Friday, May 11, 2007

Convincing Diabetics They Need Exubera

Last year, Pfizer (over)confidently predicted that Exubera would become a $2 billion-a-year blockbuster, but now, some Wall Street analysts question whether Pfizer will even recoup the $1.3 billion it spent to acquire the exclusive rights to Exubera. When Pfizer released its Q1 2007 earnings results, the company said that sales of Exubera were "disappointing" without specifying dollar amounts.

Pfizer has declined to report total 2006 sales for Exubera — even though the company does so for all of its other drugs — and the reason seems to be because the sales have been marginal at best. According to data from IMS Health, a health care information company, Exubera recorded 10,000 prescriptions in the U.S. for 2006, and had total U.S. sales of $18.9 million.

According to The New York Times, Exubera receives only about one of every 500 prescriptions for insulin written in the U.S. For the week ended March 9, 2007, new prescriptions written for Exubera edged up 3% and total scrips rose 5.2%, according to Mike King at Rodman & Renshaw, who cited more recent IMS Health data. But Pfizer acknowledges that Exubera has not done as well as they had hoped.

"Exubera is not where we wanted it to be at this time," admitted Jeffrey Kindler, Chairman and CEO, in a conference call. The company seeks to develop the market for Exubera more in the second half of the year.

A big reason is because Exubera hasn't exactly gotten favorable treatment from health insurers. Indianapolis-based WellPoint Inc. and Minnesota-based UnitedHealthcare, the nation's two largest insurers, placed Exubera in the third tier of their drug formularies. Co-pays at that level run $40 to $50 per prescription at UnitedHealthcare. Insurers are shying away because of its "exuberant" cost. According to WellPoint, Exubera costs $300 more per year than Lilly's Humalog and Humulin insulin, and nearly $600 more per year than Novolog and Novolin insulin made by Novo Nordisk.

The lack of progress on Exubera has made Wall Street wonder whether the inhaled-insulin market is really as large as drug companies once thought according to James Reddoch, a biotechnology analyst at Friedman, Billings, Ramsey. "It sounds nice on the surface, the fact that you can now breathe in your insulin. But there are problems from a practical standpoint."

The Exubera inhaler is bulky and can be hard to use, doctors say. The device is almost as large as a tennis ball can when open, and it must be pumped repeatedly before the insulin can be inhaled.

Pfizer is not ready to write the product off at this stage. Susan Silberman, Pfizer's senior vice president of worldwide commercial development claimed that Exubera's performance is meeting expectations.

"The focus is on getting people familiar with the product as it exists now," said Rick Chambers, a spokesman for Pfizer. "At this point, we're satisfied with how the process is moving. The feedback we're getting from patients and physicians is positive."

Silberman said "I think we have to manage this product differently. Insulin is intuitive. What has changed is the approach to delivery -- so (marketing) is about the education."

Intuitive? That's one word that is almost never used to describe insulin, and that statement suggests strongly that Silberman, a senior executive assigned to manage Exubera, is completely clueless when it comes to diabetes management. Deb Butterfield, author of "Showdown with Diabetes" once wrote "Knowing what dose of insulin to take was not then, and is not now, a precise science. It is not a simple analog of food, exercise, and insulin; rather it is a complex and seemingly random theory of chaos with a few discernable known variables."

A source familiar with Pfizer's thinking prior to the launch said that the company relied on consumer research data which turned out to be faulty in the real world. The data, the source said, indicated that new diabetes patients would be more likely to get treatment if they could avoid using needles, and that if there was a no-needle-inhalable device option offered, a large majority of consumers would ask for that. (In fact, Pfizer's head of worldwide pharmaceutical operations, Ian Read repeated that belief in January.)

Bloomberg News reports that some 2,300 Pfizer sales representatives have been promoting Exubera to more than 5,000 doctors. But Pfizer has also hired approximately 900 additional, part-time diabetes educators to explain the product to doctors and patients, and more will be added, although the company wouldn't say how many.

But Pfizer's own sales reps have berated Exubera on Café Pharma, the pharmaceutical industry's web-based gossip bulletin board. "I've only been able to sell one Exubera script that I know," said one rep. "So much hype before the product was launched. This thing is a bust," wrote another. "Dumb, dumb, dumb," typed a third, "Look at the size of the bong who the fuck wants to carry something so damn big that it doesn't even fit in a pocket[?]"

Although Pfizer's Silberman claims that marketing is all about education, she seems to be overlooking the fact that Exubera also means more work for doctors. Specifically, Exubera's unit of measurement makes it tough to convince doctors to prescribe it. Doctors must manage different dosages for Exubera relative to all other insulin, and for patients who wish to switch, doctors also have to convert their dosages which many don't want to do.

