Market access: Negotiating the new landscape for oncology
*Peter Mansell explores how the boom in cancer drug development conflicts with current healthcare funding models *
By on Jan 25, 2011Peter Mansell explores how the boom in cancer drug development conflicts with current healthcare funding models
There has been a gold-rush mentality around the market for oncology drugs in recent years.
And in the long run, that may prove to be the markets undoing.
Scientific advances, such as genomics and molecular biology, have thrown wide open the possibilities for better targeted, more effective, and safer therapies against an ever wider range of cancers.
Not surprisingly, pharmaceutical and biotechnology companies have jumped at the chance to mitigate the current R&D drought, address unmet needs, and secure premium prices in a segment that, for all the media focus on patients denied state-of-the-art therapies, still carries a good deal of political clout.
Counting only biotechnology products, estimated by IMS Health to make up more than a third of oncology candidates in late-phase development, there are some 254 treatments in development for cancer and related conditions.
There are 162 for the second largest category, infectious diseases.
As the oncology pipeline fills up, governments and other healthcare providers/payers are homing in on the prices of cutting-edge therapies such as Erbitux (cetuximab) and Avastin (bevacizumab), especially as populations age and more cancers make the transition from death sentence to manageable chronic illness.
These concerns are symptomatic of a broader environment marked by the inability of governments to meet growing healthcare demand, an increasingly conservative attitude towards innovation, tighter regulation, an evolving customer base, and a very negative perception of industry, noted Michael Zaiac, vice president and head of global medical affairs, adolescent/adult vaccines for GSK Biologicals, at eyeforpharmas 2010 Oncology Market Access Europe conference.
A complex and demanding environment
Market access challenges have proliferated in kind.
Back in 1990, said Richard Lomas, external affairs and market access manager for Genzyme Therapeutics UK, the formula largely boiled down to clinical evidence plus key opinion leader support and the money followed.
Now, Zaiac observed, there are multiple bases to cover: optimizing the summary of product characteristics; identifying the right patients; developing and commercializing appropriate biomarkers; securing medical endorsements; regional and local treatment guidelines/recommendations; showing real, measurable benefits to local, regional and national health technology assessment bodies; negotiating with payers/reimbursers; and addressing multiple stakeholders.
Despite the strong emotional and political headwind behind cancer, these challenges tend to intensify in the oncology category, where prices, cost-benefit ratios, and comparative effectiveness are under increasing scrutiny and there is growing resource to commercially unpredictable risk-sharing schemes.
That said, the oncology landscape still has much to offer.
Uday Bose, European head of oncology for Eisai, described it as a highly motivating environment delivering significantly improved patient outcomes with constant evolution of the treatment paradigm.
The question is whether this motivation can survive and prosper in such a complex and demanding market access environment.
Escalating costs
As Lujing Wang, vice president of Campbell Alliances pricing and market access practice, pointed out, cost is one of the cornerstones of market access.
Cancer costs are escalating, not only due to high prices but to growing disease prevalence, earlier diagnosis, better radiation treatment and surgical resection (which expands the available population for drug treatment), and a wider range of treatment options.
These effects are particularly marked in the US, where healthcare expenditure accounts for 20% of gross domestic product.
Yet, as Wang observed, most elements of the healthcare reform package pushed through Congress in March focus on access rather than cost.
When unit cost inflation, aggravated by increased use of innovative products, is lumped together with rising system overheads, an ageing population, and misaligned incentives such as controls on supply and demand, the inevitable consequence, Wang warned, is denied, delayed, or restricted market access and downward pressure on prices.
Expensive cancer drugs, such as Sutent (sunitinib), are being forced to offer free cycles of treatment, which are price cuts by another name.
The 50% discount required from pharmaceutical manufacturers in the US to fill the donut hole coverage gap for Part D drugs under Medicare will be a disaster for other premium-priced brands like Avastin, Wang believes.
While the US is going down the big government route in healthcare, there are a number of other relatively fragmented healthcare markets in which payer consolidation is increasing leverage over costs, Wang noted.
In Germany, there were 1,221 sick funds in 1992 and only 242 in 2008.
Moreover, the role of primary care is being refocused to create gatekeepers to access.
As a result, the competitive landscape for cancer drugs has transformed, with market access ramping up from 0% to 100%, according to Wang.
That means the competitive edge is no longer in sales and marketing but in value added.
A growing mandate for HTA
European countries such as France and Germany are seeing a growing mandate for more aggressive HTA while the US is looking to Europe for direction, Wang said.
NICEs cost-per-QALY formula may not be readily transferable abroad, but the UK agency is setting benchmarks and working with counterparts in more than 60 other countries, including the recipients of the $1.1 billion allocation for comparative effectiveness research in the US.
As Wang noted, this is a sizeable chunk, about equal to the total government investment in NICE since 1999.
Furthermore, emerging markets for pharmaceuticals, such as South Korea, Taiwan, and Brazil, are building up their own HTA capabilities, while the US managed care model is being exported (e.g. through Medco) to Europe and Asia.
One symptom of this environment, and the rapid congestion in more traditional oncology categories such as breast cancer and non-small cell lung cancer, is a gathering interest in orphan indications for cancer drugs.
