As Keytruda expands, payers recoil

December 28, 2018 | Strategy

Melanie senior

Checkpoint inhibitors like Merck’s Keytruda (pembrolizumab) and Bristol Myers Squibb’s Opdivo (nivolumab) are extending the lives of many cancer patients. Yet their success across a growing range of cancers is forcing payers to negotiate harder bargains, including reimbursement caps.

Keytruda’s December 2018 approval in Europe as an adjuvant treatment for late-stage melanoma patients who have undergone surgery is just the latest in a string of approvals for the drug across multiple cancer types and settings. Keytruda is used across cancers of the skin, lung, blood, head and neck, liver, intestine and cervix, among others. Based on its quarterly sales trajectory, it will soon be an $8 billion blockbuster.

At an average cost of about $13,000 per month, Keytruda, like others in its class, is much pricier than chemotherapy. Much of the data supporting checkpoint inhibitors are strong – the KEYNOTE-054 trial backing Keytruda’s recent EU melanoma approval, which enrolled over 1000 patients, showed a 44% reduction in the risk of disease recurrence or death compared to placebo.

It’s hard to argue with that. (These patients’ current option, post-surgery, is to ‘watch and wait’ to see if the disease returns.) UK watchdog the National Institute of Health & Care Excellence (NICE) agreed to make the drug available via the Cancer Drugs Fund.

Yet this is a ‘managed access’ scheme – a temporary agreement, while further data are collected on the drug’s longer term benefits, particularly overall survival. CDF will fund the drug until the end of 2021, after which NICE will review its guidance.

The US FDA will issue its decision on Keytruda in this melanoma setting by February 2019. Checkpoint inhibitor approvals will continue – and may accelerate – beyond that. The drugs work by interfering with a mechanism used by cancer cells to hide from our immune system. This unlocks our body’s own defences against the abnormal cells. It is a fairly general approach, which works across several tumor types, especially those, like melanomas, where there is already a low-level immune response.

Checkpoint inhibitors are already a crowded class. Alongside category-leader Keytruda and Opdivo, the first to gain approval back in December 2014, sit Bristol’s Yervoy, Roche’s Tecentriq, Merck KGAa’s Bavencio, AstraZeneca’s Imfinzi and Sanofi/Regeneron’s Libtayo – plus plenty more in late-stage development.

Competition, in theory, gives payers more negotiating power. But checkpoint inhibitors are not all the same. Some inhibit different receptors within the complex immune-system control pathways. This makes them more appropriate in some settings than in others. Dosing and administration frequency can vary, along with toxicity. So some checkpoint inhibitors may carve a niche where there are relatively few alternatives.

And some may work better in combination with other treatments – not just older, chemotherapy drugs, but newer targeted therapies, too, with high price tags of their own.

For example, Keytruda is in a Phase III trial alongside Amgen’s oncolytic virus drug, Imlygic. Early data suggest that the duo may significantly enhance the strength of response. Adding an oncolytic virus may also expand checkpoint inhibitors’ reach beyond tumors that already trigger a low-level immune response, to include those that are immunologically “cold” – which accounts for the majority. That could unleash even faster growth in the class.

These dynamics will force a range of new pricing and payment structures, beyond the relatively straightforward price-volume arrangements, and overall spending caps, already in place in some European markets. The same drug used within a combination may have to be priced lower than when used alone, for example. Pricing may need to be linked to specific indications. Payers may insist on even stronger survival data.

Indication- and combination-specific pricing approaches are compelling in theory, and have long been investigated. Implementing them has proved very tricky, though. Checkpoint inhibitors’ runaway growth may be what helps overcome those practical barriers.