Takeout of Durata shows antibiotics investment can pay dividends
Attempts by US regulators to spur research into novel antibiotics have prompted an uptick of work in the field. These initiatives could now also be helping to spark corporate activity: the takeout of Durata was probably influenced by the company achieving qualified infectious disease product (QIDP) status for its lead project, Dalvance.
The five years' additional patent protection that this brings will be an attractive prospect for Actavis, which yesterday agreed to buy Durata for $645m. The acquisitive speciality pharma company already has a strong position in antibiotics and Dalvance neatly plugs a hole in its franchise.
The drug is a glycopeptide that in May gained the accolade of being the first QIDP designated product to reach the US market. It is approved to treat acute bacterial skin and skin structure infections (ABSSSI) caused by Gram-positive bacteria, including MRSA, and comes with a dosing advantage over the widely-used, first-generation glycopeptide, vancomycin. It is dosed twice at a weekly interval, as opposed to the twice-daily cycle of its incumbent.
Under the GAIN (Generating Antibiotics Incentives Now) act, QIDP bestows five years' additional patent protection, on top of the standard five years that NCE status brings. This means that Dalvance has rock-solid, non-patent related protection until 2024 – a significant stretch of time in which Actavis can commit to marketing the drug without threat of generics.
This commercial advantage no doubt influenced Cubist’s decision in 2013 to buy Trius Therapeutics, whose lead asset was tedizolid, now being sold as Sivextro. Also approved in ABSSSI but belonging to a different class, this drug also has QIDP status and now boasts a valuable guaranteed ten-year exclusivity period.
All in the price
Of course, Actavis and Cubist might have chosen to buy Durata and Trius to complement their existing franchises, regardless of the exclusivity periods of their lead drugs. So it could be that QIDP status helped the drugs’ original owners negotiate a higher price, rather than a sale per se.
It is interesting to note the similarity of the upfront values of these deals – $645m for Durata and $707m for Trius – along with the fact that both contained a CVR based on sales milestones being met.
While attempts to prompt research activity in this space can probably be judged to have worked to a greater or lesser extent, Actavis and Cubist now face an arguably bigger commercial challenge. Fears of developing resistance means these products are rightly reserved for the most severe cases, and even when they are used, courses are short and rarely repeated. Futher, first-generation products like vancomycin and Zyvox are increasingly available as cheap generics.
Earlier this year Durata was hit by pushback from the US Medicare programme on the Dalvance price (Price the spotlight for newly launched antibiotics, August 8, 2014). This is unlikely to be a struggle limited to only one of the novel antibiotics.
Perhaps the bigger companies in Actavis and Cubist are set up to negotiate with payers from a stronger position. But even if they are able to swallow a lower price, they will still need to shift a certain volume of product to make a return on their investment.
A ten year exclusivity period sanctioned in law is recognition of this. And the takeovers of Durata and Trius provide evidence that these strategies are having some of their desired effects. But if another branch of government – the one that picks up the drugs bill – is refusing to play ball, it raises the question of whether real antibiotic innovation has been fostered here?
If the answer is yes and these new drugs really do meet an unmet need, then a price with which all can be happy has to be found before this programme can be judged a success in the long term.