Published 18 September 2009, doi:10.1136/bmj.b3811
Cite this as: BMJ 2009;339:b3811

Feature

Pandemic Flu

Flu’s unexpected bonus

¹ Financial Times, London

doi:10.1136/bmj.331.7527.1277

With over 96 countries stockpiling oseltamivir, Andrew Jack assesses who has benefited from pandemic flu

Former US defence secretary Donald Rumsfeld was talking about weapons of mass destruction and the war in Iraq when he referred to "unknown unknowns" in 2002, but he could just as easily have been explaining why drug companies have been able to make money out of the global flu pandemic. Within a few months of his comments, a series of events began to fuel growing international concern about a new pandemic. The mixture of fear and ignorance over its timing, nature, and severity soon sparked an unexpected bonanza for the manufacturers.

Since the emergence of swine flu in Mexico this spring finally triggered the first pandemic in four decades, J P Morgan, the investment bank, estimates that governments have made fresh orders for antiviral drugs of $3bn (£1.8bn; 2bn) and that recent or potential sales of vaccines are $7bn.¹ All that despite signs that the virus is proving relatively mild, with potentially less impact than a standard seasonal flu outbreak.

One beneficiary has been Gilead, a fast growing US biotech business that initially developed the antiviral medicine oseltamivir (Tamiflu). In the three months to June this year alone it reported $52m in royalties on its drug. Another who gained was Rumsfeld, Gilead’s former chairman and continuing shareholder, who stressed that he disqualified himself from decisions that could have caused conflicts of interest.²

Roche, the Swiss giant that licensed, commercialised, and manufactured the drug from Gilead, has benefited most of all. In its most recent financial quarter, it generated SFr609m (£350m; 200m; $590m) in sales on the drug. For the full calendar year, it expects that it will contribute SFr2bn to revenues.

Oseltamivir had already become an important product for the company, generating SFr1.6bn in 2005, long before the pandemic began. In fact, the drug became the world’s first "virtual" blockbuster, earning ten digit revenues to treat a virus that did not yet exist.³

Such commercial success was far from inevitable. When the drug was launched to treat seasonal flu in 1999, it—and the slightly older, first in class sister drug zanamivir (Relenza)—flopped. Zanamivir was judged not cost effective by the UK’s National Institute for Health and Clinical Excellence, ruling out its use in the National Health Service.

Japan was among the few large countries to prescribe oseltamivir on any scale. Elsewhere, seasonal flu was widely dismissed as little more harmful than the common cold, although it kills up to 500 000 people globally each year. But in 2003, the mood began to change. Severe acute respiratory syndrome (SARS) reminded people how fast and far lethal new viruses could spread with plane travel. Then the spread of H5N1, including to birds across Europe and human deaths in Turkey, switched attention to flu.

Being seen to act

Broader political factors were also at work. In the US, then President George Bush was keen to pledge resources after criticism of his administration over its botched handling of Hurricane Katrina. In France, President Jacques Chirac sought to ensure no repetition of the disproportionate deaths of elderly people during summer heat waves.

In the UK, which has amassed stockpiles of oseltamivir to cover a greater proportion of its total population than almost anywhere in the world, there was the spectre of foot and mouth disease. Already in 2004, the government’s exercise to assess security threats had identified flu as a greater risk than terrorism.

Furthermore, in the wake of the trillions of dollars paid out by government during the global financial bailout in late 2008, even the hundreds of millions allocated by some richer countries on pandemic preparations suddenly seemed relatively modest.

Oseltamivir provided only a partial solution to a pandemic, offering a modest reduction in the length and severity of flu symptoms. But it was far more effective than the older class of antiviral drugs, now rendered largely obsolete by resistance. And it was far easier to take than zanamivir, which patients have to inhale.

And while the lengthy production of a flu vaccine could not even begin until the specific pandemic strain emerged, oseltamivir allowed politicians to show that they were doing something.

There was a chance for the first time to treat and even potentially prevent a flu pandemic. At the least, a containment strategy to slow the spread of the virus and reduce its intensity would ease pressure on overworked general practitioners and hospital intensive care units while buying time for vaccine production.

Roche has traditionally worked closely with public relations advisers to stoke media interest, adding to political pressure. As its pubic adviser Edelman wrote at the time of initial US launch of oseltamivir for seasonal flu in 1999, it worked with the company to create "a hybrid network of twelve local public relations agencies to take advantage of flu as a breaking news story and launch Tamiflu in the top 100 local markets when flu was in the area . . . The Roche local business units and sales force identified local physicians who were interested in participating in our media campaign to add the clinical angle to the Tamiflu story . . . We partnered with consumer and professional organizations in an effort to educate their members and constituents on influenza and Tamiflu . . . We leveraged these relationships by enlisting our third-party partners to serve as spokespeople and increase awareness of Tamiflu and its benefits."

Earlier this year, research supported by Roche showing the widely varied levels of stockpiles in different countries put pressure on the laggards to catch up.⁴ As a pandemic of conferences got underway, drug stockpiles were an easy box to tick in efforts to show that governments were doing something. To date, Roche has provided more than 270 million doses to 96 governments.

Exploiting opportunity

Over time, Roche has expanded the uses of the drug, winning regulatory approval for its use in children and pregnant women and providing lower dose and easier to swallow liquid paediatric versions. Today, it is studying oseltamivir’s use in combination with other medicines, over longer durations, and in intravenous form.

