ESCP Models – Hepatitis C Medications (Part 3), Commercial Impact

By: Josef Bossart, PhD, Managing Director, The Pharmanumbers Group

The first two articles in this series^1,2 provided a real-world example, the Hepatitis C treatment market, of how ESCP methodology can provide an objective analysis of the forces impacting product evolution. From a base of no effective medications for HCV in 2000, the market reached full maturity by 2017 through a series of product introductions that sequentially addressed Efficacy, Safety, Convenience, and even Pricing.

The ESCP method is based on the concept of balancing, rather than simply “weighing”, Efficacy, Safety/Tolerability, Convenience, and Pricing^3-6. Analyzing annual sales of products in the HCV treatment market provides a quantitative perspective to the qualitative seesaws of the first two articles. After an early focus on Efficacy, often at the expense of poor safety and tolerability, subsequent products provided critical enhancements in safety, tolerability, and convenience. Surprisingly, pricing has become a major area of competitive activity just a few years following the introduction of the first optimized oral products. The sales analysis and summary that follows for the sake of simplicity looks only at the US market for HCV therapeutics. Other market approvals generally lagged those of the US, and including them makes it harder to tease out trends.

Phase 1 – Providing Efficacy
The first real breakthrough in the treatment of HCV occurred early in the 2000s with the approval of Schering-Plough’s PegIntron and Roche’s Pegasys. As discussed in Article 1, these two products, in combination with ribavirin, provided effective cures on the order of 50%, a remarkable breakthrough for HCV patients. The PEG-Interferon and ribavirin combination came at a cost in terms of tolerability and convenience. Treatment involved twice-daily oral dosing of ribavirin and once-weekly injections of either PegIntron or Pegasys. The PEG-Interferon injections were associated with flu-like symptoms, and the ribavirin caused its own set of tolerability and safety issues. The treatment period was 52 weeks, for both ribavirin and the PEG-Interferon.Despite this, the products were well received given the absence of effective therapeutic alternatives. Branded ribavirin, as Rebetol and Copegus, rode the wave of PEG-Interferon sales until the introduction of generics in 2004. With time, a consensus arose that Pegasys was superior to PegIntron and sales shifted toward the Roche product.It is worth mentioning that the sales of both PegIntron and Pegasys will look rather anemic in comparison to the sales of later oral products. This is a little misleading and perhaps underestimates the commercial success of these PEG-interferons. The early 2000s was the era when a billion-dollar product was a “blockbuster”. Both PegIntron and Pegasys qualified on a global basis. This was also a time when companies were, in retrospect, a little naïve about how elastic the market really was in terms of pricing. A full 52-week course of therapy with either Pegasys or PegIntron cost about $52,000 at list. A 24-week course of treatment with one of the oral HCV medications was priced at more than $80,000. Schering-Plough, later Merck & Co., and Roche quite possibly “left money on the table”. That probably isn’t a fair comparison as the newer medications provided better efficacy, safety, and convenience. But then again, any $2,000 laptop you purchase in 2021 is going to be much better than the $2,000 laptop you purchased in 2005, even neglecting the impact of inflation.

Sales of Pegasys increased in 2012 as new oral antivirals were approved in combination with PEG-Interferon, softened with shorter dosing periods, and then cratered with the approval of treatment protocols not requiring PEG-Interferon. Sales of Rebetol dropped with the introduction of Roche’s version of ribavirin, Copegus, and then effectively disappeared with the approval of generics, as did sales of Copegus a couple of years later.

Phase 2 – Marginal Improvements in Efficacy, Safety/Tolerability & Convenience
The next generation of products, Vertex’s Incivek, Merck’s Victrelis, and Janssen’s Olysio, oral protease inhibitors, were prescribed in combination with the PEG-Interferons and ribavirin (see Article 2 for details²). Efficacy improved substantially and convenience was improved somewhat by reducing the number of weeks of PEG-Interferon injections from 52 to as few as 24. Oral dosing though was not really optimized, and these products introduced a new set of concerning safety and tolerability issues.

