Big pharma under pressure Healthcare spending

BIG PHARMA UNDER PRESSURE

The recession is now biting the pharma sector hard. Following nearly 40 years of continuous growth, healthcare spending in the EU has started to fall. Sarah Houlton reports.

This is the first year there has been a drop in EU healthcare spending since 1975, according to the OECD and the European Commission. Their report, ‘Health at a glance – Europe 2012’ indicates that healthcare spending fell Europe-wide by 0.6 per cent in 2010, a significant reduction on the average annual growth of 4.6 per cent the sector experienced throughout the previous decade.

Unsurprisingly, the worst effects were evident in those countries most badly hit by the economic crisis. The fall in Greece, for example, was almost 7 per cent – a dramatic swing away from the 6 per cent annual growth in the country from 2000–2009. While these figures represent the entire healthcare market, in practice pharmaceuticals are a large proportion of this – around a fifth. The report warns that there is a significant danger that these spending cuts will have a long-term impact on healthcare outcomes.

The long-standing industry complaint about the willingness of governments to pay for new medicines and make them available to patients in a timely fashion continues. In the UK, for example, the Office of Health Economics has predicted that over the next three years the spending on such products will rise by about 1 per cent a year. This is despite the anticipated £3bn in savings the NHS will make over that period by the growing availability of cheaper generic versions of big-selling medicines as their patents expire.

Indeed, several such medicines became subject to generic competition in 2012. Perhaps the biggest drop was in sales of Plavix (clopidogrel), Sanofi’s blockbuster blood thinning drug. In 2011 it sold more than $9.3bn worldwide; this dropped by about 70 per cent as cheaper generic versions became available. As can be seen in the Table, sales losses from patent expiries in 2013 is likely to be lower, with the biggest seller, Cymbalta (duloxetine), only at number 17 on the 2011 worldwide total sales list – and half of them are biologics, which are currently much more resistant to competition. While this offers industry a little respite, the sales losses in subsequent years will rise again, with bigger-selling drugs due to face competition in 2014. These include AstraZeneca’s Nexium (esomeprazole), at number five on the list with 2011 sales of almost $8m – and three of the products ahead of it are already patent-expired.

Innovation opportunities

While the days of the $10bn mega-blockbuster are over, many unmet medical needs remain, providing significant opportunities for pharma innovation. Several first-in-class drugs have been given positive opinions by the European Medicines Agency. One of these, AstraZeneca’s Forxiga (dapagliflozin), is a medicine for Type II diabetes that works in a new way – it inhibits a hormone in the kidneys that promotes the reabsorption of glucose by the bloodstream. This improves the control of patients’ diabetes without raising the amount of insulin secreted.

Irritable bowel syndrome now has a new treatment – Constella (linaclotide) from Almirall. This is a synthetic peptide designed to improve the quality of life of patients suffering from IBS with constipation. Although about 20 per cent of the population are believed

to be affected by IBS, treatment options are extremely limited, and this should provide a degree of relief, at least for some patients.

UniQure Biopharma’s Glybera (alipogene tiparvovec) is a European first – the only gene therapy medicine to gain approval thus far. It uses a viral vector to deliver the gene for an enzyme that is not produced in patients with the rare disease lipoprotein lipase deficiency. The gene is then expressed in the muscles, enabling the enzyme to be made in the body, and preventing the recurrent attacks of pancreatitis patients with this condition suffer from.

US scandals

The US had its worst public health problem in decades as a result of a shocking absence of quality control procedures at the New England Compounding Center in Framingham, MA. The company formulated products including corticosteroids for spinal injections, and about 500 patients who had received these injections developed fungal meningitis, 36 of whom died. It took the authorities a couple of months to work out the source of the problem, and then when the FDA inspected the facility they found appalling conditions.

The 483 defect notice issued in October highlighted numerous serious problems, with many filled product vials contaminated with green-black foreign matter or white filamentous material. Half of them contained fungal contamination. The company had been using non-sterile materials to formulate injectable products, while equipment and clean-rooms were significantly contaminated with many different fungal strains. They had even been turning the air conditioning off overnight, leading to a failure of the control of both temperature and humidity in the formulation suites.

