Will Trump Succeed in Curbing Drug Prices in 2019?

US President Donald Trump wants to peg US in-patient drug prices to an international drug price index, comprising mostly European countries. He is calling for an end to other countries’ “freeloading” off the US, which has the highest drug prices in the world.

Trump is proposing one of the most draconian changes to US drug pricing, and one which looks, for a Republican President, oddly socialist. The plan would cap the amount that the US government payer, the Centers for Medicare & Medicaid Services (CMS), would reimburse so-called “Part B” (out-patient) drugs at a yet-to-be-determined indexed rate of international drug prices. And it would pay physicians a flat-fee for administering these drugs, rather than, as under the current system, a proportion of a drug’s average sales price. This often incentivizes them to use pricier treatments.

Trump’s proposal, as laid out, is unlikely to come into effect, according to policy analysts at Capital Alpha in Washington. Apart from likely resistance from those Republicans opposed to price controls and the potentially negative impact on innovation, there’s a huge risk to patient access, if manufacturers play hard ball and don’t sell at the mandated price. There is no law forcing them to make their products available. Such a scenario would be disastrous, politically and socially.

Something needs to be done, though. The US spends twice as much per capita on prescription drugs than the UK, and the bill continues to rise. Drug firms see the risk: many of the largest players have voluntarily agreed to rein in price rises (a couple have actually decreased prices). They are trying to look socially responsible, as news headlines have highlighted the most egregious cases of drug price inflation, stoking public anger.

The problem is not just manufacturers’ price-setting, though. It is also the complex, contorted US drug supply chain and reimbursement system, which involves multiple middlemen, each shaving off a slice of the drug price as rebates or discounts. Pharmacy benefit managers (PBMs), which purchase prescription drugs on behalf of health plans, have come under increasing fire for lining their pockets. Some physicians, too, have benefited from high drug costs.

Yet PBMs, especially the larger ones, can also help negotiate lower prices for certain drugs – and have done so in the past. There is no single villain in– or simple solution to – the thorny US drug pricing debacle.

Meanwhile, Pfizer in November 2018 announced that 41 of its drugs will become more expensive in 2019, with one product’s price rising by 9%. This is still a far cry from wholesale price increases of previous years, though, and still within the voluntary 10% limit agreed by most of the biggest players, following Allergan’s 2016 lead. 90% of Pfizer’s portfolio will not see price increases at all. And drug-makers are more proactive about outcomes-linked pricing: Bayer offered payers a deal on its $32,000-per-month brand new cancer drug, Vitrakvi (larotrectinib) the moment it launched in the US on November 26. If patients don’t respond within 90 days, the drug cost is refunded.

Still, Pfizer’s announcement has stoked the flames of a debate that will continue through 2019 and beyond. Bernstein analyst Ronny Gal suggests that, with unpleasant pricing plans like Trump’s on the table, drug firms have little to lose and may have something to gain by increasing prices. It gives them a bargaining chip in forthcoming negotiations around some kind of price-curbing arrangement, even if it is not internationally-indexed prices.

In respiratory diseases, it is all about delivery

When Vectura’s nebulised form of budesonide, VR475, failed its Phase III asthma trial in late November 2018, the UK company blamed the drug, not the device. A conventional nebulizer also failed to significantly impact exacerbations, versus placebo.

In respiratory diseases, like in some corners of diabetes, the delivery device often does matter more than the drug. Many of the active substances have been around for decades. Among patients with conditions like asthma and chronic obstructive pulmonary disease, outcomes are hugely dependent on correct use of inhaler devices. That has been shown in real world studies, such as the CRITIKAL asthma review, published in 2017.

The problem is that devices can be tricky to use. Several require patients to follow a multi-step process, inhale with just the right force at just the right time, and even then it may not be clear whether the dose has been taken. Many physicians do not know how to use them, either.

So the competition is around who can offer the most convenient, easy-to-use delivery device – one shown to generate the best adherence data, fewest medication errors and thus lowest medication wastage among a given patient group.

