Belsomra® Strategic Marketing Plan

Pharmaceutical Marketing Strategy and Planning IFinal

Professor JambulingamWritten By:

Maggie CutliffMark Dziubas

Rich GalloKendyl Pyfer

Alex Tait

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Table of Contents Executive Summary

I. Product Profile…………………………………………………………………………….3II. Current Situation Analysis………………………………………………………………...4

A. External Analysis……………………………………………………….....5Market Analysis……………………………………………………….…..5Customer Analysis…………………………………………………….…..7Competitor Analysis………………………………………………………9Environmental Analysis……………………………………………….....12

B. Internal Analysis………………………………………………………..…16 Company Analysis……………………………………………………….16

Product Analysis………………………………………………………....17 SWOT Analysis……………………………………………………............19

III. Strategies based on SWOT and Key Issues………………………………………………25IV. Key Issues, CSFs, Strategy and Tactics for Product Success in 2016…………………...26

A. Key Issue 1: Limiting Formulary Access, Restricting Market Share……26B. Key Issue 2: Number of Refills is Lower………………………..………29C. Key Issue 3: ……………………………………………………………..31

V. Vision for Brand……………………………………………………………………...….35A. Brand Vision Statement……………………………………………….....36B. Lifecycle Management Issues…………………………………………....36

VI. Forecast for 2016-2018………………………………………………………………………37VII. Budget for 2016………………………………………………………………………….….38VIII. Conclusion……………………………………………………………………………...….39IX. Appendix……………………………………………………………………………………..40

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Executive Summary

Belsomra® is a new innovative, revolutionary product that uses a different type of mechanism to help patients that suffer from insomnia. Belsomra® is the only drug in the insomnia market that specifically targets the action of orexin, one of the wake neurotransmitters. In a clinical study conducted, patients fell asleep faster and stayed asleep longer with no evidence of physical dependency. This drug is distributed by Merck & Co, a leader and innovator in the pharmaceutical industry with great history of reputable products.

One out of three adults suffer from insomnia, which averages to 30% of the general population, but only 20% receive help from the health care provider. The number of adults suffering from insomnia continue to grow each year. This number proves that the demand in the market is high with not many patients are being treated for their condition. This provides Belsomra® the opportunity to penetrate the market and become the top drug prescribed for insomnia treatment.

The main goal is to highlight Belsomra®’s attributes, by providing a SWOT analysis, and to position Belsomra® to have a competitive advantage in the insomnia market for the fiscal year 2016. The in-depth SWOT analysis provides an internal and external examination of the insomnia market. This analysis then created the strategies, which led to the key issues in the market. There are three main key issues that will help and make Belsomra® the top prescription treatment in the insomnia industry. These key issues are: 1) Limited Formulary Access, Restricting Market Share; 2) Number of refills is lower than new prescriptions written; 3) Market Clutter. Associated with each key issue presented, there are corresponding critical success factors, strategies, and tactics. By recognizing these key issues in the market, Merck can strategize Belsomra® to eventually become the leading prescription insomnia treatment.

The forecast predicted for 2016-2018 is projected to have the eligible population increase at a maintained growth rate, the insomnia prevalence increasing among that population, insomnia diagnosed mild population to increase from the population that insomnia is prevalent, and the amount of insomnia prescription treatment patients also increase. This is important because Belsomra® can have a large impact on this population and thus increase sales. The budget will also increase for the year of 2016 due to strategy implementation to drive Belsomra® in the market. Thus, these efforts will reach the main goal: for Belsomra® to have a competitive advantage in 2016 and upcoming years.

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I. Product Profile

Belsomra®

Belsomra® is a prescription drug medicine for adults who have trouble falling or staying asleep. It is an oral pill that is prescribed once daily, specifically thirty minutes before bed with at least seven hours available to sleep, at a recommended dose of 10 milligrams. If a patient continues to have trouble falling or staying asleep, a higher dose can be prescribed at 15 or 20 milligrams. There is also a 5-milligram pill that can be prescribed for certain patients.1 This treatment is considered a Schedule Class IV controlled substance; drug abuse and dependency may occur with this drug; however, according to the clinical trials conducted, there was no physical dependency shown after prolonged usage of Belsomra®.2 It is not recommended for patients that experience narcolepsy.

Belsomra® offers data that supports the efficacy in four main categories common to many patients who suffer from insomnia: sleep efficiency, sleep onset, sleep maintenance, and sleep throughout the night. Each category shows clinical data over a prolonged period of time, which proves that Belsomra® is favorable compared to the placebo. Regarding sleep efficiency, patients experienced an average of ninety more minutes of sleep with Belsomra® compared to sixty minutes more with a placebo. Patients fell asleep faster; supporting the claim that sleep onset is reduced. Patients also spent less time awake during the night when taking Belsomra ®compared to the placebo. In addition, the clinical trial information supports the claim that patients slept throughout the night longer compared to the placebo.3 These four categories of efficacy contribute to the Belsomra’s attributes; thus, obtaining a stronger competitive advantage.

The following is a sequence of events regarding Merck’s announcement of Belsomra® until it was approved by the FDA: On November 8, 2012, Merck announced the FDA acceptance of the new drug application for suvorexant (Belsomra®); on May 22, 2013, Merck released a statement on the FDA advisory committee meeting for Belsomra®; on July 1, 2013, Merck received a complete response letter for Belsomra®; finally, on August 13, 2014, the FDA approved Belsomra® for treatment of insomnia.4 Belsomra® is on patent until November 20, 2029.5 However, 30 milligram and 40 milligram doses were not approved due to poor clinical trial data.

1 “Are you Looking for a Different Option to Treat Your Insomnia?” Belsomra® (suvorexant) C-IV.2 "Prescribing Information: Belsomra." Merck.3 “Belsomra Efficacy Profile.” Sleep Efficiency. Merck.4 “Belsomra Approval History.” Drugs.com.5 “Generic Belsomra Availability.” Drugs.com.

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Background on Disease State: Insomnia

Insomnia is a common term used to characterize a sleeping disorder that affects an individual’s quality of life. It can be defined by four different and distinct aspects of the insomnia condition: 1) difficulty falling asleep; 2) difficulty staying asleep or attaining nonrestorative sleep (and this difficulty is present despite adequate opportunity and circumstance to sleep); 3) this difficulty attaining sleep becomes associated with daytime impairment or distress; 4) this sleep difficulty occurs at least three times per week and has been a problem for at least one month. According to the University of Maryland Medical Center, signs of insomnia include but are not limited to: not feeling refreshed after sleep, inability to sleep despite being tired, daytime drowsiness, fatigue, irritability, difficulty concentrating, anxiety as bedtime approaches, and tension headaches.6 There are several risk factors that affect an individual’s possibility of developing insomnia: increased age, gender (women more so than men, specifically with menses and menopause), stressful life event, traveling across time zones, substance abuse, lifestyle, current medication usage, night shift or changing work schedule, asthma, depression, and sedentary lifestyle.7 Sleep is crucial to perform daytime activities and for the brain to be able to perform optimally; therefore, there is a demand in the market to meet these conditions and for the competitive product, Belsomra, to lessen the severity of insomnia, reverse the effects of insomnia, and more importantly, reduce the risk of any comorbidity associated with the disorder.

Many who suffer from insomnia have associated conditions or disorders that make insomnia more serious than just ‘being tired’. The following conditions increase the potential for chronic insomnia: comorbid medical disorders, such as psychiatric disorders (this is the most common comorbidity, examples include depression and anxiety disorders), circadian rhythm disorders, and working night or rotating shifts. In addition, insomnia also causes an increased risk of certain chronic conditions, such hypoxemia, dyspnea, and neurodegenerative diseases.8

There are two different categories of insomnia: acute and chronic. Acute insomnia, or also known as brief insomnia, is the most common type of insomnia for people to suffer from since it is usually due to a change in an individual’s personal lifestyle or a major life event, such as bad news or work stress. This type of insomnia is normally resolved without treatment; once the individual becomes more accustomed to the specific changes that occur, this insomnia is cured. Chronic insomnia, also known as long-term insomnia, usually occurs when an individual has trouble falling asleep or staying asleep. Some people with chronic insomnia have a history of difficulty sleeping. In most cases this will happen at least three nights a week for at least three months.9

6 "Insomnia." University of Maryland Medical Center. University of Maryland Medical System, 22 Jan. 2013. 7 Ibid.8 Roth, Thomas. "Insomnia: Definition, Prevalence, Etiology, and Consequences." Journal of Clinical Sleep Medicine 3.5 (2007): S7-S10. 9 “Insomnia Symptoms.” National Sleep Foundation.

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II. Current Situation AnalysisA. External Analysis

Market Analysis: Belsomra® Profile

Belsomra®, classified as an orexin receptor antagonist, is the first approved drug of its type on the market. Previous prescription insomnia treatments have included “GABA-A receptor antagonists, melatonin receptor agonists (ramelteon), and histamine H1 receptor antagonists (doxepin).” According to the article Belsomra®, A First Look, the discovery of the involvement of orexin and the sleep cycle was incited from studies examining the effects of narcolepsy. Researchers have determined that approximately 90 percent of people diagnosed with narcolepsy are also orexin-deficient. Belsomra® was determined to be effective after three clinical trials including more than 500 participants. These studies displayed patients who took Belsomra® fell asleep faster and slept for a longer period of time than those taking the placebo drug. Erik K. St. Louis, MD, Head of Neurology at the Mayo Clinic, states about the effectiveness of Belsomra®, “ It works like nothing before it, by antagonizing the hypocretin neurotransmitter system, which has the function of promoting alertness.” Two of these trials had a similar design, generally categorized as, “randomized, double-blind, placebo-controlled, parallel-group studies” and involved 20 and 40 mg doses for patients under 65 years old, and 30 mg for patients over the age of 65. All tests were determined superior in both sleep maintenance and latency. The third trial, categorized as a “one-month crossover” involved 10 and 20 mg doses, also deemed superior in sleep latency compared to the placebo10 (Reference Figure 3: Belsomra®’s Product Profile vs. Perceived Value). In summary, Belsomra® is uniquely designed to antagonize the part of the patient's brain that controls an individual's alertness. The drug has proven to display a reasonably equal amount of effectiveness for all age groups.

Diagnosis

According to the National Heart, Lung, and Blood Institute, insomnia will be likely diagnosed by a primary care physician. As stated earlier, this disorder is classified as individuals who have trouble falling asleep and staying asleep, despite having a sufficient sleeping environment and an adequate opportunity for sleep.11 A primary care physician will base this diagnosis on a patient’s medical and sleep histories, a physical exam, and may conclude that a polysomnogram (PSG) should be done. During a PSG, a patient will stay overnight a sleep center to have brain activity, eye movements, heart and blood pressure monitored to determine, “how much oxygen is in your blood, how much air is moving through your nose while you

10 “Belsomra: A First Look.” practicalneurology.com11 Roth, Thomas, PhD. “Insomnia: Definition, Prevalence, Etiology and Consequences”

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breathe, and your chest movements.” This determines whether a patient is suffering from sleep apnea, or another sleep disorder, that could be the cause of insomnia.12

Treatment Protocol Guidelines

Treatments include but are not limited to: homeopathic healings to prescription medications, but the major changes include lifestyle and behavioral adjustments in order to create regular sleep habits. Keeping a consistent and regular sleep and wake cycle also contributes to a healthy sleep pattern. If these changes do not benefit the patient, medication can then prescribed.13 This is the time of intervention when Belsomra® should be introduced to patients and already in the minds of those suffering from insomnia. Health care providers should also be aware of the innovation of the product and feel confident prescribing this treatment to suffering patients.

