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A $5.4bn sale, a historic asset swap and a drug trial controversy. Even by its own standards, 2015 is shaping up to be a busy year for Novartis as the Swiss firm looks to cut costs and increase margins.
In January, the company offloaded its animal health business to Eli Lilly, but it was the $20bn asset swap with GlaxoSmithKline in March that set industry tongues wagging. CEO Joe Jimenez promptly announced billions in R&D investment, while analysts lauded Novartis’s healthy 30.6% core margin.
But despite such bullishness, the spectre of the drug trial controversy in the UK refuses to go away.
Novartis stands accused of trying to block research into cancer drug Avastin, used by many doctors as a cheaper but unlicensed alternative to treat wet age-related macular degeneration (AMD). The disease affects at least 26,000 people each year in the UK and if left untreated can cause blindness.
Lucentis, the officially licensed version of the drug, is marketed in the UK by Novartis and costs the UK National Health Service (NHS) £244m a year, or around £740 a dose. Trials have demonstrated that Avastin is also an effective treatment for AMD – and significantly cheaper at £50-£65 per dose.
A global pandemic of poor quality medicines could undermine decades of work.
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For GlobalData analyst Shaan Thakerar, it was another example of Novartis’ penchant for bending the rules in order to protect product revenue streams in a fiercely competitive global drugs market.
"Allegations made by the British Medical Journal that Novartis tried to sabotage clinical trials ascertaining Avastin’s (bevacizumab) efficacy and safety in treating wet AMD have detrimentally affected the company’s reputation," he says. "Prescribing Avastin in lieu of Novartis/Roche’s gold-standard Lucentis (ranibizumab) – to which Novartis holds the European commercialisation rights – could potentially create cost-savings for the UK’s National Health Service of approximately £102m.
"Denying patients more affordable, equally effective medicines, or swaying clinical trial data to capture a greater share of the market, can be perceived as cynical, and portrays pharmaceutical companies as money-hungry and not centered around patient care," he adds.
Eyes on the prize: inside the Avastin controversy
The British Medical Journal (BMJ) claims it has evidence that clinicians with ties to Novartis urged primary care trusts to pull out of one trial, and that the company tried to derail a second UK trial.
The trial’s chief investigator, Alex Foss, a consultant ophthalmologist at Queen’s Medical Centre in Nottingham told the BMJ how, during the trial’s planning stage, a Novartis representative tried to divert him to Novartis funded work, with the prospect of future funds for personal research projects.
Novartis denies the claims, but BMJ editor-in-chief Dr Fiona Godlee says the new evidence "raises questions about the legal and regulatory positions that have skewed clinical practice, fuelled NHS drug costs, and left doctors confused about what they can and can’t prescribe."
Thakerar agrees. "Aside from being cheaper, Avastin has analogous efficacy and safety profiles to that of its rival," he says. "The BMJ purports that Roche was unwilling to investigate Avastin in a clinical setting, with implorations from UK physicians to do so falling on deaf ears.
"Additionally, in a move to safeguard its own product’s financial performance, Novartis attempted to discourage ophthalmologists in the UK from participating in head-to-head studies evaluating Avastin against Lucentis. These publicly-financed studies revealed that Avastin is cost-effective relative to the standard-of-care.
"This incident is not the first time that Novartis and Roche have come under fire regarding Lucentis and Avastin. The two Swiss giants were handed a €182m fine for trying to prevent the arrival of Avastin in Italy in 2014. In the same year, EU regulators announced that they were scrupulously monitoring the activities of both companies to see if they violated any antitrust regulations."
Big in Japan: Novartis and the Diovan scandal
The Avastin controversy could perhaps be explained away as the actions of an over-zealous UK sales rep. However, Novartis is also embroiled in a series of scandals in Japan involving its blood pressure drug Diovan, leading to speculation about a pattern of deceptive trial and data practices at the firm.
In April 2014, Novartis also failed to report side effects of its drugs Tasigna and Gleevec, which surfaced as it collected data on 3,000 patients under leukemia treatments, reports the Japan Times.
"The Diovan scandal is another example of why pharmaceutical companies are struggling to gain popularity among patients and the wider, general public," says Thakerar. "A statistician employed in Novartis’ Japanese subsidiary unit was involved in post-marketing cardiovascular clinical trials for the antihypertensive medication. He failed to declare his connections with the Swiss pharmaceutical powerhouse and is being accused of fabricating data.
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"To the prescribing community, the amended results gave the impression that Diovan was superior at reducing blood pressure and, ultimately, at lowering an individual’s likelihood of experiencing a stroke or angina. Two Japanese universities that undertook some of these clinical trials following Diovan’s launch in Japan have declared that their study reports had been tampered with and incorporated falsified information.
"Novartis is being accused of excessively exaggerating Diovan’s therapeutic benefits on the grounds that the integrity of these clinical trials was compromised," he continues. "To exacerbate the situation, Novartis has already quoted and disseminated the positive effects of Diovan about 700 times in scientific literature, including leaflets to physicians and high-profile medical journals.
"The legal system in Japan holds Novartis accountable, stating that the drug developer did not effectively supervise the employee’s activities. If guilty, Novartis would have violated the Pharmaceutical Affairs Act. The drug developer and its employees could incur significant penalties, including a maximum fine of $20,000, imprisonment and/or suspensions in company operations."
Novartis Pharmaceuticals chief David Epstein has responded by saying that the firm has "already undertaken decisive action to address problems with the company’s investigator-initiated trial research programmes in Japan". He added that "we are committed to changing the culture" at the local unit "and demonstrating ethical leadership among pharmaceutical companies in Japan".
False positive: improving the image of Big Pharma
PricewaterhouseCoopers predicts that the global pharmaceutical market could be worth around $1.6 trillion by 2020; for integrated multinationals, profit margins remain high, at around 30%.
With competition for market share escalating, Thakerar believes systematic company-wide reporting and an embedded culture of personal accountability can help to prevent data and trial manipulation.
"The Diovan controversy highlights the need for greater transparency and scrutiny across all tiers of a pharmaceutical company’s hierarchical system," he says. "These practices should be implemented throughout all organisations and encompass everyone from the omnipotent CEO to the on-the-ground clinical scientist.
"If history is anything to go by, senior management at pharmaceutical companies should be more informed about what happens internally within their companies. Prophylactic measures and mitigation plans, such as intensive screening of physicians’ employment histories, should be adopted. This could potentially deter future issues from arising in the first place.
"It is clear from the Diovan and Avastin cases alone why public opinion of the pharma industry is so low. In a fiercely competitive climate, where drug developers are trying to recoup billions of dollars of R&D investment, any opportunity to protect a drug’s revenue stream will be exploited.
"An open dialogue, founded on education and guidance that offers synergies for all parties, including external governing bodies, drug developers, payers and patients, should be encouraged. This is one way of obviating future incidences."
