Teva Braces for Tussle With Insurers Over Copaxone’s Heir

Teva Pharmaceutical Industries Ltd. (TEVA) is using records from its 24-hour support hotline in the U.S. to persuade thousands of multiple sclerosis patients to switch from its biggest-selling drug, Copaxone, to a new version that has patent protection until 2030.

It’s a desperate moment for Teva: Copaxone, which brings in $4.3 billion in annual sales and accounts for more than half its profit, may have generic copies by May, when its remaining U.S. patents expire. The Petach Tikva, Israel-based company is trying to soften the blow by persuading patients and their doctors to switch from the daily injection to a new, three-times-a-week version.

The toughest customer for the new version, though, might be insurers, who know a cheaper generic for the original Copaxone is on its way. The new version won’t be able to claim any proven health benefits over the older version beyond convenience.

“Some payers are viewing this as Teva’s strategy to avoid losing patients and they may take an aggressive stance,” said Gary Owens, a former executive at a licensee of the Blue Cross Blue Shield Association of health insurers who now runs an independent consulting business. “It’s going to be a wrestling match between two 500-pound gorillas.”

Photographer: Adam Reynolds/Bloomberg

A logo is displayed at the entrance to Teva Pharmaceutical Industries Ltd.'s headquarters in Jerusalem. Close

A logo is displayed at the entrance to Teva Pharmaceutical Industries Ltd.'s headquarters in Jerusalem.

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Photographer: Adam Reynolds/Bloomberg

A logo is displayed at the entrance to Teva Pharmaceutical Industries Ltd.'s headquarters in Jerusalem.

Given the expected generic competition and soaring sales of new branded drugs that come in pill form, such as Biogen Idec Inc.’s Tecfidera, analysts estimate that sales of Copaxone will fall 56 percent by 2016. (TEVA) Teva’s American depositary receipts are down 23 percent from the record set in 2010, in part on concern about competition to Copaxone.

Patient Support

Kimberly Harter is the poster child for Teva’s plan. Harter has struggled to remember her daily Copaxone injection since 2005, the year her multiple sclerosis was diagnosed. So when her neurologist in Salt Lake City described the new version, requiring only three shots a week, during a routine visit in January, the single mother from Utah was eager to try.

“It’s hard to remember to inject yourself every day,” Harter, 37, said from her home in Provo, Utah. “Whenever that happens, I worry it will throw off my treatment.”

In addition to contacting doctors like Harter’s neurologist, Teva has started e-mailing patients registered with its Shared Solutions program, a patient-support hotline staffed by nurses 24 hours a day, since the U.S. Food and Drug Administration cleared the drug on Jan. 28.

“Our records show that you may be a candidate for this new treatment option,” read one promotional e-mail obtained by Bloomberg News. “Talk to your health-care provider.”

Clinical Advantage

Teva has contact with 85,000 patients, said Jon Congleton, who oversees the company’s central nervous system drugs, including Copaxone. “The awareness has been building,” he said in an interview.

Unlike patients and doctors, insurers probably will ask whether the new Copaxone has health benefits beyond convenience, said David Lassen, chief clinical officer at Prime Therapeutics LLC, a U.S. pharmacy benefit manager. Teva may struggle to show that because the clinical tests presented to the FDA compared the long-lasting medicine to a placebo -- not Copaxone, which has been on the market in the U.S. since 1997.

“We are going to assess first of all if this agent, relative to the daily agent, offers a significant clinical advantage,” Lassen said. “And by that I mean any safety or efficacy uniqueness that will offer a true clinical outcome advantage versus the daily drug.”

CVS Caremark Corp., the largest provider of prescription drugs in the U.S., Aetna Inc., the third-biggest insurer, Express Scripts Holding Co., the biggest drug benefits manager, didn’t comment on how they plan to cover the new Copaxone.

Price Questions

For now, Teva is offering a small discount on the new product. It sells it for $60,500 a year, or $1,000 less than the old version. The daily version is a 20-milligram injection, while the newer product is 40 milligrams three times a week.

Amid the looming threat of a generic -- and competition from pills such as Tecfidera and Novartis AG (NOVN)’s Gilenya -- Teva has raised the price of Copaxone. In January it increased the cost of Copaxone by 9.9 percent, according to Congleton. The drug’s price has more than doubled in the past eight years, according to Bloomberg calculations based on data from Excellus, a nonprofit licensee of the BlueCross BlueShield Association.

Teva is optimistic about insurance coverage. Congleton says the company expects to convert 30 percent to 50 percent of patients to the long-acting Copaxone. While the payers have “economic incentives, they also focus on what’s best for the patients and there’s obviously a clear benefit there,” he said.

‘Cutting Deals’

Teva converted 4.6 percent of total Copaxone prescriptions to the 40-milligram dose for the week ending Feb. 21, said Asthika Goonewardene, a Bloomberg Industries analyst in London, citing data from Symphony Health. Teva said in an e-mailed statement that it’s “encouraged by the response to date.”

The approval of a generic probably will precipitate a decline in sales and bring Teva to the negotiating table on price, said Joseph Sinopoli, president at PreLaunch Strategy LLC, which provides reimbursement and consulting services in Boston. A first copy might be 20 percent cheaper than the original, he said.

At that point, “Teva is going to be cutting deals,” with insurance companies, he said.

Momenta Pharmaceuticals Inc. (MNTA) and Novartis AG’s Sandoz unit are working together on a generic version of daily Copaxone, called M356, and are awaiting regulatory approval. Momenta plans to be ready to start selling the drug at the time of patent expiration, Chief Executive Officer Craig Wheeler said on a Feb. 10 conference call.

No Biking

Multiple sclerosis is a chronic inflammatory disease that robs patients of muscle coordination and balance. It stems from damage to the myelin sheath, fatty tissue that protects nerve fibers in the brain and spinal cord used to conduct electrical impulses that control movement.

Harter says she can no longer pick up her kids or ride a bike, and at one time she was so incapacitated she had to temporarily give up care of her three children.

Copaxone reduces the frequency of relapses for people with a form of MS known as relapsing-remitting.

Last week, Harter received a three-month supply of her new 40-milligram shots, for which she paid a $3.80 co-payment. “I am so thankful,” said Harter, who said she hopes nothing changes when a generic version of the daily medicine reaches the market.

For Related News and Information: Teva Sees $3 Billion in 2020 Sales From Reformulated Drugs

To contact the reporter on this story: David Wainer in Tel Aviv at dwainer3@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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