So the analysts get their pivotal conclusion on comparison to generics by overstating the number of pills required to deliver the generic medication by 60%, and overstating the cost by 40%. 

There is every reason to believe that with new focus on the benefits of this medication, that the generic cost would fall to a figure closer to $1.00 per day.

Pills Per Day

Secondly both analysts cite the higher number of pills per day that would need to be taken under a generic substitution regimen, which would potentially decrease compliance. The reality is that it would be highly likely that the generic substitute regimen would be available with the same regimen of two pills, three times a day as would be for the Bidil regimen.  (see above)

That is because, although the analyst failed to mention it, generic ISDN is already available in 40mg dosages and generic hydralazine is currently available in 25mg, 50mg and 100mg dosages. If Bidil in fact proves to have any success at all, it is a certainty that a 75mg dosage would be available. As such, the generic regimen would result in no more non-compliance than the Bidil regimen, as both would require two pills, three times a day. In fact, in reviewing generic drug pricing, you will find per pill price increases are negligible for higher dosages, and it is therefore highly likely that the generic regimen cost would actually fall below $1/day.  

Incidentally, Stocklemon believes that in talking to cardiologists that ANY drug regimen that requires patients to remember to take pills three times a day has a serious risk of non-compliance, and this is likely to be a source of less enthusiasm by cardiologists for BiDil than one might expect, even if the final results hold up.

Significance of Pricing Power

Nitromed says it plans to hire its own marketing staff to bring this drug to market.  This is an expensive marketing route.  Why not just have BiDil distributed by a major drug firm?  Because of the somewhat controversial racial differentiation that forms the scientific basis of BiDil, it seems the major firms don’t want to have their sales reps involved in explaining this tricky differentiation.

That is why pricing power is key to the commercial success of this product.  If pricing is severely limited by generic equivalence, dependence on its own sales reps, and the associated costs, will quickly eat up most of the “blockbuster potential” of this drug.

Insurance Co-payments

Contrary to what both analysts have stated, the total co-payment made by patients under their health insurance plans would not necessarily be any higher for those prescribed the lower-priced generic substitutes rather than BiDil. That is because such plans uniformly require lower co-payments by patients using generic drugs than for brand-name drugs. Two such generic drug co-payments would generally not differ materially from one brand-name drug co-payment, and in some cases can be even less.  Here is an example where it would be less……Blue Cross Blue Shield for federal employees

http://www.fepblue.org/openseason/bodrugcopaylevls-os03.html 

While the actual total dollar co-payment under the two regimens would vary from plan to plan, they are not likely to differ greatly, and in any event, be a minor issue in comparison to the significantly lower annual price of the generic regimen.

Conclusion

It is the opinion of Stocklemon that the research that has been done on Nitromed is incomplete and irresponsible.  When making a pricing analysis it is imperative to look to more than one source.   Furthermore, when purchasing anything from a pill to a refrigerator, a cautious consumer should look beyond one source.  Stocklemon is not stating that the investment banking relationships had anything to do with the incomplete analysis, we are stating the irony and coincidence of the reports.

Disclaimer- Principals of Stocklemon are short Nitromed and are enthusiasts of Peanut Butter and Jelly