Future strategies for pricing and market access in oncology

Transcription

1 Future strategies for pricing and market access in oncology Discussion document October, 2014 BOSTON CHICAGO DALLAS DENVER LOS ANGELES MENLO PARK MONTREAL NEW YORK SAN FRANCISCO WASHINGTON

2 Agenda We review the situation of pricing and market access (PMA) in oncology in 3 steps: 1. Historical perspective 2. Recent changes / situation today 3. Future developments PAGE 1

3 Historically, oncology PMA has been an exception Value seen primarily in extending survival (OS) Focus on US market: High value market (bulk of sales, free pricing and price increases) Key role of NCCN guidelines and copayment support Oncology sales 2013 by region (% of total) ROW 25% Ex-US focus on EU-5: Increasing use of patient restrictions by payers to limit budget impact/burden US 41% NICE often key EU market access focus, however standard by-pass through Cancer Drug Funds Not representative of broader EU response/opportunity Japan 10% Japan often an afterthought (limited MA barriers/regulated pricing) Little or no focus on emerging markets (e.g. pricing mostly in line with EU) EU-5 24% Source: IMS MIDAS Total = $90.8bn in 2013 PAGE 2

4 Historically, oncology PMA has been an exception (cont.) US drug sales and price of therapies across selected therapeutic areas $4,000 Humira Enbrel Remicade Oncology products stand out in their ability to achieve high prices and sales $3,500 Neulasta Copaxone Oncology Sales in $ millions $3,000 $2,500 $2,000 Avonex Herceptin Rituxan Gleevec Avastin Revlimid CV MS Supp. Care (oncology) Immunology $1,500 $1,000 $500 $0 Alimta Rebif Gilenya Victoza Velcade Aranesp Procrit Orencia Betaseron Zytiga Tracleer Afinitor Simponi Letairis Cimzia Effient Ventavis $0 $50 $100 $150 $200 $250 $300 $350 Cost per day (in $) Unit basis Other CNS agents Other therapeutics Similar picture observed for EU-5 Oncology top therapeutic area spend (>># 2 diabetes) Oncology over 30% of preclinical and phase I R&D activity PAGE 3

5 The price of oncology drugs has increased rapidly over the past 20 years, and a new launch product now typically exceeds $10,000 per month US price per month (in 2013 $) $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 US launch price per month (in 2013 dollars) Proleukin Nestle (aldesleukin) Provenge Dendreon (sipuleucel T) Campath Sanofi (alemtuzumab) Arranon GSK (nelarabine) Yervoy BMS (ipilimumab) Adcetris Seattle G. (brentuximab) Cyramza Lilly (ramucirumab) $10,000 $5,000 $ Time Source: Memorial Sloan Kettering (Peter Bach) PAGE 4

6 Oncology PMA today at a cross-road Historically Future Business as usual? Oncology PMA has been an exception Oncology PMA evolves yet remains an exception? Transition to standard PMA? PAGE 5

7 Oncology PMA today at a cross-road US vs EU vs EM EU = post-amnog world Pricing in the US in the spotlight: We are now in the post-zaltrap era CEOs under pressure -- may be the target of investigations (e.g. Sovaldi) Increasing US payer appetite for managing oncology category Clinical pathway experimentation Impact of oral oncology on pharmacy budgets Generic substitution; biosimilar entry next? New ACO channel and physician practice/provider consolidation Germany: from open access to highly constrained access with AMNOG France: Introduction of economic considerations in HAS assessments Italy: Systematic use of risk-sharing (only reimburse for responders) Spain: Budgetary pressures on new oncology spend UK: Cancer drug funding extended till March 2016 Emerging markets Brazil: mandated coverage for oral therapies by private sector and private/government tiered-pricing China: End of high quality = high prices? Russia: DLO/regional access critical yet trends murky PAGE 6

