Use this report’s case study analysis to benchmark the pricing strategies of leading innovative products and evaluate the drug reimbursement environments of major markets and therapeutic categories...

“The price premium for Lucentis over Macugen was over 100% in the US, while the drug was introduced at a more moderate 50% premium in the UK. Even if one was to use an entire vial of Avastin (as opposed to splitting it into 20 or more AMD doses), the cost of Avastin AMD treatment would still be less than a third of Lucentis in both the UK and US...“

• Position your upcoming products for quick access to key markets by comparing the regulatory mechanisms influencing reimbursement decisions across countries including Japan, France, Germany, Italy, Spain, the US and the UK.

• Understand the latest challenges and issues facing various categories of innovation including ‘new market’, ‘redefining the category’, ‘second-generation’, ‘incremental therapeutic’ and ‘incremental formulation’ innovations.

• Assess the innovative drug reimbursement environments of major therapeutic areas by identifying the current trends, unmet medical need and economic requirements of a range of disease categories including oncology, HIV, autoimmune diseases and diabetes.

• Leverage innovative new market access programs to protect prices for novel therapies in cost constrained reimbursement settings.

• Benchmark the reimbursement strategies of leading products by using detailed case studies of recently launched and upcoming innovative therapies across each type of innovative category.

Key issues examined in this report...

“Abraxane sales doubled in 2007 to $350 million, more than three times the sales of branded Taxol which is under threat from generic competition. Abraxane’s sales growth has been limited by a delayed approval and launch in Europe, with 2008 sales likely to surpass $500 million...”

 “The Japanese market offers a relatively structured approach to setting price premiums for new, innovative drugs. However, it offers little guidance where adequate comparators do not exist – and as a result first-to-market pricing can be a little more complicated...”

• Major brands must aim to convey this comparative value with quality

of life adjusted years (QALY) and cost of treatment assessments.

• Non-prescription availability. Alli’s switch from Rx to OTC usage in

2007 reinvigorated the US market for obesity treatments.

GlaxoSmithKline is currently pursuing a similar switch in Europe with

approval expected during 2009 at the latest.

• Innovative therapy competition. The combination of high unmet

need and technological feasibility within certain therapy areas has

resulted in innovative therapies competing against each other at high

prices. The technological complexity associated with new oncology

and autoimmune treatments has caused significant price premiums

over more established therapies.

Chapter 4: Pricing challenges of recently launched innovative therapies

Prezista vs Fuzeon: HIV/AIDS premium pricing The pricing and positioning of Prezista and Fuzeon in the HIV/AIDS market is very similar to that of Byetta and Januvia in type 2 diabetes. Both therapies offer some incremental benefit, but the more complex therapy, Fuzeon, with high associated manufacturing costs, was priced at a significant premium. As a result it is positioned as a niche therapy distinct from more established treatment protocols. The Prezista launch price discount was a departure from continued price premiums for all new HIV therapy launched in the last ten years or so. As shown in Figure 4.18, Prezista sales grew strongly in 2007, while sales growth for Fuzeon was more modest. Both drugs offer an additional treatment option for failing, treatmentexperienced HIV/AIDS patients, but Prezista is building market share in direct competition with other protease inhibitors while Fuzeon offers a distinct, more niche therapy option for failing patients. Figure 4.19 shows the relative prices of selected HIV/AIDS drugs in the UK and US. When Fuzeon was launched at a price more than twice that of any other available HIV therapy, largely as a result of a complex and expensive manufacturing process. The launch of the new protease inhibitor Aptivus in 2005 continued an established trend whereby each new entrant into a treatment class was priced at a small premium over established therapies. However, when Prezista was launched in 2006 it broke from this trend by pricing at a small discount (10%) over Aptivus in both the UK and US. Pricing levels for HIV/AIDS drugs in the UK and US were similar once exchange rate differences were accounted for except for Fuzeon which added a greater premium in the US compared with the UK. Prezista broke the mould by pricing below the last FDA-approved HIV therapy Aptivus (tipranavir) and similar to Reyataz (atazanavir). This created significant goodwill, and good press with patient advocacy groups.

