GSK’s Big Push To Maintain Its Respiratory Reign

GlaxoSmithKline is counting on new products like Breo Ellipta and Anoro Ellipta to extend its legacy in respiratory disease beyond Advair Diskus, which could face generic competition within the next five years. But GSK may need to wage a battle on the reimbursement front before it can claim commercial success – a challenge highlighted by Express Scripts’ unexpected decision to put Advair and Breo on its not covered list for 2014.

• GSK launched Breo Ellipta in October, as an anchor for a portfolio of drugs it is developing for delivery through the Ellipta device, the next one most likely being Anoro, a LABA/LAMA combination.
• The drug’s once-daily dosing could improve compliance, and thus health outcomes. But Breo lacks data payors want to see demonstrating superiority on safety and efficacy versus twice-daily treatments. That hurdle will be hard to overcome without the real-world evidence the company is in the midst of compiling, but which won’t be available until 2015 at the earliest.
• The pharmacy benefit manager Express Scripts Inc.’s unexpected decision to exclude Breo and Advair from its national formulary in 2014 indicates just how tough the road is becoming for branded drugs aimed at competitive therapeutic areas.
• The uncertain timing of generic Advair temporarily takes some pressure off GSK, but, with a clarified regulatory pathway now in place, generics competitors are sharpening their knives.

GlaxoSmithKline PLC’s launch of the first once-daily inhaled corticosteroid/long-acting beta2-agonist Breo Ellipta (fluticasone furoate/vilanterol) for chronic obstructive pulmonary disease (COPD) is a pivotal moment for the company.

Heavily dependent on its respiratory franchise, GSK needs Breo and new drugs like it to succeed if it is to continue to dominate the market. The company’s ICS/LABA Advair Diskus (fluticasone/salmeterol) holds court now, with Advair ranked as the world’s second best-selling drug. It generated $7.72 billion in 2012, or 20% of GSK’s total sales, but rivals, both generics and branded, are chomping at the bit.

GSK hopes to bolster its respiratory ranks not only with Breo, but also with several new drugs that could mitigate damage if generic versions of Advair do reach the market. The timing of that cataclysm remains uncertain due to regulatory challenges, though the patent protection on the drug components of Advair have already expired and patents covering the Diskus device expire in 2016.

The suite of new drugs, including Breo, all depend on the same Ellipta delivery device, which makes a strong launch execution for Breo even more critical. A second product, AnoroEllipta (umeclidinium/vilanterol), will be just as important to GSK as Breo, if not more so, as potentially the first once-daily long-acting muscarinic antagonist (LAMA) and LABA combination product to reach the US market. An FDA advisory committee gave it a thumb’s up in September, and many industry observers believe LABA/LAMA combinations will eventually be the new gold standard for treating COPD. (See (Also see "GSK’s Anoro Ellipta Needs CV Postmarket Study, FDA Panel Says In Endorsement" - Pink Sheet, 10 Sep, 2013.).)

Umeclidinium has also been filed as a single agent LAMA for COPD.

Exhibit 1

GSK’s Rich Respiratory Pipeline

Phase I	Phase II	Phase III	Registration
Fluticasone/vilanterol/umeclidinium ICA/LABA/LAMA for COPD	Losmapimod p38 kinase inhibitor (oral) for COPD	Breo (vilanterol/fluticasone) LABA/ICS for asthma	Anoro Ellipta (umeclidinium/vilanterol) LABA/LAMA for COPD
GSK2339345 Sodium channel blocker for asthma	Fluticasone/umeclidinium ICS/LAMA for asthma	Mepolizumab IL-5 antibody for severe asthma	Umeclidinium LAMA for COPD
GSK2269557 Phosphoinositide 3 kinase inhibitor for asthma/COPD	Dilmapimod p38 kinase inhibitor (IV) for acute lung injury		Fluticasone furoate ICS for asthma
GSK2256294 Soluble epoxide hydrolase inhibitor for COPD	GSK961081 Muscarinic antagonist, beta2-agonist (MABA) for COPD
GSK1325756 CXCR2 chemokine receptor antagonist for COPD	GSK2245035 Toll-like receptor 7 agonist for asthma
	GSK2190915 FLAP inhibitor for asthma
SOURCE: GlaxoSmithKline

GSK believes Breo offers clear value to patients, physicians, and payors: a once-daily treatment intuitively improves adherence, which results in better health outcomes and reduces overall health care costs. When it comes to COPD, that means lowering medical expenses from exacerbations, the wheezing and shortness of breath that frequently results in doctor’s visits, hospitalizations, and lung function damage.

