ESA Safety and the New, Transparent FDA

If you are interested in knowing what FDA thinks about important regulatory issues, including specific product reviews, it is time to renew your subscription to the New England Journal of Medicine.
A team of FDA officials, including Office of Drug Evaluation I Deputy Director Ellis Unger and Center for Drug Evaluation & Research Deputy Director for Clinical Science Robert Temple, used NEJM as a vehicle to announce a formal reassessment of the safety profile of erythropoeitin stimulating agents in chronic kidney disease, including an advisory committee review to consider (most likely) whether use should be limited to the minimum amount necessary to avoid the need for a blood transfusion.

The advisory committee isn't surprising; as we reported in The RPM Report last month, FDA was looking carefully at new clinical data suggesting that use of ESAs (Amgen's Aranesp, J&J's Procrit) may increase the risk of strokes in chronic kidney disease patients. And, given all the issues around safety of ESAs in oncology, an advisory committee was probably inevitable.

What is surprising is the forum to announce the plan.

But not too surprising. Unger previously used NEJM to publish a summary of the basis for approving Lilly/Daiichi Sankyo's Effient, after a long and controversial review. Former Merck drug safety head Peter Honig cited Unger's Effient editorial during an Institute of Medicine meeting on drug safety in September as a good way for the agency to explain its thinking about safety issues.

And Commissioner Margaret Hamburg and Deputy Commissioner Joshua Sharfstein announced their agenda at FDA in an editorial published by NEJM on the day Hamburg took office.

We expect a lot more pharma execs will be scanning those headlines in weeks to come.

In Follow On Biologics We Trust

Typically, Big Pharma business briefing days aren't known for being newsy events. Another year, another ho-hum pipeline update--complete with the requisite hyperbolic biodollar citations for clinical candidates to appease investors. But in the case of yesterday's annual Merck confab, that certainly wasn't the case.

At its day long event, the Big Pharma revealed the creation of Merck BioVentures, an ambitious new business unit with a heavy emphasis on follow-on biologics that aims to launch at least six such products in the 2012 - 2017 time period. The group will rely heavily on proprietary technology obtained when Merck bought the glyco-engineering biotech GlycoFi back in 2006 for $400 million.

In an interview with "The Pink Sheet" DAILY, Frank Clyburn, the newly appointed senior VP and general manager of MBV, noted that Merck plans to spend $1.5 billion over the next seven years in the hopes of putting at least five follow-on biologic candidates in the clinic by the end of 2012. "We are going to look at developing follow-on biologics in a number of therapeutic areas, a very diverse portfolio," Clyburn said.

The company is already 20% there. The only FOB Merck was willing to discuss specifically was its pegylated erythropoietin for anemia, a molecule called MK2578 designed to compete with Amgen's Aranesp currently in clinical trials that could launch as soon as 2012.

In comments to analysts and the press, CEO Richard Clark also played up the importance of FOBs to Merck's future growth strategy. Admitting that "2009 will be an important year of transformation and execution for us," Clark noted that "follow-on biologics represents a significant market opportunity due to the extensive patent expiries of leading biologics in 2017."

It is so nice to be right.

One of our favorite themes here at IN VIVO Blog--in addition to the potential benefits to biopharma of risk mitigation strategies--is that Big Pharma has a huge opportunity to become a leader in FOBs.

Think about it: as Congress continues to mull over FOB legislation, its increasingly unlikely that they will consider an abbreviated pathway to approval for these products. Indeed, it's going to take significant expertise on a number of fronts--clinical, manufacturing, and regulatory--to meet the case-by-case standards being contemplated by legislators for follow-on approvals. And, since the products are unlikely to be therapeutically substitutable, companies will also need significant sales and marketing expertise to actually make money on such products.

Who has the requisite know-how? With the exception of Teva Pharmaceuticals, it ain't the traditional generic makers. "Other players with vastly superior capabilities and resources may be at least equally—if not better—suited to participate...such as some large-cap pharmaceutical and biotech companies as well as select mid- and small-cap biotech companies," said Ken Cacciatorre, an analyst with Cowen and Co. in this April RPM feature by Kate Rawson.

A majority of Big Pharma even have the technology platforms to make it happen. Late to the biologics party, a number of Big Pharmas were extremely busy in 2006 and 2007 gobbling up so-called next generation antibody companies in their bid to build capability, especially in areas with already established intellectual property such as the anti-TNF space. In addition to Merck's purchase of GlycoFi, other biopharmas inking deals around next-generation players include GSK (Domantis), BMS (Adnexus), Pfizer (Biorexis), and Wyeth (Haptogen).

But until 2008, when Teva announced it was buying albumin-fusion play CoGenesys, the corporate spin has been about the opportunities to develop novel biologics. Teva's willingness to commit $400 million to its own FOB program seemed to jolt the thought-processes of other biopharma execs. In a matter of months, former GSK CEO JP Garnier was publicly signaling the strategic importance of Domantis' technology because it allowed the pharma to"re-do a monoclonal for everything that is on the market, from Avastin to Rituxan...without infringing IP. With a product that might even have a twist."

At Pfizer's analyst day in March, meanwhile, CEO Jeff Kindler indicated that the New York giant was also considering how to position itself in terms of FOBs. In response to a question about whether an abbreviated approval pathway would prompt the company to start developing follow-on biologics, Kindler responded: "I do think that's an opportunity for us."

But if Pfizer and GSK suggested they were willing to dip their toes in the FOB waters, Merck's news should be taken as a full-scale immersion. And it's really not that surprising. Anyone listening to Merck's financial guidance call last week knows the dire shape the pharma company is in thanks to slumping Zetia and Vytorin sales.

The company needs to do something to jump start its R&D. And using GlycoFi's technology to gain a chunk of the follow-on biologics market, poised to take off under the auspices of a new Democratic administration, is a logical place to start.

Thanks to heavily engineered yeast, Merck can develop specific protein versions that are "best-in-class" with "a better circulatory half-life, targeted tissue distribution and/or increased potency," according to Peter Kim, President of Merck Research Laboratories.

And that is the biological equivalent of the fast follower strategy Big Pharma has perfected so successfully for small molecules. At a time of increasing regulatory risk, what better way to gain a grasp on a new therapeutic modality than to create me-better versions of already well studied and hugely successful molecules such as Rituxan or Enbrel and then market the hell out of them?

It will be interesting to see if Merck's news spurs other Big Pharma down the FOB path. Certainly biotechs, such as Amgen and Genentech need to think carefully about life-cycle management strategies for their own products. Hours after the news broke, Lazard analyst Joel Sendek issued a report urging caution when it comes to Amgen:

"We view Merck’s biosimilar program as a serious long-term threat to Amgen’s anemia franchise. Neupogen follow-on biologics currently marketed in the EU have failed to acquire a very significant share of the market or dent usage of Amgen’s dominant products; however, in our view, Merck represents a more formidable competitor due to its marquee brand name and marketing expertise."

hang-glider dollar bill by flickr user J0nB0n used under a creative commons license.