Wang specified two commercial approaches in this respect: the pothole strategyentering the market with a niche indication that addresses an unmet need, then expanding into other indications and tumor types (e.g., Avastin)and the jackhammer approach, whereby a company differentiates in a crowded category by breaking the market up into subsets of patients or market segments that did not previously exist (e.g., Herceptin).
The salami-slicing or niche and creep strategy in oncology is already proving contentious, particularly with the blurring of orphan and regular indications and the tendency to set the pricing and reimbursement agenda (and avoid unfavorable reference pricing from market to market) with the lead indication.
Anne-Toni Rodgers, director, government affairs and public policy Europe for Baxter Healthcare, warned that companies are losing credibility with reimbursement agencies by securing coverage for very small cancer indications when they know they have plenty more in the pipeline.
And as Ulf Staginnus, head of pricing, health economics and outcome research, Europe for Novartis Oncology, commented, too much reliance on orphan status means that once everyone is special, then no one will be special.
But Anant Murphy, head of market access, Europe for Celgene International, dismissed the assumption that reimbursement for a cancer drug on a narrow labeling platform then kicks open the door.
When Velcade (bortezomib) files for a label extension, he said, in many countries this entails another discussion with the pricing and reimbursement authorities, and often Celgene is forced to lower its price.
Risk sharing and patient access schemes
There was also some skepticism about the continuing feasibility of risk sharing and other patient access schemes, which increasingly seem to be a sine qua non of market access for some of the newer oncology therapies.
Citing the heavy administrative burden involved as well as concerns around the system bandwidth, financial risks, implications for net prices, and reliance on a cost-centric approach that raises payer expectations, Wang said there is a feeling these schemes have already gone as far as they can.
According to Murphy, who gave a presentation on risk-sharing schemes, these programs are really about managing uncertainty, such as disparities (and associated cost variance) between clinical efficacy and real-life effectiveness.
Most schemes are designed to reduce or limit expenditure without the fuss of cost-effectiveness assessment and outright denials of access.
This does not mean they are without interest for manufacturers, he added.
Indeed, there are distinct benefits such as the political kudos for both payers and manufacturers of negotiating access to new therapies on a payment-by-results basis.
Risk sharing is also an opportunity to maintain list prices, circumvent the expense of a cost-benefit submission (and exposure to dodgy social value principles such as QALYs) and to drive value through knowledge gained in tracking in-market effectiveness.
But Murphy also had a number of caveats.
Value creation through enhanced knowledge of real-life effectiveness is almost impossible to maintain in practice, while in-market results usually come out worse than the evidence from clinical development.
Sponsors also need to ensure that discounting in a risk-sharing scheme does not jeopardize product value and undermine the pricing structure for follow-on indications.
Too many moving targets
Ulf Staginnus saw a number of storm clouds gathering over the European market access landscape for the next generation of oncology products.
The most worrying of these is an uncertain business climate with no clear frame of reference and too many moving targets.
Staginnus highlighted in particular the increasing difficulty of planning launch prices due to currency fluctuations and repeated re-assessment of pricing policies according to different reference criteria in countries such as Spain and Greece.
For example, he explained, the conventional staggered launch program for a new drug, in which nominally free pricing (tempered by profit controls under the Pharmaceutical Price Regulation Scheme) has made the UK a favored point of entry, has been scuppered by the devaluation of sterling.
Companies are now effectively dealing with two Europes in pricing terms, with an amazing value drop in Central and Eastern Europe that is then imported via low-priced countries such as Spain or Greece to other European markets.
Rodgers reminded the conference that Europe may be climbing out of recession but the economic crisis is not over yet for healthcare.
Healthcare policy
In most European markets, health is a socially funded public service in which budget allocations have been diverted into tackling public sector deficits.
Rising demand, shrinking healthcare income, fixed capital costs and assets, high levels of unemployment and patient consumerism make it all the more difficult to find savings.
Drugs are a very visible target and will continue to be singled out for healthcare cuts, Rodgers predicted.
To this end, the standard government tool kit for pushing down costs will become better defined and more rigorous.
In Rodgers view, this will include price controls (reference pricing, tougher cost/volume negotiations); more sophisticated purchasing and commissioning; head-to-head competition including tenders and reverse auctions; limits on treatment and product choice; closer HTA scrutiny of rare/orphan conditions; more stringent evidence requirements (cost-effectiveness, etc); more risk management/patient access schemes; and the expansion of conventional supply and demand management tools such as guidelines, co-payments, and generic substitution.
As she pointed out, cancer has already pushed the boundaries in healthcare policy, with concessions such as NICEs end-of-life criteria, patient access schemes, co-payment innovations, and patient engagement.
And with equity issues arising over less vocal patient populations, as well as a massive shifts towards preventive strategies to take the strain off healthcare budgets, governments are going to be taking a much harder look at return on investment in the category, Rodgers warned.
Tough choices
The common thread in all of these perspectives was that the boom in cancer drug development, for all its benefits to science, society and the long-term viability of a research-intensive pharmaceutical industry, is essentially incompatible with healthcare funding models and priorities as they now stand.
That will mean tough choices for governments, patients, society and industry.
It is for industry to make sure its voice is heard when these choices are made and to strengthen that voice through an end-to-end commitment to generating and demonstrating sustainable value in oncology.
For more on HTAs, see HTAs go global: What it means for market access.