At the end of March, we learned that Dr. John Buse, president-elect of the American Diabetes Association had caught hell for his comments about Exubera. His now-infamous quote was:

"I think Pfizer will wish they had never gotten into this. I doubt they'll regain their investment. There is no advantage to Exubera and there may be a safety risk. I see it as my job to talk people out of (using) it."

The Wall Street Journal Health Blog spoke with Buse, and he told them that last part of his quote was taken out of context. He said he was talking about risks for patients who contract diabetes early in life and spend decades on insulin. (Clinical tests showed Exubera can hurt lung function a bit.) Also, it can be hard for Type 1 diabetics, who tend to be younger and whose bodies don't make insulin, to use Exubera, because they may need a more precise dose than the inhaled system can deliver, Buse said.

For younger patients, Buse said, "I'm going to make it sound pretty bad: A., You may have to take it for a long time and we only have 3-year safety data. B. You're going to carry this crazy thing that's the size of a can of Coke. You're going to be mixing packets before meals. People are going to think you're doing drugs. Why would you do that?" However, Buse did say that for some older patients with Type 2 diabetes, in which the body doesn't make sufficient insulin and/or becomes insensitive to it, they may be good candidates for Exubera.

In February, Pfizer's Ian Read, president of Pfizer's worldwide pharmaceutical operations told Bloomberg News that Pfizer planned a major Direct-to-Consumer (DTC) advertising campaign targeting newly diagnosed diabetics who may not want to inject themselves daily.

"The heart of the issue in diabetes therapy is the delay in getting patients to begin taking insulin, a delay that often lasts more than 8 years." Read said.

The pitch, while yet to be finalized, is likely to try and convince millions of Type 2 patients that insulin usage can now be initiated without so-called "painful" injections. But as the success of Byetta, an injectable medicine to treat Type 2 diabetes suggests, many Type 2 patients are willing to inject medicines if the drug has an associated beneficial side-effect.

Pfizer declined to talk about the campaign other than to say that a direct-to-consumer push would begin during Q2 2007 and that consumers would see a "full court press." A trade publication for the advertising industry Brandweek called its advertising agency; Grey Healthcare in New York, but the call was not returned. However, Read did say that the television ads will target newly diagnosed diabetics who may not want to inject themselves daily. Patients who develop diabetes later in life may put off using insulin because of needle phobia, he said.

Its unclear whether marketing alone will be sufficient to overcome the medical, economic, practical and legal concerns that have hurt Exubera. Exubera's biggest advantage over standard insulin is that it doesn't require injections. But the success of injectable medicines like Byetta has proven that the advantage of inhalable insulin is not as big as developers had long assumed it would be. Wall Street analysts are skeptical that consumer ads will produce better results.

"We are not aware of any pharmaceutical product that has ever become a blockbuster that was not endorsed by specialists," says Merrill Lynch analyst David Risinger, who in January lowered his initial 2008 sales projection to $175 million from $300 million.

It seems clear that in spite of extensive trials done on Type 1 patients and the fact that Exubera has FDA approval for use by adults with Type 1, Pfizer really has no interest in the Type 1 market. The unit of measurement Pfizer chose does not enable sufficient precision (blisters with a minimum of 3 units is the smallest dosage possible) for most insulin-sensitive type 1 patients, rendering the product largely useless for the majority of insulin users who have Type 1. That may prove to be Pfizer's biggest mistake. Its well-established that insulin is not viewed by most Type 2 patients as a sign of successful diabetes management, regardless of whether there is any truth to that belief. But perceptions aside, the mistake many pharmaceutical companies make is assuming that the Type 1 market, although comparatively small by volume of insulin purchased, is not relevant when it comes to insulin. Type 1 patients comprise nearly one-fifth of all insulin purchasers, so while its true that convincing some Type 2 patients to use insulin may generate sales, manufacturers must acknowledge that the treatment alternatives open to Type 2 patients is large and growing.

By comparison, in the words of Dr. C. Ronald Kahn, M.D., fromer President and Director Joslin Diabetes Center and Professor of Medicine at Harvard Medical School (p. 27), "Genetic engineering of the insulin molecule and new methods of delivery have improved insulin therapy, but in essence, the treatment for Type 1 diabetes has changed little since insulin was discovered." That's the real opportunity when it comes to marketing insulin, as that market has huge unmet clinical needs.

