Wednesday, February 20, 2008

FTC, Generics, and the War in Iraq

The Federal Trade Commission (FTC) is trying to "crackdown" on Big Pharma payments to generic manufacturers that agree not to bring lower-cost generic versions of brand name drugs to market (see "Crackdown by FTC on Big Pharma").

As reported in the above cited article, "last week the Federal Trade Commission launched a high-profile battle against Cephalon (CEPH), the maker of the blockbuster narcolepsy medication Provigil, over a $200 million payout it gave to four generic companies in exchange for an agreement not to develop a competing medication. In a lawsuit filed in federal court in Washington, D.C., the FTC claims that the deal violates antitrust law."

This is interesting because I recall attending an industry conference in Boston in late 2001 during which a Cephalon representative from the Provigil team described an exciting new market for the drug -- shift work sleep disorder, which is a circadian rhythm sleep disorder affecting people who change their work or sleep schedules frequently or work longterm on other than the day shift.

At that time, Provigil was approved only for narcolepsy, which affects a relatively small population of people -- the National Institute of Neurological Disorders estimates that narcolepsy "affect(s) about one in every 2,000 Americans" or about 150,000 total. A new indication was clearly needed to get respectable sales.

Still, are there enough sleep-deprived shift workers to support Cephalon's blockbuster goals for Provigil? Note: 2006 sales of Provigil represented 44 percent of Cephalon's $1.7 billion in 2006 revenues. That's $760 million in annual Provigil sales.

A 2005 NEJM editorial claimed "As many as 20 percent of workers in industrialized nations are shift ... Shift-work sleep disorder, defined as a primary complaint of insomnia or excessive sleepiness temporally associated with a work period that occurs during the habitual sleep phase, has been diagnosed in as many as 10 percent of shift workers."

If you do the math, you get about 2 million US shift workers who may suffer from shift-work sleep disorder.

It turns out that Cephalon wasn't interested so much in Fedex workers who sort overnight parcels in the Atlanta hub. Cephalon needed a large group of patients that would repeatedly use the drug over a long period of time if it wanted to generate significant sales. That group was the US military, which promised to be a very lucrative market for Provigil. This was the market that the Cephalon representative was ecstatic about at the Boston conference.

In 2002, Cephalon filed for the new indication and the FDA approved it in 2004, a few months after the invasion of Irag -- and after "mission accomplished."

But the military was using the drug on an "experimental" basis a lot earlier than the invasion of Iraq.

"U.S. soldiers are staying awake for days and nights on end in Iraq, and many are almost certainly benefiting from military research into pills that let them work for 40 hours straight, without feeling "wired" and without crashing afterward." (See "New drug may help soldiers stay awake. Doctors unsure of long-term effect.")

The FTC says there have been 100 deals like the Cephalon one since 2004. So why only go after Cephalon? Could it be that the FTC is trying to save the military some money by making it easier for the 4 generic manufacturers to get into the game?

If so, this may be a case where ordinary US citizens enjoy the spoils of war: the Cephalon case may go all the way to the Supreme court where FTC hopes the Court will issue a precedent-setting decision in its favor. "We're trying to reverse the course of the law and get another circuit to find these deals illegal in the hopes that the Supreme Court will resolve [the issue] once and for all," said an FTC staff member.

That would mean the end to Big Pharma deals with generic manufacturers to keep generics off the market.

Who said the war in Iraq does not benefit Americans?

1 comment:

  1. This goes to show that the two groups (the government and big pharma) that claim to have the interest of the public in mind, really just act in the best interest of themselves. We may catch a price break simply because big pharma isn’t just sticking it to us on this one, but the government as well. Generics make up 65 percent of all prescriptions, but are roughly 20 percent of the costs.

    I love how every time big pharma gets busted gouging consumers they play the “it will stifle innovation” card. The American government has let big pharma have free run of the American drug market and yet they are still reinventing and re-marketing drugs that have been around since the 60’s.

    Like you said, at least something positive comes from the war in Iraq. Hopefully with a change in office will come a change in healthcare, and a realignment of the consumers and the governments’ goals.

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