Gardasil, RotaTeq sales top Merck quarterly report

As we've written previously, corporate financial reports aren't exactly our forte. However, the price of Gardasil (and, to a lesser extent, RotaTeq) have been prominent in policy discussions both in the U.S. and internationally, so this week's sales news from Merck is worth noting here.

This Merck document includes a table listing sales for various vaccines in the third quarter of 2007. Among the highlights:

• Gardasil: $418 million in sales
  
• RotaTeq: $171 million in sales
  
• Zostavax: $61 million in sales
  
• All other vaccines: $593 million in sales
  

Remembering that these numbers represent only three months of sales, we can see clearly that the days in which vaccines were not thought of as potential profit centers for the pharmaceutical industry are long over. (Moreover, most European vaccine sales are not included in these figures, making the true totals even higher.)

Here's coverage from Reuters and the Associated Press, which reports that total Gardasil sales for the first 9 months of 2007 is $1.14 billion. Also of interest is the detailed news release from Merck. According to is, Gardasil has now been approved in 86 countries (with 50 more pending) and RotaTeq is approved in 69 countries.

There's no doubt that many hope that these remarkable sales figures is the U.S. and elsewhere will encourage Merck to expand its programs (like this one) to deliver free or low-cost vaccines to those parts of the world that would benefit most from them.

Vaccine business booming for pharma; Financing gaps for uninsured children

While we've been away in August working on the new VaccineEthics.org, a few items appeared that highlighted two very different angles of vaccine financing, cost, and profitability.

Last Sunday's New York Times noted how "Vaccines and Their Promise are Roaring Back." The story highlights the oft-repeated account of the surge in research interest from pharmaceutical companies, new products, and huge profit growth in vaccines in recent years.

Amid all this enthusiasm for new vaccine development, the story all but ignores the many challenges required to produce and deliver safe, effective, and affordable vaccines. Its conclusion captures the tone of the entire story:

"The allure of the silver bullet -- of wiping out an entire class of related diseases with a single injection -- remains a powerful symbol of technological advance. Fifty years ago, vaccine creators captivated the world's imagination. With the return of vaccine-making to the center of the pharmaceutical business, new sources of profits are emerging, and new heroes of innovation."

Speaking of challenges, a report published in JAMA earlier this month noted "Gaps in Vaccine Financing for Underinsured Children in the United States." (subscription required for full text). The CDC-sponsored study offers a useful overview of the varied programs that finance vaccines for uninsured or underinsured children. The authors' data confirm the long-standing belief that a significant percentage of underinsured children are not receiving all recommended vaccines due to shortfalls in state funding and federal discretionary spending. An accompanying editorial by Matthew Davis ("Reasons and Remedies for Underinsurance for Child and Adolescent Vaccines") examines the causes and possible solutions to this problem.

Merck report: $358m in Gardasil sales for Q2; $1 billion total for vaccines

While we don't typically highlight corporate earnings reports or similar news, the quarterly report released Monday by Merck for April-June 2007 provides some new information about the growing market for vaccines, and, in particular, Gardasil. Here's coverage from yesterday's New York Times, "Another Quarter of Strong Results by Merck," and a similar story from Reuters.

Since this news comes directly from the company, the Merck press release is particularly useful. Here's part of what it says about vaccines:

"Total vaccine sales, as recorded by Merck, were $1.0 billion for the quarter, compared to $349 million in the second quarter of 2006. The growth in vaccine sales was led by the performance of GARDASIL along with strong contributions from ROTATEQ and other pediatric vaccines. Vaccines in most major European markets are sold through the Company’s joint venture, Sanofi Pasteur MSD, and the results from its interest in the joint venture are recorded in equity income from affiliates.

Total sales as recorded by Merck for GARDASIL, the Company's cervical cancer vaccine, were $358 million for the second quarter. As of the second quarter, GARDASIL has been approved in 80 countries, many under fast-track or expedited review; and launched in 59 of those countries. The vaccine remains under review in approximately 40 other countries.

ROTATEQ, Merck's vaccine to help protect children against rotavirus gastroenteritis, achieved worldwide sales, as recorded by Merck, of $119 million for the quarter. As of the second quarter, ROTATEQ has been approved in 61 countries and it has launched in 22 of those countries."