GSK hopes to eventually support its pharmaco-economic assertions with more data backed by long-term clinical studies, but results from those are several years off. For now, GSK may find itself offering steeper rebates than it would like to secure access to Breo and relying on controversial co-pay assistance programs to offset out-of-pocket expenses for patients.

Meanwhile, GSK CEO Andrew Witty signaled his growing confidence in his company’s respiratory portfolio during the company’s third-quarter sales and earnings call October 23, commenting, “I really do feel today very materially more optimistic about what our long-term game plan has always been, which is to remain the respiratory market leader and to grow market share over the next several years.”

But it may be awhile before investors stop holding their breath. Breo and, likely, Anoro have jumped clear of 10 years of development hoops, but the bigger challenge to the products may lie in the commercial realm. Asthma and COPD are crowded therapeutic categories, and payors want to be sure that new drugs influence health outcomes before reimbursing them. Already, some payors are pushing back against Breo, which offers a clear dosing and convenience benefit to patients, but doesn’t stand out from existing medications on safety or efficacy.

The issues facing Breo are similar to those drugmakers are facing industrywide, regardless of therapeutic area, when a new drug launches in a congested category with limited data differentiating it on either safety or efficacy. Breo offers a case study for how payors may respond to a new product with a once-daily benefit in a congested therapeutic area in today’s increasingly cost-conscious environment.

Breo Launch Kicks Off

The US Food & Drug Administration approved Breo in May as a maintenance treatment and for reducing exacerbations in patients with COPD, but GSK began shipping it October 14 in order to ramp up supply and prepare the commercial team. (See (Also see "GSK Set For Breo Launch, But Access Will Require Time" - Pink Sheet, 14 Oct, 2013.).) Breo became available in pharmacies October 30.

The LABA component of Breo, vilanterol, is a new molecular entity, while fluticasone furoate is already available as a nasal spray suspension approved for the treatment of allergic rhinitis and marketed by GSK under the brand name Veramyst (fluticasone).

“It was critical that we got all of our organization prepared for the introduction of Breo,” SVP of respiratory Jorge Bartolome says. “One critical element was making sure all of our account managers and reps were prepared to start selling both the new ICS/LABA and also the device, because it underpins the future of the portfolio.” Getting both a new device and a new product out the door is a “complex undertaking,” he adds. It requires getting a handle on manufacturing on two fronts and educating the commercial team in two areas as well.

The delay was minor given the drug’s lengthy development time line. The product emerged from a collaboration begun in November 2002 with Innoviva Inc., in which the two companies set out to develop a second-generation Advair. [See Deal] GSK paid $50 million up front, and the companies have since updated terms several times, most recently in 2012, when GSK again increased its stake in its partner from 19% to 26.8%.

The approval of Breo has changed the direction of Theravance, which will receive a 15% royalty on sales of the drug for the first $3 billion in sales and is also partnered on Anoro. As a sign of the high hopes the partners have for the franchise, Theravance, in May, announced plans to separate into two companies, one specifically to manage the royalties and the other to remain a drug discovery company.

GSK isn’t rushing Breo out the door. With the advent of Advair generics remaining uncertain, the company still has time on its side. And, from GSK’s vantage point, Advair will continue to have a place in the market. Breo is only approved for COPD, whereas Advair is approved for both COPD and asthma. COPD accounts for about half the brand’s sales, according to GSK.

In Europe, the European Commission recommended approval for both indications November 18. In contrast, FDA has shown itself to be more risk averse when it comes to approving new drugs for asthma due to safety concerns. GSK is awaiting data from an ongoing Phase III clinical trial in asthma patients before determining whether or not to pursue the asthma indication in the US.

COPD: Large, Growing, And Unmet Medical Need

Restricting Breo’s use to COPD cuts the drug’s market opportunity in half in the US, but the disease opportunity is nothing to shrug at. (See (Also see "COPD Market Snapshot: New Products, Limited Differentiation" - Pink Sheet, 6 May, 2013.).) The global market for COPD was nearly $9 billion in 2011 and is expected to grow at a steady annual rate of 4% between 2011 and 2021, when sales will reach almost $13.4 billion, according to the market research firm Decision Resources Inc. Growth will be driven by the expansion of the aging population, increased diagnoses through more widespread use of spirometry, and the introduction of new, more expensive once-daily treatments and fixed-dose combinations, particularly the first LABA/LAMA combinations.