Deal of the Year Nominee: FDA Makes Amgen An Offer It Can’t Refuse

Ah, awards season. Why should film critics have all the fun? And voting! It's not just for presidential elections. This year your IN VIVO Blog team is nominating a handful of alliances, acquisitions, financings, regulatory negotiations and legislative compromises in our First Annual DOTY competition. And then you, dear readers, will vote (early and often, we hope) for the winner. Imaginary federal and international biopharmaceutical statutes prohibit us from awarding a monetary prize. But our winners, when they die, on their deathbeds, they will receive total consciousness. So they've got that going for them, which is nice.

Who said the Deal of the Year has to be a business development transaction between two companies? (Ed. note: nobody!)

At a time when regulatory challenges, reimbursement hurdles and the general political climate is at the top of mind for many biopharma executives and their investors, we think there is a strong argument that the most important deals being struck as 2009 dawns are between industry and government.

And if you are looking for a negotiated agreement involving two or more parties with profound implications for the entire biopharma sector, we think the relabeling of Amgen’s darbepoetin Aranesp and Johnson & Johnson’s competing epoetin brand Procrit more than qualifies. Why this change among all the other labeling changes in the year of “Safety First” at the Food & Drug Administration? Because this was an especially one-sided deal.

The Aranesp relabeling was the the first (and, so far, only) time FDA has used its new power to order sponsors to make specific labeling to changes. FDA gained that with the enactment of the FDA Amendments Act in 2007. So far, the agency has invoked the mandatory labeling authority seven times, but in each of the other cases the sponsor (or sponsors) has agreed to the change. But not with Aranesp.

Talk about an important precedent.

Labeling “negotiations” have always been something of a misnomer, since—from industry’s perspective—it was never exactly a level playing field. Still, at least in theory, manufacturers wrote the label, and FDA approved it. True, when the agency wanted, it could essentially write new labeling by declining any alternative language—but only at the cost of leaving an existing label in force while “negotiations” continued.

The FDA Amendments Act changes all that, giving FDA for the first time the explicit authority to dictate labeling to a sponsor in response to a safety issue.

And with Aranesp, we have the first case study of what FDA can do with that enhanced leverage.

On July 30, FDA announced updated safety labeling for Aranesp to resolve concerns about potential tumor promoting effects of the agent. The agency insisted on two specific provisions that Amgen disagreed with: one restricting use of the products to cancer patients undergoing chemotherapy where a cure is not the expected outcome; the second warning against use when hemoglobin levels are above 10.

What does the FDA action mean? We answer that question at length in an article just published in The RPM Report.

But here are two ways to consider the impact. First, $3 million a week. That is how much Amgen estimates the new restrictions have pinched sales. And remember, this is after an already sharp reduction in the size of the brand after a restrictive coverage policy implemented by the Medicare program. (For a detailed breakdown of the, um, breakdown in Aranesp sales, see the chart below.)


Second, $30 million a week. That is how much Aranesp still generates in revenues—a number that could be much lower if FDA had demanded the withdrawal of the oncology indication altogether (or, even, withdrawal of the product itself.) Before FDAAA, those might have been the only alternatives for FDA. And remember, that is the promise of the new law: FDA has much more authority to dictate who can actually use a drug, but--in theory at least--more drugs make it to market, and those that make it stay.

Coincidentally or otherwise, new drug approvals are up this year, but it is obviously far too early to draw conclusions about how this bargain will actually work out. But one conclusion is clear: labeling negotiations will never be the same...

[Deals of the Year 2009 Bonus Preview: FDA and Amgen are still working out the details of a formal Risk Evaluation & Mitigation Strategy for Aranesp. The agency has already used that authority on several other products, but the Aranesp program must be a doozy: Amgen says it will prompt another 10%-20% drop in sales.]

Long Tail of the Law

Drug products are evolving long tails and they are going to carry costs for firms well into the future.

Drug safety commitments in the US and in Europe are developing into regulatory requirements that will stretch out for years, requiring time and resources from companies even after the products may have lost all commercial viability.

Two recent examples demonstrate this quirk of regulatory evolution.

Pfizer’s inhaled insulin, Exubera, was pulled from the market a year ago in October 2007; but a year later, FDA is imposing a formal Risk Evaluation & Mitigation Strategy on the product. That’s the authority that the agency received for controlling products in the post-market from the FDA Amendments Act in September 2007.

An article in “The Pink Sheet” (October 13) delves into the reasons for FDA’s belated regulatory requirements on the discontinued product. FDA says it expects Pfizer to undertake a supplemental NDA filing for Exubera to develop a medication guide and a communications plan to set a precedent for future inhaled insulin products that might try to come to market citing Exubera as a reference.

The legacy regulatory requirement is going to likely to cost Pfizer time and effort and stretch well past the commercial demise of Exubera.

FDA is also using its new legislated authority to further require Pfizer to submit data from Phase IV commitments. When Exubera was approved, the Phase IV commitments were part of an agreement reached by the company with FDA to conduct seven studies on 85,000 patients. FDA is converting that agreement into a mandatory requirement for six of the studies.

Pfizer says the studies have been terminated. FDA explains that it added the beyond-the-commercial-grave requirement to assure that any data that was collected by the sponsor would be submitted. As FDA says, “while the completion of the trials was not a mandate, the submission of data was.”

Shire also has had a recent experience with a withdrawn product that demonstrates the lingering costs and obligations even after a product is off the market.

At mid-year, Shire said it was discontinuing its overseas erythropoietin product, Dynepo, as a result of lower prices for the EPO class due to the introduction of biosimilars at prices 20-30% below branded levels. The company did not mention the general troubles in the ESA class from declining indications but that could not have helped the commercial prospects.

For commercial reasons, Shire decided to call it quits. But for regulatory reasons, the product will have lingering costs.

According to a late July briefing by the company on first half results, Dynepo will cost Shire about $6.5 million to warp up previous post-market study requirements. The company explains that “the costs are part of the commitments made to participants, centers, doctors, and clinical staff.” Like Pfizer, the company does not plan to finish the studies, but costs remain.

The situation of continued studies after market withdrawal is not new. With the post-market becoming more heavily regulated and with FDA having authority to require work (not just request it), companies should be prepared for long tails dragging behind dead products and holding back operating results.

Amgen and J&J: Falling in Love All Over Again

With most of our bloggers on vacation, we haven't yet troubled ourselves to analyze the Bristol bid for ImClone (if imitation is the sincerest form of flattery, we trust Roche is feeling good). And we didn't jump on Sanofi's buyout of Acambis either. (Thank goodness our colleagues at "The Pink Sheet" DAILY actually work in August!)

But even the dog days of summer can't stop us from taking note of this one: Amgen is giving global rights (except for Japan) to a clinical stage neuropathic pain project to...(drum roll please) Johnson & Johnson.