Vectura hopes the ‘guided inhalation system’ technology used in VR475 may yet find its place among younger asthma sufferers. The system guides patients through a series of slow, deep breaths and notifies them when treatment is complete, logging adherence data in an app, too. Phase II data for VR647 earlier in 2018 suggested that children found the breath-activated delivery system easy to use, with little or no loss of medication.

Meanwhile, Vectura’s partner Mundipharma in September 2018 launched the easy-to-use flutiform k-haler in the UK, with further European launches expected over the coming months. The k-haler delivers a well-known drug duo of inhaled corticosteroid and long-acting B2 agonist (LABA). But its sponsors claim it is more user-friendly than conventional metered dose inhalers, requiring only gentle inhalation to trigger dose release, rather than the high inspiratory force needed for dry powder inhalers. The result, the companies say, is fewer inhaler errors, and better outcomes for patients.

Delivery may also help determine the winner in another competitive respiratory sub-category: injectable therapies for severe asthma. GlaxoSmithKline, AstraZeneca, Teva,

Novartis/Roche and Sanofi/Regeneron all have monoclonal antibody therapies in this space: Nucala (mepolizumab), Fasenra (benralizumab), Cinqair (reslizumab), Xolair (omalizumab) and Dupixent (dupilumab), respectively. Dupixent, an excema drug only recently approved by FDA for moderate to severe asthma, may have the edge, even though it is last to the party.

That’s because, as a pre-filled syringe for sub-cutaneous injection, it is the only one that can be delivered at home. There will be other factors in play, though: Fasenra is given only once every eight weeks, while Dupixent is administered every other week. (The others are once-monthly). Pricing will also play a big role in the battle among these £30-40,000-a-year injectables, and they may soon face a new competitor as AZ/Amgen receive FDA breakthrough designation for tezepelumab, which could serve a broader range of patients.

Finally, delivery systems are driving some unusual dynamics post-Advair, too: sales of GSK’s blockbuster continue to erode, but more slowly than many anticipated, and not because of true generics. Several generic candidates have been delayed at FDA due to challenging bioequivalence hurdles – it is tough to re-produce GSK’s Diskus delivery device. So Teva in 2017 launched a drug-device combo using its own RespiClick device, called AirDuo RespiClick. That cannot be substituted for Advair. But Teva simultaneously launched its own, cheaper, substitutable generic of AirDuo RespiClick, effectively delivering the lower-cost alternative that many payers and patients were waiting for.

Movember: Prostate cancer, largely controllable, still kills; increasing prevalence driving drug development

It’s November, and if the men around you are sporting especially robust moustaches, don’t worry. It means they are paying attention to their health.
During Movember–a mashup of “moustache” and “November”–men grow out their moustaches to raise awareness of men’s health issues.

It’s not just about awareness: The Movember Foundation is a global charity focused solely on men’s health–especially suicide prevention and mental health, and testicular and prostate cancer.
We’re focusing on prostate cancer. But because it affects only men, and men are less likely to seek preventive care than women, awareness is crucial. Early diagnosis usually means a positive prognosis. But men aren’t getting that early diagnosis.

Disturbing changes

Overall cancer incidence (1999-2014) and mortality rates (1999-2015) have dropped, according to 2018 Annual Report to the Nation on the Status of Cancer. But the news isn’t as positive for prostate cancer. Researchers reported increased incidence of late-stage prostate cancer; they also found that, after decades of decline, prostate cancer mortality has stabilized. Perhaps of greatest concern is an increase in men diagnosed with late-stage prostate cancer that has spread.

Roughly 164,690 prostate cancer diagnoses will be made before the year is over, according to the American Cancer Society. More distressing, 29,430 men will die from the disease. Globally, prostate cancer diagnoses are expected to double to 1.7 million by 2030.

A January 2018 report from Datamonitor Healthcare estimates that the cases of prostate cancer will increase by more than 25 percent between the 2016 and 2036 across the US, Japan, France, Germany, Italy, Spain, and in the UK.

