Business Week has just published an excellent piece exploring the pros and cons of Amgen’s new drug for osteoporosis. It illustrates how drug-makers—and Wall Street investors—view new products. It also demonstrates why government regulators should begin taking a close look at pricey “me-too” drugs before committing billions of tax-payer dollars to pay for those new products.
An Osteoporosis Blockbuster for Amgen?
Its bone-loss treatment denosumab, which could bring in $2 billion to $3 billion a year, is closer to FDA approval. But not all experts are sold on it
Wall Street has set an exceptionally high bar for Amgen (AMGN)'s new bone-loss treatment. Shares of the world's largest biotechnology company have jumped 27% in the past three months, to 60, largely on news of clinical trials that showed the drug is as at least as effective, and sometimes better, than standard osteoporosis treatments when it comes to preventing and treating dangerous fractures. On Aug. 13, an advisory board of the U.S. Food & Drug Administration is expected to recommend that the agency approve the drug, known as denosumab, in October.
Bone loss is a huge and growing medical problem: . . . Amgen has requested that the FDA approve denosumab not only for treating osteoporosis but also for preventing it in post-menopausal women and some cancer patients. If the agency concurs, the drug could bring in $2 billion to $3 billion a year, analysts predict.
At a time when the country is focused on reforming health care, however, some health experts are asking an important question: Can the U.S. afford to shield the bones of millions of aging baby boomers? On Aug. 11, the New England Journal of Medicine published a critical editorial penned by Mayo Clinic professor of medicine Dr. Sundeep Khosla. He isn't convinced Amgen's drug is that much better than older, affordable alternatives, such as Merck (MRK)'s Fosamax, now available as a generic for as little as $100 a year. Amgen won't reveal its pricing plans yet, but analysts are assuming that because denosumab is a biologic drug, it will cost significantly more than the $2,000-a-year price tag on Fosamax's most expensive rivals. "If there's only a marginal difference, you really need a reason not to use those older drugs," says Khosla, who neither participated in the Amgen trials nor has financial relationships with companies that market rival treatments.
Reducing the Hassle Factor
In two denosumab studies, the results of which also were published in the NEJM on Aug. 11, the drug performed admirably against a placebo. In post-menopausal women with osteoporosis, it decreased the risk of hip fractures by 40% and spine fractures by 68%. Men with prostate cancer who were on a treatment that can cause bone loss experienced a 62% lower risk of spine fractures. But Amgen has done just a handful of trials comparing denosumab to currently marketed bone-loss drugs. And in osteoporosis, those trials only measured bone density—not fracture risk. That worries some physicians. "I have 14 years of experience with Fosamax, so when something new enters the field, I need to know: Does it work better?" says Dr. Harold Rosen, director of the osteoporosis prevention and treatment center of Beth Israel Deaconess Medical Center in Boston.
Amgen executives are confident they can market denosumab based on its ability to reduce "the hassle factor," said Dr. Roger Perlmutter, Amgen's executive vice-president for research and development, in a June interview. Unlike Fosamax, which is a daily or weekly pill—or other drugs that require intravenous infusions—denosumab is a twice-yearly injection that's as easy to administer as a flu shot, Perlmutter says. Side effects sometimes seen in the older drugs, such as stomach problems and jawbone deterioration, seem rare with denosumab. As for the potential price, he says, "We don't intend to be exploitative. We want the value proposition to be clear."
The biotech company's ability to communicate that value proposition could be complicated by the FDA, which is likely to zero in on side effects. Denosumab is an antibody that attacks bone loss in a completely new way—by blocking a protein that normally stimulates bone-destroying cells. The long-term implications of interfering with that pathway are not yet clear, but some patients in the studies suffered serious skin infections, and others came down with cataracts. If the FDA requires physicians to monitor patients closely and report side effects, that could discourage widespread prescribing of denosumab.
All told, denosumab may prove to be the biggest marketing challenge the 29-year-old biotech has ever faced. The market for osteoporosis drugs is about $5 billion a year, estimates Lazard analyst Joel Sendek, but it's shrinking as insurers push patients to switch to generic Fosamax. That has sparked a marketing war: In 2008, Roche (RO) spent $92 million advertising its osteoporosis drug Boniva, with spots featuring actress Sally Field, according to TNS Media Intelligence. Novartis spent $53 million pitching its rival drug Reclast. "Amgen is going to have to convince patients, doctors, and third-party payers that this is a good drug to have in the armamentarium," Sendek says. "It won't happen overnight, especially in a cost-constrained market."
First, notice that from Wall Street’s point of view, this is a story about a stock, rather than a story about a drug. The stock has spiraled 27 percent in just three months on hopes that Amgen will be approved by the FDA.
That’s the lead—how much the stock has climbed, and how much money investors might make—not how much good denosumab might or might not do for patients. Indeed, in the very first paragraph, the reporter makes it clear that this exciting new drug is only “ as effective, and sometimes better” than existing treatments. What makes the new product exciting is that, if it’s approved, the company stands to make a handsome profit, because denosumab will be very, very expensive.
