Small Change, Big Impact?

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A small difference in wording could have a huge effect on sales of Bristol-Myers Squibb's (NYSE: BMY) Orencia.

Theoretically, at least.

Orencia's old label said that it was approved for rheumatoid arthritis (RA) patients "who have not been helped enough by other medicines for RA." Today, Bristol-Myers said the Food and Drug Administration had changed the label to indicate that the drug works in patients that have had RA for less than two years.

Essentially, Bristol-Myers is trying to get Orencia bumped up the pecking order, so that it gets used in combination with methotrexate, instead of waiting until patients fail to respond to that drug. The only problem is that methotrexate is an oral drug that's available as a cheap generic, while Orencia is an expensive biologic that needs to be infused every four weeks. Even if the label says that Orencia plus methotrexate works better than methotrexate alone, doctors may continue with the status quo of trying the generic first, then transitioning to the biologic if that doesn't work.

And the status quo is less than ideal for Orencia. Last year, its third year on the market, Orencia had sales of just $441 million. Bristol-Myers is clearly having problem competing against the multibillion-dollar TNF inhibitors, such as Humira from Abbott Labs (NYSE: ABT); Remicade, which is from Johnson & Johnson (NYSE: JNJ) in conjunction with Schering-Plough (NYSE: SGP); and Enbrel, by Wyeth (NYSE: WYE) and Amgen (Nasdaq: AMGN).

To encourage patients to switch to Orencia, Bristol has a deal in which it'll pay a patient's copayments for the first six months, and even pay for the first copayment of a competing brand if the patient doesn't like Orencia.

The plan seems to be working; sales were up 41% in the first half of the year. Whether this label change will have as much of an impact remains to be seen.