Nonmedical Treatments

According to the National Sleep Foundation, there are nonmedical treatments for insomnia that include psychological and behavioral techniques. Some of the most successful treatments indicated were relaxation training, stimulus control, sleep restriction and cognitive behavioral therapy.14

Relaxation control instills a patient to “systematically tense and relax muscles in different areas of the body” which then calms the body and prompts sleep. Other techniques involved in relaxation control include breathing exercises and meditation. Stimulus control is essentially creating an connotation between a patient’s bedroom and sleep by limiting what the patient does in his or her bedroom. An example of this would be prohibiting reading, watching TV or exercise in the bedroom. Cognitive Behavioral Therapy can be defined as a “short- term, goal- oriented psychotherapy treatment that takes a hands-on, practical approach to problem solving. Its goal is to change patterns of thinking or behavior that are behind people’s difficulties, and so change the way they feel”.15

Over-The-Counter TreatmentsAccording to the Mayo Clinic, OTC sleep aids can be categorized into three common

segments: Diphenhydramine, Doxylamine succinate, Melatonin and Valerian. ● Diphenhydramine: A sedative antihistamine

○ Products Include: Benadryl, Unisom Sleep Gel, Sominex, Nytol, Sleep Eez

12 “Diagnosis and Treatment of Chronic Insomnia” Ncbi.gov13 "Insomnia." University of Maryland Medical Center. University of Maryland Medical System, 22 Jan. 2013. 14 “Insomnia Treatments” nationalsleepfoundtion.org15 “In Depth- Cognitive Behavioral Therapy” psychcentral.com

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○ Side Effects Include: Dry-Mouth, Blurred Vision, Next Day Drowsiness, and Urinary Retention

● Doxylamine Succinate: A sedative antihistamine○ Products Include: Unisom Sleep Tabs○ Side Effects Include: Daytime Drowsiness, Dry Mouth, Blurred Vision

● Melatonin: Natural hormone that helps control a patient’s sleep- wake cycle○ Research has suggested that melatonin does appear to help improve sleep, but is

recommended for incidences such as jet lag or shift work.○ Side Effects Include: Headache and Daytime Dizziness16

Based on the current market analysis of these OTC sleep aids, we have concluded that the biggest threat our product faces in comparison to these treatments would be cost. Currently, Belsomra® is priced at approximately $280 for 30 tablets of the 10 Mg dosage. According to the National Sleep Foundation, insomnia is found to be more present in patients with a lower socioeconomic status. Therefore, these patients could be more likely to choose an OTC product ranging from $10 to $15 over Belsomra® simply because they cannot afford it.

We have concluded that the biggest opportunity our product holds in competition with OTC products is the Belsomra® clinical study results displaying the success of the product in comparison with OTC products.

Customer Analysis

According to the Journal of Clinical Sleep Medicine the guidelines for treatment goals for insomniac patients are as follows:

“The primary treatment goals are: 1) improve sleep quality and quantity 2) to improve insomnia related daytime impairments. Other specific outcome indicators for sleep generally include measures of wake time after sleep onset, sleep onset latency, number of awakenings, sleep time or sleep efficiency, formation of a positive and clear association between the bed and sleeping, and improvement of sleep related psychological distress.Concerning pharmacological treatment of insomnia, the guidelines state:When pharmacotherapy is utilized, the choice of a specific pharmacological agent within a class, should be directed by: 1) symptom pattern; 2) treatment goals; 3) past treatment responses; 4) patient preference; 5) cost; 6) availability of other treatments; 7) comorbid conditions…”17

Patients for insomnia prescription medication consist of everyday working citizens that have difficulty sleeping despite having the appropriate opportunity and condition to do so. Insomnia is most prevalent in older adults, specifically women. Studies have shown that insomnia is most consistently present in Caucasian females who are single, divorced, or

16 “Sleep Aids: Understand the Options” mayoclinic.org17 “Diagnosing Insomnia” aasmnet.org

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widowed. It is highly likely that insomniac patients have an additional co-morbid physical or mental illness; and has been shown to be more present in adults with lower incomes.

When targeting patients for Belsomra®, the product aims to emphasize that it is a different way to treat a patient’s insomnia. Belsomra® differentiates itself by being the only sleep aid on the market that is an “orexin receptor antagonist”.18 The chemicals in the drug are involved in the sleep-wake cycle, and alter the signaling (action) of orexin in the brain. So, patients who take Belsomra® experience more of a normal sleep rhythm in contrast to other drugs on the market. Belsomra® has also been proven to not cause rebound insomnia, fulfilling one of the largest unmet needs in the prescription insomnia market. The drug is most likely to attract patients who have undergone other treatment options for their insomnia, and want to pursue an option that works more with their natural sleep cycle and further prevents rebound insomnia.

This information proves that Belsomra®’s patient market is large and currently able to be defined by gender and other demographic factors. As pictured in Belsomra®’s television commercial, a middle-aged woman is the main character; Merck is aware of and has identified the medication’s typical patient and, subsequently, the drug’s target market. The company can highlight the efficacy of the drug and provide existing customer insight and feedback, which can convince the patient to either switch from an existing treatment or commence with this treatment option. There are also sleep resources located on the Belsomra website, such as a doctor discussion guide, and advice from a sleep expert. Patients can even create a personalized sleep profile by taking a quiz and receive customized tips to help them sleep better. This customized approach helps Merck, and specifically Belsomra, reach the customers and gain a better customer relationship.19

Segments of customers control a great deal of how the drug may do in the future with sales and will determine future data and analysis. Even though the patients have the ultimate power in purchasing and continuing to use the drug, physicians and payers are the other two thirds of the ultimate customer segment.

There are many different types of physicians (both MD and DO) that can prescribe insomnia treatments: internal physicians, primary care physicians, and specialists, including sleep medicine, neurologists, psychologists and psychiatrists. Primary care physicians are the initial vehicle for help and treatment for this ailment. Sleep medicine specialists have more comprehensive insight and knowledge about insomnia.20 Therefore, Merck should target primary care physicians and sleep medicine specialists since they are the main doctors that are treating the insomnia target market and have the authority to prescribe Belsomra®. The physician needs to know that the drug they prescribe is safe and effective. Also, a drug that produces less harsh side effects with the support of long-term data will thrive in the market. Therefore, the launch of Belsomra® may address some of the unmet need in the insomnia market due to the safety profile

18 “What is OREXIN” Belsomra.com19 “ How is BELSOMRA different” Belsomra.com20 “Insomnia Doctors” Healthline

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of this drug and the availability of long-term data.21 According to the clinical trials performed, Belsomra® has no physical dependency effects and is effective compared to the placebo.22

A patient flow analysis can illustrate when there is an opportunity for intervention for Belsomra® to be prescribed. A patient may feel symptoms of insomnia but may believe he or she can self-treat himself or herself. Melatonin or other over-the counter-drugs may be used to treat insomnia, or even altering one’s lifestyle and behavior to create regular sleeping patterns could be methods that a patient utilizes to treat themselves without the aid of a physician.23 The patient has probably seen television commercials for Belsomra® but believes that he or she does not need to be medicated and can treat himself or herself. Because of this publicity, the patient is familiar and aware of Belsomra®. If these home treatments do not work, the patient may consult their primary care physician for further treatment. This point of intervention by the physician is when Belsomra® should become the physician’s primary treatment option. Merck can position this product as unique, safe, and effective. This would convince physicians to prescribe the product. A patient will become more compliant to take the drug due to advertisements, which will then also serve as a reminder for the patient to take the drug. Healthcare payers are important to not only Merck, but to physicians and patients as well. Payers have strong influence over whether or not a physician prescribes a drug to the patient. If the insurance company covers the cost of Belsomra®, it is then deemed more advantageous for the patient and the physician will feel more confident prescribing the treatment. If an insurance company does not cover the cost of Belsomra®, patients must pay out-of-pocket and physicians may not feel influenced to prescribe the product. This provides a barrier because Merck cannot reach these physicians/patients. However, located on the Belsomra® website, there are special offer discounts and free ten day trial vouchers available to help patients afford the treatment.24 This is a way for Merck’s new product to connect with the customer and begin to build a relationship.

Competitor Analysis

In order to maximize penetration of the sleep market, it is important to understand the customer’s priorities to accurately confirm that Belsomra® is the market leader. Currently, key patient value drug efficacy, safety, long-term data analysis, and the relative cost of treatment. These key customers consist of people that have difficulty sleeping when given the correct amount of time to do so. Those individuals who have sleep problems when not given the typical 7-8 hours fall into a slightly different category. Typically studies show that the majority of users that will suffer from insomnia will be middle-aged women. The patient has the highest degree of influence, followed by the doctor and payer. In order to ensure that Belsomra® is the market

21 “ PharmaPoint: Insomnia- Global Drug Forecast and Market Analysis to 2023” PR Newswire22 “ Taking Belsomra” Belsomra.com23 “Insomnia” University of Maryland Medical Center24 “ Special Offers” Belsomra.com

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leader Merck must effectively position the product versus the current competition.25

Merck must position and promote their product to be different from their competitors since Belsomra® has recently emerged into the market. According to a study, which was conducted from 2013 to 2023, the main driver of the insomnia market will be the launch and introduction of Belsomra®. However, the biggest barrier and threat for growth in the market will be the competition from generic medications.26 One of the main opportunities for Belsomra® is that most generic medications do not promote their medication in the current market. This gives Belsomra® the opportunity to promote themselves strongly within the market. Another opportunity created for Belsomra® is to bring in patients currently not satisfied with their sleep aid drug. According to Merck’s Eric Luthi, executive director and global brand leader for Belsomra®, 1/3 of the patients who have started using Belsomra® are “continuous treaters. You would think that someone who chooses to treat every night is pretty happy with their therapy, but when we actually talk to those patients, what we find out is they’re not that happy,” Luthi says. “Frankly, that’s a market opportunity.” Some motivations in customer segments will be patients (faith in efficacy and needing to change), physicians (need to sell and increase customer flow), and payers (to increase their own customers if drug succeeds).27 Each motivation for every segment may be different, however they may depend largely on the success of the drug itself.

There are many competitors in the insomnia market, including name brands and, before mentioned, generic versions. Belsomra®’s key competitors are Ambien®, Lunesta®, Sonata®, Rozerem®, and the generic versions of each, Zolpidem Tart, Zolpidem Tart CR, Eszopiclone, and Zaleplon, respectfully (Rozerem® does not have a generic form available yet; the drug is still on patent until 2019).28 The insomnia market is flooded with many drugs, especially with a large amount of generic erosion; this market holds stiff competition with the 70+ drugs that are present. According to recent research, the insomnia market is predicted to decline over the next couple of years, but the market it is expected to accelerate as new drugs are introduced.

According to the IMS Hypnotics and Sedatives Sales data, the primary competitors to Belsomra® are: Ambien®, Lunesta®, Rozerem®, and Zolpidem Tart CR. The secondary competitors include: Eszopiclone, Zaleplon, Zolpidem Tart, and Sonata. The most used product in the market is Lunesta®. Many patients are trying Belsomra®, but very few are refilling the treatment. In comparison, Lunesta®’s new prescription and refill prescription data is almost the same.29 However, patients may be switching from Ambien or Lunesta® to Belsomra®, but then switch back to their old medication. This could be due to various reasons, such as expense, ineffectiveness of the new medication, or familiarity with the proven treatment. Ambien is also used as a muscle relaxer, differentiating it from the other insomnia medications in

25 “ About BELSOMRA” Belsomra.com26 “ PharmaPoint: Insomnia- Global Drug Forecast and Market Analysis to 2023” PR Newswire27 "Merck's Quest To Revive The Market For Insomnia Drugs." Forbes. 28 IMS. 2012-2015 Hypnotics and Sedatives- All Products Sales TRx NRx and RRx Data 2012-2015.29 Lunesta. Sunovion Pharmaceuticals

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its class. It is important to note that Zolpidem Tart CR’s sales are almost double that of Belsomra®’s total

sales. Peter Harbin from IMS health stated, “A shift has taken place, and now it’s not only the prescriber that can dictate what the prescription should be, but also a very intricate network of non-prescribers – formularies, managed care groups and long-term care practices”.30 Generics are cheaper and payers are more willing to cover lower-cost generics than name brand medications. It is clear that it is very difficult for Belsomra® to compete with generics due to the low, if any, customer’s out-of-pocket expense, physicians’ willingness to prescribe generics because of the low cost to the patient, and the payer’s coverage. In order to get a full understanding of how the competitors are currently positioned, Merck wants to do an assumed communication strategy comparison. Merck wants Belsomra® to be positioned in a way that allows the customers to draw connections between the insomnia market and Belsomra.® 31 The customers refer to the product websites to get more information about each treatment. When comparing Belsomra®, Lunesta® and Rozerem websites each product displayed a unique positioning statement. Belsomra’s® main message is “Are you looking for a different option to treat your insomnia?” Lunesta’s website displayed the main message, “Fall asleep and stay asleep so you can wake up feeling rested.” Rozerem®’s website displayed the main message, “Rozerem is approved for adults having trouble falling asleep.” Belsomra®’s message is the only key message stated as a question. By stating the message as a question Belsomra® attracts customers by allowing them to answer the question themselves.

