Pharmaguy's Insights Into Drug Industry News
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Pharmaguy's Insights Into Drug Industry News
Pharmaguy curates and provides insights into selected drug industry news and issues.
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HHS Says Namenda "Hard Switch" Will Cost Medicare a Minimum of $6 Billion

HHS Says Namenda "Hard Switch" Will Cost Medicare a Minimum of $6 Billion | Pharmaguy's Insights Into Drug Industry News |
Actavis said last month that it stood to lose $200 million in sales if an appeals court didn't let it force patients over to a new, patent-protected version of Alzheimer's treatment Namenda before generics hit. But if the court does allow the so-called hard switch? The federal government stands to lose much, much more.

The cost of that move to Medicare and its beneficiaries? A $6 billion spending increase between 2015 and 2024--at the least, the department said.

"We are concerned that the measures taken by Actavis undermine competition and result in excess payments by consumers and taxpayers," it wrote in the report. "… Actavis' planned conduct would exacerbate the problem of financing health care for the elderly."

Pharma Guy's insight:

HHS concludes its report saying:

"The planned withdrawal from the market of Namenda IR appears designed to force a highly- vulnerable population suffering from a severe chronic illness to shift to a reformulated version of the product for the purpose of limiting generic competition and preserving monopoly profits. Actions of this type undermine consumer choice and generic competition in prescription drug markets.

"If Actavis curtails production of Namenda IR, consumer welfare will suffer due to a combination of fewer choices and diminished price competition. The federal government in particular would overpay relative to what it would have paid had the generic product been permitted to freely compete with the newer reformulated product. Such practices stress public budgets and reduce the ability to promote value-based health care use. As a result, Actavis’ planned conduct would exacerbate the problem of financing health care for the elderly."

Way to go, "patient-centric" pharma! 

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No Namenda for You!, Says Actavis CEO to Patients

No Namenda for You!, Says Actavis CEO to Patients | Pharmaguy's Insights Into Drug Industry News |

Actavis is betting it can switch a large number of patients to a newer Alzheimer's pill from an older version.

While Actavis is busy fighting a court battle over marketing plans for a newer version of its big-selling Alzheimer’s pill, the drug maker is also working hard to convert many patients from its older version of the drug before generic rivals emerge later this year.

At the moment, the newer Namenda XR accounts for about 40% of all prescriptions written for both the old and new versions of the drug. But Actavis believes Namenda XR can capture as many as 70% of prescriptions by July, when generic copycat versions of the older Namenda IR become available.

But to what extent will it succeed in reaching that goal? This is unclear due to the ongoing legal fight. The drug maker, you may recall, is currently battling with the New York State Attorney General, who filed a lawsuit claiming the switching effort violates antitrust law. The original plan was to remove Namenda IR from the market and force patients to take the newer Namenda XR.

But a federal court judge last month issued a preliminary injunction that prevented Actavis from discontinuing sales of its older Namenda IR (see story here). Actavis appealed the ruling and a hearing is scheduled for next month in which the drug maker hopes to convince a federal appeals court to lift the preliminary injunction.

If that doesn’t happen, “Actavis will have to use marketing strategies – detailing, differential pricing, and direct-to-consumer advertising to convert as much of the market to Namenda XR as possible before generics enter,” writes Sanford Bernstein analyst Ronny Gal in an investor note. Actavis, in fact, has already begun a consumer advertising campaign to speed the switch.

Pharma Guy's insight:

Meanwhile, here's an example of how pharma CEOs are the antithesis of "patient-centricity":

During an investor conference last week, Actavis chief executive Brent Saunders maintained that “I think we have a very good shot at it. It is not a slam dunk. But it’s a lot of hard work and there are a lot of people that have to do what they need to do. But we are very focused on it.

That is, Actavis is very focused on keeping patients on a more expensive brand-name drug than on helping patients lower or eliminate their co-pays with a generic version.

The key here is getting physicians to switch their script writing to Namenda XR because many state laws prevent pharmacists from substituting a generic for the brand name drug prescribed by the physician. Thus many pharmacists will be forced to say: "No Namenda (IR) for you!"

