Pricing a new oncology agent across multiple indications

If the patients are sick enough, the theory goes, you can charge a lot for your drug.  How much of a difference your drug makes also matters.

Consider an immuno-oncology agent to be added to the current standard of care in each of the four indications listed in Table 1.  The assumed clinical attributes for the new combination regimens are shown.  They include changes in median overall survival (adding 8 months), median time to progression (adding 4 months), response rates, safety/tolerability and dosing.

Capture.JPG

Applying our analytics, we can quantify the disease burden (mortality and morbidity) and the degree of improvement offered in each patient population. This allows an informed comparison with recent successful launches, and we can thus calculate the US WAC “normative price” for the added agent in each target population (second row in Table 2), based on the value delivered.

Capture 2.JPG

The normative prices for the new drug are translated into implied prices per cycle (third row), which in this example range from $2,500 to $11,700. 

These results allow the team to assess the opportunities and inform the clinical and commercial development strategy.  For instance, with a normative price of $63,100 and a large patient population, 2nd line CRC has high revenue potential (this tool also estimates peak-year patient share and revenue).  If this agent’s price were set at its CRC normative per-cycle price ($3,100), then it would also be seen as appropriately priced in 2nd line ovarian, but it would be somewhat expensive in 1st line melanoma, likely leading to downward pricing pressure and a greater likelihood of access limitations there.  It would however be underpriced in 2nd line head and neck cancer (normative = $11,700), leaving money on the table in that smaller population. 

We have used this framework to help clients evaluate pricing potential for new oncology and hematology drugs across as many as 25 candidate indications for a given asset.  Naturally, other factors affect how indications are prioritized: probability of technical success, strategic fit, and the length and cost of late-stage clinical trials.  Having a sound analysis of pricing potential can make for better development decisions, including not only which indications but also which combinations to pursue.    

Contact Equinox Group to see more details about this application of our tools.

Calquence: The price is right

Conclusion: Our Cost vs. Benefit analysis indicates that Calquence is appropriately priced.

Calquence offers moderate clinical benefit compared to Imbruvica, the standard of care in relapsed/refractory mantle cell lymphoma. Calquence delivers a solid efficacy improvement, the effects of which flow through to improved mortality and morbidity. Combine these factors with somewhat favorable side effects and only slightly worse convenience and Calquence makes for a solid upgrade from Imbruvica. Calquence charges about $170,000/ year (WAC price) compared to Imbruvica’s $157,000. Given its level of clinical benefit, it is appropriately priced.

Drivers for Calquence.PNG

Our Cost vs. Benefit tool allows us to plot Calquence within a historical data set of new oncology drugs that have achieved favorable market access. Incremental cost is plotted along the y-axis and clinical benefit along the x-axis. Our historical data set shows a clear relationship between clinical benefit and cost, forming a cloud of data points. In general, drugs that fall within this cloud are priced appropriately given the level of clinical benefit they offer. Calquence lands just barely above the cloud, which means given the level of clinical benefit it provides, it may have been able to warrant a slightly higher price, but is well within the range of historical analogs.

In relapsed/refractory chronic lymphocytic leukemia, Calquence has shown promising 12 month data, but these data are not yet sufficiently mature to allow us to estimate its clinical benefit in that population. We will update our analyses as more mature data becomes available.

Calquence.jpg

Radicava: Not Innovative Enough to Sustain Strong Start

Conclusion: Despite the early success of Radicava, the new ALS treatment provides little clinical innovation. After the buzz surrounding the first new drug for ALS treatment in 22 years passes, we expect patient share to decline. Radicava’s modest efficacy barely improves patient outcomes; our rare diseases model shows that it’s priced too high relative to its clinical benefit.

Strong Start

According to Mitsubishi Tanabe Pharma America, more than 3,500 ALS patients in the US have been treated with Radicava (edaravone), representing around 20% of ALS patients in the US. This patient share is likely driven by excitement from advocacy groups: following Radicava’s approval, ALS Association president and CEO Barbara Newhouse shared her organization’s hope that the approval “signals the beginning of a new chapter” in ALS treatment. Calaneet Balas, an executive VP for the organization, stated there was “a great amount of excitement” surrounding the drug’s approval and that she thinks the new agent “has brought true hope to [the ALS] community.” Disease burden in ALS in extremely high, and the heavy press coverage surrounding the approval propelled a strong first-year of sales: Radicava tallied $110 million in sales in the US alone in the drug’s first full year.

 

Skepticism

Despite the strong start, we don’t believe Radicava’s growth in the ALS market will be sustained. Radicava is an expensive addition (WAC=$137,400/yr) to riluzole and offers only small efficacy improvements compared to riluzole alone. That modest slowing of disease progression is offset by the inconvenience of near-daily IV infusions in two-week intervals and an absence of data on damage reversal and survival benefits. For Radicava’s price to match the clinical benefit vs. cost of other drugs in rare diseases, its WAC price should be about $55,000/yr.