Considering the companies have spent the past two decades in an endless series of disputes, arbitration and litigation over their last licensing deal, involving a little product called EPO, that is news indeed.

If there ever was a case of adversity bringing people closer together, this is it.

Amgen and J&J have both said that their working relationship has been improved by the all-out effort to save the EPO franchise from regulatory and reimbursement challenges. So much so that Amgen CEO Kevin Sharer told the JP Morgan conference in January that “I never thought I would say this, but this circumstance has made us and J&J quite effective partners.” That may not be much of a silver lining from everything that has befallen EPO--but it sure is hard to imagine the two companies reaching this agreement two years ago, when the only place their executives were likely to exchange confidential information was in court.

Amgen's willingness to deal with J&J also suggests that it really means business when it talks about winnowing down its pipeline. In fact, Amgen has already shown it means business, in fact; Japanese rights to the neuropathic pain compound were already sold as part of a large partnership with Takeda in Japan.

Now the terms. Amgen receives $50 million up front--or a refund of one-quarter of the $200 million Amgen paid to settle antitrust litigation with J&J over EPO last month. Amgen will also receive development milestones of up to $385 million. There are additional commercial milestones and a sales royalty too.

And, no, there is no copromotion agreement.

Amgen's Denosumab: NOW How Much Would You Pay?

Monty Hall is back, because it sounds like it may be now or never to secure a partnership with Amgen for one of the most eagerly awaited Phase III projects in the industry—the post-menopausal osteoporosis treatment denosumab.

Recall that Amgen is considering partnering the project, a once-unthinkable option but now an oh-so poignant sign of the times for an industry struggling to reinvent itself. Recall also that we offered you complimentary access to the profile of denosumab from Elsevier’s Inteleos database to help you decide how much to pay for a share of this potentially huge market opportunity—and to shoulder some of the risk that denosumab will instead become another spectacular Big Pharma flameout.

The latest development: Amgen has announced positive Phase III results in a big osteoporosis trial, involving about 8,000 patients studied for three years. The company certainly isn’t underplaying the results. R&D chief Roger Perlmutter told The New York Times that the trial “exceeded my expectations”--which seems hard to do, given that denosumab is essentially a bet-the-company project for Amgen at this point.

During Amgen's quarterly call July 28, Perlmutter explained his ebulliance. “The fact that we saw statistically significant reductions across all primary and secondary endpoints was really very impressive. I will also say that when you look at the safety database, you have nearly 24,000 patient years of experience here, so it is far greater than anything else that we had to look at. The fact that the safety profile is so balanced as compared to placebo was extremely encouraging.”

Now, we might take those comments with a grain of salt, since all indications are that Amgen is still actively soliciting interest in partners for the drug. As CEO Kevin Sharer noted during the call, the positive study “certainly doesn’t preclude the necessary work we will do to see what our options are.”

Amgen, of course, wants to raise the price of any deal: “This data certainly makes us more confident in our ability to launch ourselves,” Sharer declared.

And Amgen certainly faces other pressures. The company is deep into cost-cutting mode as it adjusts to the new, sharply reduced realities of its flagship EPO franchise. The last thing it wants to do is embark on aggressive new spending to build a massive primary care sales presence to support denosumab.

Sharer, understandably, declined to provide any estimates on how much Amgen would have to spend to support a go-it-alone launch—no sense showing all your cards, is there?

"Our view is that we've got really strong data here," he said. "We're going to have to take this data, look at it carefully, see what physicians think. But I just want to assure our shareholders that we're going to make a full and complete analysis and surface the right set of options, and I'm confident we'll pick the right one.”

Sharer also suggested that an internal launch might not be as expensive as the conventional Big Pharma model would suggest. "We see this medicine with its high science component as being something that will take the kind of high science and medicine approach that we've historically taken. So we do not see this as a normal general practitioner kind of sales product that you just throw in the bag."

On the other hand, Sharer clearly has a bit of a one-track mind when it comes to thinking about the importance of denosumab to Amgen. Asked to comment on Amgen's overall approach to infrastructure-building, and whether there might be any opportunities in the current climate of consolidation, Sharer replied succintly. "I can't imagine buying a company to acquire a sales force. That' s inconceivable."

So I guess those Genentech sales reps are going to have to look elsewhere....

The Enemies You Keep

Former Rep. Bill Thomas sure has it in for Amgen.

First, as chairman of the House Ways and Means Committee, Thomas made life difficult for Amgen by siding with sworn enemy Johnson & Johnson during the now-resolved EPO bundling dispute.

Thomas wasn’t particularly happy with allegations that Amgen gave large rebates for Aranesp (which competes with J&J’s Procrit) when purchasers committed to buying Neulasta and Neupogen.

And just before retiring from public service in 2006, Thomas teamed up with Rep. Pete Stark to criticize the Centers for Medicare & Medicaid Services’ reimbursement policy for Aranesp, in the hopes of making anti-Amgen changes in the way that the product was covered under Medicare Part B.

But while the Amgen/J&J feud has finally ended with a $200 million payout to J&J, Thomas can’t quite bury the hatchet.

This time around, he’s working against Amgen on the issue of follow-on biologics. Thomas has teamed up with Insmed Inc.—a company you might remember from a moderately infamous YouTube video—but that also just announced the results of a study demonstrating bioequivalence between its INS-19 and....wait for it...Amgen’s Neupogen.

Insmed has a long way to go on INS-19—that bioequivalence study was a Phase I trial. But the company says it is planning to petition FDA to commence Phase III studies of INS-19, and wants to move another “me-too” biologic, INS-20, which Insmed says is a “generic form” of Amgen’s Neulasta, into Phase I. (Are you sensing a pattern here yet?)

How Thomas’ vision for a follow-on biologics framework is different than the bipartisan legislation that’s already out there is unclear. It’s also unclear how the Congressional Budget Office’s scoring of the Senate’s version of the bill will affect the chances for near-term passage of any legislation.

But what is clear is that there’s no love lost between Thomas and Amgen. Conventional wisdom would suggest that it took a pretty sweet fee for Insmed to get Thomas on board as a strategic advisor. But given Thomas’ history with Insmed’s main target in the war on follow-on-biologics, maybe it didn’t take too much convincing.

Amgen/J&J Settle Bundling Dispute: Did Both Sides Lose?

In June 1988, Iran and Iraq ended an eight year conflict by accepting a United Nations mandated cease fire--Iraq the ostensible victor, but both sides exhausted militarily and devastated economically. A year later, the Food & Drug Administration approved Amgen's erythropoeitin brand Epogen.

We didn't see the connection at the time, but it suddenly seemed clear to us when Amgen and Johnson & Johnson announced last week that they have settled antitrust claims in a case filed by J&J over bundling of Amgen's EPO brand Aranesp with its Neupogen and Neulasta franchises. J&J will receive $200 million, so we guess they "won"--but it is hard to see how either company comes out ahead in the latest chapter in the endless series of disputes arising from their EPO partnership.

