For those who didn't hear the news when it broke, diaTribe news reported (see https://diatribe.org/glucagon-options-expand-lilly-discontinues-emergency-kit for the news) that Lilly announced that the company intends to discontinue manufacturing its traditional Glucagon Emergency Kits https://www.lillyglucagon.com/ (website no longer active) by the end of 2022. The kits are old-school, mix & inject kits which many patients (and caregivers alike) really despise because they are rather cumbersome and inconvenient to use when time is of the essence. Having an unpopular product works in the absence of competition, but when newer, more convenient products or cheaper generic products emerge, the product has reached the end of its product lifecycle.
Previously, on July 24, 2019, Lilly announced (see https://www.prnewswire.com/news-releases/baqsimi-glucagon-nasal-powder-3-mg-the-first-and-only-nasally-administered-glucagon-to-treat-severe-hypoglycemia-in-adults-and-children-with-diabetes-ages-four-years-and-older-approved-by-fda-300890782.html for details) that it had received FDA approval for BAQSIMI (see the FDA approval letter at https://www.accessdata.fda.gov/drugsatfda_docs/appletter/2019/210134Orig1s000ltr.pdf for details) which aimed to be a more convenient and easier-to-use glucagon product. Some patients don't like the nasally administered product and therefore prefer easier-to-use "pens" which are similar to EpiPens. Fortunately, those options now exist too.
Cause #1: Newer, More Convenient Glucagon Products
Lilly said that the different, newer glucagon products including the company's own proprietary form of glucagon branded as BAQSIMI as the main reason sales are declining on the older glucagon rescue kits. Personally, I'm not a big fan of BAQSIMI because I used it once and got a terrible bloody nose and I must have used an entire box of tissues to stop it from bleeding (my bed sheets still have blood stains), but to each his or her own; not exactly the way I wanted to recover from a hypo.
But a number of other more convenient rivals including autoinjector pen devices now exist including Xeris Pharmaceuticals, Inc. which received FDA approval for its Gvoke glucagon prefilled syringes and ready-to-use glucagon rescue pens on September 10, 2019 https://www.businesswire.com/news/home/20190910005829/en/Xeris-Pharmaceuticals-Receives-U.S.-FDA-Approval-GVOKE%E2%84%A2/ and then in 2021.
Then, on March 22, 2021, Zealand Pharma received FDA approval (see the press release at https://www.globenewswire.com/news-release/2021/03/22/2197267/0/en/Zealand-Pharma-Announces-FDA-Approval-of-Zegalogue-dasiglucagon-injection-for-the-Treatment-of-Severe-Hypoglycemia-in-People-with-Diabetes.html for detail) for its dasiglucagon analogue product which is branded as Zegalogue and had an aggressive manufacturer coupon program, plus the product is being trialed in Beta Bionics' dual-hormonal insulin/glucagon pump which also has the ability to reverse low blood sugars. However, Novo Nordisk recently acquired Zegalogue so prices and distribution may change. Collectively, these rival products have no doubt decreased demand for Lilly's older Emergency Glucagon Kits.
Cause #2: Cheaper Generic Glucagon Products
Left unsaid in diaTribe's announcement is the emergence of cheaper generic glucagon products which are now competing aggressively on price with old-school kits from Lilly and Novo Nordisk (those products are generally commercialized without rebates to PBM's since many generics tend not have back-end rebates to PBM's).
For example, the FDA announced on December 28, 2020 that it had formally approved an abbreviated new drug application for glucagon for injection 1 mg/vial in an emergency kit, manufactured by Amphastar Pharmaceuticals Inc. for its glucagon injection emergency kit which was approved under the FDA's abbreviated new-drug application (ANDA) required for generic drugs. The Amphastar glucagon product was reportedly the first-ever generic glucagon product approved by the FDA using the FDA's abbreviated new-drug application (ANDA) process required for generic drugs. See the Amphastar press release at https://www.globenewswire.com/news-release/2020/12/29/2151177/0/en/Amphastar-Announces-Approval-for-Glucagon-for-Injection-Kit-1mg.html for details.
But Amphastar's generic market exclusivity didn't last long.
Also in 2020, rival Fresenius Kabi USA which is based in Lake Zurich, IL (in suburban Chicago, although the parent company is based in in Bad Homburg near Frankfurt, Germany) which announced that it had also received FDA approval for a new, generic glucagon kit. See Fresnius Kabi USA's press release at https://www.businesswire.com/news/home/20200205005106/en/Fresenius-Kabi-Introduces-Glucagon-Emergency-Medicine-Kit for details.
