With the FDA set to act today on the marketing application for paliperidone, a once-a-day schizophrenia drug from Johnson & Johnson, the company hopes it will pass muster handily. There's reason for optimism: The new drug is derived directly from Risperdal, a blockbuster schizophrenia drug and J&J's best-selling product last year, with sales of $3.55 billion.
But Johnson & Johnson plans to market the new treatment as a significant improvement over Risperdal. As a result, J&J and paliperidone have drawn scrutiny from the medical community and raised doubts on Wall Street.
Risperdal's rebirth as paliperidone is the latest wrinkle in the quest by pharmaceutical companies to extend sales and profits from aging blockbusters whose patents are about to expire by tweaking and relaunching them under new names. Generic Risperdal, or risperidone, could be available as soon as next year or 2008. J&J hasn't yet selected a marketing name for paliperidone.
The issue has broad implications as consumers, employers and government programs struggle to pay for rising prescription-drug bills. Pharmaceutical companies extol their commitment to ground-breaking research, but some of their leading drugs are spitting images of previous hits.
After a patient swallows a dose of Risperdal, usually a tablet a day, the liver transforms the medicine into paliperidone, the active substance inside the body. By marketing paliperidone as a new drug, J&J would perform this act of metabolism inside the lab; the new pill would release the chemical over 24 hours. J&J expects paliperidone, if approved, to bring five more years of marketing life to its antipsychotics line.
As drug makers' research labs have sputtered in recent years, many companies have propped up sales by marketing reworked versions of older products that are set to go generic. Chemically, the new drugs are just different enough to win more patent life. But they offer scant medical advantages over their predecessors despite costing much more than generic versions of the old hits, critics say.
Copycats have included Schering-Plough Corp.'s Clarinex, an antihistamine that in 2002 replaced the megahit Claritin, which rode a wave of direct-to-consumer advertising to $3.2 billion in annual sales at its peak in 2001 before going generic. Likewise, in 2002, Forest Laboratories introduced the antidepressant Lexapro, a derivative of the antidepressant Celexa that has gone on to supplant Celexa as the company's best-seller. AstraZeneca PLC's purple Nexium pills replaced Prilosec. Nexium has become AstraZeneca's best-selling drug, as Prilosec once was, with $4.63 billion in sales last year.
Drug maker Wyeth is seeking FDA approval of desvenlafaxine, derived from the main ingredient in the antidepressant Effexor XR, which is Wyeth's No. 1 medicine, with sales of $3.46 billion last year. Effexor XR is facing the prospect of generic competition in a few years.
A backlash is brewing among payers. UnitedHealth Group Inc., the managed-care giant, decided this month to stop paying for Nexium, citing the availability of less-expensive and equally effective options. UnitedHealth says the move could save it $150 million.
J&J executives, through a company spokesman, declined to be interviewed about paliperidone, citing today's deadline for FDA action on its marketing application. In July, Joseph Scodari, J&J's world-wide chairman for pharmaceuticals, told analysts during an earnings conference call that paliperidone will hit the "sweet spot" in the market for antipsychotic drugs by "combining best-in-class efficacy with an excellent safety and tolerability profile, in a convenient dose."
Earlier this month, at a Bear Stearns conference, Vice Chairman Robert Darretta said J&J sees paliperidone as "the best-in-class antipsychotic," according to a Thomson Financial transcript. It "will give us the opportunity to compete for business not simply with Risperdal users, but users of all antipsychotics."
Is paliperidone better than risperidone? A lot of money is riding on the answer. Medicaid and other government insurance programs pay a big portion of the drug bill for the mentally ill. Some 30% of Risperdal's $1.35 billion in U.S. sales through August this year were to Medicaid, according to data from WoltersKluwerHealth. The most popular doses of Risperdal cost about $4 a pill. When a generic version of Risperdal becomes available, these plans and consumers could save millions of dollars by using the less expensive alternative.
David Norton, a J&J pharmaceutical executive, acknowledged doubts at a Merrill Lynch conference in London last week. "Everyone is asking the question, So how does this fit, and how will it fit, into our market? Is it better than risperidone?" he said, according to a Thomson transcript. Paliperidone has "a more benign side-effect profile," he said, adding, "We are feeling pretty confident about the drug in terms of efficacy."
The research backing J&J's claims for paliperidone seems a little thin. Clinical tests, involving 1,600 patients, pitted it against a sugar pill, not Risperdal or other antipsychotic drugs, a company spokesman confirmed.
"They can't claim it's better than risperidone because they didn't do the comparison," said P. Murali Doraiswamy, a psychiatry professor at Duke University, who reviewed the publicly available clinical data on paliperidone and wasn't involved in testing it.
In presentations at medical meetings over the past year, J&J has said that, as expected, paliperidone was more effective than a placebo in relieving symptoms of schizophrenia at six weeks, delayed recurrence of symptoms when measured as long as 11 months, and was well tolerated. Common side effects included rapid heart beats and insomnia.
Paliperidone "doesn't represent any kind of quantum leap in efficacy or tolerability" over existing antipsychotic drugs, said Norman Sussman, a professor of psychiatry at New York University, who wasn't involved in testing it. He said he expects J&J's marketing of "fine distinctions" will sway some doctors but said he plans to use it mainly for patients who have had bad reactions or haven't responded to other drugs.
J&J has cited dissatisfaction with existing medicines as an opening for paliperidone to gain traction. "We need more choices, and we need better medicines," said John Kane, a psychiatrist at Zucker Hillside Hospital in New York and a paid consultant to J&J. "No one medicine is going to work for everyone."
The antipsychotic drug market is highly fragmented because few of them work well for a large percentage of patients. Jeffrey Lieberman, a professor of psychiatry at Columbia University, confirmed that in a landmark study last year but said, paliperidone "is not producing much in the way of advances."
J&J declined to discuss pricing. Analysts expect the new drug's prices to be similar to or slightly less expensive than Risperdal. A generic version of Risperdal would be significantly less expensive than either Risperdal or paliperidone.
In the absence of comparative studies, doctors are left to their own devices in evaluating paliperidone. Next year, the picture could get a bit clearer. J&J has begun head-to-head tests of paliperidone against AstraZeneca's Seroquel, the most-prescribed antipsychotic in the U.S., for treatment of schizophrenia and bipolar disorder. Those results won't clarify whether paliperidone is better than Risperdal.
Some analysts have forecast sales for paliperidone as high as $2.5 billion in 2010. Tony Butler, a Lehman Brothers' drug analyst, said he questions J&J's ability "to grow future antipsychotic sales" with paliperidone. "We're unaware of any substantial additional value in paliperidone over Risperdal," he said. Lehman estimates annual sales of paliperidone will peak at $1.5 billion compared with a peak of $4.5 billion for Risperdal.
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