On the other hand Lunesta® and Rozerem® display the key messages as generic statements.32 Belsomra®’s message statement incorporates the world different so that consumers subconsciously associate this product as being able to provide a new more elevated treatment than other brands that offer similar functions. Merck also wants to create a competitive landscape around the key messages associated with performance data. Lunesta® exhibits a strong message around performance data. Lunesta®’s website displays, “ Lunesta® is the #1 prescription branded sleep aid with over 31 million prescriptions written to date.” Lunesta®’s message seizes the customer’s attention by testifying the products number one.33 Belsomra website performance statement is presented in a more scientific manner. Belsomra’s website declares, “Belsomra® is the only prescription sleep aid that targets and inhibits the action of orexin.” Belsomra® as mentioned previously is trying to continue to project the message of being different by communicating the product’s distinctive efficacy and safety. Due to the fact that Belsomra® is an orexin antagonist class, it does not have the same side effects that other drugs in the market do.34 The orexin antagonist allows for patients to not only fall asleep but it also allows them to remain asleep. Contrary to Belsomra®, Rozerem® shows high safety and low efficacy. This could help differentiate Belsomra® and drive its growth. Although Lunesta® is more established in the marketplace and is generic. The leverage Lunesta® currently holds over Belsomra® will

30 “The Benefit of Commercial Analytics” b-eye-network.com31 Belsomra. Merck32 Rozerem - Prescription Sleep Aid. Takeda. 33 Lunesta. Sunovion Pharmaceuticals34 “Taking Belsomra” Belsomra.com

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be diminishing due to the patent expiration of Lunesta® in 2014 (Reference Figure 1: Unmet Needs diagram).

In addition to Rx drugs, there are also over the counter prescriptions that a patient could try. Over-the-counter drugs make coming into this sleep market quite a challenge because there are so many options and it does not involve consulting a doctor. Along with OTC medication there are also herbal options. The most common herbal option would be melatonin. Melatonin is a natural hormone made by your body’s pineal gland.35 In multiple studies done by the National Sleep Foundation it was shown that melatonin is not very effective. Its effectiveness varies on the appropriate time it is taken. This can be said for multiple drugs as well however. Another treatment in this market would be alternative therapies. These therapies can consist of anything from diet and exercise to acupuncture, yoga, hypnosis and aromatherapy. In a study done by The National Sleep Foundation 26% of adults take a bath or shower to help them sleep.36 This is compared to 7% of the population that uses prescription medication. Belsomra® on average cost around $275 dollars for 30 tablets, melatonin cost around $6.99. Belsomra® costs are higher than Melatonin which may cause for patients to try using OTC products before trying Belsomra®. As for other therapies, yoga for example cost around $115 a month. A hypnosis or acupuncture session would cost around $85-150 dollars. When comparing these prices to Belsomra® they are relative in price, meaning Belsomra® has an opportunity to capture this audience of patients.

Merck’s new product has a specified target market. The positioning of the drug to attract new and existing customers is centralized around the drug being different and unique. Promotion of the drug as safe and effective satisfies physicians’ worries when prescribing this new insomnia treatment to their patients. The promotional strategies include special offers, compelling messaging, an informative website and television commercials. This competitive and comparative analysis provides a valuable outlook and evaluates information that could be useful to Merck to strategize their marketing to not only reach new customers, but also to convince existing customers to switch to this treatment, thus gaining a larger share of the insomnia treatment market. This marketing can also work as an advantage to Merck because some insomnia treatments already existing in the market no longer market and promote their product, such as Ambien. (Reference Figure 2: Perceived Safety vs. Perceived Efficacy of Competitors Illustrating an Unmet Need).

Environmental Analysis

Consumer Trends

According to the National Sleep Foundation’s poll 55% of parents felt that sleep was extremely important to their own mood. 37 In the survey as a whole sleep was viewed as very or

35 “Melatonin” nationalsleepfoundation.org36 “Insomnia Treatments” nationalsleepfoundtion.org37 “National Sleep Foundation Poll” nationalsleepfoundtion.org

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extremely important to the majority of parents Although this percentage is relatively high, consumers are still not aware of the importance of treating

insomnia. As mentioned previously in

the patient’s treatment pathway, the diagnosis stage is where most of the consumers are lost due to not only the lack of awareness but also the consumer self-diagnosis the symptoms.

Economic Trends

When looking at the Sleep Review article, one begins to develop a greater knowledge of the current sleep market.38 The insomnia market was at an all time high in about 2013. The Journal for Sleep specialists predicts that the sleep market will not recover until about 2023. The reason the recovery even occurred was due to the launch of two new drugs Belsomra®, and Eisai’s E-2006 according to The Journal for Sleep. The insomnia drug sale market was at about $2.1 billion in 2013 and is not predicted to recover to about $1.8 billion until 2023. What does this mean for the time being? The decline in sales will affect seven markets, and specifically, the United States will be affected due to the fact that they made up 71.4% of the market share is 2013.39 Lunesta® used to be the sleep market leader, but as of April 15, 2014, it is now officially available in generic form as eszopiclone. Right around the time Lunesta® became generic, however Belsomra® entered the market. The Journal for Sleep Specialists predicts by 2023 it will be the highest selling insomnia drug to date due to the market driving factors such as its long-term safety and first-in-class safety. Belsomra® is also offering saving coupons for patients. Belsomra® offers a one-dollar per tablet coupon if the patient is paying $150 dollars or less out of pocket. The other coupon offered is for patients paying $150 dollars or more, this coupon allows for $3 dollars per tablet deal.40 The savings coupon provided is helping patients with the cost because Belsomra® average pharmacy cost is $275.73.41 Merck is also offering a manufacturing assistance program called Merck Helps. This program allows for patients to receive the medication for no cost if they qualify based on current household income and insurance plan.42 If the Journal for Sleep Specialists is correct, Belsomra® will generate $458.6 million dollars worth of sales over the seven major markets.

Government Trends

The government has developed organizations to develop a greater awareness around the sleep market. An example would be The National Center on Sleep Disorders Research. This organization is created within the National Heart, Lung and Blood Institution. The organization

38 “Insomnia Market” nationalsleepfoundtion.org39 “Insomnia Market affected” nationalsleepfoundtion.org

40 “Savings Coupon for Belsomra” Belsomra.com 41 “ Belsomra price and Belsomra Prescriptions” smartprescriptionsavings.com/belsomra-Coupon42 “ Belsomra Prices” goodrx.com/belsomra/saving-tips

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was created to create awareness around the sleep market. The sleep market in America is composed of around 70 million people suffering from

sleeping problems. The NCSDR estimated around $15.9 billion dollars accumulated to the nation’s health care bill. The $15.9 billion dollars in expenses does not include the indirect costs to the United States because of lack of sleep. This

organization's goal is to reduce these issues in society by research, training, technology transfer and coordination. Specialty doctors do the research, from biologists to epidemiologists. The wide range of specialty doctors allows for the organization to promote awareness from within the medical field, while gaining data needed to draw conclusions. In order to insure this research is put to good use training occurs for scientists who participate in researching sleep disorders. The center then seeks for a transfer of technology by making sure the key opportunities found are used to benefit the public. The center also works with nonprofit organizations to share information. The government tries to gain awareness by setting up organizations like the NCSDR via the Internet. The website contains contact information for the organization as well as related resources and printable resources.43

Political Trends

President Obama’s Affordable Care Act is one of the major political trends that affected the sleep market. The Affordable Care Act made insurance companies cover any pre-existing conditions. This concluded to many patients being able to receive treatment for sleep disorders that they had been diagnosed with and could not afford coverage for. The only way the disorder is not covered is if the employer did not purchase the insurance plan or before the Affordable Care Act came into existence. The act tries to ensure treatment is being offered for patients and results are the main concern. The introduction of this healthcare plan into the market leads to the ability to reach a demographic of customers who could not afford to receive medical coverage.44 The Affordable Care Act affects the employer as well, ObamaCare initiated an employer mandate.45 This employer mandate not only leads to more patients having insurance but it also creates a bigger healthcare market overall. Regulatory Trends

The U.S Food and Drug Administration lowered recommended doses for certain drugs in the insomnia market that contain zolpidem. The FDA recommended these lower dosages due to all accidents that occurred because of how it affected patients the morning after use. The products affected by the lower dosages are Ambien, Ambien CR, Edluar, and Zolpimist. The lower dosages have led to more studied done by the FDA to determine the efficacy and safety of

43 “The National Center on Sleep Disorders Research” http://www.nhlbi.nih.gov44 “Obamacare and Sleep Disorders” healthadvisory.com 45 “ObamaCare Employer mandate” obamacarefacts.com

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the drugs currently in the sleep market.46 When Belsomra® first applied for approval the 30mg and 40mg were not approved instead a

10mg and 20mg dosage were approved into the market. Due to the FDA recommendation of lower dosages, this is a weakness for Belsomra®. If a new drug comes to the market that does not contain zolpidem and could be prescribed at higher dosages without causing next day symptoms, many patients would most likely switch medications.

Technology Trends

In today's society, technology has become a staple of one's everyday life. For example, the ability to check emails at the click of a button has shifted the population’s work-life balance. It has created a generation of work-obsessed employees. This affects the quality of sleep that the total population is achieving. According to Harvard Medical School, scientists believe that using technology such as smartphones, tablets or laptops right before going to sleep effects wavelengths of light that lead to the suppression of melatonin. The suppression of melatonin in the brain leads to a lack of sleep and is causing the evolution of our circadian rhythm.47

The technology in society today also can be looked at in a positive light as well. The Internet is used to display websites for organizations such as The National Center on Sleep Disorders Research that was mentioned previously. The Internet also displays current news articles written on the sleep market. The different channels of communication via the Internet allow for a greater overall awareness. Along with the Internet providing information around the sleep market, it also provides consumers with the ability to look up the symptoms associated with lack of sleep. The ability for the patient to self-diagnosis oneself creates a greater opportunity for a treatment plan.

The market also has become flooded with new technology for tracking an individual’s everyday health. For example products like FitBit, iHealth, Jawbone 24-7, all allow the consumer to track the hours of sleep they have gotten each night. These fitness trackers are raising awareness around the importance of sleep. Merck has even created its own App called the “Sleep Guru”. This app is designed to track sleep and help patients suffering from insomnia create adequate sleep patterns. There is an opportunity in the market to create a stronger App and allow for individuals to incorporate this app into everyday life. The importance of an individual’s health in today’s society is extremely present.

Opportunities and Threats Associated with External Analysis

Major opportunities that exist for Belsomra®:· To market directly to the consumer’s perception of the importance of sleep for their well-being

46 “FDA requires lower recommended dosages” www.fda.gov47 “Smartphones can cause Insomnia” www.newsmax.com

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· To differentiate Belsomra® from the generic brands in the market by drawing attention to its unique class of orexin antagonist.