In addition, although Radicava was approved for all ALS patients, it has only shown results in a small subset of patients who were recently diagnosed (within 2 years) and whose symptoms have rapidly progressed. It is estimated that only 7% of ALS patients meet these criteria, and the authors of the pivotal study state, “There is no indication that edaravone might be effective in a wider population of patients with ALS who do not meet the criteria.”

This limitation has not been lost on payers, with companies such as United Healthcare and Tufts Healthcare requiring patients to meet the trial inclusion criteria in order for their treatment costs to be covered. Lastly, while Radicava boasted strong initial sales figures, we don’t yet have data on rates of treatment discontinuation, which could be high given the modest efficacy, high cost, and inconvenience.

Many doctors share our skepticism. In Discussing edaravone with the ALS patient: an ethical framework from a U.S. perspective, Yeo & Simmons argue that physicians should see past the excitement from advocacy groups. In line with our analysis, these authors urge physicians to take the time to understand the costs and impact of administration demands on patients’ quality of life, and weigh them against the modest efficacy seen in trials.

Our prediction has already started to come true. Mitsubishi Tanabe expects Radicava sales to decline in 2019. In line with our analysis, Mitsubishi expects the inconvenience of frequent infusions to be a deterrent for patients, and the company is already trialing an oral suspension formulation of Radicava that would help justify its current price.

How to Price an Oncology Drug

It is widely agreed that drugs should be priced to reflect their value, or clinical benefit.  But how does one measure clinical benefit?  Equinox Group uses a proven method to quantify clinical benefit, derived from our deep experience in assessing unmet medical need.

A new drug’s proposed cost (on Y-axis, inverted scale) should align with its promised clinical benefit (on X-axis) to place it in the “cloud” of successful recent launches.

A new drug’s proposed cost (on Y-axis, inverted scale) should align with its promised clinical benefit (on X-axis) to place it in the “cloud” of successful recent launches.

Locating clinical benefit on a specific scale allows us to examine how benefit is related to drug price in many recent launches that have gained good market access. Our analysis of drugs that have achieved favorable market access shows a clear relationship between cost and benefit. That observation allows us to advise companies on appropriate pricing for their emerging oncology agents.

Our measure of clinical benefit reflects efficacy, safety/tolerability and dosing, and how efficacy affects disease burden – mortality, morbidity, and cost. 

We can model the expected attributes of a new agent against the background of disease burden in a specific patient population to test the clients’ desired price for the asset.   We can plot the results on the graph above to determine if the new drug falls within “the cloud” of successful agents.  If it does, the drug will most likely achieve favorable market access at the desired price. If not, a rethinking of the pricing strategy may be called for. Our analysis can be applied to the US and each of the five major EU countries, and the same framework can deliver estimates of peak-year patient share and revenue.

Clinical benefit and drug cost vary by patient segment because of duration of treatment, disease seriousness, and a host of other factors, so we analyze each target indication separately. That way, agents with potential in multiple populations can be analyzed in each indication to find the optimizing price for the asset across the board. 

Hemlibra: A Strong Leader in Hemophilia A

Conclusion: The clear leader for hemophilia A patients with factor VIII (FVIII) inhibitors, Hemlibra (emicizumab, Roche) also brings competitive heft to the larger, more crowded, space of hemophilia A without inhibitors. Combining improved efficacy and convenience, Hemlibra offers significant clinical innovation over the current standard of care (SOC), Advate (Shire).

First approved in November 2017, Hemlibra is well positioned within the hemophilia A market. For patients with inhibitors, it wins in a landslide when compared to bypassing agents such as recombinant activated factor VII (NovoSeven®, Novo Nordisk). Among this small group, Hemlibra substantially reduces cost and administration frequency in addition to improving efficacy.

But how does Hemlibra look in the much larger (and more brand-loyal) population of patients without inhibitors, an indication Hemlibra won in October 2018?

Capture.JPG

Compared to Advate, the current SOC among patients without inhibitors, Hemlibra shows meaningful improvements in efficacy, tolerability, and convenience, leading to an 8.7% reduction in unmet medical need, as seen in the waterfall chart. While Advate requires at least three IV bolus administrations a week, Hemlibra can be given as a weekly subcutaneous injection with better outcomes in annualized bleeding rate and in the proportion of patients experiencing zero bleeds per year. 

So far, Hemlibra sales have backed analysts’ high expectations. Hemlibra brought in $224 million in 2018 revenue and looks to claim an even larger market share in hemophilia A patients, both with and without FVIII inhibitors, moving forward.

Our analysis combined clinical trial data from both Hemlibra and Advate prescribing information labels as well as the HAVEN 3 study.



