The heartburn drug Nexium, the object of a half-billion-dollar marketing campaign to move people off the prescription medications predecessor, Prilosec. Top 10 Pharmaceuticals Prilosec slipped from the number-one to the number-two selling prescription drug last year after its patent was about to expire and maker AstraZeneca shifted its promotional muscle to the "new Purple Pill," Nexium. Drug Treatment U.S. Sales 1 Lipitor Cholesterol $5.22b 2 Prilosec Heartburn $4.61b 3 Zocor Cholesterol $3.68b 4 Prevacid Heartburn $3.55b 5 Celebrex Arthritis $2.61b 6 Epogen Anemia $2.56b 7 Procrit Anemia $2.55b 8 Zyprexa Schizophrenia $2.51b 9 Zoloft Depression $2.27b 10 Paxil Depression $2.15b The Life Cycle of the Purple Pill Worldwide earnings from the Purple Pill grew annually from the time it was introduced in 1988 until just before its patent expired last year.

By Neil Swidey

Part 2 of 2 (Continued from last issue)

To those who question how a company like AstraZeneca can justify the staggering profits it collects from a drug like Prilosec, Nilsson again points to his sketch. "This is the answer." AstraZeneca spent $2.7 billion on R&D last year. Then again, the company also reported profits of $4.2 billion.

Still, all the competition from the me-too drugs should bring down overall health care costs, right? Maybe in any other world. But the exorbitant marketing campaigns used to launch competitors, like Prilosec me-too Prevacid, tend to drive up costs. They increase the patient population, sucking up customers who might do fine on 50-cents-a-day generic H2 blockers and moving them into the new, more powerful PPI club, whose daily admission fee runs seven to eight times higher.

James Richter, the longtime Massachusetts General Hospital gastroenterologist who last month became chief medical officer of Caritas Christi Health Care System, puts it this way: "You go to the rental car counter, and the company's paid for it, and you can get a Hyundai or a Cadillac. So you take the Cadillac even though the other would be sufficient."

There's a phenomenon associated with PPIs called acid rebound. Because the medicine puts a brake on the acid-producing pumps in your stomach, when you stop taking it, that built-up acid can be unleashed, says Ferris.

Even if there's no full-scale rebound, most people have some recurrence of symptoms because the PPIs were powerful enough to let them resume bad habits, such as eating fatty foods. When that power's gone, they start paying for their sins. Ferris and his associates recommended extra doses of the H2 blockers at the beginning, knowing that rebound is usually temporary. But few people made it that far.

What's clear is that if you want to restrict this expensive drug to only those people who really need it, you have to start at the beginning, before they've test-driven the Cadillac. But all those TV commercials make that next to impossible. Most people have a spouse or a cousin or a mechanic who's on the Purple Pill and speaks evangelically about it ("I can eat chili again!"), so they enter the doctor's office knowing what they want. Richter explains how it works: "They come in and say: 'My husband takes Nexium. Do you think that would work well for me?' I say, 'Yes, but have you tried Tagamet? It doesn't appear that you're having symptoms that frequently.' But they say, 'Nexium and Prilosec seem to work really well.' So I say, 'Fine.' "

Besides cost, there's no downside to taking Nexium or Prilosec. But if it takes a doctor 15 minutes to talk a patient out of a more expensive drug - and that's pretty much all the time the doctor has with the patient to begin with - it's not a practical investment.

And this calculation comes from Richter, who for 20 years has refused to meet with drug company sales representatives, on principle. Think about how much more quickly a doctor might offer up the new drug if he had the Nexium golf-scoring software loaded onto his Palm Pilot or if the Nexium drug rep had just brought by lunch for the staff when he arrived to restock the sample cabinet.

Throughout the summer and fall, David Calabrese had a ritual to start his day. He would walk into his Roxbury office and check his e-mail in search of an announcement that the generic Prilosec had finally been launched. Calabrese is the pharmacy director for a network of 2,500 doctors associated with Beth Israel Deaconess Medical Center and several other medical facilities. Last year, Prilosec was the biggest item ($6 million) on his outpatient drug budget. A generic offers the promise of cutting that tab by a third in the first year and much more in subsequent years.