· To position Belsomra® in the market based on its long-term efficacy and first in class safety.· Use the Internet to full potential; when individuals search insomnia, Belsomra®’s website would be the first to display on the page, utilizing search optimization

Major threats that exist for Belsomra:· Competition in the Orexin Antagonist class· The domination of generics in the insomnia market· The consumers perception around insomnia and the use of over the counter drugs

II B. Internal Analysis

Company Analysis

In 1668, John Frederick Merck acquired Angel Pharmacy. Merck began manufacturing in 1827. Over 100 years later, in 1950, George W. Merck made his well-known speech at the Medical College of Virginia at Richmond. At this speech, he released a statement that is still familiar today: “We must try to remember that medicine is for the patient. We try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear. The better we have remembered it, the larger they have been.” The year 1987 marks an important year in Merck history. This is the first of seven years that Merck had been named by Fortune magazine the most admired corporation. In addition, Forbes magazine named Merck the most innovative company in the pharmaceutical industry. Four years later, Merck celebrated its 100th year anniversary. Over these years, Merck acquires many different companies and the trend continues to 2015. Recently, Merck acquired Cubist Pharmaceuticals, expanding Merck to have a strong foundation and opportunity for growth in the hospital acute care market. Merck was established in 1891 and is currently headquartered in Whitehouse Station, New Jersey. There are about 69,000 employees who work for this developed, strong company.48

Merck has six major, distinct categories that contribute to this history: business heritage, commitment to health, access to health, innovation, ethics and integrity, and diversity and teamwork.49 These are all interwoven together to cause Merck to be diverse, strong, and a top pharmaceutical company in the industry. Merck has a range of products, from sunscreen to specialized medicine. Some of Merck’s products include: NuvaRing® (birth control), Singulair® (asthma), and Coppertone® (sunblock). In addition, Merck does not just treat humans; the company also has vaccines for animals, such as dogs, cats, and cattle. The company therefore has a diverse set of treatments; this is a competitive advantage since Merck can appeal to a large range of customers.

48 "Merck & Co." DrugWatch49 “History.” Merck.com.

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However, there are problems with approval and continuation of treatments. For example, some of Merck’s treatments have left consumers

with injuries. Merck recalled the drug Vioxx®, which was prescribed as a painkiller, in 2004 because the drug more than doubled the risk of heart attack and possibly, death. Before this drastic recall, more than 38,000 deaths were directly related to Vioxx® and astonishingly, up to 25 million Americans were taking the drug.50 The drug continues to be off of the market. This is a valuable example because the company became aware of the problem and recalled the product eliminate any additional adverse events. This proves that Merck is committed to the health of their customers and integrity of their treatments.

According to the Investor Presentation by Rob Davis, the CFO of Merck, in March 2015, Belsomra® is considered in category Wave 1 for Merck’s “Growth from Core Commercial Areas and Launches.” Wave 1 is between the Core Focus Area and Potential Future Launches (Wave 2). Merck’s core focus revolves around diabetes, hospital acute care, oncology and vaccines. Wave 1 is for current and near-future launches, where Belsomra® is placed along with various treatments, such as Keytruda® and Gardasil9®. Belsomra® was launched in the US and Japan. The company predicted more than 1,000 US total prescriptions per week early in the launch, and 2 billion insomnia medication doses administered per year in both the US and Japan. This is an opportunity for Merck since approximately 30% of patients are seeking new alternatives and are continuous treaters (approximately 60% of prescriptions).Wave 1 also significantly contributes to the overall sales of the company.51 This proves that Merck is committed to Belsomra®.

Product Analysis

Belsomra®’s perception and brand image have been exhibited as one of the top priorities for not only the company but the brand team as well. Several different studies and consumer reports have been released within the past few months to show how those associated with Belsomra® (physicians, payers, and patients) are viewing the product. Recent data displays that within the first couple months, physicians were writing 4,000 prescriptions per week in total. This could be for a number of different reasons from possibilities such as, wanting to try new products or steering away from generics with radical efficacy to safety measurements. In order to grow the brand image and consumer perceptions Merck decided to launch an educational campaign covered with cartoon characters that includes, unbranded TV ads, branded print ads, a mobile app, and a website. The website includes typical features such as a quiz that looks into your current sleep patterns. However, one item of major concern for the Belsomra® brand team is the data that shows an early tapering off of NRx not too long after the launch. This could come from a number of different reasons but it will ultimately catch the brand teams’ eye to address marketing tactics to new users and unaware patients. Merck will continue to further their reach to

50 "Vioxx Recall“ Merck and FDA." � DrugWatch.51 Investor Presentations. Barclays Global Healthcare Conference. Merck.

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their consumers as long as they feel education on the product is needed in a market that demands a great deal of it. Merck decided these were

extremely important due to the sheer cautiousness and skepticism of patients using sleep medication. These specific educational campaigns should strengthen the brand image as well as consumer perceptions for Belsomra®.

Even though insomnia drugs are predicted to drop in sales by $1.4 billion by next year, Belsomra® is supposed to lead a major charge for the turnaround in the market. Research has suggested by around the year 2023, Belsomra® has the chance to reach sales of close to the number of $500 million (refer to financial). That number will jump up and down depending on factors such as change in market strategy, change in consumer taste, or change in insomnia market. Each change has the potential to benefit or hurt Belsomra®. The brand team will need to combat several challenges along the way.

Like all new drugs coming to market, challenges will arise on several different occasions. The first challenge came before the release of the new drug when Merck received notice from the FDA on their late trials. After an initial rejection from the FDA, Merck was only approved for doses from 5-20 milligrams rather than the normal (larger) dosage of 30-40 milligrams that are effective in clinical trials. “The analysis which included 1,264 women and 707 men, found that the most common adverse effect reported by both groups was next-day drowsiness.” However, the challenges will not stop there. “As challenging as it will be to get the physician community on board with Belsomra®, convincing insurers to pay for the product could be even tougher, especially considering the availability of cheap, generic Ambien.”52 This leads to inside weaknesses the product may encounter. The drug will only be hitting the market with a low milligram dosage, which could be detriment to the product's success in different ways. Physicians could be skeptical of the strength of the drug at a low dosage and consumers may be stray from moving up in dosage as well. This obviously comes from a concern for side effects in a dangerous subject area, however it may be tough to be effective on those with strong tolerances to the prescriptions that have an extremely difficult time sleeping. Main challenges that will be looked into over the next few quarters will be if patients try/switch to Belsomra® and stay with that regiment permanently. Useful information from companies such as IMS Health, will help the Belsomra® brand team take an inside view into where categories such as NRx, RRx, and TRx are trending (See Financial).

Financial

From IMS data, the sales of every major category, such as volume and growth, has increased over the last several months. Despite an earlier than expected flattening of NRx, recent months have shown improvement. TRx, NRx, RRx, and Sales all have steadily increased since the launch of Belsomra®, with supporting data of continued growth within the last few months. Each major category increase shows at least a small amount of approval from the selling,

52 Weintraub, Alene. “Merck’s Quest To Revive The Market For Insomnia Drugs.” Forbes.

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prescribing, and usage of the product on a daily basis. From an assessment standpoint, the products great start most likely had something to do with

the way the insomnia market is turning for the years to come. There are few drugs on the market that compare to the level of efficacy and safety that BELSOMRA presents. Even though it is competing against a heavy market of generics the value of the product so far has established itself in a unique way.

(Example: Over 3 months span in Sales…3,686,423/4,699,820/5,382,573)There have been many assumptions concerning how Belsomra® will thrive in the market.

One source predicted it at around $900 million, but has since been corrected because of the FDA’s findings. “Once pegged as a $900 million drug, Belsomra® might have had more of an opportunity to get there had it won the FDA’s blessing it's first time around, back in 2013. When it did score and approval last August, with the lower maximum dose, analysts pegged sales at $300 million to $500 million. However, pertaining to life cycle management of the drug, this would be considered a part of the future plans. Global Data sees Belsomra® leading the insomnia market by 2023 with $458 million in sales, as most of the leading branded remedies get

generic competition in the meantime.”53 Life cycle management trends in the market include many physicians writing new prescriptions for the drug, according to IMS data, which supports Global Data’s claim that it will be the leading insomnia treatment in the market. At this point, Belsomra® is so early in its life cycle that even with the high expectations to become a STAR, the current status of the drug would have to be classified as a QUESTION MARK. With all the reports and excitement coming from the perceived efficacy and safety of this drug there is strong potential for it to gain large market share and switch across the chart to become a STAR (Figure 4 Belsomra® BCG Analysis).

Positioning

Merck wishes to occupy a clear and concise place in the market with their new drug Belsomra® when it comes to competing products. This unique stance will help set them apart and draw their target consumers towards their product while intending to keep them as recurring users to up their RRx. The product in the insomnia market goes up against few drugs that are still on patent with the same attributes that Belsomra® presents. The main differentiation with Belsomra® comes within the science that Merck always stresses behind its products. Merck emphasizes the main sleep and wake pathways in the brain or “neurotransmitters”. These neurotransmitters are specifically targeted by Belsomra® to give a patient a great night sleep while not waking up with drowsiness. This leads into giving consumers a reason to believe, having some of the highest levels of efficacy and safety of any branded insomnia drug on the market today. Belsomra® should therefore be considered the optimal choice for patients suffering from insomnia.

53 Staton, Tracy. “<Merck Execs Tout Early Yield from Sleep Drug Belsomra’s Launch.” FiercePharmaMarketing

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Positioning Statement

Belsomra® is the first-in-class prescription that targets the orexin receptor in the brain. Unlike competitors, enabling insomnia patients to fall asleep, stay asleep and have reduced next day fatigue supported by clinical evidence.

SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis

Strengths

When positioning Belsomra® in the insomnia market, Merck will focus on a number of strengths that the drug possesses to ultimately set it aside from its competition. These strengths are Belsomra®’s different mechanism of action and its safety and efficacy concerns combated through clinical trials. Given how Belsomra®’s patent coverage concludes in year 2029, Merck

essentially has prolific time to position itself in the insomnia treatment market and circulate, and therefore, amplify, Belsomra®’s strengths.54

Mechanism of Action

To elaborate on Belsomra®’s unique mechanism of action, Belsomra® is the only prescription sleep aid that targets and inhibits the action of orexin – a central promoter of wakefulness, and by inhibiting orexin, Belsomra® is thought to help quiet the wake pathway.55 To enrich this notion, Belsomra® essentially is different from other insomnia treatments since it targets a patient’s sleep cycle; causing patients to remain awake during the day and ultimately increase the chances of falling asleep and staying asleep at night.56 Furthermore, given the known perception of how treatments first in the market habitually retain a majority of the share, Belsomra®’s late entry may raise questions in product success. Although Belsomra® has been launched late in the insomnia market, which may be viewed as a weakness, the targeting and inhibiting of the hormone, orexin, a new mechanism of action, reveals first-in-class notions.

Clinical Trial

In addition to the different mechanism of action, Belsomra® provides patients and health care providers a strong notion of its safety and efficacy revealed through clinical trials. “An average of 90 minutes more sleep with Belsomra® vs 60 min more with placebo at Month

54 Dr. Thanigavelan Jambulingam, “Class Discussion” Saint Joseph’s University, Pharmaceutical Strategy & Planning I.55 Belsomra. Merck.56 Ibid.

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1”.57Since efficacy is a crucial need in the eyes of the payer, prescriber, and patient, Merck will utilize this information through marketing tactics

and strategies to augment the brand. Continuing with Belsomra®’s clinical trial results, it was also concluded that Belsomra® is non habit-forming and results in no patient dependency effects*. This essentially highlights yet another strength, as well as Belsomra®’s competitive advantage, since nearly all of Belsomra®’s immediate prescription competitors; Lunesta® (the leading insomnia treatment solution), Ambien®, Ambiem CR®, Zolpidem, Zolpidem Tartrate ER and Sonata have dependency potentials (Drugs.com). The only competitor that can compete with Belsomra® through non-dependency claims is Rozerem®.58 However, Belsomra® can easily highlight its competitive advantage to Rozerem® through informing prescribers and patients of Belsomra®’s long-term clinical trial data and a stronger safety profile. With that being said, Rozerem® also has an appealing safety profile so Merck will need to differentiate itself from them by providing emphasis on Rozerem®’s lack of efficacy, no approval for use in Europe, potential to decrease testosterone levels, and lastly how Rozerem® only is approved for initiating sleep while

Belsomra® also helps patients stay asleep. In regards to Rozerem’s lack of efficacy, in clinical trials patients fell asleep 7 to 16 minutes faster and an average of 11 minutes faster on placebo. 59

According to phase III data of the clinical trials, Belsomra® improves both onset sleep (lead time to fall asleep) by 25.7 minutes and sleep maintenance (unvaried sleep) by 60.3 minutes. Additionally, the trial data also showed Belsomra® aided patients in entering unremitting sleep 36 minutes faster and assisted patients in decreasing the amount of time of wakefulness during the night. 60 In contrast to older drug solutions, the trial data further highpoints how patients experienced normal sleep rhythm and suffer no rebound insomnia even after 12 months of usage.61 These proven results and sanctions will allow Merck to confidently emphasize on Belsomra®’s efficacy while marketing to consumers, prescribers, and payers.