Recall that Amgen and J&J have been in dispute off-and-on over dividing up the EPO market for the better part of 20 years. Indeed, Amgen only markets Aranesp because it prevailed in an arbitration case with J&J over rights to the product.

But the bundling dispute took the contentious relationship between the two companies to a new level. When J&J launched a scorched earth litigation and lobbying campaign, there were plenty of people concerned that it could backfire by making both companies--and, indeed, the whole industry--look bad.

We aren't the type to say we told you so (okay, yes we are--we told you so), but when safety issues flared up with EPO, the perception that use of the products was driven in large part by contracting practices and reimbursement plays sure didn't help.

And, with both products damaged, a settlement was probably a pretty simple matter at this point. When this fight began, it was a high-stakes battle over every inch of ground in a lucrative and growing market. Now both armies are in retreat--and this isn't a fight either side wanted.

Mircera: Bad for Patents, Good for Patients?

Anyone following the heated Amgen-Roche battle over Roche's Mircera might be interested in some court documents posted today--notably Roche's license agreement for a proposed launch of its drug in the US, and Amgen's counter-brief. (Hat-tip to our friends at Bear Stearns...er...JP Morgan...for this one.)

What, you say? Didn't Judge Young rule last October that Roche infringed Amgen's patents--the latest of several of EPO victories for Amgen over the decades?

Well, yes he did. But although Amgen won the patent battle, it hasn't yet won the public interest battle, apparently. The Judge basically isn't sure whether blocking Mircera from the US entirely, as Amgen is seeking via an injunction, would best serve American patients (and their government's wallets). So he left open the possibility, in a hearing two weeks ago, that Roche may launch the drug nevertheless.

There are conditions: Roche must pay Amgen a 22.5% royalty on US sales (as Roche had already said it was willing to do), it must price Mircera to the Medicare program with an average selling price the same or less than that of Epogen, it must provide evidence of clinical usage and the real world dosage of Mircera to allow a dose conversion factor to be calculated, and it must fund an independent monitor to account for royalty payments. Lastly, patients switched to the Roche drug must be allowed to access the product at the same price going forward regardless of the outcome of future legislation.

Fine, says Roche in its posting, we'll adhere to all that. And we think it's great that patients are offered choice, and a better treatment option--especially, it says, rubbing it in, "given the FDA’s recent re-examination of serious safety issues associated with Amgen’s ESA products." Amgen's behaved rottenly, the document continues (yes, we're paraphrasing somewhat), so any harm that may come to it following a potential modification of this injunction in Roche's favor should be ignored. Hail billions of dollars of savings to the U.S Treasury!

Amgen isn't used to this kind of post-victory set-back. And it could probably do without it, given everything else going on--not least ODAC's not-so-bad-but-not-great-either decisions on restricting ESA usage in chemotherapy-induced-anemia patients, etc. The Big Biotech comes back with just the points one would expect in a briefing support document (filed, with Roche's, ahead of a potential ruling early next month over whether Mircera will indeed be allowed this conditional entry).

Innovative drugs like ours have enhanced economic growth and reduced medical expenditures, Amgen says. Letting Roche in would create an unwelcome precedent, suggesting that even valid and infringed patents don't fully protect innovative drugs. Woe betide the end of private sector investment in drug R&D....etc.

Now, though we do hear that Amgen's IP-protection tactics have perhaps over-aggressively exploited quirks in IP law, and while we do feel, like Roche, that Amgen's monopoly has perhaps overstayed its welcome, the US biotech does have a couple of points here. If patents are judged to have been infringed, the infringer should be banned until the patents expire--that principle underpins the industry, right? And we also tend to agree with Amgen's point that "with all due respect, determining the appropriate amount Medicare should pay for biopharmaceutical products and medical treatments is not the province of this Court."

We're not lawyers and perhaps we missed the point. (Though if we may toot our own horns for a second, we predicted nearly two years ago that Roche would be willing--or required--to agree to cut prices as a condition for market.)

Still, the battle was over whether Roche infringed Amgen's patents. Turns out it did (whatever you think about how Amgen extended and protected those patents). Bringing issues of drug costs and patient choice into the court-room mix may be well-intentioned, but may also backfire big time if it dilutes the power of patents.

High Noon Haiku: Endo, RNAi, and EPO

Sometimes we don't have the time to cover all the stories we'd like. But occasionally we'd like to link over to them anyway, while encouraging you, the reader, to give us a short take on the rest of the day's news. Welcome to High Noon Haiku. Give it your best shot in the comments (remember, it's 5-7-5) ...

AZ and Silence
New deal in RNAi
Where are the details?

***

Amgen, J&J:
EPO benefits outweigh
The risks, FDA!

***

Peter Lankau's gone
Endo didn't waste much time
Holvek's the new boss

***

Wall St. Journal blog
Has good piece on new blind gov
Too bad they're Mets fans

(image via threadless.com)

FDA’s Careful Reading of the EPO Market

The headlines today focus, quite logically, on the big question that the Food & Drug Administration will be asking the Oncologic Drugs Advisory Committee on March 13: should the approval of EPO (Amgen’s Aranesp and Johnson & Johnson’s Procrit) for use as supportive care in oncology be rescinded?

In briefing materials posted on FDA’s website today, the agency lays out the issues it wants the committee to discuss, including the possibility of removing the indication for use of the drugs in the cancer setting. (EPO products are also used to treat anemia in other indications, primarily kidney disease.)

The possibility of FDA withdrawing the approval of what has been a standard component of chemotherapy regimens for almost 15 years is truly astonishing to consider. But it is by no means surprising that the committee will be asked to discuss that possibility. When FDA announced the latest ODAC visit for EPO in January, the agency made very clear that it would be at least raising the possibility of withdrawing that indication altogether. (You can read our analysis of the issues at stake March 13 here.)

The more interesting reading for biopharma executives trying to make sense of the new drug safety climate comes in an appendix to the briefing materials, containing the review of potential risk management options for EPO by FDA’s Office of Surveillance and Epidemiology.

Assuming the committee supports leaving at least some oncology indications in place for EPO, the discussion will quickly turn to risk management options. And, as of the end of this month, FDA is armed with the power to make those programs mandatory.

The FDA Amendments Act, signed into law in September, spells out a series of tools that FDA can require as part of Risk Evaluation & Mitigation Strategies. What it does not do is spell out how, in practice, FDA will choose which tools to apply—and how to determine what is or is not an effective strategy.

That is where Appendix 2 in the briefing documents comes in.

To us, it reads like a case study in how the agency will define the metrics for success in REMS.

The message it sends is unmistakable: "success" for a sponsor facing a serious safety question looks an awful lot like failure in a commercial context. When FDA wants to know if a REMS is working, it will look at market data or other commercial tracking statistics for evidence that use is declining—either overall or in submarkets of concern.

The analysis is filled with market research statistics. The agency uses retail prescription data to look at how use of the drugs has been affected by risk management steps taken so far. The review acknowledges reimbursement changes by the Centers for Medicare & Medicaid Services as an important factor as well (though we would argue that CMS’ policy probably is the biggest reason for reduced use of EPO.)