At this point, it seems that relatively few observers outside of Pfizer believe that Exubera can ever reach $2 billion in sales, a forecast the company continues to repeat. In fact, one blogger speculated that even if Exubera were to get 1.2 million Rx's in the year 2010, the product would still be a bust for Pfizer.

In late 2006, a Datamonitor study concluded that the efficacy of marketed injectable insulins was rather difficult to improve upon, citing a very limited R&D pipeline for insulins now in development. They concluded that the diabetes market would not be receptive to inhalable insulins until more compelling data is generated demonstrating a compelling clinical benefit for inhalable insulins over injectables.

David Risinger, an analyst at Merrill Lynch who in early April cut his estimates for Exubera sales said "I don't think the drug can be saved." Mr. Risinger now expects that Exubera will have $310 million in sales worldwide in 2012, down from his previous estimate of $800 million. Other analysts have also cut their forecasts.

"I think Pfizer is on drugs" if it believes it will get $2 billion a year from Exubera, said David Kliff, publisher of Diabetic Investor, a specialist investment data company. If Pfizer does reach its goal, "I'm going to run down Madison Avenue naked," he says. Kliff believes Pfizer will be lucky if Exubera ultimately does half the business that Pfizer is predicting.

4 comments:

Bernard said...

Scott

Thanks for another useful analysis.

When I first saw this device I was pretty convinced it wasn't going to go anywhere.

When thinking about trying to get people to replace one system with another, I seem to recall that the new system can't be just 10% or 20% better than the old. It needs to be a much clearer improvement (I think it was maybe 50% or more better).

Picture this. You're going out to a fancy restaurant with your partner. It's a special evening, candlelit restaurant, gentle music, what a great atmosphere for some romantic time together.

Shortly before the food arrives you need to take your insulin. Let me see you have three choices: first discreetly dial up a bolus on your pump; second get the small vial of insulin out of wherever you're carrying it together with a small syringe and discreetly under the table draw up the insulin and inject (presumably through your clothes into your leg - you don't want to spoil the conversation; OR choice number 3 get this HUGE CYLINDRICAL container out from wherever you managed to hide it, pump it up vigorously several times (if restaurant security hasn't already tried to nab you) and then place it in your mouth and inhale while watching the green light to make sure you're doing it all properly.

Scene 2. You're at home trying to clean the house, feed the children and yourself, and take insulin.

Scene 3. You're in an important board meeting, eating a catered meal and you need to take insulin.

I could go on. What were these folks thinking? Was a tiny jab so bad that folks were going to rush from it to a huge device that had to be used just so?

Personally, I'm surprised they've managed to sell as much as they have so far.

Anonymous said...

Pfizer just needs a new marketing strategy. Here's what I would recommend.

(1) Spend beau-coup bucks to purchase Lilly's insulin-manufacturing business. (You may have to purchase Novo's business, too, though a little quid pro quo, or U.S. government protectionism might help.)

(2) Remove Lilly's (current) insulin products from the U.S. market.

(3) Promote Exubera as "the best" and/or "the most popular" insulin product. (Assuming 1 & 2 above have been followed,it will be the only U.S. product being manufactured.)

(4) Educate doctors with pseudoscience about the reasons Exubera is superior to other products. Wine and dine influential diabetologist while extolling the popularity of Exubera.

(5) Wait for the big bucks to roll in from a diabetic population held captive.

There it is, Scott: from sluggish to stellar in 5 easy steps. . . a "success" story Wall Street is certain to love.

Melody

Scott said...

Bernard, I certainly agree with your sentiments, but I think the main reason for failure comes down to Pfizer's lack of understanding the market for this product. That's one reason I called attention to the fact that assuming that the the Type 1 market, although comparatively small by volume of insulin purchased, is irrelevant when it comes to insulin. I suspect that will be seen as a HUGE mistake.

As for Medody, while I see your comments are intended to be humorous, there are a few practical problems with your new marketing strategy, the biggest being that the product is already in the hole $1.3 billion, therefore I doubt Pfizer can justify much more contiuned investment to acquire not one, but two existing insulin manufacturers. Also, the legal liability for eliminating a unit of measurement with sufficient precision in lieu of a 3 unit measurement would surely bankrupt the company, as well as open the doors for competitors including Sanofi Aventis, as well as several Indian, Polish and Argentinian companies to waltz in and kill Pfizer's efforts! Regardless, I do appreciate your feedback!!

Anonymous said...

Wow all of your comments about exubera is fun. I found that "the bong" was easier to take than the shots now. I'm a preschool teacher and I have to leave to inject. It was easier to explain and to not frighten the children or peers. I was guniea pig for 7+ years. It was not for type 1's but still easier in a classroom. em-k