It has offered to reprocess older stocks of the drug. Even a highly unusual recent extension by regulators of the shelf life from five to seven years, which postpones any need to replace expired stock, may perversely tempt some governments to add to their stockpiles, knowing that they will now last longer.

With the pandemic underway, it was soon clear that using oseltamivir as a "fire blanket" to prevent localised flu outbreaks escalating into a global pandemic would not work. Some doctors raised concerns about side effects of taking the drug. The most recent recommendations from the World Health Organization are that people who are not considered at high risk need not be treated.

Yet orders continue to grow. In the UK, oseltamivir has practically become an over the counter drug, with one distinction: it is handed out free after callers provide a simple description of their flu symptoms by telephone, bypassing the need to see a doctor.

Even so, in the UK and elsewhere, concern that limited health system supplies or distribution problems have spurred many private sector employers—and international organisations—to buy their own private prescription stocks directly from Roche.

Oseltamivir’s rise has not been without problems. Japanese regulators suspended its use in teenagers after suggestions of a link with suicidal feelings. A number of seasonal flu viruses in circulation began to show resistance to the drug. The enormous gap between demand and supply, and its relatively high cost for the poor, triggered calls to overturn the patents and let rival companies make it more cheaply. But Roche defended its brand, expanding production capacity while donating 11 million treatments to WHO; offering to license manufacturing to generic rivals; waiving patent rights in the poorest countries; and providing deeper discounts and deferred payment terms to others.

Future directions

The peak may soon be over. Today, Roche’s former dominance is under threat. Biota, the Australian biotech company which first developed zanamivir, and GlaxoSmithKline, which commercialised it, have seen more modest sales, partly because the drug is more difficult to take. But as governments have sought to diversify from a single drug, and some resistance has emerged, they have complemented their oseltamivir stockpiles with supplies of zanamivir. The drug contributed A$45m (£23m; 26m; $39m) in the past year to Biota; and £60m in the second quarter of this year alone to GlaxoSmithKline—up from just £3m in the second quarter last year.

Oseltamivir’s patents expire in 2016, and newer experimental antiviral drugs pose a competitive threat even before then. These include peramivir, which is being developed by BioCryst with Green Cross Pharmaceuticals and Shionogi and laninamivir, by Biota and Daiichi Sankyo.

Although antiviral drugs have provided a stop-gap for prevention, government planners hope that vaccination will provide still greater reassurance against a returning, second pandemic wave. Vaccine manufacturers have been much more coy about providing figures on their pandemic sales, partly because they have yet to produce, test, and deliver the vaccines. There are still regulatory hurdles over the use of adjuvants and other antigen sparing techniques.

But more than a dozen companies—including Sanofi-Aventis, GlaxoSmithKline, Novartis, Baxter, CSL, and AstraZeneca—all stand to gain and are already receiving substantial funding from governments to reserve scarce capacity, invest in research, and launch production. Many are already indulging in a public relations war stressing the relative advantages of their vaccines.

Despite the sales now being generated by the pandemic, neither the main flu drugs nor the vaccines have become a primary source of profits for the large companies. As William Burns, Roche’s head of pharmaceuticals, said in a presentation in early September, Tamiflu was a "hidden surprise," but even now it is only the fourth bestselling medicine.

Other companies also stress that they have risked substantial sums in development—$2bn so far for GlaxoSmithKline alone. And the head of Sanofi-Aventis asserts that although pandemic vaccine orders represent a "nice one-off," they are not sustainable.⁵ What the current response is doing is creating a stronger future range of tools for tackling seasonal flu.

There is little doubt that several drug companies and their shareholders have benefited strongly from flu. But they have also contributed to easing its ill effects. Whether the money has been justified will ultimately depend on the final toll once the pandemic has passed, and how far its impact could have been known in advance.

Cite this as: BMJ 2009;339:b3811

doi:10.1136/bmj.331.7527.1277

---

Competing interests: None declared.

References

1. Jack A. Drug groups to reap swine-flu billions. Financial Times 2009 Jul 20. www.ft.com/cms/s/0/375dde06-7559-11de-9ed5-00144feabdc0.html.
2. Schwartz N. Rumsfeld’s growing stake in Tamiflu. CNN Money 2005 Oct 31. http://money.cnn.com/2005/10/31/news/newsmakers/fortune_rumsfeld.
3. Jack A. How Tamiflu became a global blockbuster. Financial Times 2009 Sep 6. www.ft.com/cms/s/0/cd89a424-9aec-11de-a3a1-00144feabdc0.html.
4. Roche. Tamiflu media briefing. 2009. www.roche.com/mb_090907.pdf.
5. Jack A. Sanofi warns of flu vaccine shortage for developing world. Financial Times 2009 Jul 29. www.ft.com/cms/s/0/5b2e0bbc-7c3e-11de-a7bf-00144feabdc0.html.

CiteULike    Complore    Connotea    Del.icio.us    Digg    Reddit    StumbleUpon    Technorati    What's this?

Relevant Article

How the media caught Tamiflu

Michael Day
BMJ 2005 331: 1277. [Extract] [Full Text]

Online poll

Find out more on doc2doc >>