The battle lines are emerging

The battle lines are emerging

Now that Lilly (NYSE:LLY) and Sanofi (NYSE:SNY) have settled their patent infringement lawsuit allowing Lilly to sell their biosimilar version of Lantus in 2016 combined with Novo Nordisk (NYSE:NVO) receiving FDA approval for their newest long-acting insulin Tresiba, the battle lines are emerging as to how these companies plan on fighting for market share. Keep in mind that Lantus remains on the market, as does Toujeo and Levemir.

Based on what we have seen and heard so far as much as these companies will attempt to differentiate their various long-acting insulin’s these efforts will likely fall onto deaf ears. Yes there are differences between the drugs but nothing so compelling that a physician would favor one above the rest. The fact remains that Lantus works very well and unless a patient is not responding well to Lantus we highly doubt that a physician would switch the patient to one of the newer products. The same goes for patients currently using Levemir.

As we have noted many times physicians are loathe to change a patients therapy regimen when it’s working and quite frankly all of these long-acting insulin’s work very well. What this basically means is that the long-acting insulin market will come down to two factors, formulary position and new patient starts. Which in essence means formulary position becomes critical as new patient starts are to a large extent determined by which long-acting has the better formulary position. Again as we have noted previously physicians are often handcuffed by the patient’s insurance coverage. While they might prefer one insulin over another they may little choice but to prescribe the insulin favored by the patient’s insurance coverage.

This is in sharp contrast to what’s happening in the SGLT2 market where for the moment it appears that Jardiance is superior to its two main competitors. Yes the jury is still out as to whether the cardiovascular benefits seen with Jardiance is a class effect, still Lilly has something both Johnson and Johnson (NYSE:JNJ) and AstraZeneca (NYSE:AZN) does not; real hard data.

This is not the case in the long-acting insulin market as the data clearly shows that while there are some minor differences between the drugs they all do basically the same thing the same way. This is the reason Sanofi was forced to discount Toujeo as it’s only incrementally better than Lantus. Yes a lower incidence of hypoglycemia is important but glycemic control is equally important and when it comes to glycemic control Toujeo and Lantus were the same. Looking at the data payors basically said the lower incidence of hypoglycemia seen with Toujeo was nice but not substantial enough to warrant preferred formulary position. Hence to keep Toujeo viable in the market Sanofi had little choice but to discount the drug.

This exact same situation is going to play out now that Tresiba is approved. Payors will look at the data and see that the benefits of the drug while nice aren’t compelling. That unless Novo is willing to provide a lower price and/or higher rebates there is no reason to provide it with favorable formulary position or premium reimbursement.

Finally payors see that it’s just a matter of time before Lilly enters this market giving them even more leverage. They know Lilly will come in with a lower price and that their biosimilar version of Lantus works as well as Lantus. Basically they can go to Novo and Sanofi and demand lower prices and/or higher rebates. They know that Novo and Sanofi cannot afford to lose market share and will likely capitulate to their demands rather than lose market share.

When it comes to the long-acting insulin market it’s the payors who are bringing a gun to a knife fight.