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Executive Summary

LyphoMed is charging patients $ 99.45 per vial under its Treatment IND protocol for aerosolized pentamidine -- the same vial price as Pentam 300 (I.V.). The Treatment IND approval amounts to an expanded indication for Pentam I.V., which has been on the market since 1985 for the treatment of Pneumocystis carinii pneumonia. The Treatment IND protocol calls for once-a-month use of the currently marketed 300 mg injectable vials with a nebulizer for the prevention of Pneumocystis carinii pneumonia. FDA approved the Treatment IND on Feb. 6. LyphoMed is the second company and the third distributor with a Treatment IND to charge for a drug under the recovery of costs provision in the Treatment IND regs after Somerset Labs, for Eldyprel, and the Massachusetts Dept. of Health, for CMV immunoglobulin. The approval should force the issue of insurance coverage of the quasi-approved Treatment IND products, which have FDA clearance for wider use, but which are not officially approved by the agency. The annual drug cost for the aerosolized use will be "nearly $ 1,200," LyphoMed estimates. "When the total costs of nebulizers and labor are added," the company said, "the total cost of prophylaxis for a one-year period, documented in a study at San Francisco General Hospital, is $ 2,100." FDA recommends administration of the drug through the Respirgard II nebulizer, which is manufactured by Marquest Corp. and costs approximately $ 20, including tubing. LyphoMed predicts that use of aerosolized pentamidine will result in "substantial savings in drug costs, costs of hospitalization and medical care." The company estimated that treating PCP with hospitalization currently costs "at least $ 12,000 per episode for a full course of treatment." The per vial price of pentamidine has been rising over recent years. It was introduced in 1984 at $ 25 per vial and reached the $ 100 per vial level in the spring of 1988 ("The Pink Sheet" May 2, 1988, p. 12). Aerosolized pentamidine is the third AIDS-related Treatment IND and the second for a PCP treatment after trimetrexate. Advance notice of the impending Treatment IND approval was widely available during the week of Jan. 30-Feb. 3, coinciding with a meeting of President Bush's Commission on AIDS and cancer drug approval requirements ("The Pink Sheet" Feb. 6, p. 7). FDA noted in a Feb. 6 press release that under the Treatment IND aerosol pentamidine "will be recommended for use in AIDS virus-infected individuals who have had at least one episode of the pneumonia or who have T4 helper cell counts of 200 per cubic mm or less." LyphoMed has set up an "800" number hotline to provide details of the Treatment IND protocol -- 800-PCP-7003. The basis for the recommended dosage is a trial conducted by the San Francisco Community Consortium, which is included in the LyphoMed NDA. That study, in over 400 patients, found once-a-month use at the high 300 mg dose dramatically reduced the incidence of PCP recurrence. FDA noted that the aerosol pentamidine Treatment IND "is the first . . . emanating from a clinical trial sponsored jointly by a community research initiative and a pharmaceutical company." The NDA also includes data from an epidemiologic study supported by the National Institute of Allergy and Infectious Diseases, which helped determine the target population for the Treatment IND. LyphoMed estimated that it has spent "more than $ 20 mil." on clinical trials. In addition, the company said it has agreed to "continue to sponsor clinical trials . . . over the next 24 months -- even after full FDA approval." Taking a page from other companies marketing high-priced AIDS drugs, LyphoMed said it is "currently developing a program for providing aerosolized pentamidine to indigent patients through locally based AIDS clinics and community organizations." LyphoMed estimates the total give-away, which includes the amount used in continuing clinical trials, to be worth roughly $ 4-5 mil. Both Schering-Plough and Roche announced such programs for indigent patients requiring alfa interferon to treat Kaposi's sarcoma following FDA approval of that use last December. Burroughs Wellcome similarly is helping with the costs of Retrovir through a $ 5 mil. subsidy. At a recent analysts meeting (see related story, p. 9), LyphoMed President Gary Nei estimated that LyphoMed is currently supplying the drug to about 1,500 to 2,000 patients in its clinical trials. Nei added that the company has agreed with FDA to supply the drug for additional studies over the next two years in another 1,500 to 2,000 patients. "We have further committed to provide a certain amount of drug, as yet undefined, but perhaps on the order of 20,000 vials, or $ 2 mil. at market ]price[, to a variety of AIDS community groups -- so the total commitment for LyphoMed in the area of free drug will probably amount to $ 5 mil.," he noted. The additional studies over the next two years, Nei said, would include combination trials with Burroughs Wellcome's Retrovir (zidovudine, AZT) and experimental AIDS drugs; studies using different dosing regimens of aerosolized pentamidine; and trials in new patient populations, such as children. LyphoMed starts the effort to get insurance coverage for the aerosol with one positive sign. The company highlighted the recent decision by the John Hancock Mutual Life Insurance Co. to reimburse for aerosol pentamidine for prevention of PCP without waiting for final approval from FDA. LyphoMed reports submitting an NDA for aerosolized pentamidine in November for prevention of PCP. Nei said he expects to complete the submission of its data from clinical trials "within the next few weeks." The company has not yet submitted data to support approval for treatment of PCP with the aerosolized drug. LyphoMed is conducting trials for the treatment indication and has received an orphan designation for that use. Comparing aerosolized pentamidine to FDA's review of Retrovir, Nei predicted that LyphoMed could have an approval within six months time. "The NDA for AZT was issued six months after approval of Burroughs Wellcome's Treatment IND," Nei pointed out. "However, because LyphoMed filed its NDA back in November and has already amassed and presented considerable data, we believe the approval of our NDA may require less time." Burroughs Wellcome's Retrovir was made available prior to final approval under procedures similar to a Treatment IND. The specific Treatment IND rules were not developed until after Retrovir's final approval. The Treatment IND and the approval scenario outlined by Nei would put LyphoMed ahead in the race with Fisons for first approval of an aerosolized pentamidine. The winner of that approval race may get seven years of market exclusivity under the Orphan Drug Act. Reportedly, Fisons is scheduled to complete its clinical submission to FDA some time this spring. With the high LyphoMed price for pentamidine, FDA is likely to feel implicit pressure to find a way to assure competition in the field. Fisons is understood to be studying the drug in a different dosage and frequency of treatment than LyphoMed. If the company chooses to seek a Treatment IND, FDA may be reluctant to approve the Fison's aerosolized product to avoid confusion among physicians and AIDS patients.

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