FDA's Sally Choe, Ph.D., who was the the director of the Office of Generic Drugs in the FDA's Center for Drug Evaluation and Research, said (see the FDA press release at https://www.fda.gov/news-events/press-announcements/fda-approves-first-generic-drug-used-treat-severe-hypoglycemia for details) said at the time "Until today, there has been no approved generic of this important drug that can save the lives of people who may experience the serious condition of very low blood sugar."
Cho added: "Today's approval reflects the FDA's continued commitment to advancing patient access to lower-cost, high-quality generic drug products that are as safe and effective as their brand name counterparts. Supporting development and expanding opportunities to bring generic copies of complex drugs, like glucagon, to the market has been a major focus of our efforts to improve competition and help lower drug prices."
At the time of the first-ever FDA-approved generic glucagon product, Amphastar revealed that it estimated (see https://www.thestreet.com/investing/amphastar-generic-hypoglycemia-injection-fda-approval for detail) that U.S. sales for Eli Lilly's Glucagon rescue kit were about $144 million and that overall U.S. sales of branded products containing glucagon for injection, 1 mg, were about $306 million for the 12 months ended September 30, 2020.
In response to declining sales due in part to more convenient, newer options as well as much cheaper generics, on August 1, 2022, Lilly formally announced it will cease production of its traditional Emergency Glucagon Kit on December 31, 2022. It's pulling the plug on a product which is effectively dying in terms of sales. The old-school glucagon products have been on the market since the early 1960's.
Sarah Noel, senior director of US Diabetes Advocacy & Professional Relations at Lilly, said "By announcing Lilly's Glucagon Emergency Kit discontinuation well in advance of the last manufacturing date, we can help people who have traditionally relied on our Glucagon Emergency Kit to prepare and discuss alternative glucagon options with their healthcare providers."
Left unsaid on Lilly's announcement that it will discontinue making old-school glucagon kits is the uncomfortable reality that significantly cheaper (for PBM's, anyway) generic forms of glucagon rescue kits from generic manufacturers including Amphastar Pharmaceuticals and Fresnius Kabi USA which have further accelerated the decline in sales of traditional, mix & inject glucagon products from both Lilly and Novo Nordisk (both of which remain curiously very heavily-rebated to Pharmacy Benefit Managers ["PBM's"] causing retail prices for patients to sell for more than $300 per kit which represents sickening price mark-ups.
Novo Nordisk: An Also-Ran in Glucagon, But its GlucaGen HypoKit Remains (For Now)
Rival Novo Nordisk has not (yet) announced any plans to discontinue its own traditional mix & inject glucagon emergency kit which it brands as GlucaGen HypoKit https://www.glucagenhypokit.com/. Unfortunately, Novo Nordisk is essentially addicted to PBM rebates to commercialize all of its products in the U.S., and as a result, its traditional glucagon treatment has an artificially-inflated retail price since the company has focused exclusively on selling via the PBM channel rather than directly to patients, and the PBM channel requires massive rebates totalling more than a quarter of a trillion dollars annually across all drug classes.
On insulin, for example, Novo Nordisk has repeatedly told investors that it's now rebating 74% of its gross U.S. sales to PBM's in the form of rebates. Unfortunately, Novo Nordisk's U.S. margins are declining as a result; the company relies on GLP-1 products for virtually all of its U.S. revenues right now. The U.S. is no longer a growth engine for the company's profits, but it's a global company and can rely on profits abroad to keep profits flowing.
Novo's Previous GlucaGen HypoKit Outsourcing Mess
Prior to 2011, Novo Nordisk did not even manufacture its own GlucaGen HypoKits. Instead, the Danish company relied upon contracting manufacture to Boehringer Ingelheim's Bedford, Ohio plant. But the FDA found that particular facility had rusty tools, mold, and a barrel of 'unknown liquid', which was later revealed to be urine from factory workers who were not permitted to leave the factory floor for restroom breaks, suggesting poor oversight and management. The Bedford, Ohio site was ultimately shut down when FDA regulators repeatedly cited the facility for GMP noncompliance violations, and the cost of cleanup made it cheaper for the company to simply shut it down and open a newer, compliant manufacturing facility located elsewhere. Since that happened, Novo Nordisk just imported its glucagon kits which are made in its own site in Denmark. Because it pays so much in rebate dollars to PBM's, it's GlucaGen HypoKit has never really been a huge seller and its not particularly profitable for the company. But because its not a big seller, importing the product is relatively easy for the company.