Table of Contents

CHAPTER 1: INTRODUCTION

• Introduction

• Supply-side factors

- Complexity and costs

- Market size

- Competition

• Demand-side factors

- Budget

- Unmet need

- Competition

• Valuing innovation

CHAPTER 2:

CATEGORIZING AND

VALUING INNOVATION

• Categories of innovations

- New market innovations

- Redefining the category

innovations

- Second generation

innovations

- Incremental therapeutic

innovations

- Incremental formulation

innovations

• Innovative market access

strategies

- Orphan drugs

- Risk-sharing

CHAPTER 3: REGION AND

THERAPY AREA SPECIFIC

CONSIDERATIONS

• Approaches to market

access in major markets

- USA

- Japan

- France

- Germany

- Italy

- Spain

- UK

• Therapy area markets for

innovative therapies

- Oncology

- HIV

- Autoimmune diseases

- Diabetes

- Others

CHAPTER 4: PRICING CHALLENGES OF RECENTLY LAUNCHED INNOVATIVE THERAPIES

• New market innovations - Gardasil (human papilloma virus vaccine): changing the treatment algorithm - Lysosomal storage diseases: pricing versus patient weight • Redefining the category innovations - Chantix (varenicline): redefining a therapeutic category - Nexavar (sorafenib) versus Sutent (sunitinib): meeting an unmet need • Second generation innovations - Lyrica (pregabalin): a new, improved neuropathic pain drug - Macugen vs Lucentis vs Avastin: premium pricing against off-label use • Incremental therapeutic innovations - Byetta vs Januvia: changing the treatment paradigm for type 2 diabetes - Prezista vs Fuzeon: premium pricing in HIV/AIDS • Incremental formulation innovations - Abraxane (paclitaxel): pricing incremental convenience - Vivitrol: market access vs premium pricing CHAPTER 5: UPCOMING LAUNCHES OF NEW INNOVATIVE THERAPIES • Introduction • New market innovations - Lupuzor (IPP-201101) ImmuPharma - Sinunase: Accentia • Redefining the category innovations - Bapineuzumab: Elan/Wyeth - Multikine: CelSci • Second generation innovations - Arzoxifene: Eli Lilly - Cordaptive (niacin ER/laropiprant): Merck • Incremental therapeutic innovations - Naproxcinod: NicOx - RhuDex: MediGene • Incremental formulation innovations - Denosumab: Amgen - Xarelto (rivaroxaban): Bayer/J&J Table of Contents (contd.)

LIST OF FIGURES • Supply and demand factors impacting market access for innovative therapies • Innovative drug categories by level of innovation and ease of market access • Source of prescription drug expenditures in the US, 2005-2006 • Italian categorization for innovative new therapies • Gardasil global sales, 2006-07 ($m) • Selected lysosomal storage disease drugs global sales, 2006-07 • Selected lysosomal storage disease drugs pricing in the UK and US, 2008 • Smoking cessation drugs global sales, 2006-07 • Smoking cessation drugs pricing in the UK and US, 2008 • Nexavar and Sutent global sales, 2006-07 • Nexavar and Sutent pricing in the UK and US, 2008 • Selected neuropathic pain drugs global sales, 2006-07 • Selected neuropathic pain drugs pricing in the UK and US, 2008 • Age-related macular degeneration drugs global sales, 2006-07 • Age-related macular degeneration drugs pricing in the UK and US, 2008 • Selected type 2 diabetes drugs global sales, 2006-07 • Selected type 2 diabetes drugs pricing in the UK and US, 2008 • Selected HIV/AIDS drugs global sales, 2006-07 • Selected HIV/AIDS drugs pricing in the UK and US, 2008 • Taxane drugs global sales, 2006-07 • Taxane drugs pricing in the US, 2008 • Alcohol dependency drugs global sales, 2006-07 • Alcohol dependency drugs pricing in the US, 2008 LIST OF TABLES • Classification for price premium (Japanese healthcare system) • Gardasil pricing in the UK and US, 2008 • Selected lysosomal storage disease drugs pricing in the UK and US, 2008 • Smoking cessation drugs pricing in the UK and US, 2008 • Nexavar and Sutent pricing in the UK and US, 2008 • Selected neuropathic pain drugs pricing in the UK and US, 2008 • Age-related macular degeneration drugs pricing in the UK and US, 2008 • Selected type 2 diabetes drugs pricing in the UK and US, 2008 • Selected HIV/AIDS drugs pricing in the UK and US, 2008 • Taxane drugs pricing in the UK and US, 2008 • Alcohol dependency drugs pricing in the UK and US, 2008 • Selected innovative therapies currently in late stage development • Key UK and US pricing data for leading case studies, 2008 •