Underscoring the increasing difficulties drug companies face convincing insurers to pay for their medicines, a U.K. regulator recommended that the country's health-care system not pay for one of GlaxoSmithKline PLC's most important new drug launches in years, saying the lupus treatment isn't worth its price.
The same regulator has rejected a string of the industry's new launches this year, including a new multiple-sclerosis drug from Novartis AG and several cancer drugs.
Cash-strapped governments, employers and others who pay for health care are increasingly refusing to cover expensive new drugs that they don't perceive as delivering enough therapeutic benefit—particularly when a cheaper generic treatment is available. The trend has been under way for years but has accelerated with the global economic slowdown.
The National Institute for Health and Clinical Excellence, or NICE, said in a statement that after reviewing the cost and therapeutic benefits of Glaxo's new drug, Benlysta, it decided the treatment wasn't "good value for money." The decision is preliminary; Glaxo and lupus patients will have a chance to dispute it.
Notably, NICE rejected the drug despite the fact that its U.K. price is less than half its price in the U.S.: about £10,000 a year ($15,600) versus $35,000.
A Glaxo spokesman said Benlysta has been favorably covered by insurers in the U.S. The drug is covered by some of Europe's state-run health systems, but is still being reviewed by others. A Citigroup analyst last month cut his U.S. sales forecast for the drug, citing "more lukewarm reception to Benlysta than we originally expected," due in part to doctor perceptions that the drug has "modest efficacy."
Glaxo defends the drug's efficacy and has expressed hope that it will eventually achieve annual sales of $1 billion or more.
The U.K. decision is particularly striking because Benlysta, developed with U.S. biotech Human Genome Sciences Inc., is the first new drug for lupus in more than 50 years.
Lupus is a difficult-to-treat disease in which the body's immune system attacks healthy tissue, causing debilitating joint pain, organ damage and skin rashes.
The mainstay treatment for years has been steroid prednisone, which has serious side effects. In some cases, doctors prescribe immunosuppressants such as Roche Holding AG's Rituxan to treat lupus, although regulators haven't approved Rituxan for this purpose.
Benlysta, launched this year, blocks a protein in the body that is elevated in lupus patients and believed to contribute to the malfunctioning of the immune system.
"This initial decision is very disappointing for patients living with lupus who currently have very limited treatment options and we will do everything we can to change NICE's mind," Glaxo said in a statement.
A spokeswoman for Lupus UK said that the patient-support group is "extremely disappointed."
In August, NICE rejected Novartis's new multiple-sclerosis drug Gilenya, which is the first oral treatment for the disease. NICE said it was unclear how much the drug helped some MS patients. Gilenya costs about £19,000 ($29,700) a year in the U.K., far less than the U.S. price tag of about $48,000 per year. NICE has also rejected Novartis and Bristol-Myers Squibb Co. leukemia drugs for certain patients; the drugs cost more than £30,000 a year. Both of the NICE decisions were preliminary.
Hurdles like these are mounting in many countries, making it harder for new drugs to achieve "blockbuster" status—the industry's term for a drug that racks up annual sales of $1 billion or more. U.S. insurers are boosting the co-pays patients must pay out of pocket in order to encourage use of cheaper generics, while Europe's state-run health systems are delaying, limiting or outright rejecting reimbursement of new drugs.
These obstacles have helped hobble sales of new medicines. Newly launched drugs—defined as those on the market two years or less—rang up U.S. sales of $4.3 billion in 2010, down from $11.8 billion in 2005, according to IMS Health.
Write to Jeanne Whalen at email@example.com