Under siege by Biogen's new long-acting Eloctate, Baxter's Advate stands its ground

Courtesy of Biogen Idec

When Biogen Idec ($BIIB) this summer priced next-gen hemophilia A treatment Eloctate on par with Baxter's ($BAX) older, less convenient therapy, the market seemed primed for patient switching. But so far, there hasn't been as much as some industry watchers expected. Now, one analyst predicts brand loyalty and payer roadblocks will keep it that way.

As Leerink Partners analyst Danielle Antalffy wrote in a recent note to clients, one mid- to high-volume hematologist she spoke with expects only 25% of his adult patients to make the switch from Baxter's Advate to Eloctate within 12 months. Another predicts just a shade above 10% will convert within that timeframe.

While two physician practices aren't necessarily indicative of a broader trend, their forecasts could show why Baxter's hemophilia sales growth keeps on coming--including a 7% swell in the most recent quarter, which contained the first three months of Eloctate's launch.

If price isn't a factor, why aren't patients flocking to Eloctate and its less-frequent dosing regimen? For starters, "brand loyalty and market stickiness," one physician told Antalffy. "If a drug is working for his patients, they tend to stay on it," she wrote. Doctors are also aware that Baxter has its own long-acting factors on their way to market within the next year or two--including BAX855, a derivation of Advate. That "resonates with many of his patients," she said.

And then there's the payer landscape. United Healthcare has already deemed Eloctate "not medically necessary," meaning it won't pay for the drug. And if other payers follow suit, "this could represent a meaningful barrier to adoption in the near to medium term," Antalffy pointed out.

All of this is good news for Baxter, whose forthcoming biopharma spinoff, Baxalta, will rely heavily on hemophilia revenues. Baxter's hemophilia sales powered 58% of its overall biopharma haul last year, with Advate bringing in the bulk of those sales.

But Illinois-based Baxter company will have some important pricing decisions of its own to make when it launches its long-lasting treatments. While Antalffy's sense is that patients will likely to reach their annual maximum out-of-pocket expenses no matter what their treatment's cost--"ultimately making cost a moot point"--the time it takes them to reach that limit might come into their decision-making process when selecting a med.

Another thing drugmakers can do to set their products apart from the pack once additional competitors come to market? Focus on improved overall patient quality of life, rather than dosing frequency, one physician suggested.