Advair is the leading corticosteroid/LABA combination and Boehringer Ingelheim GMBH’s Spiriva (tiotropium) is the leading LAMA. Advair is dosed twice a day and Spiriva is once daily. The individual components of Advair are also marketed as Serevent (salmeterol) and Flovent (fluticasone).

In the US, in 2012, Advair held a 72.3% share of the $6.79 billion ICS/LABA market, including both COPD and asthma, while AstraZeneca PLC’s Symbicort (budesonide/formoterol) held 19.2%, according to IMS Health Inc. Additionally, a variety of short-acting beta agonists, including generic albuterol, which are dosed every four to six hours or as needed, and corticosteroids, are also prescribed for COPD.

Physicians largely base their prescription choices on treatment guidelines from the Global Initiative for Chronic Obstructive Lung Disease (GOLD). Patients with mild COPD generally start pharmacologic treatment with short-acting bronchodilators. As a patient’s disease progresses with more symptoms and increased risk of exacerbations, he steps up to a LABA, a corticosteroid/LABA combination, or a LAMA. The most severe patients might consider triple therapy with a corticosteroid, a LABA, and a LAMA.

New LABA/LAMA combinations, like Anoro, which offer the potential for more potent bronchodilation than currently available treatments, are expected to eventually supplant ICS/LABA combinations as the market leaders for the treatment of COPD, according to Decision Resources.

Although GSK leads the pack in the US with Anoro, Novartis AG appears on track to beat GSK to the punch with a LABA/LAMA combination in Europe. Its Ultibro Breezhaler (indacaterol/glycopyrronium) was approved there in September, and the company is aiming to launch the drug before the end of the year. The US program has been waylaid by FDA concerns over dosing and safety, leading Novartis to run a new Phase III trial, studying a twice-daily dose rather than a once-daily dose. A regulatory filing is now expected in late 2014. In clinical studies, the product demonstrated impressive efficacy, including superiority to Advair. (See (Also see "Novartis Once-Daily COPD Combo Safe, Effective And Ready For Filing – Everywhere But In The U.S." - Pink Sheet, 10 Sep, 2012.).)

Some drugmakers including GSK are pursuing an ICS/LABA/LAMA triple combination as well.

Exhibit 2

What’s On The Horizon? Combinations

Manufacturer/Brand	Molecules	Mechanism	Device/Dose	Indication	US Status
GSK’s Advair	Fluticasone/salmeterol	ICS/LABA	DPI/twice daily	COPD/Asthma	Marketed
AstraZeneca’s Symbicort	Budesonide/formoteral fumarate	ICS/LABA	MDI/twice daily	COPD/asthma	Marketed
Merck & Co.’s Dulera	Mometasone/formoteral fumarate	ICS/LABA	MDI/twice daily	Asthma	Marketed
GSK’s Breo	Fluticasone/vilanterol	ICS/LABA	DPI/once daily	COPD	Marketed
GSK’s Anoro	Vilanterol/umeclidinium	LABA/LAMA	DPI/once daily	COPD	Filed, 12/18 PDUFA; Phase III for asthma
Novartis’ Ultibro (EU brand name)	Indacaterol/glycopyrronium	LABA/LAMA	DPI/uncertain	COPD	Phase III
Boehringer Ingelheim	Olodaterol/tiotropium (Spiriva)	LABA/LAMA	SMI/once daily	COPD	Phase III
Forest and Almirall	Formoteral/aclidinium	LABA/LAMA	DMI/twice daily	COPD	NDA filing delayed indef-initely
SOURCE: Company filings; Elsevier’s Strategic Transactions

Physicians are looking forward to adding new, fixed-dose LABA/LAMA drugs to their armamentarium because the products appear to have a pharmacologic synergy when used together resulting in increased benefit to patients.

In a survey conducted by Jefferies Research, 52 pulmonologists said they expect 20% of COPD patients to be treated with LABA/LAMA combinations within five years after the drugs enter the market. Use of LABA/LAMAs is expected to come primarily at the expense of LAMAs.

Boehringer, the leader in the LAMA class, is developing its own once-daily LABA, Striverdi Respimat (olodaterol), now pending at FDA and recently approved in Europe. It is also studying the LABA in combination with Spiriva in Phase III trials.

