Price Is GSK’s Weapon Ahead Of Tanzeum Launch

GlaxoSmithKline has priced its once-weekly GLP-1 agonist Tanzeum 64% below the high dose of Novo Nordisk’s market-leading, once-daily Victoza – a sign of the uphill commercial battle it faces against an entrenched rival.

GlaxoSmithKline PLC revealed that the price of its new once-weekly glucagon-like peptide-1 receptor agonist Tanzeum (albiglutide) for type 2 diabetes will be significantly lower than rivals in the competitive market when it launches in late July.

Tanzeum will be priced at about $326 for four pens, a monthly supply, the company told “The Pink Sheet” DAILY. The cost is 64% below the price of a monthly supply of the commonly-used 1.8 mg high dose of the market-leading GLP-1, Novo Nordisk AS’ Victoza (liraglutide). The wholesale acquisition cost of Tanzeum will be 10% below the cost of the lower 1.2 mg dose of Victoza. Tanzeum is dosed once weekly, while Victoza is dosed once daily. Victoza is supplied in either two or three prefilled pen. Three pens are needed for a one-month supply of the high dose and two for the low dose.

Tanzeum was approved by FDA in April as the fourth GLP-1 to reach the market, which raised questions about how GSK will successfully differentiate the product from rivals (Also see "GSK’s Tanzeum Once-Weekly GLP-1 To Launch In Third Quarter" - Pink Sheet, 15 Apr, 2014.). The answer to that question, not unexpectedly, appears to be price.

Filling The Bydureon Void

In addition to Victoza, the GLP-1 market includes AstraZeneca PLC’s Bydureon (exenatide extended-release), which is dosed weekly, and Byetta (exenatide), which is dosed twice a day. Since GLP-1 products are injected, weekly administration is seen as being an important advantage, but Bydureon hasn’t made a dent in the market compared to Victoza. It generated sales of only $80 million in the first quarter, while Victoza generated $531 million (DKK 2.91 billion).

But GSK is looking to fill the gap that Bydureon has left open. Bydureon has been held back by administration challenges; the product has to be reconstituted before administration and is delivered via a wide-gauge needle.

It has also suffered from roller coaster style management changes. It was approved by FDA in 2012 in the hands of Amylin Pharmaceuticals Inc., which was acquired a few months later by a joint venture made up of Bristol-Myers Squibb Co. and AstraZeneca, which the latter took over fully in 2013 (Also see "AZ Doubles Down On Diabetes, Buys Out Bristol’s Share in Alliance" - Pink Sheet, 19 Dec, 2013.).

Now with Tanzeum about to enter the market and more rivals on the way, Bydureon’s chances of gaining a foothold in the market are diminishing. AstraZeneca is hoping to jumpstart sales of the product by introducing an easier-to-use dual-chamber pen, which eliminates the need for reconstitution. It was approved by FDA in March, but AstraZeneca hasn’t said yet when the product will launch or why it is not already on the market (Also see "AstraZeneca Hopes Bydureon Pen Will Rewrite GLP-1 Story" - Pink Sheet, 3 Mar, 2014.).

GSK’s pricing strategy for Tanzeum will put more pressure on Bydureon. The cost of Tanzeum is about 35% below the cost of Bydureon, which has a wholesale acquisition cost of $440 for a monthly supply, according to Gold Standard’s pricing database ProspectorX.

GSK said the pricing strategy for Tanzeum is intended to provide broad access to coverage for patients.

“Our objective is to deliver medicines that address the needs of our customers and price according to the value that they deliver,” GSK said. “The burden of type 2 diabetes is now at 29 million people diagnosed in the U.S. It is a complex disease to manage for many patients who are already on multiple treatment therapies, trying to achieve adequate glucose control.”

Indeed, diabetes is a therapeutic area that has come under the scrutiny of payers recently. Victoza was excluded from Express Scripts’ national drug coverage formulary last year in a particularly eye-opening example of payer pushback (Also see "Express Scripts Tightens Commercial Formulary Control With “Not Covered” List" - Pink Sheet, 7 Oct, 2013.). Express Scripts and CVS Health Corp. are expected to announce their 2015 national formularies in August, which will be critical for drug companies that market products that could be included on a “not covered” drug list (Also see "Express Scripts, CVS Caremark Expected To Unveil 2015 Formularies In August" - Pink Sheet, 3 Jul, 2014.).

Given the pharmacoeconomic dynamics, GSK’s decision to price Tanzeum below existing marketed drugs is a smart one. GSK needs to leverage price especially because Tanzeum failed to demonstrate non-inferiority to Victoza in a head-to-head clinical trial. Bydureon also failed to demonstrate equivalent efficacy to Victoza in a head-to-head comparison.

Both drugs were approved based on extensive clinical trials comparing the drugs to commonly-used classes of diabetes treatments including insulin and metformin.

GSK may not have long to establish Tanzeum as the leading once-weekly GLP- 1 in the market, however. Eli Lilly & Co. is just behind with a once-weekly GLP-1 dulaglutide, which so far appears to have the best data package because it did stand up to Victoza in a comparative trial.

The drug, which Lilly plans to market under the brand name Trulicity, was non-inferior to Victoza administered daily at its highest 1.8 mg dose at reducing hemoglobin A1C from baseline at 26 weeks in a Phase III clinical trial. Patients in the trial treated with Victoza, however, did demonstrate statistically significant weight loss (Also see "Lilly Opens ADA With Head-To-Head Dulaglutide/Liraglutide Data" - Pink Sheet, 14 Jun, 2014.). Dulaglutide is pending at FDA with regulatory action expected in the second half of the year.