8 Zaltrap demonstrated broadly KOLs ability to impact price and access At Memorial Sloan-Kettering Cancer Center, we recently made a decision that should have been a nobrainer: we are not going to give a phenomenally expensive new cancer drug to our patients. The reasons are simple: The drug, Zaltrap, has proved to be no better than a similar medicine we already have for advanced colorectal cancer, while its price at $11,063 on average for a month of treatment is more than twice as high. In most industries something that offers no advantage over its competitors and yet sells for twice the price would never even get on the market. But that is not how things work for drugs. The Food and Drug Administration approves drugs if they are shown to be safe and effective. It does not consider what the relative costs might be once the new medicine is marketed. In an unusual move, a big drug company [Sanofi] said on Thursday that it would effectively cut in half the price of a new cancer drug after a leading cancer center said it would not use the drug because it was too expensive. The move announced by Sanofi for the colon cancer drug Zaltrap could be a sign of resistance to the unfettered increase in the prices of cancer drugs, some of which cost more than $100,000 a year and increase survival by a few months at best. Zaltrap came to market in August at a price of about $11,000 a month. Soon after, Memorial Sloan- Kettering Cancer Center in New York decided not to use the drug, saying it was twice as expensive but no more effective than a similar medicine, Avastin from Genentech. Both drugs improved median survival by 1.4 months, doctors there said. PAGE 7

9 Future End of the oncology exception? Pricing needs to be more rigorous, evidence-based Need to manage PR/advocacy opportunity/risk proactively Portfolio approach needed - need to be consistent from asset to asset ASCO s value algorithm - a significant PMA risk? Key role of high impact evidence development PMA needs to come in early - Pricing and market access considerations should be brought in the clinical decision making early in the process Need for integrated approaches that maximize opportunities while providing a robust/step-wise factbase for pricing decisions Need to prioritize e.g. key geographies / other key issues Developing economies: A growing need for tier-pricing and other innovative approaches PAGE 8

10 Are KOLs/clinicians the main potential barrier to access for the future? ASCO task force on Value in Cancer Care is developing an algorithm scorecard to evaluate drugs value based on their: Cost Efficacy Side effects Right now the value framework is intended for doctors to use exclusively on an individual basis with their patients ASCO does not intend to publish rankings or any other generalizable information about the overall value of specific treatments Could ASCO s algorithm transform the US into France or Germany? Timing uncertainty (i.e. 1st version may not bite but the 2nd could ) Post-Zaltrap, there is a significant risk that payers use physicians to reduce costs (if physicians don t do it on their own ) We are trying to be an honest broker in helping oncologists and patients make their best-informed treatment decisions based on effectiveness and cost Lowell E. Schnipper, MD Chair of ASCO s Value in Cancer Care Taskforce and Chief of Hematology/Oncology at BIDMC in Boston PAGE 9

11 Key role of high impact evidence development Evidence-based articulation of the value generated is likely to become key for a new therapy to achieve significant premium pricing, particularly in Europe Potential upside from incremental evidence Product X value vs. SoC (6-month treatment basis, k$) $1,000 Survival benefit $1,000 $200 quality of life burden of administration $200 AE costs $200 $400 RW survival due to longer treatment duration For such value-based pricing approaches, the monetization is typically based on current payments made by payers for similar level of outcomes $3,000 SoC Cost ProductX value PAGE 10

12 PMA needs to be brought in early in decision-making Common past PMA pitfalls Emerging early PMA best practices Late and/or rushed assessment of potential market access barriers/considerations Sub-optimal pricing and launch decisions Poorly designed clinical programs that don t address payer needs, particularly ex- US Pursue local data initiatives (key for local advocacy) Lack of consistency from asset to asset, and across geographies What works for today s asset may hurt the next company s blockbuster Conduct appropriate PMA situation analysis prior to initial clinical investments Identify PMA-specific evidence needs Update as clinical development progresses Establish early PMA representation on GPT and GBT teams Explicit consideration of market access and pricing challenges and opportunities Clear accountability for local data initiatives Develop common framework across portfolio PAGE 11

13 Project Summary: Approach Pricing needs to be rigorous Need for integrated approaches that maximize opportunities while providing a robust/step-wise factbase for pricing decisions Research and Analysis Steps 1 Payers Qualitative and Quantitative Research Impact of product benefits and price on Product X market access (e.g. restrictions and for the US - copayment tiers) by price point and payer (type) 2 3 Physicians Patients Quantitative Research (option for qualitative research) Estimate preference share for Product X: impact of formulary (e.g. restrictions and for the US - copayment tiers) on physician prescribing behavior Quantitative Research (US only) Impact of patient out-of-pocket costs on patient preferences and requests for a lower cost alternative therapy or non-compliance Model Integration Steps 4 Physician-Driven Share Physician-driven share Apply market access outcome (e.g. restrictions and for the US - copayment tiers) to estimate physician therapy preference shares based on price-access relationship. Combines 1 and 2. 5 Fully Integrated Share and Price Fully integrated share Apply impact of price on physician-driven shares to patient share based on out-of-pocket costs estimate patient demand, therapy requests, and physician compliance. Combines 3 and 4 PAGE 12

