Affymax Prepares to Mount Challenge to Amgen Anemia Drug Monopoly
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perform poorly in their first days of marketing new products. And even if Affymax sets its price 20 percent lower than Amgen, which Raymond predicts, it will still have to negotiate contracts with the remaining 30 percent of the market that isn’t married to Amgen, and get these providers to change their anemia drug dosing protocols. Currently, dialysis patients get Epogen several times a week with their treatment, and the Affymax drug is only dosed once a month. While that might look like a convenience advantage for the new product, Raymond notes that the transition “will take time as dialysis centers are heavily protocol-driven.” He predicts Affymax will get $21 million in U.S. sales in 2012, and then $128 million the next year.
Many investors never would have predicted Affymax would get this far. Clinical trial results showed in June 2010 that chronic kidney disease patients on its drug had an increased risk of heart-related serious adverse events. The company went ahead and sought FDA approval anyway, partly because the clinical data suggested that the drug offered similar benefit and risk in dialysis patients, a sicker population.
The company has been hiring managers with experience in sales, marketing, and reimbursement, Orwin says. It plans to hire a sales force of about 60-80 people to pitch the product to U.S. kidney specialists at first, and then dialysis centers. The company is recruiting, interviewing, and negotiating salaries with the sales force, and making offers that are contingent on Affymax getting FDA approval. Training shouldn’t be too big a challenge, since most of the sales people will have experience selling other anemia drugs, and only need to learn the specifics of the Affymax product. “We have most of the key leadership positions filled with really terrific people,” Orwin says.
Affymax has been waiting for this critical moment a long time, having hired chief commercial officer Jeffery Knapp back in July 2006. He’s still there, and says he’s had a lot of time to study other company drug launches, and to get to know the right folks at Medicare and in the dialysis community. One of the key decisions has been to identify and recruit the sales force now, but not to actually pull the trigger on hiring people until it has an FDA approval letter in hand. It might need to spend more time on training to get the sales force ready to roll, but that’s a better scenario than hiring the sales force now, training it, and then having them twiddle thumbs for a few months if the FDA delays the application for some reason.
“It’s an expensive proposition to hire a sales force and have an approval date slip,” Knapp says. “From a motivational point of view, there’s nothing better than having an approval letter in hand and sending the staff out, rather than having them site idle for months because there was some kind of delay. I’ve seen it happen many times.”
Pricing of this drug will be key to its market appeal. Affymax hasn’t said what the price will be, but as Orwin said above, healthcare providers are under pressure to limit their spending on anemia drugs ever since Medicare changed its practice and started reimbursing on a fixed amount per patient, rather than just approving claims as they come in. Affymax has flexibility to undercut Amgen on price, because its drug is thought to be cheaper to manufacture than Amgen’s. Raymond estimates that the Affymax drug will cost about $6,000 a year.
Affymax isn’t saying what the price will be, although it is about “95 percent there,” in making that decision, Orwin says. Amgen, for its part, doesn’t appear to be attempting any pre-emptive strike against its emerging competitor by lowering its own price. On the contrary, Orwin says, Amgen has been cutting back on some rebates it previously offered to providers, and has implemented a couple of small price increases in the past year.
Orwin, for his part, didn’t seem to want to engage in any trash talk against his bigger competitor as he gets ready for battle. He does say that there was a lot of interest in the dialysis community in getting an alternative to Amgen’s drug back in 2007 when Roche’s Mircera was approved by the FDA, and that same desire for more choices is back. Now that healthcare budgets are under even more pressure, Orwin says he feels the wind in his sails. “What momentum existed in the community at that time is back. If anything, the forces in our favor are greater now,” Orwin says.