GSK should be well positioned in the near term. “We expect that Anoro Ellipta will gain significant share from the LAMA class in COPD, while putting limited pressure on the LABA/ICS and LABA alone classes,” Jefferies analyst Jeffrey Holford said in a September 12 research report analyzing the respiratory market. As a result, he forecasts that GSK’s respiratory franchise revenues (Breo, Anoro, Advair) will increase from 2013 to 2016, but that the entry of a substitutable generic of Advair in the US will erode the franchise value beginning in 2017.

Sanford C. Bernstein research analyst Timothy Anderson expects GSK’s respiratory franchise revenues will peak in 2015 when sales of Advair, Breo, Anoro, and nominal sales from “other” products will reach £8.49 billion ($13.62 billion). They will then decline to £6.95 billion ($11.15 billion) in 2017, with Advair sales taking a substantial hit from the entry of a substitutable generic in the US in mid-2016. He expects both Breo and Anoro to eventually become blockbuster drugs, but not to the tune of Advair (he forecasts sales of £1.14 billion and £1.44 billion in 2020, respectively).

The Challenge: Reimbursement

Getting Breo and Anoro to blockbuster sales levels will require broad access to patients, but payors generally view the newest respiratory drugs as having limited, if any, benefit over existing medications.

This is certainly the case with Breo. Payors want to see data showing how the drug’s dosing advantage impacts compliance, and how modest improvements in surrogate endpoints such as forced-expiratory volume in 1 second (FEV₁) – a standard endpoint used by FDA to evaluate efficacy in COPD clinical trials – affects clinical outcomes. That requires demonstrating value on endpoints like reduced exacerbations and hospitalizations, or other reductions in cost of care.

“What Breo brings to the market is once-a-day dosing for COPD versus twice daily, and that does not get us very excited,” Prime Therapeutics LLC’s chief clinical officer David Lassen says. “Although there may be a ploy to use once-daily dosing as a pharmaco-economic model to suggest improved adherence, that hasn’t been proven and we really doubt that is going to play out in a significant way.”

Though Prime’s Pharmacy & Therapeutics Committee has completed its review of Breo, the pharmacy benefit manager hasn’t yet disclosed what that coverage decision is.

“Logically thinking, anytime you can reduce the number of times a patient takes a medicine that should have value. Having said that, the general feeling within the payor community is that they do not want to pay a premium for compliance,” says Steve Stefano, managing partner at the consulting firm SynopiaRx, and previously the head of GSK’s managed markets division.

Director of clinical evaluation and policy at the pharmacy benefit manager RegenceRx Sean Karbowicz points out, “It’s one thing to say you are going to go from a nebulizer administered four or six times a day to a product that is twice a day. That’s a more realistic and more impactful difference on adherence, but twice a day to once a day, you are starting to get diminished returns.”

RegenceRx is not recommending Breo be included on its clients’ health plan formularies, but it is not saying plans should exclude it outright either. “The health plans that we work with have different perspectives and might have different thresholds for what they are going to accept on formulary,” he says.

Payor support is particularly important in COPD because for patients cost is a hurdle to treatment. The disease usually affects the elderly, who are often on a fixed income and insured by the Centers for Medicare & Medicaid Services. Many end up “on Brovana or Perforomist with budesonide by nebulizer because that is free for the patient,” said James Donohue, MD, a pulmonary disease specialist and professor of medicine at the University of North Carolina at Chapel Hill in an interview earlier this year. Nebulized LABAs, including Brovana(arformoterol) or Perforomist(formoterol) are reimbursed under Medicare Part B. Nebulizers convert liquid medicines into a mist that can be inhaled, but require administration through a face mask or mouthpiece attached to a compressor.

For new medicines, “the co-pays are phenomenal,” Donohue said. Recently introduced therapies include Novartis’ ArcaptaNeohaler (indacaterol), the LABA component in Ultibro, and Forest Laboratories Inc.’s first-in-class phosphodiesterase inhibitor Daliresp (rofumilast). Co-pay assistance programs are often offered for new drugs, but patients aren’t eligible for those programs when drug spending is reimbursed through Medicare Part D or other federally funded programs.

GSK Highlights Indication For Exacerbations

GSK’s Bartolome insists that Breo has a compelling value proposition over Advair and other drugs for COPD. “Breo Ellipta offers patients with COPD the opportunity to have a once-a-day product that offers true 24-hour sustained lung function improvement … at the same time as reducing exacerbations,” he says. “Exacerbations are critical because they drive a significant amount of the COPD cost and burden and are very detrimental to patients.”