14 Sensitivities to Payer Access % Increase in Price where 0% of Patients are Clinical Trial Results Reimbursed High Impact 30.0% Medium Impact 20.0% Market Access Trends High Reduction 10.0% Small Reduction 5.0% Distribution of Payer Access by Patient Segment (Assuming Default Clinical T Price where 0% of Patients are Reimbursed Patient Segment Specialist & GP Special ist only HeFH 1,266 7,594 Severe PAD 1,898 7,594 High risk CAD 1,898 7,594 Acute ACS 6,328 5,063 Statin intolerant 5,063 6,328 Stroke 5,063 7,594 Type 2 Diabetes 3,797 7,594 Data Type Patient Ranges of Prices to Consider Minimum Price 1,266 Maximum Price 10,125 Patient Segment Assumptions Number of Number of LDL>100 LDL>130 Sensitivity to Patient Segment Patients Patients Utilization HeFH Severe Se vere PAD Severe High risk CAD 3,400 1,700 Severe Acute ACS 1, Less Severe Statin intolerant Less Severe St roke 1, Less Severe Type 2 Diabetes 1, Less Severe All Patient Segments 9,272 4,281 Directions Light green boxes allow you to enter new names that will be used throughout the model. Delete extra Patient Segments if you do not want to include them in the model. Competitive Landscape Terms Assumption Terms US Payer Access Tiers Targetable Population Least Restrictive Tier Tier 2 Large Population LDL>100 Moderately Restrictive Tier Tier 3 or Restricted Small Population (Default) LDL>130 Most Restrictive Tier Not Reimbursed Patient Sensitivity to Payer Access & Utilization EU Payer Access Prescriber Types Very Sensitive Severe Tier 1 (Highest Tier) Specialist & GP Less Sensitive (Default) Less Severe Tier 2 Specialist only Tier 3 (Lowest Tier) Not Reimbursed Clinical Trial Results (Impact on Access & Utilization) Significantly Positive Results High Impact Patient Segments Moderate Results Medium Impact Segment 1 HeFH Less Significant Results Low Impact Segment 2 Severe PAD Segment 3 High risk CAD Copay Assistance Segment 4 Acute ACS Assistance Assistance Segment 5 Statin intolerant Limited Assistance (Default) No/Limited Assistance Segment 6 Stroke Segment 7 Type 2 Diabetes Sampling Segment 8 High Sampling High Sampling Segment 9 Low Sampling (Default) No/Limited Sampling Segment 10 Market Access Trends High Reduction in Access High Reduction Medium Reduction in Access Small Reduction No Change in Access (Default) None Sensitivities to Utilization Percentage % Decrease in Point Increase Δ Market Share in Specialist & between GP Mark et Prescriber Patient Sensitivity Share Types Severe 5.0% 10.0% Clinical Trial Results Hi gh Impact 7.0% 10.0% Medium Impact 3.0% 5.0% Copay Assistance Assistance 0.0% 0.0% Sampling Hi gh Sampl ing 0.0% 0.0% Utilization of Less Severe Patients (Assuming Default Clinical Trial Results, Copay Assistance, and Sampling) Specialist & GP Mark et Share if First Entrant (% of 50% Patients) Specialist & GP Mark et Share for Order of Entry Selected in Outputs Tab (4th) 25% Not Reimbursed at Pmin Not Reimbursed at Pmax Mark et Share (% of Patients) Specialist & GP Speci al ist onl y Decrease in Market Share Relative to Specialist & 0.0% 60.0% 95.0% 95.0% GP Mark et Share by Prescriber Type 25.0% 10.0% 1.3% 1.3% ,266 2,743 4,219 5,696 7,172 8,649 10, % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1,266 2,683 4,101 5,518 6,936 8,353 9,771 30% 25% 20% 15% 10% 5% 0% 100% 80% 60% 40% 20% 0% 13.3% 86.7% 0.0% Specialist & Specialist only Not GP Reimbursed At User Selected Price ( 4,010) 9.4% At Optimal Price ( 11.3% 6,050) 32.5% 38.9% Profit (per Patient) Optimal Price User Selected Price 31.8% 68.2% 0.0% Specialist & Specialist only Not GP Reimbursed 19.7% 23.6% 0% 20% 40% 60% 80% 100% Need to prioritize e.g. key geographies / other key issues The No brainer : Avoid the time wasters (e.g. Australia) More difficult yet key : Assess launch sequencing / timing options from a PMA perspective EU pricing barriers Now bypassing/delaying entry in some EU-5 countries a real consideration Challenging innovation/clinical benefit ratings and economics (Germany post-amnog, France, etc.) Pricing spillovers on other countries (e.g. Japan) Japan matters (potential bigger than EU-5?, HTA risk?) Keep it simple! Need flexibility as things change Sales volume uncertainty will remain (even for big countries like Brazil, Russia and China) Product X expected peak net sales Japan 11% Data inputs Other assumptions ROW 21% EU-5 8% Scenario analysis controls Patient segment characteristics Access Utilization Distribution of access by segment Calculations US Calculations Profit-maximizing Price Market share by segment US 60% PMA scenario modeling can help! Outputs Financials Market Share, Revenue, Profit Impact of Price on Access Distribution of Payer Access Managing price differentials is challenging (exchange rate fluctuations, US price increases, ) Definitions/new molecule customization Distribution of Market share by access by segment segment EU Calculations Impact of Access on Utilization Market Share by segment HeFH Severe PAD High risk CAD Acute ACS Statin intolerant Stroke Type 2 Diabetes All Patient Segments PAGE 13

