Adverse Reactions: What Does the Vioxx Withdrawal Mean for the Pharma Industry?
In September, Merck & Co. withdrew its blockbuster painkiller Vioxx from the market after post-launch studies indicated that use of the drug led to increased risks of stroke and heart attacks. In February, an advisory panel to the U.S. Food and Drug Administration (FDA) recommended that the whole class of drugs known as Cox-2 Inhibitors, including Vioxx and Pfizer’s Celebrex and Bextra, should have a "black box" warning, the FDA’s sternest caution. The panel concluded, however, that the benefits of these drugs outweigh their risks, and it narrowly voted to recommend allowing Vioxx to return to market.
Holding Up a Mirror
While the fallout for specific drugs, the industry, and regulators remains to be seen, this appears to be a watershed event for the industry. Sales of Cox-2 drugs, estimated at $7.6 billion for the 12 months ending June 2004, dropped by a third. Merck alone lost $32 billion in share value, the single biggest loss a big pharma company has seen from any product withdrawal. "The Vioxx withdrawal is a seminal event because of the players involved — some of the largest companies, some of their most valuable drugs, both the European and American regulatory structures," said Roger Longman, managing partner of Windhover Information and academic co-director of the Wharton/Windhover Program. "It holds up a mirror to the entire industry."
A lot of people did not like what they saw in this mirror. The FDA approval process, drug development, and, particularly, the marketing came under sharp attack. "Marketing tries to create differences where differences do not exist between products," commented David Campen, MD, medical director of drug information, utilization, and technology of Kaiser Permanente’s pharmacy operations in California, in an interview in IN VIVO: The Business & Medicine Report, which Longman edits. Kaiser helped develop the post-launch study that identified the elevated risk of adverse cardiovascular events in the use of Vioxx based on its 1.4 million patient records.
A Question of Science
The case has not only raised regulatory and strategic issues but also scientific questions. "A lot of the discussion in the media has implied that this is just a political question, but it is really a difficult scientific question," said Wharton Professor Patricia Danzon, academic co-director of the Wharton/Windhover Program. "What conclusions can we draw from different types of data? What sort of data will the FDA require pre-approval versus post-approval?"
While the FDA has primarily focused on randomized clinical trial data in the past, the new concerns were raised in part from observational data on patients taking the drug after its launch. With health care systems and insurers collecting extensive information on a broad cross section of patients, observational data could greatly expand the scope of monitoring but also raise the level of uncertainty for the industry. Observational data is not as controlled and rigorously designed as clinical trials.
Depending on how these scientific questions are resolved, the Vioxx fallout could either slow the approval process or accelerate it. The concerns about Vioxx didn’t surface in controlled trials until after 18 months of use. "Should all trials for chronic drugs run for that long period, or are we going to admit market access and then do more systematic monitoring post-launch?" Danzon asked. The answer could have a significant impact on the cost and timing of moving drugs to market. Of the $800 million to $1 billion price tag to bring a new drug to market, "fully half of that cost is the time cost of money," Danzon said. "If one of the effects of this is that trials have to be even longer than they are now, it will drive up costs. On the other hand, if we can use statistical methods to correct the observational data reasonably well for possible confounding factors, this approach might let drugs on the market earlier, but with more post-market observation. The effect could be profound."
Screening and Liability
There will also be greater attention to identifying and screening patients at risk for negative reactions. "There will be a greater premium on trying to identify patients who are going to have adverse outcomes," Danzon said. "To the extent that they can be identified, whether through pharmaco-genomics (genetic testing to guide drug treatment choice in clinical setting) or other approaches, these may be used. But a key question is whether such tests are available and whether people will pay for them."
In addition to the science, the legal rulings in the Cox-2 cases will have repercussions for the industry. "We don’t know what the conclusion will be on the liability issues," Danzon said. "If the company has a drug on the market that is completely in compliance with the FDA and has given the FDA all the information about adverse outcomes, will the courts say that the company is still liable for adverse events? If so, companies will be, in effect, regulated by both the FDA and the courts."
Shifts in Markets and Marketing
The Vioxx withdrawal may also accelerate an industry shift toward more specialist drugs, such as treatments for multiple sclerosis and colorectal cancer. "Primary care companies will depend increasingly on specialist products," said Longman. "Science and pipelines were already trending this way. The shift to specialization is a fact that should by now be front-and-center in the thinking of every senior pharmaceutical executive and board member. An industry that has been built for primary care will somehow have to adapt itself to a future of much smaller, better-trained sales forces where marketing takes its direction from medical thought leaders, not consumer products." This shift will benefit the biotech industry, which pursues specialty drugs for economic reasons (smaller trials, greater pricing flexibility, and smaller sales forces).
Danzon pointed out, however, that specialty drugs such as cancer medications have benefited from less-intense scrutiny on pricing in the past. Payors are now looking more closely at these drugs, so this advantage may be short-lived.
"Moreover," noted Longman, "Specialist drugs are by no means risk-free — particularly for biotechs who depend on just a few drugs for their entire valuation." Elan and Biogen Idec recently withdrew their MS treatment Tysabri after two patients got sick, and one died, while being treated with Tysabri, among other drugs. Since both companies rely on the product for growth, investors hammered their shares.
Nonetheless, because the drug is clearly beneficial for many patients, the CEO of Elan was willing to indicate that the drug might be back on the market as early as the summer — a rapid return absolutely impossible for a primary care product. Advertising is expected to become more cautious. "Even though they met the FDA requirements, the advertising for Cox-2 drugs gave the general impression that these drugs were widely appropriate," Danzon said. "Companies will have to be very careful in marketing that populations at risk for side effects are identified."
No Simple Answers
For health care leaders, however, there are no simple answers. Pharma has always been a complex and risky business, particularly with the rise of blockbuster drugs. "These very high-volume drugs are in some ways like an uninsurable risk such as a hurricane," Danzon said. "If a drug turns out to have a certain clinical profile, all the patients who take the drug are potentially similarly affected. There is no diversification. It is an uninsurable risk, so it is not possible for drug companies to buy reasonably priced liability insurance for these types of risks."
At the next running of the Wharton/Windhover Program in May, Danzon said they expect to bring in representatives of the FDA and other experts knowledgeable about this fast-changing competitive landscape. "It really is an extremely complex challenge," Danzon said. "You need expertise and the ability to weigh input on many different dimensions. This is just another consideration. Whether this is a relatively transitory event or a paradigm shift, it is not radically changing the fact that this has always been a complex and risky industry."
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