No matter how effective it is, a drug is worthless if the people who need it can’t afford it. That’s been almost an anthem for patients and policy wonks testifying before U.S. Congress on drug prices.
With the increased public focus and scrutiny on the subject, pricing is likely to play an outsized role in how some of the 11 medicines on this year’s Cortellis Drugs to Watch list perform on the market. It especially will be true for those entering crowded therapeutic spaces where they will face not only competition from other brand drugs but also from generic or biosimilar versions of those drugs.
In the past, competition hasn’t guaranteed lower prices, at least in the U.S. “Many economists might expect medicines to become more affordable in an increasingly crowded therapeutic class,” said Pamela Bradt, chief scientific officer at the Institute for Clinical and Economic Review (ICER).
Instead, “traditional market dynamics have been unable to drive down prices,” she said, even in spaces like rheumatoid arthritis (RA), because of the rebate system in which drug companies pay pharmacy benefit managers (PBMs) for formulary placement.
Under that system, competition impacts the rebates sponsors have to negotiate with PBMs for preferred formulary placement, but not the list price. In Europe and other markets, competition influences negotiations with agencies like the U.K.’s National Institute of Health and Care Excellence that determine whether the price of a new drug is an efficient use of limited health care resources compared with what’s already available.
But current dynamics are changing in the U.S., so drug companies need to consider those emerging changes when they launch new products. Pricing – or more specifically, what the patient has to pay – can make a difference in whether a doctor prescribes an older drug that works or a new one that offers improved efficacy, safety or convenience. And with many U.S. lawmakers pushing for Health and Human Services to negotiate the price of drugs with the biggest health care spend, drug companies might want to look at how their prices will impact that spend.
That’s a big factor in large therapeutic spaces such as diabetes, where there already is a lot of outrage because of soaring patient costs for insulin and the fact that only three companies control the huge market. One of those companies, Novo Nordisk A/S, made the Cortellis Drugs to Watch list with its oral semaglutide, Rybelsus.
At its annual estimated U.S. net price of $6,103, Rybelsus is cost-effective as an add-on for type 2 diabetes, ICER determined. Despite that finding, the independent nonprofit research institute issued an access and affordability alert for the drug, citing the high demand for an oral semaglutide. In the past, many patients who could have benefited from a GLP-1 therapy avoided it because of the need for injections. Now that there’s an oral formulation available, they’ll be more likely to use it.
Thus, the demand is likely to create added costs that “may be difficult for the health system to absorb over the short term without displacing other needed services or contributing to rapid growth in health care insurance costs that threaten sustainable access to high-value care for all patients,” ICER warned.
In the crowded RA space, pricing could be key to the success of Gilead Sciences Inc.’s filgotinib, a JAK1 selective inhibitor awaiting approval. The space has been dominated by Abbvie Inc.’s mega-blockbuster Humira (adalimumab), which is already competing with several biosimilars in the EU and will have five biosimilars in the U.S. in 2023. In addition to Humira, RA patients have a choice of several other drugs, including three other JAK inhibitors.
In evaluating the cost-effectiveness of the JAK inhibitors already approved – Abbvie’s Rinvoq (upadacitinib), Pfizer Inc.’s Xeljanz (tofacitinib) and Eli Lilly and Co.’s Olumiant (baricitinib) – ICER used Humira’s price as a comparator. Based on that comparison, ICER’s value-based price benchmark range for Rinvoq is between $44,000 and $45,000. That represents a 25% discount off the drug’s annual list price of $59,860, “a suggested discount that is consistent with the rebates we assume the manufacturer is currently offering,” ICER said.
Such comparisons can offer pricing guidance for new entries like filgotinib, but they don’t address concerns about how new drugs are valued in the first place – something that’s sure to gain more momentum with patients and policymakers as launch prices continue to climb.
“While upadacitinib appears to achieve common thresholds for cost-effectiveness when compared to adalimumab, legitimate questions remain about whether or not adalimumab, launched 17 years ago, is fairly priced to begin with,” Bradt said. Humira has had several price increases in those 17 years, all of which have added to its blockbuster status.
For instance, between 2017 and 2018, Humira's wholesale acquisition cost increased by about 19%, while its net price increased by almost 16%. That net price change resulted in an estimated increase in drug spending of $1.86 billion, ICER said.
Migraine therapy is another space represented on this year’s blockbuster list that’s seeing increased competition. Biohaven Pharmaceutical Holding Co. Ltd.’s rimegepant, as well as Eli Lilly’s Reyvow (lasmiditan) and Allergan plc’s Ubrelvy (ubrogepant), appears “to be less effective overall than triptans and [is] expected to be much more expensive,” ICER Chief Medical Officer David Rind said. However, he added, for patients who are unable to take triptans or who don’t get adequate benefit from them, rimegepant and the two other drugs demonstrated an improvement in migraine symptoms in 10% to 20% more patients than those who responded to placebo.
While triptans are expected to remain frontline treatment for migraines, according to an ICER evidence report, the common side effects associated with the drugs and their contraindications create a need for alternatives like rimegepant. To be cost-effective though, rimegepant would need to be priced between $2,200 to $3,200 per year, well below Glaxosmithkline plc’s Imitrex (sumatriptan), ICER said.
But to reach blockbuster status in the next few years, rimegepant’s price likely would need to be much higher. At its peak in 2007, Imitrex barely breached the $1 billion mark. With generic competition fully established, Imitrex’s 2019 sales were expected to generate only $176 million, according to Cortellis analysis.
Big price tag
Of all the products on the Cortellis Drugs to Watch list, Biomarin Pharmaceutical Inc.’s hemophilia A gene therapy, valoctocogene roxaparvovec (valrox), is expected to have the biggest price tag, if it’s approved, at $2 million to $3 million. Since valrox is a one-time cure, Biomarin may not have as big of a sell with payers as would a company seeking premium pricing for a drug to treat a chronic condition.
Provided the cure valrox offers proves to be durable over the long term, a U.S. payer could recoup a one-time expense of $3 million within five years, as current replacement therapies for hemophilia A add up to annual costs of $600,000 to $800,000.
However, payers might balk at a high-priced cure due to the fluidity of the insurance market. There’s no guarantee that the insurer who pays for the cure will be the one to realize the savings. So, depending on a patient’s age and other factors, a payer could attach a lot of conditions to its coverage of the gene therapy. To overcome payer hesitancy, Biomarin may have to get creative in its negotiations, perhaps offering an installment plan or an outcomes-based arrangement.
Regardless of the payment hurdles, valrox could hit blockbuster sales with fewer than 500 patients per year. But then there’s the question of the patient copay. While drug companies point to the value a cure brings in terms of “health savings” to justify seven-figure price tags to payers, patients are bound by what they can afford.
Congressional hearings on drug prices have been filled with patient stories of how they must choose between paying the rent or buying groceries and paying their share for a life-saving drug like insulin. Paying for high-priced gene therapies would create an even bigger challenge for patients. A 10% copay for a $3 million cure would exceed the median cost of a house in the U.S. by $100,000 and would be nearly five times the $63,179 median U.S. household income in 2018.
To read more about the Cortellis Drugs to Watch potential blockbusters, visit BioWorld’s collection of articles which are freely available.