The deterioration in lung function for patients who have an exacerbation is significant, he says. COPD patients who end up in the hospital have a 20% chance of being re-hospitalized within one year and a 20% chance of dying in the next year, according to Bartolome.

Both Breo and Advair are approved as maintenance treatments to improve airflow obstruction and for reducing exacerbations in patients with COPD, whereas Symbicort only carries the maintenance indication. The clinical trial data supporting the approval of Breo were mixed, however. (See (Also see "GSK’s Breo Ellipta Approved With COPD Airflow Obstruction, Exacerbation Claims" - Pink Sheet, 10 May, 2013.).) Treatment improved lung function compared with placebo and a steroid alone in several trials, but failed to demonstrate statistically significant difference in some trials at certain doses and failed to demonstrate superiority to Advair in either COPD or asthma in two non-pivotal studies.

FDA’s Pulmonary-Allergy Drugs Advisory Committee, which met in April, evaluated both the individual components and the combination. Reviewers questioned the contribution of fluticasone to the combination, given that it failed to demonstrate a replicated statistically significant effect in studies, while it was associated with an increased risk of adverse events including pneumonia and fractures. (See (Also see "Breo Ellipta Review Pits Clinical Benefits Against Statistical Shortcomings" - Pink Sheet, 22 Apr, 2013.).)

GSK priced Breo at a wholesale acquisition cost of $267.67 for a 30-day supply, on par with Advair’s WAC. But in contract negotiations with payors, drug manufacturers usually offer discounts and rebates to secure a better formulary placement. Analysts and pricing experts expect GSK to raise the price of Advair to force the switch to Breo, a common practice in the drug industry.

Prime says that from its analysis, on a cost-per-script basis, Merck & Co. Inc.’s Dulera (mometasone/formoterol) is the most affordable ICS/LABA product (though Dulera is approved only for asthma, not COPD), followed by Symbicort, Breo, and then Advair.

Express Scripts Splashes Cold Water On GSK

Already, the pharmacy benefit manager CVS Health Corp. said it won’t include Breo on its formulary beginning January 1, 2014, and, in what appears to be a significant change to the way payors typically reimburse drugs for asthma and COPD, Express Scripts Holding Co. (ESI) last month put Advair as well as Breo on a list of drugs that are excluded from coverage on its national formulary for 2014. The ESI formulary extends to employers and health plans representing between 30 million and 40 million members. (See (Also see "Express Scripts Tightens Commercial Formulary Control With “Not Covered” List" - Pink Sheet, 7 Oct, 2013.).)

ESI’s decision stands out because it encompasses not only the new drug, Breo, but also the gold standard for the treatment of asthma and COPD, Advair. The aggressive move suggests payors are taking a tougher stance on formulary management when they believe multiple clinically equivalent alternatives are available. In this instance, ESI included Symbicort and Dulera on the formulary instead of Breo and Advair.

The decision may sit well with ESI’s main clients, the sponsors, as a measure of the PBM’s ability to control the climbing cost of innovative specialty drugs. But it will be likely harder for physicians and plan members, that is, the patients, to swallow. Advair, in particular, but also Breo have some distinct administration advantages over their competitors, namely, they are delivered via dry powder inhalers [DPIs]. Symbicort and Dulera, on the other hand, are metered dose inhalers [MDIs].

Some patients find DPIs easier to use, and using a device they feel comfortable operating can help ensure patients get the right amount of medication. MDIs are pressurized canisters that release medication when it is pushed into the mouthpiece, and coordinating breath and actuation can be challenging to some patients, particularly children and the elderly. With dry powder inhalers, the medication is released when the patient breaths in.

“The device is key,” said Donohue. “Let’s say you are a primary care physician and you are treating 19 different diseases and COPD, you don’t have a lot of resources to dedicate to education. That’s where the beauty of the Advair Diskus comes in. It’s so simple. The patient doesn’t have to go through a complicated learning.”

