Health Insurers Study New Arthritis Drugs From Monsanto, Merck
Bloomberg News
November 17, 1998, 4:10 p.m. ET
Health Insurers Study New Arthritis Drugs From Monsanto, Merck
San Diego, Nov. 17 (Bloomberg) -- Monsanto Co. and Merck &
Co., working to bring new arthritis pills to market, face a
challenge convincing health insurers that it's worth paying more
for painkillers that could be free of dangerous side effects.
Their success in making that case will determine whether
their drugs, the first two in a new class known as Cox-2
inhibitors, will meet analyst expectations for combined annual
sales of as much as $5 billion.
The drugs, which promise relief from arthritis pain without
the risk of dangerous gastric bleeding, are likely to be sold at
much higher prices than existing painkillers such as Roche
Holdings Ltd.'s Naprosyn and Novartis AG's Voltaren. Managed-care
companies are already asking whether they are worth the money.
''They don't provide additional pain relief,'' said Robert
Seidman, WellPoint Health Networks Inc.'s vice president for
pharmacy. ''The majority of patients don't have a problem with
gastric upset, so there's no reason to pay $4 a day when you can
pay $4 a month.''
While the drugmakers say they've yet to decide how they will
price the new treatments, they are already talking up the
benefits of these medicines.
Researchers from Monsanto and Merck last week presented data
on trials of the Cox-2s at a meeting of the American College of
Rheumatology, the world's largest annual gathering of arthritis
specialists.
The new drugs seek to target an enzyme linked to pain and
swelling, cyclooxygenase-2, without hampering a related enzyme
that helps protect the stomach from the acid it contains.
Older Patients
The drugs might be good for patients taking drugs that
predispose them to bleeding, Seidman said. Many older people take
such drugs, including DuPont's Coumadin, to prevent heart
attacks.
''If you're over 65, you can get the drug. If you have
rheumatoid arthritis, you can get the drug,'' Seidman said. ''If
you're out playing softball and you hurt your knee, you don't get
the drug.''
Brendan Healy, a health-care analyst at USAA Investment
Management Company, said he does expect the Cox-2 drugs to raise
costs for managed-care companies. USAA owns shares in both Merck
and Monsanto.
The drugs are largely expected to be used in place of non-
prescription medications for which managed-care companies don't
pay, said Healy, who follows managed-care companies including
Aetna Inc. and PacifiCare Health Systems Inc. and some
drugmakers.
The effect will likely be most pronounced in managed-care
companies with a heavy concentration of customers on Medicare,
the government health program for the elderly, Healy said.
Cost vs Benefit
''My guess initially is that it's going to cost more than
the benefits,'' Healy said. ''Arthritis isn't life threatening.
It's more a lifestyle type of thing -- you don't want to be in
pain all the time.''
Kaiser Permanente, the No. 1 U.S. operator of health
maintenance organizations, is drafting general guidelines for the
use of Celebrex and Merck's similar drug, called Vioxx.
Kaiser will likely only pay for the drugs for patients most
at risk, said David Campen, a rheumatologist who heads Kaiser's
formulary committee for Northern California.
''The issue is, to what degree do you spend to obtain a
benefit,'' Campen said. ''If we did a head scan of everybody in
the program every year, we'd pick up brain tumors. Are employer
groups that pay us willing to fund that sort of screening? Of
course not.''
Monsanto, which is scheduled to appear Dec. 1 before a Food
and Drug Administration panel studying its application for
approval of its Cox-2, dubbed Celebrex, or celecoxib, may try to
persuade insurers that they could save money by footing the bill
for its new drug.
Risks of Existing Drugs
Though the company declined to discuss its plans for
marketing the drug to insurers, a press release issued last week
pointed out concerns about the safety of existing arthritis drugs
-- known as non-steroidal anti-inflammatory drugs, or NSAIDs.
NSAIDs include Roche's Toradol, American Home Products
Corp.'s Orudis and SmithKline Beecham Plc's Relafen.
Recent research has found that upper gastrointestinal
complications from NSAID use lead to some 107,000
hospitalizations and 16,500 deaths each year in the U.S.,
according to Monsanto.
Managed-care companies also are looking at whether to pay
for new treatments for rheumatoid arthritis, a potentially
crippling form of the disease. The U.S. Food and Drug
Administration this month approved Enbrel, which was developed by
Immunex Corp., a biotech company majority owned by American Home
Products Corp.
Bioengineered Drugs
Bioengineered drugs are generally more expensive than
traditional pharmaceuticals like the Cox-2s because they're
tougher to develop and manufacture.
The wholesale cost of Immunex's Enbrel, which last week won
U.S. approval, is about $11,700 a year, versus about $3,500 for
the more toxic generic drug methotrexate, now the standard of
care for the disease, the company said.
''You've got to balance the cost difference with therapies
that are much more targeted -- giving them fewer side effects --
and are able to deliver much more than traditional
pharmaceuticals,'' said Peggy Phillips, Immunex senior vice
president for pharmaceutical development. ''It's all about
value.''
--Jim Finkle in Washington, Marion Gammill and Kerry Dooley in |