But the agency drills down much deeper, looking into metrics like settings of use. Aranesp, FDA finds, is used most commonly in outpatient clinics (54% of vials sold), while Procrit’s largest in non-federal hospitals (39%). Outpatient pharmacies are relatively small markets for each brand, FDA notes. “Interestingly, the long-term care channel accounted for approximately 10% and 5% of sales distribution for Procrit and Aranesp, respectively.”

The agency also looks at indications associated with use of the drugs. “The top two diagnoses or indications associated with the use of Procrit and Aranesp as reported by office-based physician practices were ‘other and unspecified anemias’ (ICD-9285), and ‘chronic kidney disease’ (ICD-9 585), each accounting for roughly 60% and 12% of use during year 2007.”

FDA and the committee will discuss options ranging from informed consent procedures to “voluntary” limits on advertising to restricted distribution programs—including programs that would restrict use by setting of care or by indication. So data on prescription trends, settings of use and indications will be useful for determining what types of risk management tools might work—and, more importantly, for future assessments of whether the programs are in fact working.

And, let’s be blunt: until FDA has better measures it will be looking for less use of a product with safety considerations. That is one of the uncomfortable new realities of the era of REMS: investing in marketing campaigns that intended to produce overall reductions in prescriptions, reductions in off-label indications, or reductions in vials shipped to “interesting” submarkets, like long-term care.

Amgen Braces for Another Review of EPO Safety: How Bad Will it Be?

Investors loved what they heard from Amgen CEO Kevin Sharer at the JP Morgan conference in San Francisco.

The stock price jumped nicely when he announced that the company’s cost-cutting plan is paying off already, with earnings per share for 2007 expected to come in well above Amgen’s revised guidance—and in fact almost in line with the low end of the company’s original forecast for the year before the EPO disaster unfolded.

Investors also responded to Sharer’s assurance that EPO sales have stabilized now that the market has had time to adjust to new restrictions on coverage imposed by the Centers for Medicare & Medicaid Services in the chemotherapy induced anemia market.

You have to feel good for people at Amgen to see a bit of positive news after a dreadful year. (How bad was 2007 for Amgen? The 5% jump after Sharer’s January 8 presentation brought the company back within range of $50 per share—which is where the stock was five years ago. Ouch.)

What we took away from the presentation, though, was not quite as rosy. The company is bracing for another potential hit to the EPO franchise when it goes back before the Oncologic Drugs Advisory Committee to review still more negative safety data about EPO. (Amgen markets epoetin as Epogen and darbepoetin as Aranesp; the company also manufactures Johnson & Johnson’s epoetin brand Procrit.)

It was ODAC that really started Amgen’s headaches in 2007 when it made unexpectedly harsh recommendations about restricting use of EPO, so there is obviously reason for Amgen to be nervous.

Sharer stressed that Amgen is prepared for ODAC and urged investors to focus on how the company fared during a Cardio-Renal Drugs Advisory Committee discussion of EPO safety in the kidney failure market, rather than the ugly discussion that took place during an ODAC meeting in May.

But he also kept mentioning the meeting.

When he said “the ESA revenue picture is stable,” he added, “but obviously the dialogue isn’t over.” Then he talked about the timing of Amgen’s annual business review, which was supposed to take place in February—but, Sharer said, will now be “in the June timeframe.”

Why? “We want to make sure our team is fully focused on giving the very best preparation for the March ODAC. If we have the business review as we originally thought in February, that would be a conflict for the same people. I think you as shareholders and I certainly as management want those people focused on ODAC. So we’ll pick another date for you.”

“It will be obviously after ODAC and we will have more to talk about then.”

Hmmmm.

Here’s what we had had heard about the ODAC meeting before Sharer spoke.

(1) It would take place in March;

(2) FDA would in essence be asking the committee to support another relabeling of the drugs to bring the FDA label more explicitly in line with CMS’ coverage policy; and

(3) There would be discussion of additional post-marketing requirements, and in particular a demand by FDA for a placebo arm in a study the sponsors are proposing that would compare the historical dosing paradigm for EPO head-to-head against the intermittent model covered by CMS.

We asked both Amgen and FDA to confirm those details, but both said that they were not in a position to discuss anything about the advisory committee review because the date is not yet set.

Well, it sounds like our sources were right about the March date, at least.

EPO Relabeling: Its Not the Black Box, Its What FDA Says About the Black Box

Whoever said actions speak louder than words hasn’t been paying attention to the regulatory response to drug safety issues involving the anemia therapies darbepoetin (Aranesp) and epoetin (Procrit, Epogen).

FDA unveiled strong new warnings on the EPO brands marketed by Amgen and Johnson & Johnson on November 8. The new warnings stress the dangers of using the agents too aggressively to elevate hemoglobin levels, and emphasize that there is no evidence that the drugs improve symptoms of anemia—they should only be used to reduce the risk of transfusion.

It is safe to assume that the new labeling will have absolutely no impact on how the drugs are actually used.

On the other hand, what FDA said about the new labeling will have an impact.

That’s because FDA used the relabeling to repeat its position that restrictive coverage rules implemented by the Centers for Medicare & Medicaid Services are “generally consistent” with the revised labeling.

FDA first made its position on the EPO drugs clear almost a month ago, in a letter to two powerful members of Congress. And in so doing, the agency ensured that the labeling change itself would be anti-climactic at best. That’s because it is CMS’ coverage policy—not FDA’s regulatory actions—that will drive use of the products going forward. (Although FDA still isn't done with EPO; what the agency does next probably won't make much of a difference to Amgen and J&J commercially, but will nevertheless be a key milestone in the implementation of the new drug safety law. You can read all about that in The RPM Report's November issue.)

The question of how the label matches the CMS coverage policy came up repeatedly during a media conference call hosted by FDA November 8. Office of Oncology Drug Products Director Richard Pazdur observed that the labeling says care should be taken that hemoglobin levels not exceed 12 g/dL. “This is not a target,” Pazdur stressed. “This is an upper boundary for safety.”

Office of New Drugs Director John Jenkins highlighted several elements of the labling, including the addition of a new chart summarizing results of six clinical trials showing an adverse impact on survival or tumor progression. The chart includes a column highlighting actual average hemoglobin levels achieved in the trial (data available for three of the six studies). Although the trials targeted hemoglobin levels above 12, actual measures achieved were below 12 in two of the three cases, including only 10.6 in one study that found an adverse survival outcome.

So, Jenkins observed, FDA has added to labeling a warning statement emphasizing that the available data cannot exclude a risk in patients whose hemoglobin levels are maintained below 12. In other words: FDA is saying the drugs are dangerous when used in patients with hemoglobin above 12, but the agency is not saying they are safe when used at levels below that.

Instead, Jenkins said, FDA's goal is to encourage conversations between doctors and patients about whether to use EPO “at all” and then to use “the lowest dose to prevent transfusion.”

