What’s the goal?
As expected the 48th Annual EASD conference is yielding an avalanche of data on diabetes drugs under development. Already this morning we’ve seen press releases from Lilly (NYSE:LLY), Novo Nordisk (NYSE:NVO) and Janssen, which is a unit of Johnson and Johnson (NYSE:JNJ). With one notable exception, Janssen, the information in these releases is disturbing and provides a perfect example of why so many of these companies are in big trouble. Here are just a few samples from the various releases:
“Study results showed that in addition to clinical results showing a statistically significant 48 percent baseline adjusted reduction in nocturnal hypoglycaemia compared with insulin glargine [0.25 vs. 0.39 events/ 30 days/patient, after adjusting for baseline hypoglycaemia events (p=0.020)]1, patients treated with LY2605541* reported a statistically significant reduction in the anxiety and fear associated with experiencing a hypoglycaemic event based upon the Adult Low Blood Sugar Survey (ALBSS).” – Lilly (Bold added by Diabetic Investor)
“… show that patients with type 2 diabetes starting insulin therapy had a 43% lower rate of night-time hypoglycaemia* when using insulin degludec compared with those using insulin glargine (0.27 [insulin degludec] versus 0.46 [insulin glargine] episodes per patient per year, p<0.001) with equivalent improvements in glucose control” – Novo Nordisk (Bold added by Diabetic Investor
“Janssen Research & Development, LLC (Janssen) today announced that use of the investigational medicine canagliflozin substantially lowered blood glucose levels when used as add-on therapy in patients on insulin therapy for type 2 diabetes and who are considered to be at greater risk for cardiovascular disease.” (Bold added by Diabetic Investor)
“The new analysis showed a reduction in systolic blood pressure with empagliflozin, which, in the study, was independent of the reductions observed in blood glucose or weight, based on a statistical measure called the Pearson correlation coefficient.” – Lilly (Bold added by Diabetic Investor)
Now Diabetic Investor does not want to imply that reducing the incidence of hypoglycemia isn’t important or that lowering blood pressure is not an admirable goal, however these issues pale in comparison to the main goal which is to lower glucose levels. Basically what’s happening here is that all of these drugs when used as monotherapy or add-on therapy do fair job of lowering glucose levels and companies desperate for any edge are coming out with these studies. They seem to think that physicians will see these studies and prescribe their me-too, copycat drug over the competitions me-too, copycat drug because it has a slightly lower chance of producing a hypoglycemic event.
Whether these companies realize it or not, and it’s our guess they don’t, the diabetes drug market is following the same path already followed by the diabetes device market. Back in the day glucose meter companies overly fascinated with technology began a game of one-upmanship. Rather than come with new and innovative improvements which would actually create differentiation between products, all meters became the same. Soon everyone had alternate site testing, small blood samples, computer connectivity, no-coding and of course pretty colors. The glucose monitor, once a medical device, had become a commodity and the glucose monitor market became a commodity market.
This is exactly where the diabetes drug market is going if drug companies continue along their present path of developing me-too, copycat drugs- drugs from the same class, which do the same thing, the same way, with very minor differences. All one needs to do is look at the DPP4 market dominated by Januvia or the short-acting insulin market and the failure of Apidra. There is a reason Januvia is king of the hill and no other DPP4 has come close to its huge sales numbers. The same is true for Apidra only in reverse as this me-too, copycat short-acting insulin which even with a lower price can’t come close to the already well-established competition.
Rather than focusing on developing truly innovative medicines most companies are playing the copycat game. They see the diabetes market growing at epidemic rates and reason even with lower prices they can eck out a small profit. They fully understand the risk involved when hunting for big game and given the current market conditions reason the risk reward profile just doesn’t make sense. Yet this play it safe, follow everyone else strategy will only hasten their demise and create exactly what they don’t want; a market ruled by price rather than performance.
Just as payors woke up to the fact that they controlled which meter company had the biggest market share, all meters where basically the same and patients didn’t really care which meter they used, they did what every company who’s in control does and put the squeeze on meter companies demanding lower prices. Realizing they were behind the eight-ball, meters companies had no choice for if they didn’t meet the payors demand their entire business could collapse. After capitulating the first time, this began a slippery slope for meter companies as payors where like sharks that smelled blood in the water. Payors knew they had the upper-hand and haven’t loosened their gripe since.
Now there are some who believe the diabetes drug situation is different and that payors will almost always pony up for new drugs that show improvements in care, even if these improvements are incremental. Januvia is the poster child for this exact situation expect for the fact of when the drug came to market. Had it not been for the Avandia controversy and the mistakes made by Lilly and Amylin with the Byetta launch; its unlikely Januvia would have achieved its current mega-blockbuster status. While many forget now the study data for Januvia wasn’t all that spectacular and many respected diabetes researchers didn’t see a place for the drug which offered only minor enhancements, that was until of course the Avandia controversy came along and changed history.
Given the current market dynamics where everyone is focused on lowering costs, payors are unlikely to pony up big bucks for these new drugs. Unlike physicians who don’t have the time to read all the study data, medical directors and their teams at the payors read every line. They know the drugs already on the market, their costs and profiles. They see that while these new drugs do offer some minor benefits, they are basically small incremental improvements unworthy of a premium price. Something they will report back to their bosses, who in turn will go to the company and basically say- “We’ll be happy to put your new, me-too, copycat diabetes drug on formulary provided we pay X. Oh and by the way, your insulin that’s already on formulary and about to face generic competition; we’ll be asking for a price cut of about 40% or so. Have a nice day.”
The one possibly exception to this situation could be Bydureon as it is everything these other drugs are not, as it actually offers something different and very compelling. While everyone else is running around like chickens with their heads cut off, looking for the smallest of differences; Bydureon is on the market and proving its worth with each new patient add. Diabetic Investor has said from the beginning that while Bydureon is no wonder drug, it offers the most complete package for treating type 2 diabetes. Best of all, it’s taken just once a week and as everyone knows therapy compliance is a critical factor in producing better overall outcomes.
Other than Bydureon Diabetic Investor isn’t all that impressed with this new crop of drugs no matter what class they fall into. While there looks to be some benefits with the SGLT-2 inhibitors, there are also some very real risks. The same goes the new longer-acting insulin’s, which do provide some benefits but nothing all that great over what we already have and will soon become generic. The same goes for the crop of once-daily or once-weekly GLP-1’s under development. The fact is at this moment in time the diabetes drug pipeline is like a minor league baseball team, lots of potential but no major superstars on the horizon. While it’s possible there could be a diamond in the rough, a late bloomer of sorts it doesn’t look that way today.
The bottom line is unless something changes and in a big way, the diabetes drug companies are planting the seeds that will eventually lead to their demise. Their failure to innovative will come back to haunt them just as it did glucose monitor makers years ago. Diabetic Investor is well aware of risks that come with hunting big game, and we’re well aware that over 75% of all compounds never make it to market. However, as Charles de Gaulle once noted; “Success contains within it the germs of failure, and the reverse is also true.” From what we’re seeing it appears as if the major diabetes drug companies have forgotten this and are more interested in not losing than they are in winning.