Weaknesses

Late Entry

Although Belsomra® has various strengths, the drug also contains a number of weaknesses that Merck will ultimately need to consider when positioning Belsomra® for the remainder of the product’s life cycle. Belsomra® was launched late into the insomnia treatment market – this hinders the products ability to grow in the market due to “first-to-market drugs,”

57 Ibid.58 Ambien; Ambiem CR; Zolpidem; Zolpidem Tartrate ER; Sonata; Rozerem. Drugs.com.59 Thomson Reuters - Cortellis. Brand - Rozerem - Generic Name - Remelteon Product Report.60 Thomson Reuters - Cortellis. Brand - Belsomra - Generic Name - Suvorexant Product Report. 61 Ibid.

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such as Ambien and Lunesta®, which hold a majority of the market share.62

Once again, Merck will need to address this late entry with positioning Belsomra® as a “first-in-class” drug due to Belsomra®’s ability to target and inhibit orexin.

FDA Roadblocks

Even though Belsomra®’s clinical trial data concluded there were no signs of physical patient dependence, there is still lack of abuse or tolerance data to date. With this, Belsomra® is unfortunately classified by the FDA as a Schedule IV Class Drug. Furthermore, the FDA has voted against the approval of 30 and 40 mg doses, due to its concern of possible next day impairment –mostly seen with the higher doses.63 To elaborate, Reuters’ Belsomra® Product Report states that those who took the higher dose of Belsomra®, 30mg or 40mg pills, 10% of those patients experienced difficulties driving. Since these findings apply to the higher dosages, it is vital that when Merck informs prescribers and payers of the safety warnings involved in prescribing Belsomra®, these mentioned warnings are geared towards unapproved higher prescriptions. However, the most common side effect among all dosages were headaches, and in

some cases, incidences of suicidal ideation and narcolepsy-like symptoms.64 All warnings will need to be disclosed with patients, prescribers, and payers.

Opportunities

Large Market & Market Potential

The University of Maryland Medical Center found that the average adult requires at least eight hours of sleep; however, 35% of adults regularly achieve this. U.M.M.C. further explained that insomnia is the most common sleep disorder – distressing up to 10% of the adult population.65 This is crucial information for Merck since it essentially shows substantial market opportunities for treating adults that suffer from this disorder. Furthermore, this opportunity and demand for treatment is ultimately justified by the dangers associated with insomnia; greater “risk of substance abuse, motor vehicle accidents, headaches, and depression”.66 Not only do the dangers of insomnia support the notion of the insomnia treatment market being a considerable opportunity, but “comorbid medical disorders, psychiatric disorders, and working night or rotating shifts all represent significant risks for insomnia” and bolster the aforesaid claim as well.

62 Dr. Thanigavelan Jambulingam, “Class Discussion” Saint Joseph’s University, Pharmaceutical Strategy & Planning I.63 Thomson Reuters - Cortellis. Brand - Belsomra - Generic Name - Suvorexant Product Report.64 Ibid.65 “Insomnia” University of Maryland Medical Center66 Ibid.

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However, it is apparent for Merck to realize these elements cannot freely be connected to insomnia for they are reasonably “precipitants of insomnia

in individuals predisposed to this disorder”. Merck will further find market opportunities brought to light by the previous assertion, by informing the public how lasting or chronic disorders are likewise a substantial threat aimed at insomnia – roughly 75%-90% of insomniacs are at high danger to be candidates for comorbid illness.67

These illnesses include, but are not limited to: pain disorders, GERD, neurodegenerative illnesses, hypoxemia, and in some cases, circadian rhythm disorders tend to be commonly comorbid – ultimately eliciting insomnia. Insomnia can also be linked to: “primary sleep disorders, restless legs syndrome (RLS), periodic limb movement disorders (PLMD), and sleep-related breathing disorders (snoring, dyspnea, sleep apnea) often present with an insomnia symptom” – particularly among the elderly. In regards to sleep apnea, which affects 12 to 18 million people in the US, clinical trials have indicated that Belsomra could potentially expand its treatment horizon to address this disease state as well – pending clinical trials will later confirm this.68 Essentially, since comorbid illnesses are significant risk factors derived from insomnia, Merck will focus efforts on informing patients and their appropriate prescribers.

Many patient types are affected by this sleep disorder, but after analyzing which types have the most growth opportunity, it is apparent Merck will focus its efforts on candidates with comorbid illnesses and adults – more specifically women and the elderly. Merck will also focus

Belsomra®’s marketing strategy to address both the treatment pathway and patient flow in the insomnia market. The patient pathway first begins with the patient becoming aware of his or her insomnia/ sleep-related issue; through an insomnia treatment advertisement, discussion with peers, or even becoming self-aware of his or her own sleeping issues. Next, the patient will either go to his or her primary health care professional or try self-treatment (natural remedies or OTC drugs). If a patient opts to see their primary health care professional, he or she may be prescribed a prescription, advised to take an OTC drug, or in some cases both. If the patient is prescribed a prescription to address this disease state, then the following outcomes are possible: 1) the patient sees improvement, which may result in drug compliance, 2) wishes to switch to an alternative therapy, or 3) ceases to continue treatment (noncompliance). The patient flow is similar but differs by providing further insight on the amount of individuals associated with each step of the treatment process. The patient flow in the insomnia market is as follows:

Roughly 111 million people in the U.S. suffer from insomnia. Of the 111 million suffering from insomnia, 59 million go to their primary health care providers were only 49 million are diagnosed. Of the 49 million diagnosed, 40.6 million receive drug

67 Roth, Thomas. "Insomnia: Definition, Prevalence, Etiology, and Consequences." Journal of Clinical Sleep Medicine 3.5 (2007): S7-S10.68 Thomson Reuters - Cortellis. Brand - Belsomra - Generic Name - Suvorexant Product Report.

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treatment (Rx, OTC, Herbal, etc). Out of the 40.6 million receiving treatment, 8.14 million patients actually received a

prescription from their primary healthcare provider.69

This information on the patient flow is very crucial for Merck to utilize when addressing opportunities and targeting where to focus efforts since it highlights a substantial ‘drop-off’ of potential patients at both the awareness and prescribing treatment stages. As a result, Merck will utilize this information to essentially focus efforts on the following opportunities: 1) increase awareness of insomnia to get more individuals to seek help from their healthcare professionals, and 2) address why physicians are reluctant to prescribe prescriptions to their patients. To further explain the opportunity of increasing awareness of individuals affected by insomnia, Merck will focus on awareness campaigns that target the aforementioned market segment types: candidates with comorbid illnesses, adult women, and the elderly. These campaigns will not only serve the purpose of creating awareness of the disease state, but can also serve the purpose of reminding patients to take their insomnia prescription – ultimately impacting the aforesaid compliance opportunity.

When targeting the prescribers, Merck will target the optimal prescriber or in other words, the ‘Top Deciles’ – the top 10% of prescribers in the insomnia treatment market. These top prescribers include sleep specialists, sleep clinicians, psychiatrists, family practitioners or primary health providers.70 Not only is it vital to target these segments, but it is also crucial for Merck to understand the influencing power of the top prescribers in the market, their needs/

unmet needs (Refer to Figure 2 for further information), and what the prescriber values in a treatment option, such as safety, efficacy, and cost. FDA Public Notification About Zolpidem

Although there are many prescription treatments for insomnia, not all prescription treatments are considered absolutely safe, ultimately playing a role in Belsomra®’s market opportunities. Before discussing how these prescription treatment dangers will be used as information for Merck to find growth in the insomnia treatment market with Belsomra®, it is essential to know why some treatments have dangers. It is known that many insomnia prescription treatments can lead a patient to become dependent on the drug or put the patient at risk for abuse. Since Belsomra® is non habit-forming and results in no patient dependence, (also mentioned in the Strength segment of the SWOT Analysis above) this highlights the drug’s competitive advantage since all of its immediate competitors have dependency side effects.71

69 Dr. Thanigavelan Jambulingam, “Class Discussion” Saint Joseph’s University, Pharmaceutical Strategy & Planning I. 70 Ibid.

71 Ambien; Ambiem CR; Zolpidem; Zolpidem Tartrate ER; Sonata; Rozerem. Drugs.com.

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Recently, (within the last two years) the FDA notified “the public of new information about zolpidem, a widely prescribed insomnia drug.

The FDA recommended that the bedtime dose be lowered because new data showed that blood levels in some patients may be high enough the morning after use to impair activities that require alertness, including driving”. Zolpidem products are “marketed as generics and [fall] under the brand names Ambien®, Ambien CR®, Edluar, and Zolpimist.” It is known that one of the common side effects of taking insomnia solutions is drowsiness but the FDA has recently warned the public that the current doses being prescribed may cause patients to “experience impairment of mental alertness” the morning after use, even if they are fully awake.”72 Due to this newly discovered information, the FDA is requiring those mentioned manufacturers to lower their recommended dose of their respective insomnia treatments. The competing brands risk a patient’s alertness in the morning and require a lower dosage, risking that treatment to become ineffective or less effective. This information will ultimately be used by Merck to potentially grow in the insomnia market industry because Belsomra® does not contain this controversial active ingredient, Zolpidem.

In conclusion, not only do the FDA findings and high-risk consumer segments provide Merck with a plethora of opportunities, but the current market’s rapid fall in insomnia sales has also created a potential growth for Belsomra® to dominate the market. With many in the market suffering from insomnia, lower dosages required from the FDA due to adverse reactions from the treatment, and the risk of patients developing a dependency, it is apparent that Merck is presented with substantial growth opportunity for their newest insomnia drug, Belsomra®. Further, Merck can develop Belsomra®’s marketing strategy to emphasize: efficacy, unique mechanism of action, and lastly its proven no risk of dependency – ultimately all developing a strong competitive advantage and defining all market opportunities.

Threats

Not only are there ample opportunities for Belsomra® to further grow and expand into the insomnia market, but there are also a number of threats that Merck will need to monitor in order to ensure Belsomra®’s projected success. These market threats are: 1) alternatives to Belsomra® and 2) regulatory risks associated with the drug. Merck will ultimately need to address these threats, try to convert them into opportunities, or pay close attention to and react accordingly to regulation changes.

Alternative Insomnia Solutions

Alternative solutions directly affect Belsomra®’s success in the insomnia drug market. For example, GlaxoSmithKline’s (GSK) dual orexin antagonist, Almorexant, was discontinued due to long-term safety uncertainties the drug possessed.73 This is a substantial threat since Almorexant targeted the same hormone, orexin, which Belsomra® does. Furthermore,

72 “FDA requires lower recommended dosages” www.fda.gov

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GlaxoSmithKline is currently developing a new potential orexin antagonist, GSK-649868, which if approved, will become a huge

competitor to Belsomra® – ultimately hurting its current competitive advantage of being the only orexin inhabiting solution. Not only is GSK currently developing a drug to enter the insomnia market, but so is Vanda with its novel drug, MT1/MT2 agonist Tasimelton, that targets new mechanisms as well.74

Even with new emerging solutions currently threatening Belsomra®’s success, the market is expected to be dominated by generics – especially through eroding sales of market leaders like Ambiem®, Ambiem CR® and Lunesta®.75 OTC medications also poses a significant threat for Belsomra® since accustomed brands, such as Tylenol and Benadryl have sleep aid solutions. Aside from these existing leaders, emerging generics, and OTC solutions, other multiple class drugs that are often prescribed-off label for insomnia treatments, include antidepressants, antihistamines, and atypical antipsychotics. Lastly, non-pharmacological interventions such as stimulus control, progressive muscle relaxation, paradoxical intention, biofeedback, and intellectual behavior therapy often produce dependable and robust changes in sleep parameters; changes in conduct such as eliminating caffeine and eluding daytime naps can also be helpful to treating insomnia76 Once again, with all the given threats that oppose Belsomra, it is apparent that Merck realizes these threats and appropriately monitors them in order to react to advancements accordingly.

