Lilly’s new strategy built around head-to-head drug trials

In the new high-stakes world of drug development, Eli Lilly and Co.’s research scientists have become research impresarios.

Lilly has set up not one, not two, but five head-to-head trials of its experimental drug dulaglutide against other leading diabetes therapies.

So far, dulaglutide’s record is four wins, no losses.

Lilly is now staging a prize fight between dulaglutide and its most direct competitor, Victoza. Both drugs are called glucagon-like peptides, or GLPs, and help patients with Type 2 diabetes produce more insulin.

If dulaglutide wins that battle, it could bring a ton of new revenue for Lilly—as much as $1.5 billion a year, some analysts estimate. If dulaglutide loses, it will see its sales potential diminished.

It’s a new reality for drug companies. No longer can they test their drugs merely against placebos. Now, they must take on the leading drug, or drugs, already on the market.

Increasingly, that’s what the U.S. Food and Drug Administration wants to see. And more important, it’s what health insurers and state-run health plans are demanding before they agree to pay for a drug and decide how much to discount it to their members.

“An approvable product is no longer the finish line for the industry. It’s a reimbursable product,” said Mark Cziraky, vice president of research at HealthCore, a subsidiary of Indianapolis-based WellPoint Inc.

This new reality has evolved over the past three years, according to industry professionals. The aging of baby boomers is creating such financial strain on health systems around the world that they are being forced to take a tougher line before agreeing to pay for new therapies.

So there’s no ducking these head-to-head fights anymore.

“People asked, ‘Why do you want to do that trial? You already have a very robust package’” of data, said Enrique Conterno, president of Lilly’s diabetes business. “I thought it was an important trial because I thought it was the obvious question that our customers would ask.”

Lilly’s diabetes strategy is much broader than dulaglutide. The company is also testing two other diabetes drugs against leading competitors in late-stage trials.

Empagliflozin, if approved, would come to market not long behind a similar drug, Invokana, made by New Jersey-based Johnson & Johnson. And Lilly has run three head-to-head trials pitting its insulin glargine against the diabetes world champion, Lantus.

Knocking off Lantus is the real goal in Lilly’s work, said Bernard Munos, a drug development consultant who used to work in Lilly’s corporate strategy group. Lantus, made by Sanofi-Aventis SA, had sales last year of $6.4 billion.

And more amazingly, it achieved 19.3-percent sales growth, even though it hit the market 12 years ago.

Doing head-to-head trials against Lantus and other leading products is the only way to vault over them, Munos said.

“It really is a smart strategy,” said Munos, who now runs his own consultancy from Indianapolis called the InnoThink Center for Research in Biomedical Innovation. “It really gives Lilly a chance to reclaim the dominance it once had in diabetes, which it never should have lost.”

Restoring the glory

Indeed, Lilly was the first company in the world to bring insulin to market back in 1923. And it dominated the diabetes market, especially in the United States, until Lantus’ launch in 2000.

Since then, it has been passed by the maker of Lantus, France-based Sanofi, as well as archrival, Denmark-based Novo Nordisk A/S. Lilly’s diabetes sales have been growing, since the number of patients developing diabetes is increasing every year, but only about half as fast as the diabetes market overall.

Lilly’s sale of insulins also has been hampered by the success of oral diabetes medicines, which patients prefer over medicines they must inject. Januvia, made by New Jersey-based Merck & Co. Inc., has proved especially popular, racking up annual sales of $5.7 billion.

Lilly’s plan is to outflank Sanofi, Novo and all other drug companies by offering every kind of diabetes medicine—short-acting and long-acting insulins, oral medicines and injectable drugs like dulaglutide.

Analysts give good odds for dulaglutide, empagliflozin and Lilly’s insulin glargine passing muster with the FDA and other regulatory bodies worldwide.

But the most important audience for Lilly’s head-to-head trial data will be the pharmacy and therapeutics committees at health insurers, hospital systems and at foreign state-run health plans. Those committees are the ones now demanding to see how a new drug performs in direct competition with an existing therapy.

“Health systems have always preferred to have that kind of data. But there’s never been the pressure that there is now,” said Jim Jorgenson, who until January was the chief pharmacy officer at Indianapolis-based hospital system Indiana University Health. He is now chief operating officer of Visante Inc., a Minnesota-based health care consulting firm.

Indeed, in the U.S., Visante estimates hospital chains will see reimbursement from government programs—which account for roughly half of all spending—drop 30 percent over the next three years.

One of the key ways to absorb such declines is to figure out how to use drugs to keep patients healthier, thereby avoiding the really costly things in health care: surgeries and emergency room visits.

Diabetics with uncontrolled blood sugar levels go to the hospital far more frequently and eventually need surgeries to deal with failures in their eyes, kidneys and feet brought on by consistently high blood sugar.

If drug companies can show their drugs help limit those outcomes, then hospitals and health plans will be more than eager to pay for those drugs, Jorgenson said.

“As providers, we have to do a much better job in delineating which therapies are actually going to improve our health system performance,” Jorgenson said. “We need to know which interventions are the most significant and in what circumstances.”

Winning over health plans

Such demands are a high bar, which is certainly raising the overall cost of bringing a new drug to market. But so far, every drug that has proved itself superior has been able to command a higher reimbursement rate than the leading drug that was knocked off, said Tony Butler, a pharmaceutical analyst at Barclays Capital.

That’s because, while health plans and hospitals are trying to take a harder line against new products, most individual patients still want the newest products.

“The [clinical] trial needs to be larger to demonstrate either superiority or non-inferiority than standard of care. That causes the costs for the drug to be greater,” Butler said. But, he added, “Consumers want the latest and greatest. So payers, they’re a little bit over a barrel.”

Lilly is testing dulaglutide against the highest dose of Victoza, Conterno said, because if dulaglutide proves superior, dulaglutide’s pricing will be compared to a larger quantity of Victoza, which is by definition more expensive. So dulaglutide can command a higher price.

If dulaglutide fails to prove better than Victoza overall, Lilly will look for subgroups of patients that do benefit more from dulaglutide.

And of course, Lilly has data from its previous studies of dulaglutide against four other drugs—the popular generic metformin; the popular oral medicine Januvia; Byetta, which was the first injectable like dulaglutide on the market; and Lantus.

So if doctors or patients have been using any of those diabetes medicines, Lilly can present data showing that they will see better blood sugar control by using dulaglutide.

Lilly also will play up that dulaglutide requires just one shot per week, as opposed to a daily shot for Victoza.

“We like our product,” Conterno said.

The head-to-head strategy is not without risks. Two years ago, Lilly came out with results of a head-to-head clinical trial of the diabetes drug Bydureon against Victoza. But Bydureon proved inferior to Victoza and never has matched its sales.•