Arena Pharma: Understanding the Market for Anti-Obesity Drugs

 |  Includes: ARNA, VVUS
by: John Tucker

The potential market for anti-obesity drugs is enormous, but no drug in this class has ever achieved blockbuster status[1]. Understanding the factors that have limited the commercial success of existing products is critical to developing accurate revenue projections for emerging anti-obesity drugs. This article analyzes the world market for anti-obesity drugs to identify these barriers. The properties of lorcaserin and other emerging anti-obesity drugs are then examined to determine whether these new agents will be able to overcome these barriers, expand the current market, and achieve blockbuster status.
Market Penetration is Poor Even When Patient Costs are Reimbursed
In 2009 the patented anti-obesity drugs Xenical, Alli, and Meridia each had worldwide sales of $300M to $350M. An additional $300M to $600M in sales were generated by generic products including phentermine, amphetamines, and sibutramine.
Figure 1 shows the prevalence of obesity and the 2008 per capita pharmaceutical spending (across all indications) of several developed and developing countries[2]. The US is a key potential market for anti-obesity drugs as shown by its unique position on the plot. The obese population in the US exceeds that of France, the UK, Germany, Spain, Italy, Australia, Canada, and Japan combined. Its ability and willingness to pay for pharmaceutical products is demonstrated by its per capita expenditure of $900.
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Figure 1. Per Capita Pharmaceutical Spending and Absolute Incidence of Obesity
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Table 1 shows estimates for 2008 total sales of anti-obesity drugs, market penetration, and the average cost of one year of anti-obesity drug therapy in the US and three other major western pharmaceutical markets[3]. The key observations from this data are:
  • The overall market penetrations of <1% are remarkably low, especially compared with the estimated 50% US market penetration of the highly successful statin class.
  • The market penetration of patented prescription anti-obesity drugs is especially low in the key US market. Two-thirds of US patients are treated with generic phentermine, which is not available in the European Union.
  • Market penetration is 0.7% in the UK, the only major pharmaceutical market where patients are routinely reimbursed for anti-obesity drug costs. This modest market penetration suggests that factors other than patient cost strongly limit market penetration.