In the U.S., prostate cancer is the second-leading cause of cancer death in men, behind lung cancer. That’s one reason Movenber is so important: Not merely that men are dying, but that it’s largely preventable. When caught early, successful treatment and recovery is likely, with 5-year relative survival rates for localized and locally advanced disease approaching 100%. Source: SEER 2018

Current therapies

Given the number of men affected, there’s tremendous incentive for drug development. So it’s little surprise that an array of drugs are approved for prostate cancer. Among the newer ones are anti-androgen medications. By decreasing testosterone levels, they starve the cancer cells. Research has shown that anti-androgen drugs can delay cancer growth, in many cases by years.

Androgen deprivation is, of course, considered a form of chemical castration. However, castration-resistant prostate cancer (CRPC) keeps growing no matter how much the testosterone drops. Treating CRPC remains an unmet need in prostate cancer, which has spurred drug development.

New approaches, new challenges

CRPC drug development will likely change the way that the disease is treated, creating a competitive environment for new market entrants, according to the January 2018 Datamonitor report. Treatment may become more segmented as pipeline drugs with new mechanisms of action
reach the market.

However, novel therapies tend to be expensive and are likely to drive up the cost of treatment. Payers in the U.S. and France, Germany, Italy, Spain and the U.K. have expressed concern about the significant and rising cost of prostate cancer treatment, according to a June 2017 Datamonitor report.

In particular, they are worried about rising costs associated with the use of expensive novel anti-androgens in earlier treatment lines. Patients needing anti-androgens represent larger patient numbers than those with CRPC, and they also require significantly longer treatment durations due
to longer life expectancies and slower disease progression.

So, this Movember…

Development of efficacious therapies for prostate cancer treatment, particularly CRPC, remains an area of high demand. Find out more about the Prostate Cancer Market.

Orphan Assets Still Hot as Pricing Debate Rages

LEO Pharma’s November 2018 deal with rare disease play PellePharm, worth up to $760 million, is just one recent example of the value that orphan drug assets can command. PellePharm’s lead candidate, patidegib, treats a little-known skin disease called Gorlin Syndrome that affects just a few thousand patients. Yet for dermatology-focused LEO, this was a strategic move into rare skin conditions – where treatments can be priced far higher, and enjoy a faster regulatory pathway and more lenient reimbursement conditions, than most drugs for more common diseases. Patidegib has orphan drug designation and Breakthrough Therapy status from FDA.

Orphan drug approvals have surged since the Orphan Drug Act was introduced in the US over 20 years ago, followed by similar incentive packages across Europe and Japan. A law designed to encourage investment into treatments for rare and under-served conditions has been used – and many say, abused – well beyond expectations. Individual conditions may be small, but the sales generated by orphan drugs as a class have doubled in the last decade, with some predicting that the category will command a fifth of all prescription drug sales by 2022.

Historically, orphan drugs escaped pricing scrutiny due to the limited number of patients involved. That is changing. They are now front and center in the wider payer backlash against excessive drug prices. One reason is that drug manufacturers have taken advantage of orphan benefits by assembling multiple, orphan-sized indications for the same drug – so-called ‘salami slicing’. This has resulted in huge overall sales for individual products: Celgene’s Revlimid (lenalidomide) sold over $8 billion in 2017, and is expected to top $12 billion by 2022. Even AbbVie’s Humira, the world’s largest-selling drug ever, has a couple of orphan indications.

Another reason orphans are now in the payer spotlight is that many of the newest treatment modalities, including gene therapy and CAR-T cell therapies, are orphan drugs. And some of these are intended as one-time treatments, with price tags to match. Spark Therapeutics’ Luxturna, the first US-approved gene therapy for an inherited retinal disease, is one example. It costs $425,000 per eye. Novartis’ CAR-T therapy Kymriah (tisagenlecleucel) is another; it is priced at $475,000.

