Dec 16, 2013 7:03PM
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Agreed. It's all about the money.  There are some natural relievers and home remedies and herbs that doctors and pharmaceutical companies don't want you to know about.  Oh well.  Take another pill and hope to live a few years longer.  Most generic drugs work just fine. 
Dec 16, 2013 7:47PM
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I sincerely hope the drug craze is over, but it is too late for many, I am afraid.  I wonder how many are in their graves toinight as we discuss this issue who should be able to discuss with us.  For a long time, I have thought the so called "drug war" should be fought from the top down.  Those who have read my posts know I am anti "ask your doctor" and anti "medicare supplements" ads.   One leads to the other.  More drugs, more illnesses, more insurance, more deaths.  When one legal drug dealer drags in about 55 BILLION dollars in one year, I'm afraid far too many people are dying to make that money for them.  4700 drug distributorships in 46 years is almost 2 drug dealerships per week.  They must be proud of "ask your doctor" ads!  I hope home remedies without side effects come back.
Dec 16, 2013 6:48PM
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It is a damn good thing I am not King. Right after I ban the words "You won the Nigerian Lottery, so please wire me $5,000 so I can arrange for you to be sent $5,000,000" I would ban the words "Ask your Doctor." LIfe was better when we did not have endless, they all sound alike television ads complete with overly well described side effects that make the damn disease look downright bearable.  And what Doctor, if asked, is every going to say I wouldn't take that crap if your life depended on it."  I vote for a return to the days of apothecaries who bloodlet and used leeches. 
Dec 16, 2013 6:46PM
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$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ izz KING of ALL !!!!!!
Dec 16, 2013 8:00PM
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I will take the old proven drugs for what ails me..... It is easy to see why the drug companies like to keep selling the new ones with high prices and bring in higher revenue. For what, reinventing the wheel by adding a grain of foo-powder to the mix and adding "research cost". Give me a break this ole BS should stop now...period.
Dec 17, 2013 11:31AM
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Once you have or can understand all the "disclaimers", then and only then have you learned something.
Dec 16, 2013 7:49PM
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     i believe that big pharma has a VERY big hand in all med schools and doctors are only aloud to learn the big pharma way.
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