The release goes on to note sales figures for Proquad ($89 million), Varivax ($147 million), and Zostavax ($47 million).

A companion document released by Merck breaks down sales between the U.S. market and internationally. Nearly 80% of Gardasil sales were in the U.S. ($286 million), as were an amazing 96% of RotaTeq sales ($114 million). There's little doubt from these data that the U.S. is leading the way in the uptake of these two fairly new vaccines, despite the far greater need for cervical cancer and rotavirus prevention internationally.

Overall, $1 billion in vaccine sales for a single company in a three-month period is perhaps the best evidence to date of the potential profitability of vaccines to an extent not previously seen. As for Gardasil, it is difficult to work backwards from the sales figures given ($358m) to ascertain the number of doses sold during the April-June period, since governments and insurance companies pay less than the well-known $120/dose 'sticker price'. This CDC price list shows a cost of $96.75/dose for Gardasil as part of the Vaccines for Children program. Using those figures as endpoints, a very rough estimate would suggest 3-4 million doses were sold, or enough doses to fully vaccinate slightly more than 1 million girls.

Given the size of the population for whom vaccination is recommended (all females 11-26), the potential growth of the Gardasil market is staggering, perhaps explaining, in part, the company's apparent enthusiasm to promote its vaccine in advance of the arrival of GSK's Cervarix.

From Vaccine: Examining vaccines' economic value

A noteworthy paper in the issue of Vaccine dated August 10 examines assessments of costs and benefits for vaccines and vaccination programs. Titled "Do we fully understand the economic value of vaccines?" (free abstract), the implied answer is fairly obvious (or there'd be little need for another paper on the topic).

Anyone who has attended a meeting of the ACIP has seen firsthand the growing attention given to cost-effectiveness studies of a new vaccine prior to a decision on recommending its use. This paper, by Drummond and colleagues, examines cost-effectiveness data for several widely used vaccines and compares policies among developed-world countries for these vaccines. Among its conclusions:

• "The vast majority of vaccine strategies are cost-effective, when compared with accepted thresholds of cost-effectiveness."
• "Standard methods of economic evaluation...may underestimate the true economic value of preventive strategies such as vaccination."
• "Current vaccination policies in developed countries are generally in line with the existing evidence on cost-effectiveness, although they often lag behind."
  

An excellent paper addressing an issue of growing importance to vaccine policy in a time when vaccine prices are reaching new highs.

Gardasil: Profile of Merck Vaccines president; feature on early HPV-cancer link proponent

Two items worth reading for those interested in background content related to Gardasil's development and arrival:

• "Making her mark at Merck" (Business Week, 8 January) -- A profile of Margaret McGlynn, the president of Merck Vaccines. An interesting item in the story: "Analysts are counting on McGlynn to drive much of Merck's growth: Some predict revenues from her division will triple by 2010, to $6 billion." While the business of vaccines is not our area of expertise, this is point underscores the period of explosive growth for vaccines that we're just entering, one in which ethical considerations will demand that much more attention.

• "Cancer quest: How ex-Penn scientist's hunch led to cervical vaccine" (Philadelphia Inquirer, 24 December) -- A very lengthy feature (two pages in the print edition) on
  Dr. Harald zur Hausen, described in the story as a very early proponent (i.e., the 1960s) of a link between HPV and cervical cancer (the credit for proving such a link has gone to others in the early 1980s). A very interesting, seemingly well researched piece.
  

$877m VaxGen anthrax vaccine contract cancelled

Since early last year, we've been covering the bad news related to VaxGen's anthrax vaccine development efforts (funded by Project Bioshield). In March 2006, we discussed a Washington Post story reporting a 'major setback'. Then in May, we noted the new government contract issued to Emergent Biosolutions, the manufacturer of the current vaccine. In October, the New York Times took a closer look at the story, as we wrote here, and a month later, we linked to the announcement that the FDA had halted further testing of the VaxGen project on account of insufficient data.

With that background, perhaps the news announced just before Christmas that HHS had cancelled its $877.5 million contract with VaxGen for 'default' should not come as a great surprise.

