Second-Line Isn't Second Best

A drug company's decision to get approved as a first-line treatment for a disease (versus a second-line one) is usually tricky. The first-line market is obviously larger, but usually has more competition. Adding further complexity to the decision, patients who've failed first-line treatments are usually harder to treat.

On the other hand, Schering-Plough's (NYSE: SGP) move in the European hepatitis C market was really quite easy. It's PEGINTRON and REBETOL combination therapy is already approved as a front-line treatment, and there aren't any drugs approved in Europe to treat cases that have failed other therapies. A market with no competition -- at least on the marketing level -- should work wonders for sales.

The company moved one step closer to its goal on Monday, when the Committee for Medicinal Products for Human Use (CHMP) recommended approval of the combination therapy PEGINTRON and REBETOL for retreating patients. The European Medicines Agency (EMEA) will get the final say on whether the drug is approved for marketing.

PEGINTRON is approved for treating hepatitis C in the U.S., both by itself and in combination with REBETOL as a front-line treatment. Its main competition both in the U.S. and Europe comes from Roche's Pegasys. The second-line treatment approval should set Schering apart -- at least in Europe. There's no word on whether the company will try to get a second-line designation in the U.S.

Schering-Plough needs all the additional sales from second-line treatments it can get. Up-and-coming stars including Vertex Pharmaceuticals' (Nasdaq: VRTX) telaprevir, with its stellar phase 2 data, and Pharmasset's (Nasdaq: VRUS) R7128 -- which will be tested in combination with Roche's Pegasys -- might be able to take front-line treatment market share if they're approved.