With the Ellipta device, GSK has tried to simplify the process further. The Ellipta has a dual strip for the first time to deliver the two treatments into the device, whereas the Diskus uses a single strip. The change allows the two medications to be mixed when they are inhaled and theoretically simplifies development and ease of use for patients. Patients can open, inhale, and close the device and don’t have to hold it in any particular way to dispense the medicine, according to GSK. It also has a larger dose counter than the Diskus, so patients can see how many doses of the medication they have taken.

the two treatments into the device, whereas the Diskus uses a single strip. The change allows the two medications to be mixed when they are inhaled and theoretically simplifies development and ease of use for patients

According to ESI, “Both MDIs and DPIs are clinically effective, and neither device has been proven to be more clinically effective than the other.” The formulary does include exception criteria to allow for approvals for Advair for pediatric patients under the age of 12 as well as patients who are unable to coordinate breath and actuation with an MDI.

“Drug choices in some classes are larger than ever, with many products costing more with no additional health benefit,” the PBM said in an email. “Smart formulary management is an important tool in helping our clients sustain a robust pharmacy benefit for their members.”

Co-Pay Cards Draw Rebuke From Payors

Express Scripts also notes more aggressively managed formularies are a way for payors to counter the drug industry’s controversial use of co-pay cards.

Drugmakers distribute them to patients to help offset the cost of expensive co-pays, most frequently when a drug does not have a preferred formulary placement. The coupon offsets the patient’s out-of-pocket expense, but leaves insurers footing the rest of the bill for what is often a more expensive product.

GSK declined to discuss its promotional strategy for Breo, but the effort almost certainly will include co-pay assistance. On the web site mybreo.com, GSK is offering a $50 off coupon to cover out-of-pocket expenses for a 30-day supply for eligible patients who pay the first $10.

“Obviously we think building access is important,” Bartolome says. “We always give the option to payors to opt out if they don’t want co-pay assistance programs with any of our inline products.”

Bartolome says negotiations with payors are just beginning. “We are early in the process,” he explains. “The initial feedback is quite positive. You will start to see that as the negotiations play themselves out.”

But the situation that arose with ESI may have lead GSK to reconsider its rebating strategy. “We are actively negotiating with ESI across multiple books of business, as well as with other payors, as well as adjusting our value proposition, making sure we have competitive terms,” Bartolome says.

GSK says Express Script’s not-covered list only applies to a subset of the PBM’s business and that the impact of the decision on Advair and Breo will depend on the number of sponsors that adopt that formulary. The restrictive formulary applies to employer-sponsored coverage, and employers have the choice to participate or not.

Not all payors agree with ESI’s strategy, indicating just how nuanced the US market is. Some believe excluding the gold standard treatment from coverage is bad news for patients and could ultimately impact broader medical costs. “Those PBMs that have gone down that path likely are pushing upstream against a market share of 50% to 60% of use being in Advair,” says Prime’s Lassen. “In a category like respiratory diseases, chronic disease where we know there is proven health outcomes on the medical side by treating appropriately, I would be concerned with taking an approach where you are changing therapy in that regard.”

Other industry observers agree the decision by ESI represents a landmark change in the way payors have traditionally viewed the therapeutic area.

“The prevailing wisdom has been that there are two categories where it is really not worth it to be super tight from a formulary management perspective because the medical costs offset opportunity is just so substantial. Those categories are number one, diabetes, and number two, asthma and COPD,” says pricing and reimbursement specialist Keith Kelly, regional general manager at the consulting firm Campbell Alliance Group Inc.

What has changed, he says, is a wider selection of drugs available for payors to pick and choose among and a growing awareness within managed care that drug availability does not necessarily correlate to appropriate use of medications.

GSK’s “Real-World” Experiment

GSK’s biggest opportunity to build the case for Breo may come in the post-marketing setting, where the company could collect data better demonstrating the drug’s positive effect on outcomes.

GSK hopes data from two long-term studies under way will also support the pharmaco-economic case. The 16,000-patient SUMMIT trial is studying Breo’s ability to improve survival in patients with COPD and a history of risk from cardiovascular disease compared with placebo. The Salford Lung Study is looking at Breo in 4,000 patients with COPD and 5,000 patients with asthma in a “limited intervention” setting by relying heavily on electronic health records to evaluate endpoints such as exacerbations and health care utilization. Data from those trials aren’t expected until 2015 however. (See sidebar, “Real-World Breo Study.”)

Both studies pose risks if the data aren’t favorable. The Salford trial in particular uses a novel trial design and is the first of its kind to test a pre-licensed drug in a real-world setting at such a large scale. The company’s decision to undertake the study at all seems an acknowledgement of how much it needs compelling data to strengthen the drug’s commercial prospects.

