FDA yanking 'breakthrough' bragging rights to Merck's hep C combo

Now that AbbVie ($ABBV) has followed up on Gilead's ($GILD) game-changing hep C combo with its own directly competitive cocktail, Merck's late-stage player in the field doesn't look quite as revolutionary as it once did. With a new drug application being prepped for a near-term filing, the FDA has decided to drop its breakthrough therapy designation for Merck, possibly slowing the Big Pharma's marketing timeline a bit.

Merck ($MRK) put out word about the FDA's decision to yank the BTD in its quarterly earnings report on Wednesday morning. The agency notified Merck about its intent to rescind (it's not official yet) at the end of January, "citing the availability of other recently approved treatments for Genotype 1 patients. The company expects to discuss this matter with the FDA and does not expect that it will impact its ability to file an NDA for this combination regimen or the timing of that filing."

Merck mounted an aggressive development effort for grazoprevir/elbasvir (MK-5172/MK-8742), an oral rival to Harvoni from Gilead and AbbVie's new Viekira Pak. These new oral drugs are dispensing with interferon, blowing away one-time market leaders from Vertex ($VRTX) and Merck. And while the clinical revolution is now well underway, payers have been anxious to get competing products in the market in order to aggressively negotiate prices downward from Gilead's hefty $94,500 price tag.

Does this change things significantly for Merck? Probably not. The agency's BTD program was aimed at accelerating drugs in the pipeline, a big deal for programs like palbociclib, which just snagged an early OK in cancer for Pfizer ($PFE). Merck has already laid out plans to file for an approval in the first half of this year, and given its aggressive posture stands a good chance of gaining an approval as the third new therapy in a quickly crowded field.

Merck used its BTD win, though, to highlight its new aggressive spirit to push product development after a long drought of innovation led to Roger Perlmutter's debut as research chief. Hep C was supposed to banner the company's newfound success. Now it's proving to be a spotlight for a major trend in biopharma, where biologic breakthroughs spawn a host of competing drugs that quickly slice up big markets.

Almost overnight, revolutions in R&D can become a competitive scrum. Third place may be valuable, and a big advance for payers, but it won't trigger any big celebrations about innovation.

- here's the release