Niche-buster drugs launch next market evolution

September 1, 2008

Will generic drugs, patent expirations, safety issues and a dry pipeline for high-incident diseases make room for a new drug paradigm?

IS THE BLOCKBUSTER DRUG model on its way out? After all of the billions of dollars generated by these popular drugs treating common conditions, will generic drugs, patent expirations, safety issues and a dry pipeline for high-incident diseases make room for a new drug paradigm?

Some industry leaders predict that biologics will be the new blockbuster model-costing more but targeting niche diseases and fewer people. "Niche-buster" has even hit the vernacular.

A 2006 report by market analyst Datamonitor suggests that drug companies are not shying away from the new biologics even though they are targeting a limited population. Instead, they are realizing the sales potential of lower marketing costs, limited competition and greater support from regulators.

Datamonitor's "From Blockbuster to Niche-buster" report predicts that the newer drugs will place an emphasis on research and development, while the blockbusters relied on aggressive sales and marketing strategies.

Gleevec, Rituxan and Remicade, whose original indications expanded to off-label uses, are examples of biologics making it into the billion-dollar marketplace. On the other hand, 13 out of 19 blockbuster orphan drugs in 2006 were biologics, but the market exclusivity period for nine of them, including Rituxan, had already expired.

Big Pharma lost $14 billion in annual drug sales to patent expirations in 2006, according to IMS Health, and in 2007, eight blockbuster brands-with combined 2006 sales of $13 billion in the United States alone-faced patent expiration.

In addition this year, branded-product revenues worth $16.8 billion will be touched by generic competition, according to Datamonitor. Pharmacy consultants, pharmacy benefit managers (PBMs) and thought leaders agree that patent expirations, post-market safety issues, a proliferation of generics and a limited pipeline for small-molecule drugs are opening the door to a new drug model.

Some experts see the evolution of the blockbuster model aligned with the development of managed care-from a one-size-fits-all approach to more personalized, targeted medicine.

"The new model will take a rifle-shot approach to therapeutic areas and require more partnership across the value chain to share risk," adds Kevin Barnett, leader, managed markets practice for Campbell Alliance, a management consulting firm based in Raleigh, N.C. He says there is no question that the combination of unprecedented patent expirations, shorter windows of exclusivity, lack of blockbusters in the pipeline and me-too competition have paved the way for a new model.

"Blockbuster drugs once had a least 10 years of exclusivity, but now it's only about a year and half before a me-too drug pops on the market," says Yi Zheng, assistant vice president of clinical programs for CIGNA HealthCare. "Consumer-driven health plans and drug competition are also putting pressure on the traditional model. Lastly, with genomics and personalized medicine, we know that one size doesn't fit all, that we will be targeting smaller-niche patient populations."

A DUAL APPROACH

Others, like Rob Epstein, MD, chief medical officer for Medco Health Solutions in Franklin Lakes, N.J., are not convinced that the blockbuster model will disappear and a biologic model will takes its place. He envisions a hybrid of the two.

"The traditional blockbuster model will not go away until we better understand the targeted molecular mechanisms of the new biologics," he says. "While the new drugs should have fewer safety issues, they still offer challenges-who needs them, how do they work, and how do you align diagnoses with the drugs."

He also believes that MCOs have become more aggressive about promoting generics over brands, challenging the traditional blockbuster model once patents have expired.

In an interview with Med Ad News, John Rhodes of Deloitte Consulting outlines the paths to blockbusters: 1) advances in drugs that are already available for more common diseases; and 2) drugs targeting tougher-to-treat diseases with less volume at a premium price that generate blockbuster revenue.