GSK began conceptualizing the Salford Lung Study about four years ago, aware that it would need to demonstrate the value of Breo in an increasingly challenging payor environment. It set out to design a study that would track patients as they moved through the health care system, relying mainly on electronic health records rather than intervention from the trial team.

Getting the trial up and running has been an ambitious undertaking. “It’s a first in the world as far as we are aware,” says David Leather, global medical affairs leader for GSK’s respiratory business, who heads the study. “Inevitably, it has been full of learnings and, therefore, also full of risks.”

But it remains to be seen if payors will be receptive to this kind of trial or skeptical about its authenticity. The UK regulatory authorities have supported the Salford Lung Study and been pivotal in helping the trial get off the ground.

“It’s often a situation where you do a study like this in Europe, where the payor community is more receptive to working with you, and the US payors are more dismissive of it,” says Kelly.

The $8 Billion Dollar Question: Generics

It’s unlikely any pharmaco-economic evidence for Breo will hold up in the court of payor opinion if generic versions of Advair reach the market. The eventual introduction of generic competition appears more likely than ever after FDA released long-awaited draft guidance in September outlining recommendations for demonstrating bioequivalence to the product. (See (Also see "Advair Generics Likely Lucrative Product For Few That Can Clear High Bar" - Pink Sheet, 16 Sep, 2013.).)

To be recognized as a fully substitutable generic under the FDA draft guidance, compounds must include the two active ingredients delivered in a similar device to the Diskus and with the same instructions. Successfully getting a substitutable generic to market, therefore, hinges on copying the Diskus device as much as the active ingredients. The device poses as many development and manufacturing challenges to generic contenders as the drugs themselves.

Nonetheless, the question in the minds of analysts and investors has shifted from if generic Advair will reach the market to when now that FDA has released the draft guidance. Several manufacturers are working on fully substitutable generic versions and also on potential branded generics that would carry the expired active ingredients but dispensed through a proprietary device (though that could require more clinical testing and represent a more challenging commercial opportunity).

Two companies, Mylan NV and Teva Pharmaceutical Industries Ltd., have publicly stated time lines for launching a generic version of Advair, though those goals vary vastly. Novartis’ Sandoz International GMBH generic drug unit is also believed to be developing a generic version of Advair, though it has declined to comment on the new FDA draft guidelines or on its development time line.

During a briefing October 8 on its respiratory R&D program, Teva said it expects to file regulatory applications for a fully substitutable generic version of Advair in the US and Europe in 2017, positioning it for a potential launch in 2018. Teva’s can-do tone was a change from its previous stance, when management said developing an equivalent generic would not be possible because of FDA’s arduous requirements.

The situation has improved because the draft guidelines eliminate the need for an inhaled AB-rated version of Advair to demonstrate dose response to prove pharmacodynamics bioequivalence, said SVP Tushar Shah, head of Teva’s respiratory R&D. “This requirement has been eliminated with the PD requirement now being a single, four-week clinical bioequivalence study,” he said. “This change now makes the development of AB-rated inhaled products in the US doable.”

Rival Mylan, however, has a more aggressive time line. It has been working to develop a bioequivalent generic since it acquired the program from Pfizer Inc. in 2011 for $17.5 million up front. [See Deal] It believes it can file an ANDA for a substitutable generic in 2015, two years ahead of Teva.

Teva management has indicated that Mylan’s time line seems overly ambitious, with Shah asserting during the R&D briefing that “it could take two to three years just to develop the device.”

“If you are starting today from scratch and you have a lot of experience working with the device maybe you could pull it off in four years,” he said. “But if you are working on a new device and have little experience, it is going to take at least six or seven years.” Teva believes it has a chance to be first to market with a substitutable generic.

In an interview, Mylan president Rajiv Malik defended the company’s goal. “How do we feel about this program? We could not feel any better,” he said, pointing out that a team from Pfizer worked on the program for four years before Mylan took over. “It is for us about a six-year-old program,” he added.

Mylan acquired the program from Pfizer after the Big Pharma closed its research and operations in Sandwich, UK, and deprioritized allergy and respiratory disease as part of its restructuring under then-new CEO Ian Read. (See (Also see "Reading Into Pfizer's Changes: First Steps For New CEO" - Pink Sheet, 7 Feb, 2011.).) In addition to the technology, Mylan gained about 75 scientists in Sandwich, where it now operates a respiratory center of excellence.