Amgen and J&J, of course, see things a bit differently. In fact, they both formally asked CMS to reconsider the policy on November 8, the same day the new labeling was adopted.

Sharer responded to FDA's position that the CMS policy is consistent with the labeling. “I think the issue of consistency here is a bit of red herring," Amgen CEO Kevin Sharer said on an investor conference call to explain the new labeling. " I think the real issue is physician discretion. Clearly, the labeling gives physicians discretion here and the NCD does not. We see that as the point of policy that really needs to be focused on.”

Sharer, though, is not promising anything in terms of changes. "Our financial plan is to manage the company on the assumption that the NCD will stand.”

The reconsideration request certainly looks like a long shot. Sharer acknowledged that the submission does not have a lot of new data in the “literal use of the word data.” It does include a new study conducted in Germany showing now adverse outcomes in patients with Hodgkin’s lymphoma, and it includes some early data about signals of increased transfusions in the US resulting from the policy.

But what it mostly does is reargue the points addressed by CMS in the policy. “Over the course of this year, many different individuals, capable individuals and entities have looked at this data and come out in favor of giving the providers discretion,” Sharer said. “We think the weight of opinion of others looking at this data is very very important information.”

Amgen Feels the Effects of CMS’ Long Shadow

To no one’s surprise, sales of Amgen’s flagship anemia product darbepoetin (Aranesp) dropped sharply in the third quarter, 23% worldwide, and 36% in the US. Given the tough new restrictions put on coverage of Aranesp and J&J’s epoetin brand Procrit in the key Medicare market, a big hit was inevitable.

Still, it is worth looking at the full impact of the Centers for Medicare & Medicaid Services coverage decision on Amgen’s third quarter results. (If you haven’t been following this, you can catch up by clicking here.)


Given the tight coverage policy, it is no surprise that EPO use is way down in the Medicare market directly controlled by CMS.

But the coverage policy is casting a much bigger shadow than that.

First, there is a spillover effect into the private insurance market for chemotherapy patients. Amgen EVP-commercial operations George Morrow reported that use of EPO in chemotherapy induced anemia patients is down 30%-40%--even though no private payors have adopted payment policies that are as restrictive as CMS’.

“Clinics and hospitals are struggling with 2-tier medical practice,” Morrow explained. “They do not want to treat all of their patients to the lowest common denominator—and here I am talking about the NCD with a hemoglobin of 10. On the other hand, they find it ethically discomforting and administratively burdensome, to implement one treatment protocol for Medicare patients in another widely diverging protocol for all other patients.”

Morrow is optimistic that the picture will brighten over time. “We are also seeing a steady increase in the adoption of differential treatment protocols, by largely more sophisticated clinics and hospitals, as oncologists reluctantly adapt themselves to the new reimbursement environment.”

There is another possibility: that private payors will begin to move more in line with CMS’ restrictions. That is the usual pattern: CMS leads and private payors follow.

The spillover from the coverage policy doesn’t stop there. Amgen is also seeing an impact on use of EPO in myelodysplastic syndrome, even though the company successfully persuaded CMS not to put new restrictions on that indication. “Even though reimbursement remains in place, physicians have reduced utilization,” Morrow reported.

It doesn’t stop there. “We are seeing some modest spillover of the ESA reimbursement concerns for colony stimulating factors or CSF. In other words, there is a generalized fear of not getting reimbursed leading to more cautious utilization.” That was a factor in holding back growth of pegfilgrastim (Neulasta), Morrow said. Sales were up 8% for the quarter, but underlying demand was flat.

“We are actively investigating and addressing any clinical or reimbursement issues that are inappropriately impacting Neulasta utilization,” Morrow said.

That impact comes on top of the effect Amgen already acknowledged from a loss of promotional support for the brand while the sales force addressed the concerns about EPO.

Amgen is still hoping it can find a way to force CMS to reconsider its position on EPO, but it acknowledges that to be a long shot. “As physician groups continue their dialogue with CMS, we hope a compromise can be reached that gives doctors sufficient latitude to make the best decisions, consistent with their understanding of the available science and their own clinical experience, while also meeting important CMS objectives,” Amgen CEO Kevin Sharer said.

Asked what kind of “compromise” he envisions, Sharer replied. “Its hard to say. Our financial plan is to manage the company on the assumption that the NCD will stand.”

That seems like a safe assumption. A Reuters interview with CMS Chief Medical Officer Barry Straube suggests that the agency isn’t going to budge any time soon.

J&J sure seems to be moving on. Amgen acknowledged during the call that reimbursement wasn’t the only issue affecting Aranesp this quarter: the product also lost market share against Procrit—a development that would have dominated the discussion of Amgen’s prospects a year ago when Aranesp was relentlessly taking over the market Procrit used to own.

Amgen CFO Bob Bradway explained that the share loss came in Public Health Service hospitals, “where our competitor offers some very steep discounts, discounts that we felt that we weren't going to match.”

Amgen isn’t happy that J&J is recapturing share in the EPO market, but there may be some comfort to the company in being able to talk about those issues. After a year dominated by regulatory and reimbursement issues for its flagship franchise, a year where the company was forced to consider what else it might turn to besides EPO, Amgen surely longs for the days when it only had to worry about the competition.

FDA Sides With CMS in EPO Battle; Labeling Change Next

Rep. Stark is smiling; Amgen isn't

Amgen Inc.’s uphill climb to reverse restrictive coverage policies for darbepoetin (Aranesp) just got a little steeper.

The Centers for Medicare & Medicaid Services’ position that it will not pay for use of Aranesp or Johnson & Johnson’s competing EPO brand epoetin (Procrit) in patients with hemoglobin levels above 10 g/dL “is generally consistent with the available data and the published scientific literature.” So says the Food & Drug Administration in a letter sent to two prominent House Democrats: Oversight and Government Reform Committee Chairman Henry Waxman (D-Calif.) and Ways & Means/Health Subcommittee Chairman Pete Stark (D-Calif.).

The letter, signed by acting Assistant Commissioner for Legislation Stephen Mason, gives CMS a vote of support the agency desperately wanted. It looks like CMS is making its position stick—and that is a development that should matter to companies across the industry, not just Amgen and J&J. (Why? We have written extensively about that in The RPM Report—including this article just going to press. Not a subscriber? Click here to register for a free trial and check out our coverage.)

FDA’s letter ends any lingering hopes for a quick reversal of the coverage policy, despite an all-out campaign by Amgen and J&J to enlist support in Congress. Amgen seemed to have gained a lot of traction on Capitol Hill, especially in the Senate, where a non-binding resolution urging CMS to reconsider the policy passed at the start of September, and where many Hill watchers expected a binding resolution to be included in a Medicare bill this year.