FDA & Regulations

Market regulations and the FDA also hinders Belsomra®’s advancements in the insomnia market. For example, “a FDA panel has backed the conclusion that [Belsomra®] is effective in

inducing and maintaining sleep, [however] there may be issues with safety”.77 Also, when Belsomra® first tried to enter the market, a Complete Response Letter recommending lower starting doses for respective insomnia treatment manufactures delayed product launch and created possible efficacy concerns. Unfortunately, lower doses where only approved causing unavoided lower efficacy – obstructing Belsomra® marketing campaigns. 78

III. Strategies based on SWOT and Key Issues

73 Thomson Reuters - Cortellis. Brand - Belsomra - Generic Name - Suvorexant Product Report.74 Ibid.75 Ibid.76 Ibid.77 Ibid.78 Ibid.

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According to the SWOT analysis, there are many strategies that Merck can facilitate in order to reach optimal goals for the future

forecast of Belsomra®. These strategies include but are not limited to: improving reimbursement, introduce a combination drug, add new dosages, and improve compliance of Belsomra®. Improving reimbursement will attract most major payers to include Belsomra® on their formulary and advance the drug to a higher tier. By placing Belsomra® in a higher tier, patients would have lower co-pays and deductibles, which would also increase the attractiveness of the drug. Introducing a combination drug in the market, such as treating insomnia as well as treating a major psychotic disorder such as depression, anxiety, or bipolar disorder, would allow Belsomra® to expand to different target customers and different target physicians. Belsomra® could partner with Merck’s drug Remeron®, a strategy that will be discussed in further detail later on. Next, adding new doses could potentially reach more customers and benefit patients. This has the potential to attract more customers and increase efficacy. Finally, improving compliance of the drug would generate more revenue and create and extend loyal relationships with customers. The assumptions incorporated in these strategies include: lack of awareness regarding patients not seeking medical assistance, generics emerging in market, Belsomra® will be the leading prescription insomnia treatment by 2023, and efficacy and safety are of high concerns to physicians.

IV. Key Issues, CSFs, Strategy and Tactics for Product Success in 2016

A. Key Issue 1 & Critical Success Factor: Limited Formulary Access, Restricting Market Share (See Figure 6)

Belsomra® is very expensive compared to other drugs currently in the market. According to GoodRx, purchasing Belsomra® in Philadelphia, PA (zip code 19131) at Rite-Aid will cost a patient $295.27, $276.7 at CVS, and $296.70 at Walgreens.79 Furthermore, these numbers listed include the final price for treatment with a free coupon. In addition to these figures, some insurance companies do not cover Belsomra® so the customer must pay for the product out-of-pocket. Compared to existing drugs in the market, Belsomra® is the second most expensive drug, following Rozerem®. This price for the Belsomra® may essentially deter customers from purchasing the drug due to affordability concerns. Other insomnia drugs, such as Ambien, are

priced around $13; forcing Merck to distinguish itself in the market and convince customers to purchase Belsomra® over competing drugs. Increasing access on the formulary is the critical success factor for this key issue.

Strategies and Associated Tactics:

Strategy One: Improve Patient Reimbursement

79 GoodRx. Prices and Coupons. Philadelphia, PA.

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The first strategy of improving reimbursement will attract not only patients, but also payers and physicians. If physicians are aware

that reimbursement options are available to patients -- essentially presenting a lower out-of-pocket cost -- physicians would be more willing to prescribe Belsomra® over competing insomnia treatments. By coupling improved patient reimbursement options with efforts to highlight Belsomra® efficacy and safety, Belsomra® can potentially become the leading prescription insomnia treatment in the market. The out-of-pocket pay for patients is considerably high even with coupons given by Merck (this can also serve as a deterrent for physicians to not prescribe the product and patients to choose competitors as their insomnia treatment, thus lowering sales and reputation of the product). Clinical trial data can also serve to prove that Belsomra® is more efficacious and more safe, and this can also be supported by the long-term data on the website. By improving patient reimbursement, all parties would be increasingly loyal and satisfied with Belsomra® as the treatment; thus, there would be more motivation to pay for Belsomra®. This strategy would address the key issue: Belsomra® is expensive and thus restricting the market share.

Tactic: Increase Coupon Benefits

Coupons are available on the Belsomra® website for patient use. Increasing the benefit amount of the coupon for a set amount of time, such as for 3 months, can create awareness of Belsomra® and convince more patients to try the drug and even refill it. This 3 month increase in Belsomra® coupon benefits will be valid at all major pharmacies; for example, Walgreens®, CVS®, Rite-Aid®, Wal-Mart®, etc. Increasing coupon benefits will influence customers to purchase Belsomra® and increase affordability.

Tactic: Money Back Guarantee “Promise Program”

Merck can promise patients a money back guarantee if Belsomra® does not work as desired or as well as previous treatments. This could show that Merck has confidence in Belsomra® that it will work for patients. This Promise Program could relay this confidence to the patient as well as the physician to prescribe the treatment since it mitigates financial losses the patient might endure.

Tactic: Introduce Rebate Program

This rebate program will help patients pay for Belsomra® at a more affordable price. This program will consist of patients registering online and receiving a rebate card to show at the pharmacy to receive a discount. This rebate program will be for use of one year and will help Belsomra®’s number of refills continue to rise. This would also

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encourage patients to refill Belsomra® and therefore increase market share.

Strategy Two: Improve Physician Motivation to Write Belsomra® Rxs

Sales representatives and Merck will emphasize the unique mechanism of action with Belsomra® and how it is different from its competitors. Belsomra® has its own class, which is a differentiating factor when describing Belsomra®. This is useful because Belsomra® is not characterized with its competitors; therefore, they do not share similar characteristics such as side effects. Physicians can classify and recognize Belsomra as different, and this will strengthen the motivation to write the prescriptions.

Tactic: Show Affordable Patient Options

Patients can register online with the Belsomra® website to receive coupons and register with the rebate program. These affordable patient options can be seen in magazines, subway walls, and even on television commercials. These coupons will be emphasized with DTC advertisements. The magazines displaying these options with include Reader’s Digest and AARP magazine to target our main population. This can also serve as a reminder advertisement to refill Belsomra® and for the patient to be compliant with this prescription drug. The physician can be targeted through this as well by placing these advertisements in Physician Magazine and Best Doctors magazines per state. These advertisements emphasizing patient affordability can convince physicians that Belsomra® is the insomnia treatment to prescribe. Physicians can be comfortable prescribing this to patients and patients will be willing to refill due to affordable options.

Tactic: Show Efficacy and Safety through Clinical Data

The long-term clinical data is one of the main highlights of Belsomra®. This data emphasizes its efficacy and safety. This information is published on Belsomra®’s website for physician viewing. Physicians want long-term data to prove that the drug is safe and efficacious to prescribe to patients. Belsomra® has four main categories of clinical data to highlight: Mechanism of Action, Efficacy, Safety and Tolerability, and Dosing. Under the category of efficacy, there are four subgroups: sleep efficiency, sleep onset, sleep maintenance, and sleep throughout the night. These subgroups display clinical data that can give physicians confidence that Belsomra® is capable of treating patients with insomnia. Under the safety and tolerability category, there are three main subgroups: adverse reactions, events of clinical interest, and dependence. These

subgroups also display charts and tables of Belsomra®, highlighting how there is no evidence of physical dependence and how there are low adverse reactions and low events of clinical interest. These categories of efficacy and safety will assure physicians Belsomra® is the top choice for insomnia treatment.

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Strategy Three: Increase Awareness of Belsomra®’s Efficacy to Payers

Most insurance companies do not cover Belsomra® on their formulary. Belsomra® is sometimes placed in Tier 3 or is not on the formulary at all, making this treatment access very limited. Merck can increase awareness of Belsomra®’s efficacy to payers to make Belsomra® a more attractive prescription to treat insomnia and therefore should be placed on the formulary. It is very new in the insomnia market; however, its unique mechanism of action places Belsomra® in a new class, unlike its competitors. By increasing awareness of Belsomra®’s efficacy, the payer can be confident it will treat insomnia patients effectively.

Tactic: Conduct Head to Head Studies with Competitors to Show Cost Effectiveness

Merck could conduct a head-to-head study comparing efficacy and safety with

competitors. These results could potentially show how Belsomra® is more cost effective and therefore, payers would be more willing to place the drug on formulary. Tier 1 is considered generics, Tier 2 is preferred brands, and Tier 3 non-preferred brands. According to some major insurance companies, Belsomra® is either considered on Tier 3 or not on the formulary at all. By conducting this study, Merck can prove that Belsomra® is more cost effective and thus can either move onto the formulary or move up on the Tiers, such as from Tier 3 to Tier 2. This would lower the co-pay for the patients and motivate physicians to prescribe Belsomra® over competitors.

Tactic: Utilize Clinical Data to Highlight Efficacy and Safety Profiles

For payers to increase Belsomra® on the formulary or place Belsomra® on the formulary, Merck must use its clinical data to highlight efficacy and safety. By a payer increasing Belsomra® on its tier, patients would pay less, increasing the chance that this treatment would be prescribed. In addition, payers must know how many patients want Belsomra® as their insomnia treatment. The IMS data could be used to show payer’s how many new prescriptions are being written, thus increasing the importance of this treatment to patients. By utilizing clinical data to highlight efficacy and safety profiles, payers would be more likely to cover Belsomra®.

B. Key Issue 2 & Critical Success Factor: Number of Refills is lower than new prescriptions written (See Figure 7)

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One of the biggest challenges throughout pharmaceutical companies is keeping patients on their drug as soon as they are prescribed

it for the first time. If the drug has an astronomical efficacy rate, then the drug speaks for itself for repeat users. However this is rarely the case, being that most patients seem to have trouble staying with a prescription for one reason or another. In Belsomra®’s first year on the market it has seen that trouble its refill prescriptions are lower than new prescriptions written. IMS data shows that recent months consist of (April: 13,395 NRx with 874 RRx, May: 17,744 NRx with 1,791 RRx, June: 20,650 NRx with 2,977 RRx. As the IMS data shows there is significant difference in NRx to RRx. Our Critical Success Factor for this large problem is to reduce abandonment of Belsomra® after first use. We will combat this gap of new and refill prescriptions in the following ways.

Strategies and Associated Tactics:

Strategy One: Compliance through daily regimen

Compliance may be indicated in forms such as staying with the schedule of the drug and also, staying with the drug after beginning the first use (refills). Before you can address the refills side of compliance, you must stress the importance of Belsomra®’s schedule in order to leave patients satisfied with their treatment. There is a strict regimen for Belsomra® that must be followed in order to keep the patient safe as well as giving them optimal results. This consists of taking Belsomra® 30 minutes before bed and leaving 7 hours (at the minimum) in between then and waking up. Belsomra® consists of a low dose effect for the patient that should not be taken more than once per night with a recommended dose of 10 mg With that being said, the maximum recommended and allowed dose is 20mg due to FDA regulation. This dosage will vary depending on the tolerance of the specific patient on Belsomra®.80

Tactic: Educate HCP’s on regimen requirements

Constant emails and leave behinds with HCP’s will contribute to doctors constant reminder to patients to follow the strict schedule that will improve their experience. Emails and leave behinds will stress that, failure to follow this specific schedule and regimen could result in serious side effects or endangering the patient’s overall health. This will put patients in a situation of knowing if they stick with the regimen, optimal results will surface.