“We made a promise to them, that this is not a one-program team, that you are going to build us a franchise around respiratory,” Malik said. The company already markets Proforomist, and its development portfolio includes nebulizers, MDIs, and DPIs, he said. “These are the three technologies that are largely used in the respiratory space. Now we are adding more molecules and more programs around these three technologies.”

It remains to be seen if fully substitutable Advair generics will ever reach the market. As GSK’s Witty said during the company’s third-quarter sales and earnings call, the Big Pharma itself has run up against manufacturing setbacks when it comes to producing Advair. “Whether or not they can ultimately get to a substitutable generic is in and of itself a further hurdle of uncertainty,” he said.

Either way, so-called branded generics could eat away at Advair’s share of the market. Teva, for example, is developing differentiated ICS/LABA products that combine existing marketed molecules dispensed through its proprietary Spiromax device, a dry powder inhaler. Teva filed the first such product in Europe in January, DuoResp Spiromax, which combines the active ingredients in Symbicort in the Spiromax inhaler.

An Advair-like product combining fluticasone and salmeterol in the Spiromax inhaler, FS Spiromax, is targeted for a US filing in 2015. That product is currently being tested in Phase II trials, with Phase III tests expected to begin in early 2014. Teva expects to file an NDA for the product through the 505 (b)(2) pathway, which allows companies to reference older drugs.

The company already sells the market-leading albuterol product ProAir and the inhaled corticosteroid Qvar (beclomethasone). Teva is enthusiastic about the prospects for Spiromax FS because in a Phase II trial the product demonstrated a similar effect on bronchodilation to Advair but with a quarter of the dose of salmeterol. The company believes the benefit is due to administration with the Spiromax inhaler.

But a branded generic like Spiromax FS would be a more difficult marketing proposition for generic manufacturers than a substitutable one, which could be automatically interchanged at the point of sale. That said, given the lack of generic alternatives available in the inhaled respiratory space, payors would likely welcome any drug that poses an opportunity to reduce spending in the category as long as data hold up on safety and efficacy.

In Europe, the European Medicines Agency released bioequivalence guidance for inhaled respiratory drugs in 2009, and generics could potentially enter the market earlier there. Bernstein Research analyst Anderson expects branded generics could enter the market in Europe in 2014.

“Our understanding is that in select European markets, even products using different devices could be deemed substitutable, meaning they would impact sales in a noticeable way,” he said in an October 24 research note.

Generics may be an uncertainty, but GSK’s respiratory franchise definitely will be facing adversaries from multiple fronts, be they generics, branded generics, or new branded combinations.

GSK has a long legacy in respiratory disease to fall back on as it looks to reposition its portfolio for the future, but creating commercial successes out of new products in an increasingly crowded therapeutic area, where payors wield more control than ever before, will require the company to pull new marketing levers beyond the tried and tested methods.

The company, all too aware of the challenges ahead, has shown a willingness to take a new approach. The Salford Lung Study is a pioneering trial that could better define Breo’s position in today’s competitive and cost-conscious world. GSK’s hand may have been forced by Breo’s clinical profile, but the clinical trial initiative could pay off if evidence shows, at least in this instance, that drugmakers deserve the financial reward they receive for bringing more convenient drugs with dosing advantages to market.

If the trial fails to demonstrate the positive impact of Breo on clinical outcomes and health care utilization, the trial will be a misstep for GSK. But as long as the results don’t turn out worse for Breo than Advair or other existing treatments, GSK may only find itself back where it is now – given that payors’ thinking on the issue of dosing appears largely decided.

GSK has made another proactive decision by bringing its next-generation drugs to market using a single new Ellipta device, despite the popularity of the Diskus. History has shown, with Advair being the poster child, how pivotal a device can be to protecting a respiratory brand, both through patient preference on the branded front and through IP and technological challenges when it comes to staving off generics. With Ellipta, GSK is launching a new device that it believes patients will find convenient because of the ability to interchange across medicines while putting up another roadblock to generic competition in the future.

GSK’s respiratory launches aren’t a sure bet, given the competitive dynamics in the market. But by keeping the focus on potential benefits to health outcomes and medical spending, GSK could win over patients and make inroads with payors as well. If Breo, Anoro, and other new products can establish a solid position in the market in the window of time before Advair generics hit, and ease the wallop, investors will be hard pressed not to call GSK’s respiratory strategy a success.