But one of the critical arguments underpinning the Senate legislation has been the contention that CMS’ policy is consistent with the FDA approved directions for use for EPO. As currently written, FDA’s label says EPO should be used to maintain hemoglobin levels at the lowest level sufficient to avoid the need for transfusions, and not be used once hemoglobin rises above 12 g/dL. Amgen, J&J, and a whole bunch of oncologists think that means CMS’ policy—refusing to pay for use above 10—is inconsistent with the labeling.

CMS has stuck by its position despite the political pressure. But no one knew for sure what FDA thought or what it would say when it finalizes new labeling for the drugs to reflect advice from two advisory committees convened in May and September. (Here is our recap of the situation, including a nifty picture of Commissioner von Eschenbach holding the PDR.)

So Waxman and Stark asked. FDA still hasn’t finalized the labeling, but it did answer the critical question. “The current labeling advises that the hemoglobin not exceed 12 g/dL,” Mason wrote. “FDA considers this to be an upper safety limit for ESA dosing, not a target for therapy. FDA is aware that there has been some confusion about the dosing recommendations in the current approved labeling and will work to clarify that confusion as we complete labeling changes that we are currently discussing with Amgen.” (Amgen is the license holder for both Aranesp and Procrit, so J&J is not directly involved in the labeling discussions.)

“Transfusions are not normally given to patients whose hemoglobin is 10 g/dL or higher,” FDA said. So I guess we know what the new labeling will say--not that it matters anymore, since FDA's letter of support is far more important to the future of the anemia therapies than anything the labeling ultimately says.

Oh, and FDA didn’t stop there. “There is no evidence that ESAs result in improved survival, tumor control, health-related quality of life at any hemoglobin level in cancer patients undergoing chemotherapy,” the agency wrote. “ESAs were approved based on their effectiveness in reducing the need for red blood cell transfusions.”

Don’t expect Amgen to take that answer lying down. But the company has an even tougher road ahead if it hopes to change CMS' mind.

Shire’s Clean-Out: Dynepo Next?

Hats off to Shire for cleaning out its cupboards and out-licensing $213 million worth of non-core drugs to Spain's newly-listed Almirall. The industry’s notoriously bad at passing unwanted assets down the food-chain, for reasons we know well—too much hassle, no glory, potential egg-on-face.

Egg-on-face isn’t an issue here: Almirall’s unlikely to turn peppermint oil Mintec, one of their eight prizes, into a blockbuster. Anyway, if anyone’s going to find a new use for an old drug, Shire is--this is the group that turned amphetamine salts marketed in Germany for obesity into a multi-billion dollar CNS franchise.

As for hassle: $213 million isn’t a bad bit of money for a company Shire’s size. That’s enough for, say, another couple of Juvistas. (Shire recently paid $75 million up front and made a $50 million equity investment in Renovo for scar treatment Juvista, around which it may build a new franchise, as we reported here.)

$213 million is also enough to plug a gap left by another non-core asset that may yet be the next to emerge from Shire: Dynepo.

Remember Dynepo? It's basically EPO, a follow-on biologic that Shire bought through its $1.57 billion acquisition of TKT in 2005. Dynepo was in fact the core focus of the deal--so much so that Shire had a back-up plan to license the product for $450 million in case the acquisition fell through.

Lucky for Shire it didn’t. Dynepo sells a miserable $2 million per quarter, a far cry from the estimated $150-200 million annual peak sales that Shire, and analysts, were forecasting. Meanwhile two other TKT drugs, Hunter Syndrome treatment Elaprase and Replagal for Fabry disease, are doing very nicely thank you—the $80 million or so combined second quarter 2007 sales of both products exceeded analyst expectations.

There’s a lesson somewhere here about the value of acquiring the restaurant over selecting from the licensing menu, if the industry needed one (which it doesn’t, it seems.) But what about Dynepo?

Its trouble is that it’s neither here nor there. Dynepo offers no advantages over existing EPO drugs—it’s just plain vanilla EPO, and the short-acting version at that. Shire has no hope of competing in the mainstream with the likes of Amgen or J&J. Yet Dynepo isn’t a full-on generic copy of EPO, either, like Sandoz’s recently-approved epoetin alfa.

The Sandoz drug may have some chance, one day, of being substituted in cost-conscious markets for the reference innovator drug, in this case J&J's Eprex (though admittedly, biosimilar substitution will be a long journey, as we reported in a previous blog post.) Not so for Dynepo.

Small wonder, then, that Shire’s management doesn’t want to invest in a new manufacturing plant for Dynepo, and admits the drug “is fighting for space” in the portfolio. We know that, unlike most pharmaceutical firms, Shire’s not allergic to selling. But will anyone buy?

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.

EPO Fatigue: Amgen Hopes History Doesn’t Repeat Itself

Did you ever have a recurring nightmare? That is what Amgen Inc. and Johnson & Johnson want to avoid next week when another panel of expert advisors to the Food & Drug Administration weighs in on the safety profile of EPO therapy to treat anemia in chronic renal failure patients.

The Cardiovascular & Renal Drugs Advisory Committee will discuss the safety profile of Amgen’s Epogen and Aranesp, as well as J&J’s Procrit, on September 11.

Amgen has been making the rounds on Wall Street, assuring investors that it is ready for anything at the Cardio-Renal Committee.

Why? Because the last time an FDA advisory committee met to discuss those same products—the Oncologic Drugs Advisory Committee in May—it did not go well. The committee recommended much stronger restrictions on use of the drugs than anyone anticipated. And things got even worse a few days later, when the Centers for Medicare & Medicaid Services issued a proposed coverage policy that sharply limited the drugs.

CMS compromised a bit when it issued a final coverage policy in July, but not enough to spare Amgen. The new payment rules prompted a major restructuring by the company in anticipation of a big drop in Aranesp revenues.

Now Wall Street is wondering what to expect from the nephrologists when it is their turn to review EPO.

In recent weeks, Amgen has been making the rounds to large investors and analysts with to assure them that it has a solid game plan in place for the meeting. The company says it has seen FDA’s briefing materials and they don’t look surprising or onerous. (The public will be able to see those materials on Friday or Monday, on FDA’s website.)

What will Amgen do? Here is how SVP-North American operations Jim Daly described the company’s approach back in June. Asked during a Goldman Sachs conference what the company would do differently to prepare for the Cardio-Renal Panel, Daly replied: “I think we’ve learned a lot from ODAC, which is go in prepared for a scientific discussion but also be prepared for wherever it goes.”

“I think that community also needs to play a more proactive role, and the good news here is that the nephrology community already has been very active with the FDA. Their primary concern is that they are taking an oncology dosing paradigm and imposing it on nephrology patients, and it’s a very different disease state.”

Still, Daly said, “we need to be prepared in case the agenda goes into other areas, whether it be the cost of ESAs, whether it be the utilization patterns as a result of reimbursement, I think we need to be prepared to address those.” Daly recalled a “pointed moment” in the ODAC review when “one of the physicians said does anybody here know what community oncologists do and why they do it? And the response was no, but I do know they make $1,200 a dose, therefore we can’t leave the prescribing decision in their hands.”

