Recently, the FDA slapped AbbVie's (NYSE:ABBV) hepatitis C virus franchise with a toxicity warning. The drug safety communication surprised few familiar with safety profiles of Viekira Pak and Technivie. Still, warning of serious liver injury risk in patients with underlying advanced liver disease after taking the drugs is bad news no matter how many expected it in the first place.
With Technivie's indication limited to HCV genotype 4 patients, Viekira Pak the major interferon-free combo therapy competing with the megablockbuster HCV franchise of Gilead Sciences (NASDAQ: GILD). Competition in this space is fierce, as evidenced by Johnson & Johnson's experience with Olysio. J&J recorded $2.3 billion in sales of Olysio last year. But, following the approval of Gilead's Harvoni last October, sales of Olysio have fallen off a cliff, reaching just $79 million in the most recent quarter. Going back a little further, Vertex Pharmaceuticals had a blockbuster in Incivek before Sovaldi's approval in December 2013. Vertex has since withdrawn Incivek from the U.S. market, putting its entire HCV program to rest.
In such a hypercompetitive market, every advantage is magnified, or at least it should be. Luckily for AbbVie investors, the company deftly worked out a sweetheart deal with America's largest pharmacy benefit manager, Express Scripts. It's the job of PBMs to create guidelines for healthcare providers that maximize benefits while reducing costs, typically by promoting the use of generics.
Three unknowns and two black boxes
Express Scripts inflamed the medical community when it excluded Harvoni from its formulary and insisted doctors prescribe Viekira Pak in its place despite Harvoni being arguably a better drug. At the top of physician complaints was lack of real-world data for three of the combination's four components.
The fourth component, ritonavir, is well understood, but that didn't help matters any. Marketed as Norvir, its label includes a black-box warning -- the FDA's most severe -- for "potentially serious and/or life-threatening adverse events".
Not only did Viekira Pak have more unknown compounds than Harvoni, but most patients also need to take it along with ribavirin. Marketed as Copegus by Roche, this side-effect laden drug also comes with black-box warnings for hemolytic anemia and embryocidal effects.
In clinical trials leading to Viekira Pak's approval, viral clearance rates of the three-compound regimen were impressive, and a little better with ribavirin added. In light of Harvoni's stellar viral clearance rates, the FDA had to insist on ribavirin's inclusion alongside Viekira Pak for the vast majority of patients.
However, following the approvals of Viekira Pak in December 2014 and Technivie in July 2015, at least 26 worldwide cases of severe liver injury in patients taking one of these drugs have been submitted to the FDA. Of these, 10 patients experienced liver failure resulting in transplant or death. We can't know how many were reported elsewhere, and AbbVie quickly countered that some of the cases occurred in patients who shouldn't have been taking the drugs in the first place. However, AbbVie's investors were clearly shaken by the news.
Gilead's trifecta of safety, tolerability, and efficacy is an incredible achievement that doesn't need a safety warning to improve its position against Viekira Pak. That said, investors will want to keep an eye out for any admission of fault from Express Scripts, or at least a softening of its anti-Harvoni stance. The PBM will soon hold a meeting to review the news and changes to Viekira Pak's label, though the drug remains on the PBM's formulary for now. Gilead could find itself with a lot more potential patients depending on the outcome.
It would be impossible to state that some specific number of people ended up with severe liver injury because they were prevented from receiving Harvoni as a direct result of Express Scripts' formulary exclusion. One thing, however, is certain: The next time it or another PBM tries to exclude an expensive drug in favor of less expensive but unknown compounds, this safety warning will be remembered.
In my opinion, Express Scripts crossed a line by excluding Harvoni for a combination of three unknown compounds and two with black-box warnings. Let's hope the FDA safety warning will make it much harder to cut expensive drugs from formularies before alternatives have proven themselves in the real world.
Cory Renauer owns shares of Johnson & Johnson. The Motley Fool owns shares of and recommends Express Scripts and Gilead Sciences. The Motley Fool recommends Johnson & Johnson and Vertex Pharmaceuticals. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.