Here's the story from the New York Times and CIDRAP News. Also: the VaxGen press release and an interesting story from the San Jose Mercury News titled "What demise of anthrax vaccine contract means for VaxGen, U.S."

Here's an excerpt from the Times story:

"'This is a great disappointment and a very real setback,' said D. A. Henderson, the former director of the Department of Health and Human Services office that helped create the BioShield program.

By the end of this year, VaxGen was supposed to have delivered its first 25 million doses to the stockpile. But as it was testing the vaccine, the company noticed that it was breaking down too quickly, apparently because of an unexpected interaction with an additive intended to bolster the vaccine’s effectiveness, said Lance Ignon, a company spokesman."

With the development of a next-generation anthrax vaccine nearly back to step one, efforts now appeared directed at stockpiling the old vaccine as a stopgap measure while rerouting support to other manufacturers at much earlier stages of the development process, making a new vaccine years away.

More on HPV vaccine criticisms, collaboration, and competition

As predicted, a slew of stories are appearing about HPV vaccines, with Gardasil's expected licensure later this week. A sampling of the best:

• Merck's $4 billion PR problem (Fortune) -- A look ahead at the (possible) battles that await Gardasil, particularly regarding opposition to state mandates. Includes quotes from Barbara Loe Fisher, perhaps the most prominent critic of vaccines, vaccine safety, and U.S. vaccination regulation and policy.

• Vaccine helps show value of partnerships (Boston Globe) -- Examines the collaboration between researchers at the National Cancer Institute, particularly Dr. Douglas Lowy, and subsequent commercial partners Merck and GSK in bringing HPV vaccines from the earliest stages of research through licensure. A great example of a successful public-private partnership, but one all but certain to add to the uneasiness of those who think the relationship between government and the pharmaceutical industry are too cozy.

• Cancer vaccine shows promise for older women (Reuters) -- Realizing the massive attention Merck's Gardasil will receive this month while its vaccine is months behind, GSK chose a conference this weekend to release new trial data on Cervarix. A 666-subject study of women age 15-55 showed that the vaccine generated antibody levels equal to those seen in younger women in earlier trials. What isn't answered in this or other stories is how beneficial it would be to launch HPV vaccination campaigns for older women, as many will have already been infected with the HPV types included in the vaccine.
  

More on Merck's "Tell Someone" HPV awareness program

Earlier this week, we wrote about the intriguing ad campaign launched by Merck to stress the link between HPV and cervical cancer. With the imminent arrival of the company's HPV vaccine, Gardasil, it seemed obvious that the print, TV, and web presence were the first steps in the rollout of promotion for Gardasil. Not so, says Merck, in this Bloomberg.com story:

"Gary Ruskin, executive director of Commercial Alert, a consumer group based in Portland, Oregon, that is critical of drug company advertising, said Merck's promotional Web site on the viral connection to cervical cancer is 'deceptive and dishonest.''

'Merck doesn't tell you why the site exists, which is to sell Gardasil,' Ruskin said.

[Kelley] Dougherty, the Merck spokeswoman, said the campaign isn't about Gardasil.

'This campaign is part of a broad and longstanding Merck public health commitment to encourage education about the disease,' Dougherty said in an e-mail."

Merck launches a costly, multi-platform ad campaign bringing attention to a virus for which the company just happens to have a vaccine set to arrive in the next month, and one has nothing to do with the other? More likely is that the spokesperson is trying to prevent Merck from running afoul of laws prohibiting advertising for medications (and vaccines) not yet approved for use in the U.S., a category that would include Gardasil -- at least until June 8.

That said, the Bloomberg story suggests that there is plenty of need for education about the link between HPV and cervical cancer. According to data from Merck, fewer than 20% of women in the U.S. are aware of the connection.

Health education is crucial, but many in the medical community continue to be wary of this responsibility falling to the pharmaceutical industry, whether through visits from drug reps, free meals, sponsored conferences or lectures, or direct-to-consumer advertising such as the "Tell Someone" campaign.

***Update: November 14, 2006 -- For more recent perspectives on Merck's "One Less" advertising campaign, click here.***