Oral semaglutide: A game changer in type 2 diabetes

Conclusion: Oral semaglutide’s clinical improvement over Januvia (sitagliptin, Merck) is 17 percent – a historically high level of innovation. In type 2 diabetes, nearly every new entrant over the last 20 years has offered an improvement in the low single digits or less. 

Capture.JPG

At this writing, oral semaglutide (from Novo Nordisk) is expected to win approval by the end of 2019. Our analysis compares it to Januvia (with metformin in the background).  The waterfall chart shows that oral semaglutide reduces unmet medical need in type2 diabetes by over 17 percent, compared to Januvia. 

Efficacy drives oral semaglutide’s improvement, reflecting superior glycemic control and reduction in CV events. The efficacy advantages ripple through to mortality and morbidity, conferring still more clinical benefit.  Oral semaglutide has a modest disadvantage in safety/tolerability and slightly higher cost relative to Januvia (we assume the oral form will cost the same annually as the subcutaneous Ozempic).  The net benefit is impressive and will be diminished only marginally when generic sitagliptin reaches market.

The clinical data used in this analysis for Januvia comes from its package insert, and for oral semaglutide, most of the information comes from its phase 3 clinical trials: PIONEER 1, PIONEER 2 and PIONEER 3

Tymlos: A new force in the osteoporosis market

Conclusion: In postmenopausal osteoporosis patients at high risk of fracture, Tymlos offers improved efficacy at a much lower price than Forteo. We expect Tymlos to slowly but significantly cut into Forteo’s share.

Tymlos to Overtake Forteo in PTH-treated Market Segment

Direct competitors, Tymlos (abaloparatide, Radius) and Forteo (teriparatide, Lilly) are both anabolic agents, delivered subcutaneously, and indicated for postmenopausal women at high risk of fracture.* In a study comparing both agents to placebo (ACTIVE trial), Tymlos outperformed Forteo on almost every endpoint, including percent reduction in patients with vertebral and non-vertebral fractures and increased bone mineral density at various bone sites. At less than half the price of Forteo (WAC = $17,000 versus $40,000 /yr), Tymlos is well-positioned to cut deeply into Forteo’s market share. Since osteoporosis patients are unlikely to switch medications, we expect Tymlos will rely on capturing newly diagnosed patients. So far, Tymlos has been successful in this approach: Radius claims that Tymlos captured 40% of new anabolic patient starts in December 2018. The impact Tymlos will have on Forteo’s market share is already emerging. After years of constant growth, Forteo’s revenue decreased steadily throughout 2018.

Evolution of the Osteoporosis Market

The osteoporosis market continues to become stratified into lines of therapy. Payers will likely require all newly diagnosed patients (except those with very high fracture risk) to try a generic bisphosphonate first. Next, a patient will likely be directed towards Prolia (denosumab, Amgen) due to its moderate efficacy, better convenience, and lower cost compared with the anabolic agents (Prolia costs $2,400 per year and is administered subcutaneously every 6 months). Patients failing Prolia would then try Tymlos or Forteo.

 

On the Horizon

Amgen and UCB’s drug Evenity (romosozumab) will soon win approval and will directly compete with Tymlos and Forteo in the high-risk population. Evenity looks inferior to Tymlos in our model because its advantages in side effects and convenience don’t make up for its poorer efficacy. However, with its efficacy on par with Forteo and with better convenience, Evenity should further erode Forteo’s patient share and challenge Tymlos if priced similarly.

*Advanced age, frailty, glucocorticoid use, very low T scores, and increased fall risk are indicators of higher fracture risk in osteoporosis patients.

Xeljanz: Is ulcerative colitis finally the place for JAKs to shine?

When the first JAK (janus kinase) inhibitor, Xeljanz (tofacitinib, Pfizer), was approved for rheumatoid arthritis (RA) in 2012, many thought it would quickly eat up a large piece of the market.  Sales since then, however, have been disappointing.  Some believe this has to do with its initial failure to get approved in Europe, while others believe that there were lingering safety issues that were not recognized in the label. Regardless, sales have continued to climb.

Six months ago, Xeljanz hit the ulcerative colitis (UC) scene –the first JAK to do so. Compared to the current standard of care, Entyvio (vedolizumab, Takeda), Xeljanz shows significant improvement in ­­­both efficacy and convenience, demonstrating that having an oral route of administration could be a game-changer in the world of ulcerative colitis.

Capture.JPG

Now that Xeljanz has an EMA approval in RA (as of March 2017) and more long-term safety data has been released, we expect it to quickly eat up a corner of the UC market. With four other JAKs in late development, this class could pose a serious threat to anyone else hoping to compete in ulcerative colitis. 

Imbruvica: Closing the window of opportunity in CLL

Conclusion: Imbruvica (ibrutinib) delivers profound improvements in efficacy and outcomes in first-line chronic lymphocytic leukemia (CLL); as a result it virtually eliminates the opportunity for developmental agents to offer significant Clinical Innovation in this indication.