Tactic: Providing data on drug success (Compliant vs Noncompliant patients)

80 "Belsomra - FDA Prescribing Information, Side Effects and Uses." Belsomra - FDA Prescribing Information, Side Effects and Uses. Web. 06 Dec. 2015. <http://www.drugs.com/pro/belsomra.html>.

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Next, our sales force will be able to provide concrete data of the drug success with

compliant vs noncompliant patient results, for patients as well as HCP’s. This will be a big influence on how serious the patient takes their daily regimen. The HCP’s will be able to back this information up once they are informed of the drug success of compliant vs. noncompliant patients. This will also show patients that being dedicated to the Belsomra® schedule will pay great dividends to their sleeping transformation.This part of compliance will contribute greatly to the overall CSF of reducing abandonment of Belsomra® Rx’s. By getting patients on a compliant schedule with their first use, it will transition into a better experience and bump up refills. While stress on compliance with Belsomra®’s scheduled regimented lifestyle leaves the patient with optimal results, complying to drug refills will furthermore promote promising patient benefits.

Strategy Two: Compliance with Refills

Refills are a category seen as the next level of importance with compliance. Compliance with refills seems to be a little lower than expected thus far. According to the IMS data, the number of refills for Belsomra® is not as high as the new prescriptions being filled. This provides Merck with the opportunity to improve compliance in subset areas such as education of physicians/pharmacists and improving reminders within the app associated with Belsomra® (through DTC).

Tactic: Educate HCP’s from sales force with more DAW’s

The best way we see getting the patients to comply with refills is by getting the doctors in the thought process of sticking with Belsomra®. We will be able to do this by getting our sales team to use part of their time with physicians that already prescribe Belsomra®, to talk about the benefits of not only prescribing Belsomra® but sticking with it as well. They will be able to show details of previous studies on how patients benefitted from the continued use of Belsomra®. With more physicians writing DAW’s it will keep patients with Belsomra® and not let pharmacists or outside variables influence a change in prescription.

Tactic: Reminder ads (within DTC...app)

The app brings an interesting variable into the equation of reminders. It not only contributes to the daily schedule of a patient using Belsomra®, but also could be a factor in the battle to increase refills. With technology use increasing every year, those who have insomnia indications may feel more inclined to take on the regimen that comes with a helper/reminder app. Sleep Guru will include more reminders of refills that points them to the next steps in the refill process. It will also refer the patient to their physician who

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has already been educated by our sales force with higher potential of a DAW prescription. These small adjustments within

the app will ultimately contribute to higher number of refills.

C. Key Issue 3 & Critical Success Factor: Market “Clutter” (See Figure 8)

Given the vast number of alternatives the insomnia market contains, such as prescription treatments, old and emerging generics, over-the-counter drugs, supplements, and even herbal solutions, it is apparent to distinguish Belsomra® from this “clutter.” There are various types of insomnia that a patient can suffer from and with the muddle market, it is obvious that the patient can become overwhelmed when attempting to address his or her insomnia condition. It is therefore vital that Belsomra® distinguishes itself from its competition and highlights its various product traits to attract and acquire these bewildered consumers. From the numerous types of insomnia known that a patient could suffer from, it is important and apparent that Belsomra® drives and delivers the main message, how this treatment could specifically alleviate symptoms of his or her insomnia, as opposed to general insomnia. Merck will essentially structure and accentuate Belsomra®’s message by not stating its solution treats insomnia symptoms in general, but it treats a particular segment of the market – to essentially acquire a keen focus from select consumers. The following strategies and tactics will provide detail on how Merck plans to accomplish this issue.

Strategies and Associated Tactics: Strategy One: Differentiate Belsomra®

There are many alternatives in the insomnia market. Treatments, other thanprescription drugs, can appeal to customers and include over-the-counter remedies and

herbal supplements and teas. In addition, patents have expired with brand name drugs, therefore allowing generics to emerge in the market. Generics can sway the customer and health care provider to use this treatment since it is cheaper for the patient and provides the same effect as the brand name drug. This provides competition and especially concerns Belsomra® since it has recently launched. Belsomra® will strategically address this issue by highlighting the benefits of Belsomra® – through drug attributes, safety and efficacy profiles – over competing prescriptions, generics, and alternative over-the-counters and herbal supplements.

Tactic: Highlight Benefits of Belsomra® Over the Competition

Belsomra® can further separate itself from the insomnia market confusion through its known safety profile. This safety contour includes Belsomra®’s low side effect profile (headaches and minor next day impairment – usually associated with high dosages), the ability to use Belsomra® for extended periods of time, and no withdrawal effect – an appealing drug characteristic due to many prescription solutions having the potential for patient dependence. Differentiating itself from the insomnia treatment

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market through its first-in-class different mechanism of action, targeting and inhibiting orexin

will also generate a strong perceived value in the eyes of the physician. To further elaborate, physicians gaining little to no progress when treating patients with their current “go-to insomnia treatment” may then prescribe Belsomra® since no other drug shares its mechanism of action – essentially becoming a viable treatment option.

Since most prescription insomnia solutions in the market treat the disease state by allowing patients to maintain asleep OR help patients with onset sleep, it is evident that Belsomra® will differentiate itself from its competition with emphasis on its ability to do both; treat multiple dimensions of insomnia. Belsomra® will address this by highlighting the drug’s attributes though informing its patients, prescribers, and payers of its multidimensional purpose. Lastly, the drug requires no dose adjustment for the elderly or patients with various forms for hepatic impairment. It is crucial that Belsomra® addresses this when informing physicians since they can treat patients similarly—ultimately generating a higher perceived value.

Tactic: Introduce a Combined Fixed Dose

Many patients who are diagnosed with insomnia also have comorbidities, such as psychiatric disorders (depression, anxiety) and circadian rhythm disorders, which could result from night shifts or rotating shifts at the workplace. Since these comorbidities are prevalent with patients diagnosed with insomnia, Merck can prompt further success of Belsomra® through combining the drug with a second drug that addresses psychiatric disorders to ultimately combat two different, but comorbid disease states at once. This could expand the indication for Belsomra® and thus attract a variety of patients. With that being said, Belsomra® presently attracts patients in the target market of women over 55 and the elderly. If indication for Belsomra® expands, the drug could acquire new segment markets, such as patients suffering from both insomnia and anxiety/depression.

It is apparent that vast benefits of combining two separate drugs into one single

dose are present. For example, combining two separate treatments have a potential to combat compliance concerns that many physicians are currently troubled with - this aspect can essentially aid in the aforementioned key issue of compliance that Belsomra® must address. It is apparent that if a patient can eliminate the need to remember taking two separate prescriptions through a fixed-combined dose, medication compliance will undoubtedly increase. Not only will addressing two separate disease states with one drug increase compliance but so will the patient’s newly held perceived value of drug convenience – the expense of addressing two separate illnesses as once can be mitigated to one drug.

Tactic: Add New Doses Belsomra® is currently indicated for treating insomnia in four different doses: 5,

10, 15, and 20 milligram pills. It is known that 30 and 40 milligram doses were not

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approved by the FDA due to increased next day impairment. If there are certain patients who are not receiving desired results with the 20 milligram dose, adding a 25 milligram dose could potentially achieve what the patient wanted, such as sleeping through the night or falling asleep faster. Adding another dose could also attract more patients with comorbidities and certain medications that drastically affect an individual’s sleep pattern. This addition could increase the effectiveness of Belsomra® and attract more patients to this treatment. It also may be beneficial to combine the 5 and 20 mg tablet to achieve this higher dosage. A large part of adding a new dosage would come from results of patients within the first year or so. This data (from IMS health) would help Merck move forward with approval of a new dosage as well as seeing if it is actually needed. However, this all is dependent on a certain amount of results in categories such as, effectiveness of certain doses, tolerance from a number of patients, and number of sales(to see if there is a drastic need for increase in volume).

Strategy Two: Discover the Reason Behind Substantial “Drop-off” and Create

Awareness of Insomnia Disease State

Of the 111 million adults suffering from insomnia, roughly 59% are truly aware/ seek help from medical professionals. It is apparent that there is a lack of awareness for the disease state and therefore, makes creating awareness a critical success factor for Belsomra®. Of the 49 million diagnosed, 40.6 million receive drug treatment (Rx, OTC, Herbal, etc). Out of the 40.6 million receiving treatment, 8.14 million patients actually received a prescription from their primary healthcare provider – another “drop-off” that requires attention

Tactic: Survey Prescribing Physicians

Given how only 8.14 million of 40.6 million receiving treatment actually receive a prescription drug, it is apparent there is a substantial “drop-off”; Belsomra® will center one of its focuses on closing that gap. Patients may see their insomnia as not severe enough for further intervention, resort to self-treatment (herbal supplements and/or OTC drugs), or simply do not retain the financial stability to afford treatment. In order to answer the previous notions, Belsomra® will need to conduct further research by surveying willing physicians and ultimately use that primary market research concluded to couple the initiative of explain the prescription treatment “drop-off”.

Tactic: Partner with National Sleep Foundation

National Sleep Foundation is a known sleep research and education website that is available for all customers to use. It highlights many categories, such as: sleep disorders and problems, how much sleep do we really need, and healthy sleep tips. These coincide with Merck’s research efforts and if NFS was to partner with Merck, customer appeal may come about. The National Sleep Foundation can furthermore increase its reputation because Merck is an already well-known established company in the pharmaceutical industry.

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To elaborate, if partnership was to formulate, patients groups from each

organization will be shared and combined. Patients who are already prescribed to Belsomra® will be told to check out and stay up to date with the National Sleep Foundation for more advice and lifestyle management within their condition by prescribing physicians. This will increase NSF’s popularity as well as increase their influence in the Insomnia market. National Sleep foundation will be referring their patients to a new and efficient drug, Belsomra®, either directly or indirectly (website ads). NSF has a base of current visitors as well as attracting new visitors on a daily basis concerned about their symptoms. By reading more into their conditions, this will steer patients to take action and the first drug that they will see within the website is Belsomra®. They may go to their doctor and immediately create discussion with the doctor about Belsomra® without doctor’s initiation – Belsomra® being the first drug of choice.

Tactic: Promote Sleep Guru Application

Merck can utilize its current sleep aid mobile application, Sleep Guru, to aid in both creating awareness and research efforts. To elaborate, Merck can strategically advertise Sleep Guru, via DTC television and print advertisements, by portraying Belsomra®’s targeted patients (women over 55 and the elderly) using the application in the advertisement. These ads can further provide information on how insomnia can be helped with the use of Sleep Guru through tracking sleep patterns, setting sleep schedules, and giving helpful tips on how to achieve a good night's sleep. The application advertisements can more so inform patients on the prevalence of insomnia and how insomnia is a condition that may get worse if untreated or may be an underlying symptom with another, comorbid, illness. This may lead to exposed viewers becoming aware of that their current sleep patterns and may pilot addresses to seek medical attention.

Getting patients to use Sleep Guru can be achieved by providing physicians with a Sleep Guru informational handout to give patients when prescribing Belsomra®. These handouts will not only provide the patient with information on the elements of Sleep Guru – its use to aid in sleep, ability to track sleep patterns, and set sleep schedules – essentially a virtual sleep coach on the patient’s smartphone, but how to download and use the free application.

Furthermore, Merck can capitalize on user’s sleep pattern information (after acquiring user permission) and redirect results to its research effort on addressing “drop-offs” in the patient pathway. Merck can do this by implementing user surveys that display the first time a user launches the app. This survey can ask questions in regards to the individual’s history of insomnia, his or her trouble falling asleep and/or maintaining sleep, various treatments attempted, previous medications tried, possible comorbid illness, etc. With information pulled from this user survey, Merck can get quantitative data on the aforementioned survey categories – essentially fashioning Sleep Guru to be a means of primary market research data.

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V. Vision for brand

We have taken key words from our critical success factors and strategies in order to better to distinguish our brand vision.

Component Description (Key Words)

Optimal Results Enhance patient’s overall quality of sleep

Treatment of Multiple Dimensions Aids patients with falling asleep and sleep maintenance

Differentiation in MOA First in class- targets AND inhibits the action of orexin

A. Brand Vision StatementBelsomra® enhances the quality of sleep for patients by targeting and inhibiting the

action of orexin, therefore treating multiple dimensions of insomnia and allowing the sustainment of normal sleep patterns without risk of dependency.