While the company has now closed down its operations and withdrawn all its products, it turns out that this is not the only compounding pharmacy where problems have been identified. A linked company, Ameridose, has also withdrawn a large number of products after FDA expressed concern about the sterility of its operations, and another Massachusettsbased compounder, Infusion Resource, was shut down after another snap inspection by FDA. These problems highlight wider concerns with compounding pharmacies – they are not subject to the same sort of good manufacturing practice controls that pharmaceutical manufacturers must abide by, and now moves are afoot to address this glaring oversight.

Ranbaxy’s manufacturing problems have also continued. Having brought in outsourced product to take advantage of its 180-day exclusivity for generic Lipitor (atorvastatin) after its patent expired in late 2011 because of issues in its own manufacturing plants, it has now had to withdraw 41 lots of homemade product. A piece of a glass housing on the production line was found to be missing, and assumed to have fallen into the powder, raising the potential for fragments of glass to make their way into drug product. In addition, a lot of 10mg atorvastatin tablets had to be withdrawn after a customer found an errant 20mg tablet alongside their 10mg pills.

Transparency problems

There was real concern in the media in 2012 about the pharma industry’s transparency – or the lack of it. For some years now critics have thrown accusations at companies that they ‘bury’ bad data from trials, only publishing those whose results are positive, with those that show a lack of efficacy or significant side-effects being hidden.

The worst headlines were reserved for Roche and its reluctance to release the full trials data on Tamiflu (oseltamivir). Governments stockpiled millions of doses of the drug before and during 2009’s swine flu pandemic, yet there are significant concerns that it is not as effective at ameliorating the effects of flu as the company has claimed, with FDA describing their effects as ‘modest’. Despite promising back then that it would release full raw trials data to allow meaningful meta-analyses to be carried out, it still has not done so. At the end of November, the company claimed it would discuss the possibility of allowing access to the full data.

A campaign for full trials transparency has been launched by the British Medical Journal, and has already garnered some support from industry. Notably, GlaxoSmithKline has expressed its support, having faced criticism itself in the past over trials data on Avandia (rosiglitazone). It says it will start to make detailed, anonymised patient-level data available to scientists, who will be able to apply to an independent panel of experts who will decide on the scientific merit of their application. Importantly, this should enable detailed conclusions to be made on how new drugs work in different patient populations. The European Medicines Agency is also working towards widespread proactive publication of trials data once products have been approved.

Hopeful signs

Although pharma is feeling the squeeze from the recession, in 2012 there were far fewer large site closures than has been common

in recent years, perhaps because of the lack of any mega-mergers. However, AstraZeneca employees were badly affected – more than 7000 jobs are going there, more than 2000 of them in R&D. The company’s strategy of outsourcing and in-licensing continues – it has decided to virtualise its neuroscience research, with a small internal team working on development with a range of external academic and biotech partners.

While the recession continues to bite, PricewaterhouseCoopers is now predicting that following a bleak few years, the following decade could usher in a ‘golden era of renewed productivity and prosperity’. Its ‘Pharma 2020: from vision to decision’ report says that the necessary tools to develop new medicines are already appearing. But despite the demand for new and better treatments for many diseases, both widespread and rare, there are still many major economic and operational challenges facing the sector.

Most of the products that will be launched over the next decade or so are already in the pharma companies’ pipelines, but the demanding commercial environment seems set to continue. If pharma companies are willing to prune their pipelines and make tough decisions to address rising customer expectations, poor scientific productivity and cultural barriers, it says, there is hope. And if they are able to survive the difficult transitional period the industry is set to face in the coming years, they should be in a good place to prosper. n Table: Top 10 pharma patent expiries 2013 by global sales

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10 Cymbalta (duloxetine), Eli Lilly, depression and pain Avonex (interferon beta-1a), Biogen Idec, multiple sclerosis Humalog (insulin lispro), Eli Lilly, diabetes OxyContin (oxycodone), Purdue Pharma, pain Rebif (interferon beta-1a), Merck KGaA, multiple sclerosis Aciphex (rabeprazole), Eisai/Janssen, acid reflux Xeloda (capecitabine), Genentech, cancer Procrit (epoeitin alfa), Janssen, anaemia Neupogen (filgrastim), Amgen, neutropoenia Zometa (zoledronic acid), Novartis, hypercalcaemia in cancer