Phase 3 – Significant Improvements in Efficacy, Safety/Tolerability & Convenience
The most significant breakthrough in HCV treatments arrived with the introduction of Gilead’s Sovaldi. For many patients there was no longer a requirement for PEG-Interferon and for some treatment was reduced to oral dosing for 12 weeks. Safety and tolerability improved significantly when ribavirin was later replaced by one of a series of combination oral antivirals, initially Harvoni, and then other products. Prices caused concerns, particularly on a per dose basis as dosing periods decreased, and pricing remained fixed. However, the overall value proposition was appreciated by physicians, payors, and patients who purchased billions of dollars annually of this next generation of products.

The impact of this oral generation is evidenced by their remarkable sales. Notable, and exceptional, was the voluntary decision by companies to withdraw products launched a handful of years earlier. This was not a regulatory issue. These products quickly became uncompetitive, generally because of less favorable safety, tolerability, and convenience characteristics. In the case of Olysio, it meant $2 billion of sales in 2014 and less than 10% of that the very next year.

Phase 4 – Market Saturation & Pricing Concessions
The inevitable next phase of the HCV market arrived in 2017 with the introduction of AbbVie’s Mavyret. This was a period when the patient population had shrunk as many of the patients who suffered with Hepatitis C infections had been treated and, with the almost 100% efficacy rate of the medications, were no longer candidates for treatment. This highlights the commercial reality of treatment versus cure, for example HIV versus HCV. A nice little business can be maintained for decades by consistently introducing improved medications to treat chronic “uncurable” conditions like HIV. In contrast a “curable” business like Hepatitis C will eventually be limited to the treatment of newly infected and diagnosed patients.

This shrinking patient pool along with relatively similar product features has led to price competition as companies seemingly try to get what they can while they can. AbbVie chose to introduce Mavyret in 2017 with a lower list treatment price despite possessing market matching features. This price signal, in addition to price pressures from purchasing groups, and a shrinking patient pool, has led to a significant drop in overall sales. This is an approach that is almost never seen in the American pharmaceutical business, where prices remain high in the face of competition, a shrinking patient population, and even generics. There were hints this might happen. AbbVie previously offered “flexible” contract pricing for its Viekira Pak HCV treatment, which was approved in December 2014 and was not quite as well featured as Gilead’s Harvoni which had been approved 2 months earlier.
The next stage of course will be the entry of generics. The first of these is likely to target Sovaldi (sofosbuvir). The most impactful will be generics of Gilead’s Harvoni, an effective, safe, and well tolerated all-in-one single tablet treatment for most HCV Genotypes. This is unlikely before the end of the decade. By then, there will hopefully be only a very small number of yet untreated patients with Hepatitis C.

Reflections
The evolution of the HCV market provides a very tidy case study of how pharmaceutical products “evolve” to treat disease. ESCP makes it a little easier to understand this evolution as a series of discrete development decisions. As a process, ESCP can help product teams visualize and communicate the benefits necessary for a new product to be therapeutically meaningful and commercially successful.

References

1. ESCP Models – Hepatitis C Medications (Part 1) https://drug-dev.com/escp-models-hepatitis-c-medications-part-1/
2. ESCP Models – Hepatitis C Medications (Part 2), Oral Therapeutics https://drug-dev.com/132475-2/
3. Drug Development & Delivery March 2021 Vol 21 No 2, p. 69. https://drug-dev.com/productdevelopment-strategy-escp-estimating-product-performance-part-1-playground-physics/
4. Drug Development & Delivery April 2021 Vol 21 No 3, p. 44. https://drug-dev.com/productdevelopment-strategy-escp-estimating-product-performance-part-2-choosing-a-seesaw/
5. Drug Development & Delivery May 2021 Vol 21 No 4, p. 39. https://drug-dev.com/prodyct-development-strategy-escp-estimating-product-performance-part-3-mind-the-axle/
6. Drug Development & Delivery May 2021 Vol 21 No 5, p. 40. https://drug-dev.com/product-development-strategy-escp-estimating-product-performance-part-4-building-playgrounds-fences/