Contrave demand swamps Takeda's direct-delivery discount program

Takeda Pharmaceuticals saw a problem with recent obesity drug launches: Cost. Private insurers and public payers were refusing coverage--or foisting big copays onto patients--dragging down new drugs marketed by Vivus ($VVUS) and Eisai.

So, when Takeda rolled out Orexigen's ($OREX) new obesity drug Contrave a few weeks ago, the Japanese drugmaker also rolled out a direct-delivery program, Direct Save. Cash patients whose insurance won't cover the drug pay $70 each month for the first two months, and $60 monthly after that. For privately insured patients, the copay is $55 per month for the first two months, and $45 a month after that.

If cost had been a barrier for Eisai's Belviq and Vivus' Qsymia, then Takeda meant to remove the barrier for Contrave.

And it worked--too well. Fewer than three weeks into the launch, more than 5,000 prescriptions had been sent into the Direct Save system. The program's website couldn't handle the volume of registrations. The backup call center couldn't deal with the number of callers.

"Unfortunately, as with many new tactics, there have been some glitches," Orexigen Chief Commercial Officer Mark Booth said during Monday's third-quarter earnings call with analysts. "[U]nforeseen technical difficulties … have resulted in delays in processing the incoming prescriptions."

Takeda has scrambled to cope, by adding call center staff and extending its hours, and troubleshooting the website. The company is also getting in touch with patients to expedite enrollments, and "proactively reaching out to healthcare providers" to make sure doctors don't lose faith in the Direct Save program.

Meanwhile, 900 Takeda reps are on the street supporting the Contrave launch, many of them with existing contacts in diabetes--where there's a significant overlap with potential obesity-drug patients. More than 500 speaker programs are now on the calendar, too. Takeda has also teamed up with Scale Down, a weight-management program that centers on a wireless scale given to patients for free. And patients who don't want to mail order can take their prescriptions--and copay discount cards--to retail pharmacies.

Booth proposes that the overwhelming interest in Direct Save is as much about predictability as it is about bargain-hunting. The wide range of coverage is a quirk of the obesity drug market--with patients showing up at the pharmacy, scripts in hand, not knowing whether their insurance will pay 50% of the cost, 20%, or nothing, he said. Under the direct program, doctors can tell patients exactly how much.

"That drove a lot of interest in the program," Booth said, which ended up putting a bigger-than-expected chunk of Contrave business into the direct channel. "That's the good news, great demand."

The bad news is obvious, but potentially fixable. Booth wouldn't say how many scripts remain in the Direct Save backlog. "I can just tell you that there's a task force set up on this," he said. "It's a top priority with Takeda. And we're working as hard as we can."

- read the call transcript at Seeking Alpha