15 Developing economies: A growing need for tier-pricing and other innovative approaches As drug budgets rise in emerging markets, so is pressure on manufacturers to enable more patients to have access to modern medicine Product X market share (% of total) Bubble size proportional to region s category market size In this example, high correlation between a region s Product X performance and income per capita High share performance in cities where income is highest Low share performance in poorer regions/rural areas Subsequent analysis helped identify new price approaches to increase the value of Product X in India and other developing countries Income per capita (in USD/annum) PAGE 14

16 The rising importance of effective collaborations with a broader set of stakeholders Physician/patient advocacy require formalized processes KOL advocacy can greatly facilitate achieving access with payers, particularly ex-us Critical importance of advocacy is generally recognized Still few companies have adequate processes for it Some accountability for performance of advocacy support required Develop local data early on [for key geographies] Key enabler for advocacy and innovative pricing Can help reduce evidence hurdle (e.g. achieve access with Phase II data) Innovative pricing approaches (MEAs, risk-sharing, etc.) Win-wins and PR deals? Italy risk-sharing model spillover to other countries? Need to ensure outcomes are maximized for payers Net Sales ($m) Assessing and Evaluating Options both from your and payers perspective Manufacturer Perspective Base value: Breakeven value: 12.2% 29.6% Without Contract With Contract Base Value Breakeven Value 0.0% 7.5% 15.0% 22.5% 30.0% 37.5% 45.0% 52.5% 60.0% 67.5% 75.0% Net Costs ($m) 1,500 1,400 1,300 1,200 1,100 1, Payer Perspective Base value: Breakeven value: 12.2% n/a Without Contract With Contract Base Value 0.0% 7.5% 15.0% 22.5% 30.0% 37.5% 45.0% 52.5% 60.0% 67.5% 75.0% Annual Rate of Relapse Annual Rate of Relapse PAGE 15

17 In conclusion: Move early Early PMA involvement, KOL/local data advocacy development Be bold High stakes in PMA in oncology as in other high value-based pricing Think local Delegate / develop effective early collaborations with key geographies (provide tools and processes to support these collaborations) Monitor access and key initiatives (e.g. local data generation) Keep it simple You can t do everything Learn from other therapeutic areas! Oncology has traditionally been insular However, no need to reinvent the wheel or revisiting errors from other TAs If you don t, stakeholders (e.g. payers) may do it at your expense PAGE 16

18 THANK YOU! Christian Frois Vice-President Analysis Group, Inc. Boston, MA USA Tel: PAGE 17