Glaxo's Advair Is the $100 Billion Asthma Drug That Won't Die

(Bloomberg) -- Sharon Bassett tries to stretch a month's supply of GlaxoSmithKline Plc's Advair over 60 days to save money on the asthma treatment because the U.S. lacks a cheaper generic version.

An alternative “would make all the difference to people like me who are on a fixed income,” said Bassett, a 65-year-old retired office manager. “It would mean being able to breathe pretty much normally.”

Since 2001, Advair has helped children and adults with chronic lung diseases while raking in about $100 billion in sales for Glaxo along the way. Yet eight years after the patent on the drug itself expired and two years since its companion Diskus inhaler lost exclusivity, it remains untouched by competition from generics in the U.S. -- and patients like Bassett pay the price.

“It's been a particularly long and frustrating journey,” said Steve Miller, chief medical officer of Express Scripts Holding Co., which negotiates drug prices for employers and insurers. “We're optimistic we're going to see a product in the second half of the year, but we've been hoping that for a while.”

After a series of setbacks for manufacturers of copycat drugs, the nation's health-care system and many of the 25 million Americans with asthma remain burdened with the costs of Advair. When patients skip doses, that means more emergency-room visits, use of powerful “rescue” medications and hospitalizations, said Christopher Fanta, a lung specialist at Harvard-affiliated Brigham & Women's Hospital in Boston.

“Given how common asthma is among children and adults, one can view this lack of low-cost generic inhaled steroids as a public health issue,” he said.

Glaxo counters that the respiratory field is already very competitive and that Advair's price after rebates and discounts has dropped about 9 percent annually over the past four years. That makes it more affordable, and insured patients pay an average of $40 out-of-pocket per monthly prescription, according to the London-based company.

Besides, the drug's days of dominance are clearly numbered. Brand-name rivals and European generics are invading its space, a new generation of inhalers are poised to replace it, and a generic from Mylan NV is threatening -- finally -- to crack the U.S. market.

Still, even after sliding from its 2013 peak, Advair racked up $4 billion in sales last year. It's the fourth-best-selling drug in the U.S. over the past quarter century, according to IQVIA, a research firm.

Hard Act to Follow

In 2010, Andrew Witty, then Glaxo's boss, confidently told investors that bringing a facsimile of his prize blockbuster to market would be “very, very difficult.” How right he was. That's because knockoffs of complex drugs like Advair face higher regulatory hurdles than simple pills.

Medicines that act directly on organs can be tricky to assess, and pairing them with devices adds to the challenge of securing approval. Inhalers are less consistent than pills in delivering doses, making it hard to show equivalence to the original, said Joe Gerald, a University of Arizona asthma specialist.

“Copying a drug in some ways is almost as difficult, if not more difficult, than coming up with a new one,” said James Ward-Lilley, chief executive officer of Vectura Group Plc, one of the companies striving to mimic Advair.

Sales of the top 100 complex drugs totaled about $16 billion last year, according to the Food and Drug Administration. Copies of these medicines have run into roadblocks at the same time that a record number of generic products are getting the green light in the U.S. The agency is seeking to lower hurdles for the class of drugs in an effort to widen patient access, Commissioner Scott Gottlieb said in an interview.

“It's a problem, quite frankly,” said Gottlieb, who wouldn't comment on specific products. “We have situations where there are branded drugs, where patents have expired, where there should be competition, but there isn't competition.”

Into Thin Air

A few companies are still trying to scale the Advair-generic mountain. A version from Novartis AG was denied in February and is now expected to launch before the end of 2019. Following a dispute with the FDA, Vectura and partner Hikma Pharmaceuticals Plc said their product may not arrive until 2020.

Analysts had once seen potential for Mylan's product to reach patients two years ago; it failed to win approval last year. The company expects an FDA decision in June and has the best odds of arriving first, said Elizabeth Krutoholow, a Bloomberg Intelligence analyst. Meanwhile, the generic market opportunity is fading.

Generic-drug makers typically plan for the day that a popular medicine's patent lapses, and pharmacy benefit managers like Express Scripts begin replacing the more expensive brand names as early as possible. With Advair, delays in introducing generic rivals have meant that the U.S. is missing out on savings of about $1 billion a year, Miller said.

Glaxo itself said that introduction of a generic in the middle of 2018 would slash its drug's U.S. sales for the year by more than half, to about 750 million pounds ($1 billion). Without a generic, sales would fall by about 30 percent, the company said.

“There's still a large percentage of the marketplace that continues to be with Advair because they are well-controlled,” Miller said. “A generic would be a tremendous opportunity for those patients to save costs.”

Advair's average annual net cost in the U.S. was about $1,640 per patient at the end of last year, said Richard Evans, an analyst at research firm SSR Health. While the price has decreased steadily since it peaked four years ago, generic competition would have had an even greater impact, he said. The first copy of a complex drug like Advair typically is priced at a 15 percent discount to the original, according to Krutoholow.

Bassett, who lives near Richmond, Virginia, said her asthma worsened when she was about 50, and Advair is the only drug that gives her relief. Now she's on Medicare and regularly goes online to look for a generic.

“Everything I find says there's nothing available,” she said. “It's frustrating.”

To contact the reporter on this story: James Paton in London at jpaton4@bloomberg.net.

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, John Lauerman, John J. Edwards III

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