Novo Nordisk does not currently have a "modern" glucagon rescue product sold in the U.S., putting the company at a competitive disadvantage in that therapeutic class of drugs. Today, Novo Nordisk is exceptionally dependent on revenues from its Type 2 diabetes GLP-1 inhibitors and various line extensions as weight-loss drugs, although rival Lilly sells one called Trulicity which was approved by the FDA in September 2014.
Lilly and then-partner Amylin Pharmaceuticals effectively created the GLP-1 space with the product formerly known as Byetta (exenatide), the two companies' partnership rather unceremoniously ended when Lilly's former CEO dumped Amylin to sign a new partnership with rival Boehringer Ingelheim Pharmaceuticals which ended with an announcement made on November 8, 2011 (see https://www.fiercebiotech.com/biotech/lilly-and-amylin-mutually-agree-to-end-diabetes-alliance-and-transition-exenatide for details).
Seeing the rebate-driven mess causing its insulin margins slip, Novo Nordisk copied and ultimately improved upon the GLP-1 drug category, while Lilly's Trulicity was late to the GLP-1 inhibitor drug category, although its Trulicity pen injector device is pretty clever (and it takes some innovation considering how rival Novo Nordisk has an entire team dedicated to insulin pen injector devices and has dominated that space for decades). When Lilly brought Trulicity to market, instead of sending hundreds of salespeople to endocrinologists and other doctor's offices, or producing expensive mass advertising, Lilly initially focused its marketing of Trulicity on insurance company payers, specifically those in commercial managed care. It saw some success there, and that really forced Novo Nordisk to aggressively compete very aggressively on its rebated prices.
Still, Lilly's Trulicity was essentially a very late "me-too" (or "me-better") drug. However, that was launched before biosimilars which are now pending approval which are likely to shake the market up further which won't really help Novo Nordisk or Lilly. There will be at least a half-dozen biosimilars of Novo Nordisk's first generation GLP-1 drug originally branded as Victoza (Biocon has one, as does Lannett/HEC and several other companies). Once biosimilars of that product hit the market, market conditions will become a whole lot tougher for branded products because the cheaper, unrebated biosimilars may become favored or else the branded products will have to increase their kickbacks ("rebates") to PBM's. Remember: 74% of Novo Nordisk's U.S. sales are today being pissed away as rebates paid to PBM's. Is it going to increase them even more so it's paying 99% of gross sales? That seems pretty unlikely.
Biosimilars Aren't Generics; Neither Are Generics -- Anymore
There was once a time whereby generics came to the market and that spelled the end of fat profits for branded drugs. But PBM's no longer work to or even really pretend to save money for anyone other than insurance companies anymore. They are now vertically-integrated with insurance companies, so their primary motive is to keep profits flowing to firms like United Healthcare, Cigna and CVS Health's Aetna business. Profits are the only thing that matters to PBM's anymore. The PBM business is also a convenient work-around to an ACA rule which requires that insurance companies commit at least 80% of premium dollars collected be allocated to health care, instead of CEO pay. But PBM revenues are not premium dollars, so the CEO's can still get massive compensation if they have a profitable PBM business.
Today, generics no longer necessarily dominate the end of a branded drug's lifecycle. The drug industry has work-arounds to extend their product lives, including so-called "authorized generic" drugs which are branded drugs with a generic drug name on the label. That matter resulted in the FDA being forced to expand the National Drug Code numbering system (catch my coverage of that HERE). Instead, today, secret rebates paid to PBM's dominate U.S. prescription drug spending. Until the FTC finishes its formal study of PBM contracting practices (much of what they do appears to be at best, marginally legally-exempt or at worst, illegal), that's the corrupt world we live in. Then, once a formal study from FTC wraps up, the U.S. Department of Justice may ultimately be forced to sue and that will also take some time.
Remember when the DOJ broke up AT&T in the telephone space? Today, the old AT&T monopoly no longer exists. Today's AT&T is re-assembled pieces of the former regulated monopoly which were re-assembled by the Baby Bell formerly known as SBC. But rival Verizon has its own strategy with a focus on mobile and broadband internet delivered via fiber optic cable in certain Northeastern states, so its fair to say that more than a few of the old AT&T's pieces today aren't exactly gems.
Anyway, while Lilly pulling the plug on old-school, mix & inject glucagon rescue kits is indeed the end of an era, it doesn't spell the end of the product (just from Lilly). While patients and caregivers prefer more convenient, newer options, cost-conscious buyers have several generic alternatives to choose from. Now, if only the U.S. can fix the PBM rebate kickback problem, we might see progress in reducing prescription drug prices. There, the FTC and ultimately the U.S. DOJ will play a critical role in undoing the damage of bad policy choices which have aggravated the problems rather than fixing them.
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