Oncology Market Access & Pricing USA

Jun 15, 2017 - Jun 16, 2017, Philadelphia

Create a dominant market position by aligning payers, your goals and your brand

Face Value

With oncology drug prices under intense and growing scrutiny, how are companies proving the value of their medicines?

The US’ multi-layered, complex healthcare payment system is not immune to the global push towards proving value. While the outcomes-based models employed for many years in Canada and some European countries have failed to garner enthusiasm on this side of the Atlantic, a broad range of alternative payment systems are under consideration. However, with its 200+ payers to consider, the heterogeneous US healthcare system presents significant challenges.

This drive towards value is most evident in the field of oncology, where the prices of innovative therapies have stoked controversy recently. It is the advent of immunotherapy in cancer that has prompted increased focus on value, says Anna Forsythe, formerly Head of Global Value & Access at Eisai and now Managing Partner at Purple Squirrel Economics. “The prices are outrageous and the duration of treatment is very long; we are talking about chronic treatment in many cases, or semi-chronic over more than two years. There are also recommendations now of combinations, two very expensive treatments taken together for an extended period of time. Where we are going with the science will not be able to be sustained from the budget perspective,” says Forsythe. Yet, US headquarters of pharmaceutical companies are only starting to become more interested in health economic analyses that are de rigeur in other markets. For example, the work of ICER – the Institute for Clinical and Economic Review – has taken pharma by surprise, she says, with several companies contacting her in search of urgent treatment comparison studies, invariably without the relevant background preparation.

No longer a bottomless pit?

For Stephen Eck, Vice President of Oncology at Astellas and Board Chairman of the Personalized Medicine Coalition, when it comes to value, there are two main issues.

“Firstly, there is only a limited amount of money to pay for healthcare; whether you pay through your employer, your insurer or the Affordable Care Act, all the systems are constrained. Regardless of how the politics come out, we need to ensure patients have access to medicines. Independent of how Congress and the new Administration decide to structure that, the issue isn’t going to go away.”

The second issue is that pharmaceutical companies are just too good at their jobs, embracing innovations, investment for which must be clawed back. “We have done a very good job of bringing forth drugs that have very large benefits, plus the drugs are getting safer and safer every year. We have to deliver a product that is increasingly better than what is already out there, not simply a marginal improvement.”

A marginal price increase for a marginal improvement might be acceptable, but the thirst for “transformational” drugs requires more investment, which ultimately needs to be returned to the investors, says Eck. “In oncology, the new checkpoint inhibitors offer very large and dramatic effects; when you can deliver something of that magnitude, it is easy to demonstrate value. The concern of the industry is that if the value is not recognized and appreciated, there won’t be money for reinvestment.”

Better understanding of diseases and the advent of personalized medicine mean that patients who will respond best to newer treatments can be identified in advance, he says. “For example, there are many forms of non-small cell lung cancer – squamous, adeno, etc. – and we treated them all the same, but not anymore. The idea that we identify which drug the patient needs and will benefit from and offer it to them has two effects – it drives up the impact of the drug as it is focused on the people in which it works, and there is a lot of certainty around your outcome. Those two things work together to increase the quality of healthcare and the overall value score.”

For Eck, this means development timelines being compressed, which requires careful planning in terms of market access. “When the marketplace changes rapidly, it makes it harder to forecast what position your drug will be in. Making sure your drugs fit within the practice plan of whatever therapeutic indication you are going after is another aspect – if it’s going to be majorly disruptive then it has to be planned. These kinds of considerations are becoming more and more important.” 

Uncertainty rules

A key element of the ‘problem’ of how to demonstrate the value of a medicine in the US is the sheer number of potential value frameworks, says Forsythe. “It is not clear yet what the interest in each of these frameworks will be. ICER is the only one that is a form of health technology assessment and it is the most feared by pharma, but there are already instances where payers have looked at ICER’s report and asked for a discount. Pharmaceutical companies are not happy about this, but they are beginning to realize they have limited ability to influence it without the data. It will never go back to the way it was, where there was unlimited money for all new treatments.”

This uncertainty is deepened by the political situation, says Jennifer Hinkel, Partner at McGivney Global Advisors, which specializes in oncology and specialty pharmaceutical market access. Under Obamacare, she says, “we were going to see public insurers take the lead and private insurers quickly follow, but now it is going to be left to the private insurers to be experimental and push out their perspectives.”

Yet, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) remains law – for now. “That is still happening, so the Oncology Care Model and some of those pieces are still moving forward.”

