Glaxo asks Cervarix approval

The race for prestige and profits in cervical-cancer vaccines intensified yesterday when GlaxoSmithKline P.L.C. formally asked U.S. regulators to approve its vaccine, Cervarix.

The long-expected application to the Food and Drug Administration - for use in adolescent girls and possibly young women - puts Cervarix at least 16 months behind Merck & Co. Inc., maker of Gardasil.

Cervarix has been tested and prepared for market partly at GlaxoSmithKline facilities in Upper Merion and Philadelphia, part of the U.S. headquarters of the London-based company. Gardasil is made and marketed in West Point, Montgomery County, home to the vaccine division of Merck, which has headquarters in Whitehouse Station, N.J.

Both vaccines have been shown to completely block at least two strains of the human papillomavirus, or HPV, blamed for roughly 70 percent of cervical cancers.

HPV is carried by hundreds of millions of men and women worldwide. Each year, the cervical cancer it causes kills about 4,000 women in the United States and 270,000 worldwide, where Pap smears to detect and treat it are rarer.

Both vaccines' huge health benefits, however, have been mirrored by unusual and sometimes controversial marketing campaigns as the companies compete for a global market expected to be worth $2 billion to $4 billion within three years.

Merck, first to market with Gardasil last June, has triggered a backlash over its state-by-state lobbying for mandatory-vaccination laws. Mandatory vaccination, besides saving more lives, could significantly boost sales, up to half paid by taxpayers.

Sexual-abstinence groups and vaccine skeptics have opposed mandatory-vaccine laws, saying parents should decide individually. Some experts also have voiced concern that such laws could lead to fewer Pap screens.

In making the case for its vaccine, Merck has said Gardasil prevents genital warts and other dangerous HPV strains. The firm is also studying Gardasil's use in boys.

GlaxoSmithKline counters that Cervarix is more powerful and may prevent up to 80 percent of cancers, thanks to the company's proprietary adjuvant, AS04, a key booster ingredient. It also is funding an unusual head-to-head comparison to try to prove Cervarix is more potent than Gardasil.

And then there is the price. At $360 for a three-shot course, Gardasil is the most expensive vaccine ever marketed, part of an industry effort to push up profit margins in the notoriously risky business.

GlaxoSmithKline declined to disclose what it would charge for Cervarix, if approved as expected sometime between October and January.

Doctors and policymakers who expect competition automatically to bring down vaccine prices are likely to be disappointed, at least initially.

Jean Stéphenne, president of GSK Biologicals, the company's Belgium-based vaccine division, said in an interview last month that GlaxoSmithKline aims to win over physicians and others by proving Cervarix is better, not by selling it for less.

"If you start a price war, you give the impression that your product is of lower quality," Stéphenne said during a trip to Philadelphia.

"For sure, at a certain point, we will compete to get a bigger market share" based on price, Stéphenne said. But he indicated the initial strategy would be matching Merck on price and beating it on effectiveness.

The strategy, while good for vaccine-makers and potentially the Philadelphia pharmaceutical sector, could prolong financial headaches across the nation's health-care system, where physicians and patients already face a cash crunch over Gardasil.

While most health insurers are covering Gardasil, some have limited their reimbursements and administrative expenses. In turn, some doctors have been slow to offer the product, likening Gardasil to handling expensive crystal with no margin for error.

"If you drop a $120 vial of Gardasil on the floor, that's a problem," said Joseph Bocchini, chief of pediatric infectious diseases at Louisiana State University and a HPV expert at the American Academy of Pediatrics.

The academy is planning an expert meeting to consider the cost squeeze, he said.

Insurers caught in the middle want all sectors of the health-care system to share the burden.

"If the question devolves entirely to reimbursement, it misses the broader issue of rising vaccine costs," said Susan Pisano, a spokeswoman at the trade group America's Health Insurance Plans. "We think there is need for a broader discussion."

Administrators of the federal immunization program last year were able to win a 20 percent discount on Gardasil - $288 per three-shot course, instead of $360, said Lance Rodewald, head of immunization services at the U.S. Centers for Disease Control and Prevention. But he described it as a tougher-than-usual negotiation with Merck, then the sole HPV vaccine-maker.

"We really don't know the effect of competition on prices, whether it gives us a better negotiating position. We think it does, but we don't have hard evidence," Rodewald said.

So far, physicians and health officials have embraced Gardasil, even with its cost and legal issues. Merck reported $155 million in sales in the fourth quarter, considered a strong launch. The next test is how it fares a year from now with competition from Cervarix.

"If they have equal efficacy, then the physician's decision on which to use is going to be made more on price and convenience," said Bocchini, the pediatric academy HPV expert.

Yesterday, GlaxoSmithKline shares closed at $54.55, up 51 cents, or 1 percent. Merck shares closed at $43.95, up 72 cents, or 1.7 percent.