In any case, is this product effective in treating Alzheimer's?

More from Pharmalot: Why the Actavis Product Switching Case may Transform Pharma

“This case is huge,” says Erik Gordon, a professor at the University of Michigan Ross School of Business. If a recent court ruling is upheld, “this could signal the eventual end of the innovative pharmaceutical industry as we know it. Drug makers will have to rethink how they invest and do business.”

At the heart of the matter is a debate over reformulating a medicine and obtaining a patent to extend the product life cycle. And the case has highlighted competing notions over whether this tactic can actually create an unfair monopoly or is the correct use of intellectual property to protect profits.

It all began last year, when Forest Laboratories, which his now owned by Actavis,disclosed plans to halt sales of its twice-a-day Namenda IR tablet for Alzheimer’s. The patent expires in October and generic rivals can appear by July. The patent on a newer, once-daily Namenda XR, however, runs until 2025.

Actavis argues that Namenda XR is a better deal for patients – not only is it more convenient, but the contents of the capsule can be sprinkled on applesauce for patients who have difficulty swallowing. The drug is also sold at a slight discount, on a wholesale basis, to the older Namenda IR.

But Eric Schneiderman, the New York Attorney General, doesn’t see it this way. He argues the maneuver is “unethical and illegal,” because patients would be forced to switch to Namenda XR well before lower-cost generics are available for the older version. And so, he filed an antitrust lawsuit.

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Actavis Loses Ruling on Namenda "Hard Switch" Marketing Tactic

Actavis Plc was ordered to continue to provide the immediate-release version of its Namenda Alzheimer’s drug in a win for New York Attorney General Eric Schneiderman, who sued the company in September.

Via TwoFour Insight Group
Pharma Guy's insight:

The decision may be most troubling for fellow companies looking to pursue the hard switch as a market-share shield, he wrote, noting that the district and appeals courts' direction suggests it would be "increasingly difficult" to pull it off.

Companies will likely have to demonstrate no hardship for patients and business rationale which differs from attempting to force the market to their new product.

TwoFour Insight Group's curator insight, December 12, 2014 10:26 AM
Similar to DPCO 2013' s authority to not allow discontinuation of a product?
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$ACT CEO Brent Saunders is Not Just a Botox Fan, He's Also a Botox User!

$ACT CEO Brent Saunders is Not Just a Botox Fan, He's Also a Botox User! | Pharmaguy's Insights Into Drug Industry News |

In early January Brenton “Brent” Saunders, the chief executive of upstart pharmaceutical giant Actavis , reclined in a medical chair on a stage in an Orlando hotel ballroom as a plastic surgeon pierced his face 30 times, delivering needles full of Botox to the crooks of his eyes and nose and injecting Juvederm Voluma, a dermal filler, into his cheeks. A cameraman documented every prick and projected it on a huge screen behind him. These are bestselling products for AllerganAGN +0.38%, which Actavis is buying for $67 billion, the biggest health care deal in six years. The audience, 1,000 Allergan sales reps, went wild.

“I don’t have any crow’s feet anymore, and I don’t have any wrinkle lines above my nose,” says Saunders, who was boyish-looking even before his face was shot up with treatments. “Now I can say I’m not just the CEO, I’m a user.”

Pharma Guy's insight:

I love those "freedom of expression..." Botox ads, that exclaim "Don't hold back! Express it all!" The copy writers certainly didn't hold back on the exclamation points!!

The not-so-subtle subliminal message is "despite what has been reported in the press and on blogs by patients (see "Botox Banality Not a Boon for TV Sitcoms"), use of Botox does not limit your range of facial expressions." But it looks like Saunders has a poker face, which I envision will not change no matter in what direction the Actavis stock price goes.

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No NamendaXR For You! Judge Blocks "Product Hoping" by Actavis

No NamendaXR For You! Judge Blocks "Product Hoping" by Actavis | Pharmaguy's Insights Into Drug Industry News |

A federal judge has decided to block for now an attempt by the drug company Actavis to halt sales of an older form of its Alzheimer’s disease drug Namenda in favor of a newer version with a longer patent life.