Hinkel agrees with Forsythe that ICER’s assessments were a shock to the industry, but they may well be the prelude to much more value assessment coming down the tracks. “ICER is trying to be a bit like NICE in the UK, by using a QALY-based (quality-adjusted life years) calculation as to where they think drug prices should be. However, there is no public policy foothold for that organization and they’ve had their wings clipped a little bit in terms of what they wanted to do in the policy sphere.”

Yet, many private payers are looking to such organizations for guidance. “We will continue to see these organizations working, but their strategy will be different from here on in.”

The outcomes-based systems proposed by ICER will continue to be “strongly opposed” by manufacturers, says Hinkel. “They tried to engage on a scientific level and play nicely with them, but the results coming out of ICER have been biased negatively against the industry.” She points to the funding ICER receives from private insurers. “Arguing for lower prices seemed to be merely a tool for leveraging larger discounts and not necessarily a way to lower the costs for patients or providers.”

It is going to be left to the private insurers to be experimental and push out their perspectives.

Changing course to follow the lead of its European counterparts in health economics will be difficult, she says. “The difference with the US is that we have such a fragmented market, with so many different payers and different providers, and we lack the social contract that exists in most of the European countries, where some things are sacrificed so that there is a good baseline of care for all people. We lack that social solidarity around healthcare.”

Sharing risk

Risk-sharing agreements, also gaining popularity globally, may seem attractive to some stakeholders, especially manufacturers, says Hinkel. “It gives a bit more control than merely negotiating a discount. It also gives them data and an opportunity to differentiate themselves against competitor molecules and competitor agents in certain subpopulations.”

Risk-based contracting will be explored, she says, but we are unlikely to see it in action for a few years. “We are going to see a lot of models that look similar to the [CMS] Oncology Care Model (OCM), so that it doesn’t fundamentally remove what we call the ‘buy-and-bill’ system. The OCM is keeping that intact but gives bonus payments for certain quality criteria as well as assessing how much you spent on a patient over six months, compared with the average for those types of patients. As it’s essentially an enhanced buy and bill model, it doesn’t fundamentally alter a lot of the economics.”

Everybody agrees that we do not know what is going to happen but that there are going to be more stringent discussions with payers about value and about price.

Pricing by indication is another model that has garnered some attention, but for Hinkel its use is particularly difficult in the US, largely due to the coding system. “If a pharma company has a drug used in both cancer and another disease, and they have two sales teams, it’s hard to know which sales team sold more. If a drug is going into a big institution, you don’t know how they are using it; there is nothing in the sales data or coding that tells you that. Theoretically, the use of pricing by indication is not feasible without a whole lot of change to how the US distribution system works.”

Any new payment models present opportunities for experimentation, she says. “With the Oncology Care Model, we are using these quality measures for the first time as incentives and penalties (where you don’t get paid the full amount if you don’t meet all the measures). This represents a big opportunity for pharma to look beyond their drugs at the disease area, to see whether patients are being diagnosed properly or helping patients to be adherent to therapy or managing side effects.”

What does the future hold?

While the value conversation is not a new one for the US, it seems to be reaching a tipping point, leaving the situation very difficult to predict. “Some years back, we had a big access problem due to the high number of people uninsured in this country, which was at least partially resolved by the Affordable Care Act,” says Hinkel. “My concern is that, if that goes away without a replacement to keep the same level of insured people, the access question is going to be completely monopolized by figuring out how to get people insured again rather than more nuanced discussion about value and access. The conversation we are having now is at risk of being drowned out by the political speculation on what the healthcare system is going to look like if it is completely reformed.”

She adds: “People are concerned that there could be a very big disruption coming in the market and they don’t know what to prepare for exactly. There are so many question marks hanging over everything.” For Forsythe, one thing is certain: “Everybody agrees that we do not know what is going to happen but that there are going to be more stringent discussions with payers about value and about price.”

Eck believes companies have little choice but to wait and see. “With various payment models, we are going through a lot of experimentation, which in many ways is a good thing because we can find a better system that rewards value and personalized medicine. You need to see these utilized for a while before you can assess whether they’re worthwhile or not; in some cases, the administrative burden may outweigh the savings. Some could be a more complex and more error-prone, so they are not without their own issues. Some of them may be better suited to certain environments than others. But the fact we are even trying them is reflective of the fact that we only want to pay for value.”

Extracted from Trends in Oncology, Market Access & Pricing Magazine. Click here to download.

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Oncology Market Access & Pricing USA

Jun 15, 2017 - Jun 16, 2017, Philadelphia

Create a dominant market position by aligning payers, your goals and your brand