AstraZeneca's Prilosec patent expired in October 2001. So Calabrese and many pharmacy directors like him across the country - for HMOs, physician groups, and hospitals - built those expected savings into their drug budgets this year. The fact that they have not materialized may well help drive up everyone's insurance premiums next year, he says. It doesn't matter if you never get heartburn. You could be one of those people who can guzzle a whole bottle of Tabasco sauce and not so much as burp. You're still affected by the Purple Pill. The overall costs to the system are that big.

Late one Friday night last month, Calabrese got the e-mail message, but it didn't say what he had expected. He quickly forwarded it to a few co-workers, putting "Ugh" in the heading.

AstraZeneca had long ago filed suit against four companies planning to produce generic Prilosec, claiming infringement not on the main patent but on secondary ones. The trial began last December in a federal court in New York and dragged on until June. Most analysts expected AstraZeneca to lose, and the company's stock took a beating. But after the judge issued her ruling on October 11, the company's stock shot up.

She ruled that three of the four generic companies had infringed on AstraZeneca's patented method for inserting a "subcoating" between the main Prilosec molecule and its purple shell. Critics had scoffed at this claim, pointing to a host of drugs that have similar subcoatings. But a patent is a patent, the judge ruled, and this one doesn't expire until 2007.

AstraZeneca spokesman Jim Coyne called the decision a "vindication." The case, he said, "has always been about defending our intellectual property." The company's chief executive, Tom McKillop, told The Financial Times of London that the court action clearly paid off for his company: "Our defense strategy has already given us longer exclusivity over the last few months. And now it is likely to give us some months more and maybe even a lot longer than that."

The two generic companies poised for a quick, aggressive launch were shut out. Earlier this month, they announced that, in exchange for a share of the profits, they would assist the one tiny firm that the judge said could launch a generic Prilosec. Still, AstraZeneca may appeal the part of the ruling that gave that firm the green light. Says Calabrese: "There's a flicker of light at the end of the tunnel, but I'm not very confident we'll see a generic Prilosec anytime soon."

The world's other big pharmaceutical companies cheered the ruling, and their stock responded accordingly. Most are in the same patent boat as AstraZeneca. The 1984 Hatch-Waxman Act awarded drug makers 17 years of patent protection (later extended to 20 years) for drugs they create. The clock usually starts ticking long before a drug is launched. These days, when the 20 years is up, brand-name drug makers do not allow their blockbusters to go off patent quietly into the night. They file for all sorts of extensions.

And they have become increasingly savvy in obtaining patents for every conceivable feature of a drug, from its coating to how it combines with other drugs to its color. Other brand-name companies, like the makers of Prozac, lost their patent infringement cases. But AstraZeneca's victory is a strong sign that it can pay to take generics to court.

Meanwhile, all the court delays have given AstraZeneca time to move market share to Nexium, and that's where hospitals like Mass. General and Brigham and Women's come in. In exchange for getting Nexium at a fantastic discount, the hospitals agreed to make it their primary PPI. The switch will save Mass. General alone more than $300,000 a year. And the price discount is clearly worth it for AstraZeneca, since patients will be discharged on Nexium, residents will be trained on Nexium, and doctors across the country will be told that Nexium is the first choice of world-famous Mass. General.

AstraZeneca spent $478 million last year on its Nexium promotional campaign, according to IMS Health, and hired an additional 1,300 sales reps just for the new Purple Pill, according to Scott-Levin Consulting, a health care research firm. The push has been incredibly effective. Some 42 percent of Prilosec prescriptions have been converted to Nexium, according to data from the investment firm Dresdner Kleinwort Wasserstein.

Nexium is actually just one-half of the molecule that makes up Prilosec. The theory is that it improves the efficacy of a drug when its most effective part is isolated, in this case the "S isomer." Many specialists doubt this claim. Nonetheless, this route to a new product is becoming more common in the industry.

Dr. Doug Levine, AstraZeneca's executive director for gastrointestinal clinical research, says Nexium represents a clear improvement over Prilosec. But in most of the company's trials, the effects of 40 milligrams of Nexium were compared against 20 milligrams of Prilosec. In the two instances where they were compared at equal strength, only one showed a statistical difference, and that was a 3 percent shorter healing time.