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Market Penetration is Low Because Patients Stop Taking Their Pills
Studies performed using insurance company and national healthcare databases in the US[4], Canada[5], the UK[6], New Zealand[7], and the Netherlands[8] show that most patients starting anti-obesity therapy drug will stop taking pills within 90 days. Less than 10% of patients remain on therapy for a year or more. Dropout rates are similar for all currently marketed anti-obesity drugs, and remain high when patients are reimbursed for the cost of treatment[4,6].
The statins are an extremely successful class of chronically used drugs, and thus serve as a useful benchmark for understanding the effect of patient dropout on anti-obesity drug sales. About 25% of patients starting statin therapy will stop taking pills within 90 days, and 60% remain on therapy for a year or more[9]. Figure 2 compares the percentage of statin and anti-obesity drug patients remaining on therapy in the 12 months after filling their first prescription.
Figure 2. Percent of Patients Remaining on Therapy Over 1 Year
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The growth of Lipitor prescriptions in the US from 1997 to 2005 (the last year prior to the availability of generic simvastatin) is reproduced reasonably well using a simple mathematical model incorporating these dropout rates and a fixed monthly rate of new patient recruitment (Figure 3)[10]. When dropout rates are higher, sales plateau sooner and at a lower level. The brown line in Figure 3 shows the US sales growth of a hypothetical drug having a new patient acquisition rate similar to that of Lipitor and a patient dropout rate typical of marketed anti-obesity drugs. Peak sales are reduced by 90% relative to those of Lipitor. Lipitor’s peak worldwide sales of $13B suggest an upper limit of $1.3B for worldwide sales that can be achieved for a drug with these high dropout rates.
Figure 3. The Effect of High Patient Dropout Rate on Sales Development
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Xenical sales peaked at $612M during its second year on the market. In the ensuing years they have averaged about $500M. The sales development of this product fits a model incorporating a high initial rate of new patient acquisition and rapid patient dropout. New patient acquisition rates then declined, reducing sales. This decline most likely resulted from growing physician disenchantment with high patient dropout rates.
High Discontinuation Rates Appear to be Due to Inadequate Efficacy
Figure 4 shows the dropout rates for treated and placebo groups in one-year clinical trials of currently marketed and developmental obesity drugs[11]. Dropout rates are normally lower in the clinical trial setting than in community practice because trial sponsors cover the costs of treatment, exclude subjects who are likely to be non-compliant, and take active measures to retain enrolled subjects. Despite this, anti-obesity drug clinical trials typically have dropout rates of 40% to 50%. These rates are higher than those observed for statins in clinical trials or in community practice.
Drug side effects are responsible for only 16% to 46% of dropouts in the drug-treatment groups shown in Figure 4. The average across the series is 28%. Placebo dropout rates are similar to or higher than those of treated patients. Thus only a minority of dropouts is due to drug side effects.
Figure 4. Patient Dropout Rates in Anti-Obesity Drug Clinical Trials
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The rate of these “other” clinical trial dropouts (those not due to drug side effects) is plotted versus efficacy in Figure 5. On average, each additional 1% weight loss reduces the one year dropout rate by 2% (p<0.05). To achieve statin-like total dropout rates, an anti-obesity drug with minimal side effects must provide weight loss of at least 10%.
Figure 5. Non-Side Effect Dropouts vs. Efficacy in Clinical Trials
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In summary, these data suggest that generic competition in the US, non-reimbursement of treatment expenses, and patient dropout are critical factors limiting the commercial success of currently marketed anti-obesity drugs. Patient dropout appears to be the most important of these. Multiple lines of evidence suggest that dropouts are primarily due to the modest efficacy of currently marketed products. Mega-blockbuster sales are unlikely to be achieved with products providing less than 10% weight loss.
Predicting the Success of Developmental Anti-Obesity Drugs
The analysis above suggests that the anti-obesity drugs currently awaiting FDA approval will not dramatically expand the market and achieve mega-blockbuster status. As incremental improvements over existing drugs, they are likely to achieve sales by taking market share from existing products and modestly increasing overall market penetration. Their limited efficacy suggests that they will not escape the historical pattern of new anti-obesity drug introductions, in which high patient dropout rates lead to sales that rapidly plateau and then decline.
The main competition for new anti-obesity products will be phentermine, Xenical, and Alli in the US, and Xenical and Alli in the European Union. Meridia was withdrawn from the European Union market in early 2010, and withdrawal in the US appears likely as well. In 2009, US sales of phentermine were $145M. Worldwide 2009 sales of Meridia, Xenical, and Alli were $300M, $345M, and $317M, respectively.
Lorcaserin’s efficacy is similar to that of Xenical. It exerts a slightly more favorable effect on serum markers of metabolic syndrome, and a slightly less favorable effect on cardiovascular parameters such as blood pressure and pulse rate[12]. Xenical improves serum metabolic parameters and reduces use of anti-hyperglycemic medications in diabetic patients, as well as reducing the rate at which pre-diabetic patients progress to frank diabetes12. In spite of these findings, Roche has been unable to obtain widespread reimbursement for Xenical in markets other than the UK. Lorcaserin is likely to encounter similar difficulties.
Xenical has distasteful gastrointestinal side effects including flatulence, diarrhea, and fecal incontinence, especially in patients who fail to follow the recommended low fat diet. Surprisingly, the available evidence suggests that relatively few patients stop taking Xenical because of these side effects. The overall and side effect- related clinical trial dropout rates for Xenical are similar to those of other anti-obesity drugs (including lorcaserin), and lower than those of placebo. In community practice, Xenical dropout rates are indistinguishable from or slightly lower than those of other marketed anti-obesity drugs. Xenical’s reputation for causing gastrointestinal side effects may reduce the number of initial prescriptions written, but data bearing on this question are not readily available.
The $660M in 2009 sales generated by Xenical and Alli form a useful benchmark for estimating the peak sales potential of lorcaserin. The overall properties of lorcaserin are superior to those of Xenical and Alli, and lorcaserin is likely to benefit from the initial burst of enthusiasm that typically greets newly introduced anti-obesity drugs. The withdrawal of Meridia from important international markets puts an additional $300M or so in potential sales in play. Assuming a modest expansion of the overall market, peak lorcaserin sales of $800M to $1.0B seem readily achievable. Historical precedent and the data presented in this article suggest, however, that these peak sales will decline by 20% or more within a few years. Because the size of the US market is limited by generic competition, obtaining marketing approval in the European Union will be absolutely critical in achieving these sales levels.

The author warmly thanks Dr. Jean Pierre Gelinas MD for many vigorous, challenging, and informative discussions of this topic. The opinions expressed by the author in this article are not necessarily those of Dr. Gelinas.

