[1]thx to phalinn ophi on flickr creative commons
In a setback to AbbVie, the Food and Drug Administration yesterday warned of liver damage from its two hepatitis C treatments, setting off a chain reaction that is reverberating across the pharmaceutical industry. With as many as seven patient deaths and several liver transplants attributed to the drugs, AbbVie stock plummeted and Wall Street fortune tellers went to work betting on winners and losers.
But before we sketch out some scenarios, let’s recap what the agency actually said [2]:
The FDA review found five cases that were probably related to the drugs, called Viekira Pak and Technivie, which was more recently approved. Another five were possibly related. Of the 10 patients, seven died and each seemed to have advanced liver disease or cirrhosis before using the drug. So the FDA is not willing to rule out the possibility that “some events might have occurred even if the patient hadn’t received treatment.”
Viekira Pak you may recall, hit the market about a year after Sovaldi, the first of two Gilead Sciences treatments, became available. The other Gilead drug is called Harvoni. The drugs promise higher cure rates – 90 percent or more – but are expensive, costing tens of thousands of dollars and sparked debate about drug prices.
AbbVie competed by offering discounts on Viekira Pak, notably in an exclusive deal with Express Scripts, the biggest US pharmacy benefits manager. But from the start, the AbbVie drug had disadvantages, because the drug offers a lower cure rate and some patients [3] must take Viekira Pak in combination with ribavirin, an older treatment that causes severe side effects. And that also meant patients had to take more pills.
So what do the wags say about what this means for AbbVie and other companies?
The serious side effects are “likely to be fatal for (AbbVie) brand, at least in the US,” writes Sector & Sovereign Research analyst Richard Evans in an investor note. He pointed out Viekira Pak already generated more adverse events than either Gilead drug. And the only way AbbVie was able to retain market share was to entice payers to place its drug on formularies, the lists of preferred medicines.
This tactic worked quite well because Viekira Pak became “a medically legitimate alternative if a Gilead drug wasn’t covered by insurance,” Evans continued. “Now that Viekira Pak has been shown to have a greater rate of serious adverse events, it’s no longer medically legitimate to cover only Viekira Pak.”
As for Gilead, the development is a plus, but the drug maker already commands nearly 90 percent of the market for hepatitis C treatments. Even if Viekira Pak were to disappear altogether, Jefferies analyst Brian Abrahams calculates the impact on Gilead revenue would be marginal. What’s more important to further sales are the number of patients going forward and competition from forthcoming drugs.
A crucial competitor will be Merck, which Sanford Bernstein analyst Tim Anderson said “stands to win.” By January, the drug maker may launch a one-pill-once-a-day regimen for several different genotypes of hepatitis C that has performed well in clinical trials. As he sees it, Merck could grab a meaningful chunk of the $2.5 billion in sales that AbbVie’s hepatitis C drugs were forecast to generate next year.
Looking more broadly, RW Baird analyst Brian Skorney suggested that the patient deaths are a setback to Express Scripts and other payers. “We always felt pharmacy benefit managers were playing a dangerous game by mandating an inferior drug solely, and very outspokenly, due to price,” he wrote in an investor note.
“Now the most extreme example of heavy handed tactics looks like a miscalculation that may have put patients’ lives at risk,” he continued. “We think the incentive for payers to try to publicly force price competition has all but evaporated.”
He added one more thought, which is that given that the patient deaths “only appeared once Viekira Pak was administered to tens of thousands of patients, the days of [FDA] approval based on safety data in a couple of thousand patients, without a comparator, may be over.”
[EDITOR’s NOTE: We updated to reflect that not all Viekira Pak patients use ribavirin].