B. Life Cycle Management Issues

Introduction

Belsomra® was introduced into the market in 2014 as the first orexin receptor antagonist prescription sleep therapy. As previously mentioned, Belsomra® is used as a treatment for patients that have insomnia, and is prescribed in dosages ranging from five to twenty milligrams. This sleep aid utilizes brain pathways to stimulate the wake cycle, therefore providing patients with an option that works more naturally with their sleep cycle.

Growth

Regarding the growth of our product, it is predicted to be the market leader by 2023. Just one month after Belsomra® hit the insomnia market, physicians were continuously writing over 4,000 prescriptions a week (Forbes). In order to continue this growth, we need to optimize our sales force. We also are investing in additional research to broaden Belsomra®’s indication to ensure that Belsomra® remains the dominant market leader. The clinical trials involved in this research will aim to provide patients with higher dosage options, and further establish the reputation of the safety of our product by continuing clinical trials. Belsomra®’s mechanism of action is another priority for our team. If the product can be distributed through dissolvable tablets, it can help to appeal to new sections within the insomnia market.

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Maturity

When Belsomra® has reached its maturity stage, the products sales will be at its peak. We can begin to increase advertising due to our brand recognition and differentiation within the insomnia market. It will also be necessary to maximize our profit while defending our market share. Creating a more intensive distribution strategy will be crucial due to the fact that Belsomra® will be highly established in the marketplace.

Decline

When Belsomra® begins to decline in the insomnia market, our first strategy will be to drawback on our sales force and consumer dollars. However, it will still be necessary to continue to increase consumer spending. In order to do this, we would plan to do additional studies in order to be approved for pediatric indications. This would not only be useful for the insomnia consumer market, but will also allow Belsomra® to have an extended patent.

VI. Forecast for 2016-2018

According to the sales and total prescription chart, the sales will continue to increase. From the assumption that Belsomra® will be the leading prescription in 2023, this growth will continue to increase at a steady rate, bypassing competitors and generics in the market. The latest data given from August 2015 is as follows: $6,567,094 (Sales $ Volume) and 29,760 Total Prescriptions written.

The following is the predicted forecast for 2016-2018:

The numbers were calculated based on the U.S. population and the eligible population, which is predicted to grow by 6% each year. The insomnia prevalence growth rate is expected to stay the same at 30%; however, with the population growing and the annual growth of insomnia growing correspondingly, the prevalence increases. The insomnia diagnosed mild percentage rate is expected to stay the same rate at 20% for the next three years, but the market will continue to

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grow. Finally, the insomnia prescription treated percentage will increase by 1% each year. This is an opportunity for Merck to position Belsomra® effectively to reach a large segment of the growing population. Based on this forecast, the revenue goals for 2016 include: increasing awareness of Belsomra® thus reaching more of the market, continue to grow at a steady rate, Belsomra® becoming profitable, funding strategic growth and meeting brand expectations.

Budget

The budget for the next year takes into perspective the key issues and strategies implemented to obtain a large segment of the market. Merck should continue to advertise and promote the treatment aggressively because Belsomra® has been in the market for just one year compared to other competitors who have solidified a reputation in the market. According to Fierce Pharma, Merck spent $9.5 billion on marketing spending in 2014.81 This budget number will increase as marketing for Belsomra® is elevated. In addition, from the data from December 2014 to August 2015, sales volume of Belsomra® continues to increase. The three-month rolling average in August totaled $6,567,094. It can be assumed that the sales volume will increase, totaling approximately $9 million. From this figure, 30% equals $2,700,000. However, this number must include the strategies suggested; they are assumed to cost $3,225,000. Thus, the total budget is $5,700,000.

From our strategic plan, we have grouped our initiatives under the following categories; the budget will be divided from the following:

● Sleep Foundation partnering*● Promise Program pamphlets● Coupon amount increase● Rebate program● Magazine advertisements● Direct mail● Education programs*● Data Access and Distribution● Sales force education● Reminder advertisements● Television commercials*● Combined Fixed-Dose Drug*● Survey● Sleep Guru Application

81 Fierce Pharma. New numbers back old meme: Pharma does spend more on marketing than R&D. November 6, 2014.

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*= A category that will be the majority of the budget. Below is a pie graph that represents the categories within the budget:

VIII. Conclusion

It is clear that there is much competition in the insomnia market. Belsomra®, differentiating itself from competitors by its unique mechanism of action, can become the leading prescription. From the analyses of the market, in-depth SWOT analysis, and three different strategies, it can be confidently stated that Belsomra® has the potential to be recognized as the leading insomnia prescription and treat patients effectively and efficiently. From the budget and forecast predictions, Belsomra® has the potential to have a positive return on investment and have an impact on today’s market.

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Sleep Foundation partnering

Promise Program pamphlets

Coupon amount increaseRebate program

Magazine adver-tisements

Direct mailEducation programs

Data Access and Dis-tribution

Sales force educationReminder adver-tisements

Television commercialsCombined Fixed-Dose DrugSurvey

Sleep Guru Application

Sleep Foundation Partnering $1,000,000

Combined Fixed-Dose Drug$1,000,000

Television Com-mercials$500,000

Reminder Adver-tisements$250,000

IX. Appendix

Figure 1. Unmet Needs diagram

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Figure 2. Saint Joseph’s University Pharmaceutical Strategy and Planning I (PMK_461_D01): Perceived

Safety vs. Perceived Efficacy of Competitors Illustrating an Unmet Need

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Figure 3. Belsomra’s Product Profile vs. Perceived Value

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Figure 4. Belsomra BCG Analysis

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Figure 5. Detailed SWOT Analysis

SWOT ANALYSISFigure 1.1

Acquired from Reuters Product Reports

Strengths Weaknesses

Mechanism of Action

o Belsomra® is the only prescription sleep aid that targets and inhibits the action of orexin – a central promoter of wakefulness also with patent coverage to 2029.

o By inhibiting orexin, Belsomra® is thought to help quiet the wake pathway

Efficacy

o An average of 90 minutes more sleep with Belsomra® vs 60 min more with placebo at Month 1.

o Additionally, patients entered continuous sleep 36 min faster and spent less time awake during the night by 47.9 min

o In contrast to older drugs, patients taking suvorexant experienced normal sleep rhythm

o No rebound insomnia, even after 12 months of continuous use

Safety Concerns

o No Evidence of physical dependence in clinical trials

o Belsomra® is none habit-forming and results in no patient dependence, this essentially highlights Belsomra’s® competitive advantage since all of Belsomra’s® immediate competitors; Lunesta® (the leading insomnia treatment solution),

FDA Roadblocks

o Controlled Substance (Scheduled IV Class Drug)

o Higher Doses Not Approved – toleranceo The FDA has voted against approval of

30- and 40-mg doses, due to safety issues and concerns of next-day impairment

o Next-day sleepiness is seen in 10% of patients, including difficulties driving

o Headache was also common, and there were also incidences of suicidal ideation and narcolepsy-like symptoms

o Lack of abuse or tolerance data to date

Various Remaining Weaknesses

o Not covered by all insurances (i.e. blue cross blue shield, Aetna)

o Drug compliance – lack or refilled prescriptions

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Ambien®, Ambiem CR®, Zolpidem®, Zolpidem Tartrate ER and Sonata have dependency potentials

Coupons and Payment Aid

o Belsomra® contests payer and prescriber coverage trepidations though providing free trials and savings coupons found on the official website of Belsomra®

Opportunities Threats

Large Market & Market Potential

o Patent until 11/20/2029o Belsomra® is predicted to be the highest

selling insomnia treatment product by year 2023– Estimated $458.6 million

o According to the US National Sleep Foundation (NSF), more than half of America's adults experience symptoms of insomnia at least a few nights a week, and 36% of respondents in an NSF ‘Sleep In America Poll' reported using either a prescription or OTC sleep aid

o High prevalence - Adults requires at least eight hours of sleep, however, 35% of adults regularly achieve this.

o Adults – more particularly women and the elderly.

o E lderly – Insomnia is linked to primary sleep disorders: restless legs syndrome (RLS), periodic limb movement disorders (PLMD), and sleep-related breathing disorders (snoring, dyspnea, sleep apnea) are often present with an insomnia symptom

Substantial ‘Drop-Off’ In Treatment Stages

Alternative Insomnia Solutions

o Uncertainty about long-term safety of dual orexin antagonists following discontinuation of GlaxoSmithKline (GSK)'s orexin antagonist almorexant in 2011

o Potential competition from other orexin antagonists currently in development, particularly GSK's GSK-649868

o Other novel drugs targeting new mechanisms are proceeding through clinical trials, including Vanda's balanced MT1/MT2 agonist tasimelteon

o The market is expected to continue to be dominated by generics, eroding sales of market leaders Ambien®, Ambien CR® and Lunesta®, and creating sales headwinds for novel entrants

o Multiple classes of drugs which are often prescribed off-label for treating insomnia, including antidepressants, antihistamines and atypical antipsychotics

o Large OTC market, including familiaro products such as Tylenol® and Benadrylo Non-pharmacological interventions such

as stimulus control, progressive muscle

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o Awareness Stage – Increase awareness of insomnia to get more individuals to seek help from their healthcare

o professionals.o Prescribing Stage – Address why physicians

are reluctant to prescribe prescriptions to their patients.

Associated Insomnia Dangers and Treatment of Comorbid Illnesses

o Potential indication expansion for sleep apnea, which affects between 12 to 18 million people in the US

o Greater risk of substance abuse, motor vehicle accidents, headaches, and depression.

o Comorbid medical disorders, psychiatric disorders, and working night or rotating shifts all represent significant risks for insomnia.

o However, it is apparent for Merck to realize these elements cannot freely be connected to insomnia for they are reasonably precipitants of insomnia in individuals predisposed to this disorder.

o Lasting or chronic disorders are likewise a substantial threat aimed at insomnia – roughly 75%-90% of insomniacs are at high danger to be candidates for comorbid illness

o These illnesses include, but are not limited to, pain disorders, GERD, neurodegenerative illnesses, hypoxemia, and in some cases, circadian rhythm disorders tend to be commonly comorbid – ultimately eliciting insomnia.

Target “Top Deciles”o The top 10% of prescribers in the insomnia

treatment market: sleep specialists, sleep clinics, psychiatrists, and family practitioners or primary health providers.

relaxation, paradoxical intention, biofeedback and cognitive behavior therapy often produce reliable and durable changes in sleep parameters; changes in behavior such as eliminating caffeine and avoiding daytime naps can also be helpful

Market Regulations

o Regulatory risk; although an FDA panel has backed the conclusion that the drug is effective in inducing and maintaining sleep, there may be issues with safety

o A Complete Response letter recommending lower starting doses has delayed market entry, with additional studies possibly required

o If only lower doses are approved, the inevitable lower efficacy could severely hamper any market campaigns

o DEA scheduling could materially affect commercial success by removing an important differentiator in the market

o Confirmation of reports suggesting higher mortality associated with sedative drug use

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FDA Public Notification About Zolpidemo The FDA recommended that the bedtime

dose be lowered because new data showed that blood levels in some patients may be high enough the morning after use to impair activities that require alertness, including driving.

o Zolpidem is an active ingredient in a nearly all Belsomra® prescription based competing products

o Potential first-to-market orexin antagonisto Current treatments for insomnia have

limitations, including morning sedation, cognitive impairment and abuse potential; differentiation of the orexin antagonist class based on any of these factors could drive growth

o Trials to demonstrate comparable or superior efficacy versus current gold standard zolpidem

o A potential lack of DEA Schedule, which could particularly drive use through primary care physicians

o Newer non-DEA Scheduled drugs, including Silenor® (Somaxon) and Rozerem® (Takeda), may offer broad appeal due to lack of prescribing complexities, as well as opportunities for sampling

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Figure 6. Key Issue 1

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Figure 7. Key Issue 2

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Figure 8. Key Issue 3

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