[1] Although widely cited as an example of a blockbuster drug, Fen-Phen never came close to the billion dollar sales mark. Phentermine was a generic drug at the time of the Fen-Phen craze. Fenfluramine (Pondimin) sales peaked at $173M in 1996.
[2] US data for pharmaceutical spending is from IMS and is believed comprehensive. Data for pharmacetutical spending by in other developed economies is from the OECD database accessed online here and may underestimate actual spending. Pharmaceutical spending data for developing countries was taken from Anderson T, Das I, Olson J, Sobelman D. Assessment of opportunities for pharmaceutical manufacturers in developing markets. J. of Managed Care Pharmacy 2009; 15(5): 396-402.
[3] a) Arena Pharmaceuticals Barclays Capital 2010 Global Healthcare Conference, March 23, 2010.
b) IMS Health, Out of pocket spending: the emerging cash market in the EU5. Accessed here (pdf).
c) UK National Health Service, here.
[4] Bolen SD, Clark JM, Richards TM, Shore AD, Goodwin SM Weiner JP. Trends and patterns of obesity medication use in an insured cohort. Obesity 2010; 18(1): 206-209.
[5] Padwal R, Kezouh A, Levine M, Etminan M. Long term persistence with orlistat and sibutramine in a population-based cohort. Int. J. Obesity 2007; 31:1567-1570.
[6] Perrio MJ, Wilton LV, Shakir AW. The safety profiles of orlistat and sibutramine: Results of prescription-event monitoring studies in England. Obesity 2007; 15(11):2712-2722.
[7] Hill GR, Ashton J, Harrison-Woolrych M. Sibutramine Usage in New Zealand: an analysis of prescription data by the Intensive Medicines Monitoring Programme. Pharmacoepidemiol. Drug Safety 2007; 16: 1217-1226.
[8] Willemen MJC, Mantel-Teeuwisse AK, Straus SMJM, Leufkens HGM, Egberts ACG, Sturkenboom CJM. Cardiovascular and psychiatric risk profile and patterns of use in patients starting anti-obesity drugs. Pharmacoepidemiol. Drug Safety 2009; 18: 631-638.
[9] a) Perreault S, Blais L, Dragomir A, Bouchard M-H, Lalonde L, Laurier C, Collin J. Persistence and determinants of statin therapy among middle-aged patients free of cardiovascular disease. Eur. J. Clin. Pharmacol. 2005; 61:667-674.
b) Yeaw J, Benner JS, Walt JG, Sian S, Smith DB. Comparing adherence and persistence across 6 chronic medication classes. J. Managed Care Pharm. 2009; 15(9): 728-740.
[10] In this model the number of patients filling a prescription each month is equal to the number of new patients on therapy at the beginning of the month plus the number of new patients recruited during the month minus the number of patients stopping therapy during the month. The number of patients stopping therapy each month is the sum of two terms. One is a fraction of the total number of patients on therapy at the beginning of the month. The other is a fraction of the number of patients recruited during the previous 3 months. The fractional values are obtained from the studies referenced in the text and the rate of new patient recruitment is optimized to give the best fit to empirical TRx data.
[11] a) Meridia: Smith IG, Goulder MA. Randomized placebo-controlled trial of long-term treatment with sibutramine in mild to moderate obesity. J. Family Practice 2001; 56(6): 505-512.
b) Acomplia: Van Gaal LF, Rissanen Am, Scheen AJ, Ziegler O, Rossner S. Effects of the cannabanoid-1 receptor blocker rimonabant on weight reduction and cardiovascular risk factors in overweight patients: 1-year experience from the RIO Europe Study. Lancet 2005; 365: 1389-1397.
c) Contrave: Greenway FL, Fujioka K, Plodowski RA, Mudaliar S, Erickson J et al. Effect of naltrexone plus bupropion on weight loss in overweight and obese adults (COR-1): a multicenter, randomized, double-blind, placebo-controlled clinical trial. Lancet 2010; 376: 595-605.
d) Orlistat: Hauptman J, Lucas C, Boldrin MN Collins H. Orlistat in the long-term treatment of obesity in primary care settings. Arch. Fam. Med. 2000; 160-167.
e) Lorcaserin: Smith SR, Weissman NJ, Anderson CM, Sanchez M Chuang E et al. Multicenter placebo-controlled trial of lorcaserin for weight management. NEJM 2010; 245-256.
f) Qnexa: Vivus (NASDAQ:VVUS) corporate press release September 9, 2009.
[12] Data taken from the Xenical package insert and reference 10e.

Disclosure: Long OREX (<1% of portfolio)