These therapies have forced manufacturers and payers to explore new payment mechanisms. Outcomes-linked payments are a logical way forward: Spark and Novartis are among those that have engaged in such deals. But they are not easy to implement. A pilot program at the US government’s Centers for Medicare and Medicaid Services (CMS) exploring value-linked pricing for Kymriah was abandoned earlier this year, though deals with individual treatment centers remain in place, Novartis says. Spark reports “advancing discussions” with CMS on an installment payment option for Luxturna, and in early November said the first two patients had been treated under its outcomes-based contracting model with commercial payers.

With multiple new orphan drugs in the pipeline (many cancer drugs are orphans) and with drug pricing still firmly in politicians’ cross-hairs, these reimbursement discussions and experiments must continue. Luxturna was recently recommended for European approval, triggering payer engagement there, too.

LEO Pharma may be joining the rare diseases party just as the music starts to fade a little. But orphan drugs are still a critical – and growing – treatment category.

For a fuller account of the latest trends in orphan drug pricing and reimbursement, including country-by-country analysis of orphan reimbursement, case studies and approval figures, see “Latest Trends in Orphan Drug Pricing and Reimbursement,” published by Datamonitor Healthcare.

Biosimilar Boon for Europe’s Payers as Humira Price Falls

AbbVie is being hit harder than expected by the October 2018 arrival in Europe of biosimilar versions of Humira (adalimumab). Europe’s payers were better prepared than ever to take full advantage of the competition, helping push the price of this top-selling drug down by 80% in some markets. With at least four copies already launched and more to follow, AbbVie leadership was forced to concede, during an early November investor call, that they had under-estimated European sales erosion. Current estimates are now a 26-27% drop-off in 2019, resulting from more aggressive discounts. Just how aggressive isn’t clear. In a call with Credit Suisse analysts in early November 2018, AbbVie management was tight-lipped on whether it had gone to 80% or not, or which countries –if any- it has walked away from. Still, CS lowered their target price for AbbVie shares, underscoring the extent of the risk to the company.

The adalimumab launches show that Europe’s biosimilars market has come of age. The challenge for biosimilar companies is no longer primarily to educate physicians and payers about what biosimilars are; it is now about differentiating their own version from the competitors, and trying to ensure price falls do not become unsustainable.

Adalimumab caught the headlines because of its size. But it won’t be the last biosimilar: Europe’s payers are already lining up to take advantage of copies of Amgen’s neutropenia drug Neulasta (pegfilgrastim), three of which have already received European Medicines Agency approval. If the uptake of biosimilar filgrastim (Neupogen) is anything to go by, 2019 could be a painful year for Neulasta sales – though Amgevita, Amgen’s biosimilar adalimumab, may help compensate. Amgevita was the first of the Humira copycats to be approved and among the first to launch on October 16, 2018.

Europe’s payers are united in their hunger for savings, but each differs in the measures and tools used to drive uptake. Some countries run nation-wide, single winner tenders where price is everything. Others prefer multi-winner tenders, taking into account local provider preferences for factors such as product presentation, stability/shelf-life, and consistency of supply. Biosimilars Market Access in the EU, a Datamonitor report, outlines country-by-country biosimilar dynamics, including data on the penetration of approved biosimilars in individual markets. The report explains the many variables that influence biosimilar success across Europe, providing recommendations on how to address regulatory, legal and commercial challenges in each region. It also provides background on naming and labelling issues across Europe, and explains Europe’s evolving intellectual property landscape and the IP issues associated with the class.

Understanding the national and regional nuances across Europe’s biosimilar markets is critical to commercial success in biosimilars, as the category matures and as competition heats up. Future launches are likely to be faster, with more aggressive price-cuts.

Over a decade since the launch of Europe’s first biosimilar, Sandoz’s Omnitrope (somatropin), Europe’s payers and patients now have experience across a range of biosimilars, from relatively simple molecules like growth hormone or erythropoietin to the more complex monoclonal antibodies like infliximab or adalimumab.

And as real-world data accumulates around biosimilar use and switching across different therapy areas, the full impact of this category is becoming clearer. Biosimilars are not simply forcing down prices. They are also beginning to influence treatment pathways in some markets, as providers begin to use more widely-available biologics earlier than payer budgets would previously allow.

This is a category to watch.