Dr. Jerry Avorn, chief of the Brigham's pharmacoepidemiology division, says flatly, "Nexium is not at all better in any meaningful way than Prilosec." One of the nation's leading experts in the study of physician prescribing patterns, Avorn has made it his life's work to try to outsmart the drug companies.

Asked why his hospital decided to take the Nexium deal, he leans back in his chair, scratches his Abe Lincoln-style beard, and sighs. Noting that he didn't make the decision, he says he does understand it. Hospitals are under incredible pressure to keep their costs down.

A deal like this could prevent the Brigham from having to lay off nurses. "It's not like anybody is taking home extra money in a valise at the end of the month by doing this," Avorn says. But he acknowledges the "bad outcome" it produces: a new cycle of patients with unnecessarily higher drug tabs.

It's yet another sign of what's wrong with our health care system, he says, and why fixing it seems so hopeless. "You've got hospitals doing what's good for hospitals, HMOs doing what's good for HMOs, and drug companies doing what's good for them," Avorn says. "We've got this crazy patchwork, with everyone against everyone else, and you end up with these paradoxes like Nexium."

So How Do We Stop This Drug Cycle From Truly Spiraling Out Of Control?

For insurers, the answer seems to be learning to say no a lot more. Most are implementing aggressive cost-control programs, such as "prior authorization," in which doctors have to obtain approval from the insurer before putting a patient on a particularly expensive drug when there are comparable, cheaper drugs available.

MassHealth, the state's Medicaid program for the poor, spent $25 million on Prilosec last year. In August, it stopped paying for the drug unless a doctor could prove that a patient needed it over a cheaper alternative. Harvard-Pilgrim Health Care, Tufts Health Plan, and Blue Cross Blue Shield have all introduced their own prior authorization programs. But in a system already larded with excessive bureaucracy, few see this as the right way out. Avorn calls it the "1-800-NO-YOU-CAN'T" route.

Also, because each insurer is out there cutting its own deals with all the various drug manufacturers and pharmacy benefits managers, there's little consistency in restrictions. Tufts, for instance, drew fire from many of its members a few years ago when it said no to Claritin. But because it got a good deal on Nexium, the new Purple Pill is not on Tufts's prior authorization list.

What seems clear is that consumers will soon be much more aware of what drugs actually cost, because insurers and employers will be passing on a much bigger chunk of the bill. It won't be a matter of a $25 copay rather than $10. They will either have to be prepared to pay full freight for the Cadillac or get used to riding in the Hyundai.

Some answers may lie in Washington, D.C. For years, the drug manufacturers have protected their interests by sharing their wealth with congressional campaign committees. But in the face of public anger - anger that will only intensify as premiums continue to rise and insurers say "No" more often - such protection only goes so far.

Federal regulators recently announced a plan to crack down on the most flagrant wining and dining of doctors by drug companies. But it's not at all clear that anyone has the stomach for real revolution, such as having an independent body with the consumers' interests in mind take over the entire testing process for new drugs.

There is momentum elsewhere, though. Last month, President Bush proposed new rules aimed at limiting the ability of brand-name drug makers to stall generics. And last year, John McCain and Charles Schumer persuaded colleagues in the US Senate to pass an even tougher measure designed to curb all those patent lawsuits that the Hatch-Waxman Act unwittingly spawned.

Though it's been stalled in the House, the measure is being pushed aggressively by a coalition of consumer groups and some of Big Business's biggest guns - General Motors, Wal-Mart, Motorola - which bear much of today's health care costs. "We've zeroed in on Prilosec," says Brad Cameron, a Washington lobbyist leading the charge on behalf of the coalition. "We've got to find a way to close these most egregious loopholes."

Then again, it may not be wise to bet against the purple powerhouse that has defied every expectation since its launch 13 years ago. The 39-year-old Cameron has had heartburn since he was in college. He confesses that when his symptoms got worse recently, he went to see his doctor. "My best friend's on Prilosec," he told his doctor. "It works for him. How about Prilosec for me?"

Boston Globe November 17, 2002