The decision, issued Thursday, represents a victory for New York’s attorney general, who had filed an antitrust lawsuit against Actavis in September, accusing the company of forcing patients to switch to the newer version of the widely used medicine to thwart competition from generic manufacturers.

“Our lawsuit against Actavis sends a clear message: Drug companies cannot illegally prioritize profits over patients,” the attorney general, Eric T. Schneiderman, said in a statement Thursday.

The decision was made by Judge Robert W. Sweet in Federal District Court in Manhattan but was sealed because it contained confidential information. Both the attorney general and Actavis, however, confirmed that the judge had issued a preliminary injunction that would stop Actavis from discontinuing sales of the older Namenda while the case is being decided.

Brent Saunders, chief executive of Actavis, said in a statement that the company was “disappointed by today’s unprecedented ruling,” but was “prepared to manage our business in a way that provides the least disruption in our ability to support the marketplace and minimize any financial impact on our company.”

The company said it would immediately appeal the decision.

The case involves a practice called product hopping by critics, who say it is meant to thwart generic competition. Most generic drugs are dispensed because state laws allow or require pharmacists to substitute a cheaper generic when a doctor prescribes the brand-name drug. But if the brand-name version is different from the generic, then the substitution cannot be made.

The old form of Namenda, a tablet taken twice a day, is expected to face generic competition starting in July. Actavis wants to switch patients to the newer Namenda XR, a capsule taken only once a day, by then.

While the company says that the less frequent dosing is a good thing for patients, its executives also have said that the switch would make it harder for generic manufacturers to gain market share, because they would be able to sell copies of only the older, twice-a-day version.

Actavis initially planned to discontinue sales of the older Namenda in August. When it was unable to make enough of the new version, it postponed the cutoff until the fall and then until January. It has said it will continue supplying the older tablets even beyond that to patients with special medical needs. But with Judge Sweet’s decision, it will apparently have to keep making the older form available to everyone.

Pharma Guy's insight:

"product hopping" -- that's a new term for me, but I've covered the topic before. Read, for example, Detrol v. Toviaz: Marketing Replaces Innovation at Pfizer! 

From the lawsuit:

This case is brought to prevent Defendants from illegally maintaining their monopoly position and inflating their profits at the expense of patients suffering from Alzheimer's disease. The manipulative tactic that the Defendants seek to employ here is what some in the industry, including Defendants' own CEO, have called a "forced Switch." In a forced switch, a pharmaceutical company that sells a drug facing imminent generic competition withdraws its drug from the market, forcing patients to switch to a different form of the drug with patents that expire later. The switch has the effect of impeding the entry of lower-cost generic drugs. A physician recently complained to Defendants, aptly describing their contemplated action as "immoral and unethical." It is also illegal. 

Defendants sell a blockbuster drug to treat Alzheimer's disease, called Namenda. Namenda is Forest's top selling drug, and is protected by patent and regulatory exclusivities that prevent generic versions from entering the market until July 2015. But rather than allowing patients with Alzheimer's to continue to take Namenda and switch to the less expensive generic version when it becomes available, as contemplated by federal and state drug laws, Forest instead hatched a scheme that interferes with patients' ability to make this switch. 

Defendants' strategy is to discontinue or severely restrict patient access to its original, immediate-release version of Namenda, known as Namenda IR, prior to generic entry in order to force patients to switch to Forest's newer, virtually identical, extended-release version of Namenda, called Namenda XR. Because Namenda XR is protected by patents for many years longer than the original Namenda IR, Defendants' goal is to use the "forced switch" to reap several more years of monopoly profits than they would have earned otherwise. Under generic substitution laws, a pharmacist will not be able to substitute lower-priced generic Namenda IR (known as memantine) for Namenda XR. As a result, once patients have switched to Namenda XR, it will destroy the market for the generic form of Namenda IR because of the dramatically increased burden, cost, and time needed to arrange for patients who have been switched to Namenda XR to switch back to the original version.

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