It’s a tie.
Since 2012, I’ve been picking the most important new medicine approved each year. It’s always a tight competition, but this year the two obvious winners are so alike that I think it’s not fair to give either an edge. They are: Keytruda from Merck and Opdivo from Bristol-Myers Squibb.
Forget the cumbersome names. These two medicines represent a breakthrough in oncology: unlocking the immune system as a weapon to attack tumor cells. The drugs block a “programmed cell death receptor” on the surface of white blood cells. Cancer cells often can use this receptor to prevent the white cells from killing them.
The drugs shrank tumors in 20% to 40% of patients with melanoma who have been failed by all other treatments. And in 5% to 10% of those patients, the tumor shrinkage persists for more than six months.
Future potential
But the real potential of these drugs will come as they are moved earlier in melanoma and into other cancers. Keytruda was approved first, in September. Opdivo followed three months later. But Bristol is further ahead in completing studies that test trying Opdivo before other melanoma drugs. That, some analysts at investment banks say, could lead to an advantage for Bristol. Regardless, sales of each drug are forecast to approach $3 billion in the next few years.
Next year, there should be more information about using both drugs in non-small cell lung cancer. Trials of Bristol’s Opdivo in that disease will be closely watched, and studies are ongoing in other cancers, too. Companies like Roche and AstraZeneca are developing their own, similar medicines. There are also other approaches that harness the immune system that are exciting doctors and researchers.
A swelling pharmacopeia
The FDA approved 41 medicines in 2014, more than in any year since 1996, according to the agency’s numbers. That’s more than double the number approved in 2007, when the pharmaceutical industry was in what appeared to be a multi-year drought.
The sheer volume of new drugs being approved bodes well for pharmaceutical companies, including the smaller biotechnology companies that invent and develop many drugs. In 2014, the NYSE ARCA Pharmaceutical Index rose 15% and the Nasdaq iShares Biotechnology index rose 35%, compared to a 13% gain in the S&P 500.
Also approved: the first single pill capable of curing hepatitis C, Harvoni from Gilead Sciences, and the Viekira Pak, a competing four-pill-a-day regimen from AbbVie. Sovaldi, one of the main components in Harvoni, was the most important new drug of 2013. Among the other important drugs approved in 2014: Zerbaxa, a new antibiotic for resistant gram-negative germs; Esbriet to treat idiopathic pulmonary fibrosis; and Blincyto from Amgen to treat B-cell acute lymphoblastic lymphoma (ALL). (Click here for a complete list.)
High costs
All this innovation is coming at a high price. Despite their increased productivity, pharmaceutical companies have also faced escalating research and development costs. But they have also been able to demonstrate astounding pricing power, raising the cost of medicines to levels that would have been unimaginable a decade ago.
Both Keytruda and Opdivo cost $150,000 per patient per year. Because the two drugs are so similar, some analysts are wondering if there could be a situation like the one that occurred with the hepatitis C drugs. Gilead priced Harvoni at $95,000 per patient per year; AbbVie priced the competing Viekira Pak at $83,000 per year, a not-very-big discount. But then AbbVie cut a deal with Express Scripts, the drug benefits giant, to grant it a significant discount in return for largely locking Harvoni out.
This may be difficult to replicate in cancer, though. The Gilead and AbbVie drugs are basically approved to treat the same types of patients. Right now, the same is true of Keytruda and Opdivo. But as time passes, they may be approved based on different studies for different patient populations. In that case, the drugs won’t be interchangeable. And that eventuality may mean neither Merck nor Bristol is willing to grant a big discount. That will be a story for next year.
