The company: Sanofi
The drug: Zaltrap
The disease: Colorectal cancer
Sales: 7 million euros in Q3, 2012
Sanofi ($SNY) knows all about development risk. Over the past decade, the pharma giant has had a bad run in the clinic. When Chris Viehbacher was named CEO 4 years ago, he made the company's dreadful productivity rate a key theme, insisting that the whole process had to be changed and leading the company into a new era of open R&D. And it went through a two-year dry spell on new approvals, with a series of high-profile setbacks on the oncology front.
Then came Zaltrap (aflibercept). The FDA gave the colorectal cancer drug a second-line thumb's up in August based on the improvement in median survival times for the patients who took the drug in Phase III. Like a lot of new cancer drugs, it wasn't cheap, with a price of $9,600 a month that put it in the growing group of six-figure therapies. But Zaltrap's price was quickly taken down by some very public flak from providers fed up by the paltry returns that could be expected from such a costly therapy.
A trio of docs from Memorial Sloan-Kettering put together a blistering review for The New York Times, declaring that MSK was taking the drug off the institution's formulary because less expensive alternative angiogenesis inhibitors--in particular Avastin--which are just as good were available. Sanofi initially defended the price, and then backed down, offering institutions a 50% discount off the tab.
The strategic misstep has puzzled some market observers who felt that Sanofi's best shot at developing a market was to offer a discount to Avastin. And now that payers have found that flexing their muscles can earn substantial discounts, the big question now is just how many more new offerings may be vulnerable to a public beating similar to Zaltrap's. Chances are, we won't have long to wait.
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