If the Cardio-Renal meeting “goes to that level I think that would be very disappointing, but I think we have to be prepared to deal with that. The best response will come from someone in the audience that says that is preposterous.”

In other words, expect plenty of patient and provider representation ready to speak up on Amgen’s behalf.

But will that be enough to ensure no unpleasant replay of the May ODAC meeting? Citigroup Yaron Werber doesn’t think so. The headline to Citigroup’s Aug. 30 note says it all: “Beware of CRDAC—the Bite May be Worse than Expected.”

Why is Werber concerned? Because “we have learned that Rich Pazdur, head of FDA’s oncology division, will be present in an oversight role. Given his aggressive stance, his presence in CRDAC is a clear concern.”

That seems like a lot to read into one FDA official’s participation in the meeting, but it does underscore a larger point about the regulatory response to the EPO safety issues. As Werber puts it, there is a “theme that FDA/CMS view EPO to have modest benefit w/growing evidence of harm. Thus, panel might be more contentious than expected even on dialysis.”

Werber isn’t alone in worrying. After all, several analysts note, Amgen assured them it was on top of the situation before the May ODAC meeting.

One other thing: Citigroup expects CMS to follow close on the heels of the advisory committee with a national coverage decision about use of EPO in nephrology. And, Werber warns, it is possible that the combined impact could be to make Citigroup’s forecast of a 10%-15% decline in the nephrology market in 2008 overly optimistic.

If Werber is right, Amgen investors have another tough three months to look forward to. Should make for an interesting week next week.

Generic EPO Should be a Big Deal. But Is It?

Novartis’ Sandoz division was on Friday granted European Commission approval for its biosimilar version of Johnson & Johnson’s epoietin alfa (Eprex). It’s not a huge surprise, given the positive recommendation earlier this summer, and given that Sandoz has done this before: growth hormone Omnitrope became the first biosimilar drug to gain European approval last year (and, after a long legal kerfuffle, got onto the US market, too).

But this should nevertheless be a big deal. We’re talking, after all, about a cheaper copy of EPO, the blockbuster anemia drug that made Amgen. A drug with sales that top $7 billion globally. Of all the biologics in generic firms’ sights, this has to be by far the most valuable--the "killer biologic," as one of you readers put it in a comment on a previous post. EPO is one of the most expensive drugs on many hospital formularies, and accounts for a huge chunk of payor expenditure.

At last!, we should be saying, the long-threatened generic biologics revolution has come to pass. Injectables will get cheaper, patient access will improve, originators will be forced to innovate and move on.

The reality isn’t quite so revolutionary. Sandoz is one of the few companies with the resources to persevere with biosimilars; many smaller firms dropped out as it became clear how onerous clinical trial and regulatory requirements would be.

Commercialization ain’t a slam dunk, either. Sure, a 20% discount counts given the prices of these drugs. But it’s up to individual countries to decide on whether docs may substitute the originator drug with a biosimilar. Innovators have done a good job lobbying against interchangeability. Questions and concerns over safety standards mean that biosimilar firms have an uphill struggle on the marketing and educational front, ensuring that these products are perceived as equivalent, not potentially dangerous cheapies.

Still, Sandoz will be helped considerably by the fact that its biosimilar has been granted the same international non-proprietary name (INN) as the reference drug, epoietin alfa (to the delight of the European Generic Medicines Association, since this goes some way at least to proving their case for scientific equivalence). Sandoz’s EPO will be available under three different brand names, though, likely in order to leverage locally-recognized and trusted generic brands across the various European markets.

Stada, another surviving biosimilars stalwart, had to settle for a slightly different INN for its generic EPO--epoietin zeta, filed in June 2006. That probably helped drive their decision to hand over commercialization to US-based specialist hospital marketer Hospira last November. The move was about “curbing financial risks” associated with the project, whose approval, as the press release optimistically states, “is still possible in late 2007”. Also last year, Mayne Pharma pulled out of a marketing deal with Pliva (now part of Barr Pharmaceuticals) on generic EPO. The product was approved in Croatia in 2005 but hasn’t got past the EU regulators.

In sum, Sandoz's approval in itself isn’t much of a threat to J&J, even less to Amgen, which sells epoietin alfa as Epogen in the US. But it is symbolic, at least in its timing, of an end to the monopolies that innovators have enjoyed on hard-to-make biologics like EPO, a topic we discussed in more detail in this IN VIVO feature.

Sandoz’s head of Biopharmaceuticals Ajaz Hussain knows that biosimilars’ take off will be slow; he told IN VIVO Blog about it earlier this summer. But take off they will, eventually—and when they do, this approval may well be looked upon, if only retrospectively, as one of the most important steps along the way.

Good News for Amgen and J&J on EPO—but not for the Rest of Pharma

CMS: The Other Drug Safety Agency

Amgen and Johnson & Johnson got some good news when the Centers for Medicare & Medicaid Services finalized its proposed policy on coverage of erythropoietin stimulating agents (ESAs) in cancer patients. The final policy is about as good as it could be for the companies under the circumstances—much better than the agency originally proposed.

CMS agreed to continue to cover EPO in a number of important chemotherapy settings and also dropped some of the toughest dosing restrictions in the proposed policy. So the worst may be over for darbepoetin (Aranesp) and epoetin (Procrit) in the cancer market. Both Amgen and J&J reported sharp revenue declines for their respective brands during the quarter in response to safety concerns—and especially payment changes—but both expect growth to resume from the new, lower baseline.

CMS may have backed off from the most draconian aspects of its proposed limits on EPO coverage, but the agency is not backing off from the position that it does not have to defer to the Food & Drug Administration when it comes to responding to emerging drug safety issues.

In that sense, the final coverage policy is not a change from the agency’s initial proposal—and that is a message that the rest of the biopharmaceutical industry cannot afford to miss.

The RPM Report has written extensively about the activist role taken by CMS in the EPO safety debate. Simply put, there are now two agencies—FDA and CMS—that manufacturers have to consider when thinking about regulatory responses to drug safety issues.

CMS made it abundantly clear in the proposed EPO policy that it does not intend to wait for FDA to finalize its review of the safety issues before acting. And in the final policy, CMS is sticking to that position.

“CMS and FDA are separate agencies with different statutory missions, and operate under distinct legal authorities,” the final policy notes. “We are encouraged that the separate and independent analyses of the FDA and CMS have raised similar serious concerns about the use of ESA treatment in patients with cancer and related neoplastic conditions.”

“FDA deliberations are not public and their timeline for making changes (if any are made) in the labeling for ESAs is unknown. We believe the safety concerns that we have identified in this document required CMS to act quickly to protect beneficiaries.”

There are still plenty of regulatory hurdles ahead for ESAs. FDA hasn’t finalized labeling changes for EPO in response to the safety issues—and both FDA and CMS are just getting started on reviewing use of the agents in the renal failure market.

But one thing is clear: CMS is not going to take a back seat to FDA when safety issues arise.