The stock’s swift rise tells us that investors have large sums riding on the FDA’s decision. When you read about lobbyists pressuring the FDA to approve a product—and lobbying Congress men to make sure that Medicare pays for it—keep in mind that these lobbyists represent the company and its wealthiest investors. Only rarely are they patient advocates. (Small investors may also be concerned about the FDA’s decision, but the big players have gambled the big bucks—and they also have the wealth to influence what happens in Washington.)
Business Week’s reporter acknowledges that, in this case, no one really knows whether the drug is better than older, much less expensive medications because the FDA did not demand head-to-head comparisons. The FDA only requires that manufacturers test the drug against a placebo and Amgen did that—so we know the drug is better than nothing.
But that’s all we know. As the reporter points out: “Amgen has done just a handful of trials comparing denosumab to currently marketed bone-loss drugs. And in osteoporosis, those trials only measured bone density—not fracture risk.” The risk of fr
acture is, of course , what we care about.
Denosumab seems a prime candidate for the “comparative effectiveness research” that the President funded in the fiscal stimulus package that Congress passed earlier this year. The Institute of Medicine (IOM) already has appointed a panel of physicians medical experts to oversee unbiased studies that measure the benefit of new product such as denosumab against alternatives already on the market.
Business Week quotes a professor of medicine at the Mayo clinic who has no financial interest in denosumab—or its rivals—expressing his concern that Amgen’s product is, at best, “marginally better.” Meanwhile, it will cost more than 20 times as much as a generic treatment now available for just $100 a year.
In other words, we’re looking at a minimal benefit, and a huge price tag.
If the FDA approves the drug, chances are Medicare and private insurers will cover it, and we’ll all pay for it in the form of higher Medicare costs—and higher insurance premiums.
Moreover, patients who take the new drug may face some serious risks. On the one hand, “Side effects sometimes seen in the older drugs, such as stomach problems and jawbone deterioration, seem rare with denosumab”—apparently no one is sure. But Amgen’s product poses other dangers: “Denosumab is an antibody that attacks bone loss in a completely new way—by blocking a protein that normally stimulates bone-destroying cells. The long-term implications of interfering with that pathway are not yet clear, but some patients in the studies suffered serious skin infections, and others came down with cataracts.”
Why would I pay more than twenty time as much for a drug that may be slightly better—and risk both nasty skin infections and the chance of developing cataracts?
Because Amgen gives my doctor free samples—and convinces him to “try denosumab”—or persuades me, via TV ads, that denosumab represents a “medical breakthrough.”
This is why many health care reformers believe that drug-makers should not be allowed to run Direct-to-Consumer ads on television until a drug has been on the market for at least three years. It’s worth keeping in mind, that when it comes to new drugs and devices, we always know less about risks. The company and its investors will always push to get a new product on the market as quickly as possible—while it’s still the “ new, new thing” that everyone is raving about it—and before we learn too much about risks and side effects.
What’s interesting is that Amgen isn’t trying to sell denosumab by marshalling evidence that it really is more effective—or less risky. Instead, executives confide that they are confident they can market it based on the notion that it “reduces the hassle factor.” Wile l patients have to take its rival, Fosamax, weekly, or even daily, they receive denosumab as a twice-yearly injection.
Just how difficult is it to take a pill weekly—or even daily? Clearly, Amgen faces a marketing challenge. That’s why drug-makers pour so much money into advertising —rather than research and development. These days, selling a drug that is only a little better than competing treatments is all about how well you promote it. Indeed, we’re told, the manufacturers of osteoporosis drugs are now engaged in a “marketing wear”: “In 2008, Roche (RO) spent $92 million advertising its osteoporosis drug Boniva, with spots featuring actress Sally Field, according to TNS Media Intelligence. Novartis spent $53 million pitching its rival drug Reclast.” Guess who pays for all of that advertising?
At this point, Amgen seems to be winning the battle to convince the FDA that denosumab should be approved. And as soon as the FDA gives its stamp of approval, Medicare will probably agree to cover the drug –unless healthcare reform gives Medicare ( or an Independent Medicare Advisory Panel), the clout to question the effectiveness of new products–and the power negotiate for discounts. In that case, Medicare would probably refuse to pay top dollar when the benefits appear minimal—and the risks unknown.
The bottom line is that someone needs to protect the patient. That’s one reason why we need the Independent Medicare Advisory Council that the administration has proposed—and a strong public sector insurance plan that will have just one concern: what is best for the patient.
Too often, for-profit insurers are reluctant to say “no” to widely-touted new products because they do not want to lose market share. After all, they are required, by law, to do their best to maximize profits for their investors. Protecting customers from the risks of a popular new drug is not really the private insurer’s responsibility.
Government, on the other hand, is charged with promoting “the public good.” And a public sector insurance plan would have no shareholders to worry about. It’s only goal would be to offer customers the best, most affordable care.