The key data supporting the March 2016 label expansion granted to Imbruvica (ibrutinib) for the first-line treatment of chronic lymphocytic leukemia (CLL) are dramatic: 98% progression-free survival at 18 months and 90% survival at 24 months (RESONATE-2 trial). Regardless of the standard of care to which we compare Imbruvica, it represents dramatic innovation, changing a feared malignancy into a mostly manageable chronic disease, much as Gleevec (imatinib) did in chronic myelogenous leukemia (CML) more than a decade ago. The waterfall chart compares Imbruvica to chlorambucil, reflecting RESONATE-2 data.

imbruvica 1.JPG

The implications for companies developing drugs targeted at CLL are profound:

  • It will be virtually impossible to deliver significant Clinical Innovation beyond what Imbruvica appears to offer; the only remaining significant unmet need targets are safety/tolerability and cost (see schema figure below).

  • It will become difficult to recruit first-line patients for clinical trials when as attractive a treatment option as Imbruvica is available, and the trial duration needed to show equivalence to Imbruvica begins to look onerous in relation to the opportunity.

  • At the same time, relapsed/refractory CLL becomes a much less attractive commercial target. By pushing out progression from first line for years, Imbruvica will radically reduce the number of treatable patients available at second and third lines during the next 5-10 years.

  • With CLL joining CML, hepatitis C viral infection, and multiple myeloma as serious diseases that can now be more or less cured with drugs, price will become a more important factor in product selection. Agents no better clinically than Imbruvica in CLL or Harvoni in HCV will need to accept lower prices, whether directly or through contracting, to capture much market share.

Since Imbruvica has reduced unmet medical need so dramatically, companies with competing drugs targeting CLL in Phase II or earlier must rethink their development strategies, redirecting resources to other cancer targets.

This figure shows the domains of medical need in first line CLL. The gold bars reflect how well ibrutinib satisfies need in each domain. The grey area above the gold bar shows the extent of opportunity for improvement for developmental agents. We derive ibrutinib’s values by transforming clinical data to dimensionless index scores between 0 (no need―e.g., perfect efficacy) and 5 (no satisfaction of need―e.g., no efficacy). The transformation functions are consistent across indications, and domain analyses are built up from detailed sub-analyses.    The interpretation for ibrutinib in CLL is that little opportunity remains for improving efficacy, convenience, mortality, or morbidity. The only remaining opportunity for meaningful improvement is in safety/tolerability. The high level of need in the cost domain is driven by high drug cost (which is warranted, given the magnitude of clinical benefit).

This figure shows the domains of medical need in first line CLL. The gold bars reflect how well ibrutinib satisfies need in each domain. The grey area above the gold bar shows the extent of opportunity for improvement for developmental agents. We derive ibrutinib’s values by transforming clinical data to dimensionless index scores between 0 (no need―e.g., perfect efficacy) and 5 (no satisfaction of need―e.g., no efficacy). The transformation functions are consistent across indications, and domain analyses are built up from detailed sub-analyses.

The interpretation for ibrutinib in CLL is that little opportunity remains for improving efficacy, convenience, mortality, or morbidity. The only remaining opportunity for meaningful improvement is in safety/tolerability. The high level of need in the cost domain is driven by high drug cost (which is warranted, given the magnitude of clinical benefit).

Keytruda: Exceptional early results in a small colorectal cancer population

Conclusion: Keytruda (pembrolizumab) is highly efficacious in a subset of colorectal cancer patients that are heavily pretreated, have metastatic disease, and have mismatch repair deficiency. Despite a very high price for a course of therapy, the clinical results overwhelmingly favor pembrolizumab’s use over best supportive care in this subpopulation.

Results were recently published of Keytruda (pembrolizumab) in metastatic colorectal cancer patients who had been treated with a median of four prior therapies. In such a sick and heavily pretreated patient population, it would not be expected that any therapy would make a significant difference, and for most colorectal cancer patients that is the case. However, for a low single-digit percentage of them who are mismatch repair-deficient, pembrolizumab is highly effective. Limited Phase II data show a clinically significant overall response rate, along with exceptionally promising trends in progression-free survival and overall survival. Despite a steep $350,000 pre-discount price for a 20-week course of therapy, the percent reduction in unmet medical need is a highly innovative 35%.

We project that Keytruda will extend median overall survival by 1 to 2 years as opposed to the handful of months to be expected with best supportive care. Survival data in the mismatch repair-proficient population were not nearly as impressive, with clinical performance probably not sufficient to offset the price. We expect pembrolizumab will achieve a label in mismatch repair-deficient colorectal cancer, and will become the standard of care. Furthermore, we expect pembrolizumab will eventually be used in earlier lines of therapy, and testing for mismatch repair deficiency will become far more common.