Medical Innovation

The Value Debate: Can Personalized Drugs Support Personalized Pricing?

Posted on Wednesday, October 10, 2012

“Personalized health care requires a new reimbursement model,” declared Roche’s VP Global Pricing & Market Access Jens Grueger in the elegant London county hall debating chamber on Monday, at the Office of Health Economics (OHE)-sponsored gathering of payers, pharma and economists. The venue was appropriate.  Debate centered around whether the move towards more personalized medicine could reasonably support more personalized pricing.  Roche, with plenty of targeted medicines at stake, thinks, perhaps wishfully, that more differential, ‘value-based’ pricing is one answer to the soaring cost of innovation. Not all payers are so enthusiastic. Grueger’s calling for more differential pricing not just for the same drug in different indications (as already happens in rare cases today) but also within indications. Such “segment-specific” pricing might, for example, see a breast cancer drug priced differently when used in the late-stage setting versus in the adjuvant setting. As Grueger argued, the price would be “based on the value that the medicine brings” in particular settings for particular patients. Most commonly in HTA-driven countries today, a drug is granted an ‘average’ price based on its value across a range of settings. But, emphasized Grueger, that one-price-fits-all- indications strategy doesn’t suit the kinds of medicines that Roche and others are developing (drugs that, just like on-market Avastin, have potential across...

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Risk-Shares Pop Up Again As Payers, Pharma Circle New Payment Models

Posted on Wednesday, October 3, 2012

Say you’re GSK, and a head-to-head trial pitting your drug against the market leader showed non-inferiority. Say, too, that even though you assembled some trial evidence that patients preferred your drug vs. the leader, this hadn’t convinced everyone. So, with 70% of prescriptions still favoring your competitor, what to do? Blunt rebating is one option – but hardly commercially attractive. So how about taking the risk of testing your tolerability claim in the real world? That won’t eliminate the need to rebate (that’s a permanent fixture with me-too drugs) But it may limit it – and, potentially, allow a reduction in the rebate going forward. Here’s how such a contract might work. In exchange for covering drug A, the payer gets discount X. If the drug meets a certain tolerability threshold (defined, of course, relative to the competitor) that discount remains. If it doesn’t, the discount deepens. In the future, if that tolerability data can be turned into reduced overall cost (side-effects, treatment switching costs) the discount may shrink. Impracticable and unlikely to pass muster with payers, you say. Generally speaking, you’d be right. Exhibit number one supporting your conclusion: the paucity of risk-sharing in the US to date. Exhibit number 2: payers’ publicly disclosed reasons for this scarcity,...

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The Prostate Cancer Battle: Can Xtandi’s Convenience Support a Premium Over Zytiga?

Posted on Friday, September 28, 2012

It may be Orion/Endo’s ODM-201, a potentially first-in-class anti-androgen to treat metastatic castration-resistant prostate cancer, that’s generating the most buzz ahead of this weekend’s European Society of Medical Oncology (ESMO) meeting in Vienna. But payers and physicians have a much more pressing concern: how to objectively evaluate two competing anti-androgens, Janssen’s Zytiga and Medivation/Astellas’s newly approved Xtandi, already on the market to treat advanced prostate cancer in the post-chemotherapy setting. A review of peer-reviewed published data suggests both drugs provide essentially the same overall survival benefit relative to placebo, and have similar quality-of-life data. Thus, the battle boils down to this: whether Xtandi’s superior convenience and its freedom from required co-administration with corticosteroids can support its 28% price premium. That could prove an uphill battle. Medivation and Astellas don’t yet have data linking its benefits to either improved outcomes or cost-savings, data points that are increasingly important in the post-reform era of accountable care. Indeed, there are signs that payers may finally be ready to say no to certain oncology drugs, albeit initially by targeting the low-hanging fruit: next generation, chemical improvements of existing molecules (think Abraxane) rather than first-in-class treatments. In a world where clinical pathways that rank medicines based on efficacy, toxicity, and cost are used to...

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Zeke Emanuel: Re-Incentivizing Pharma & Device Companies to Solve Technology’s Data Problem

Posted on Friday, September 28, 2012

Zeke Emanuel would like to set the record straight. He’s not against new medical technology. Indeed, the UPenn med school and Wharton professor calls the profusion of industry-generated new technologies “a great thing”. But his support is necessarily tempered — a wariness born from his days as a health policy advisor in the Clinton and Obama administrations. Emanuel’s willingness to critique newer, costlier innovations that deliver results no better than older, cheaper technologies has made him a lightning rod for critics who argue he’s in favor of rationing (as well as death panels, which he was famously accused of inventing as part of his role in fashioning the Affordable Care Act). He also happens (with another dozen and a half similarly influential panelists) to be a speaker at the Real Endpoints Symposium on Nov 1-2 in Philadelphia. The unfortunate truth, says Emanuel, is that advances in healthcare technology have generally not delivered the kind of productivity benefits Moore’s law describes in computer processing. But that won’t always be so. Future technologies, he believes, will not only increase the quality of healthcare, particularly in areas which haven’t seen much progress, but also “lower costs and do it more efficiently.”  That double goal is “what technology is supposed to do…we just...

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Patient-Based Pricing: An Answer To The Soaring Cost of Innovation?

Posted on Friday, September 21, 2012

Roche’s investor day on Sept. 5 provided heartening news for breast cancer patients. Executives outlined an array of increasingly targeted therapeutic permutations to combat the tumor, building on its leadership with Herceptin. But payers will have come away worried. The slew of new drugs, combinations and conjugates points to rapidly-multiplying per-patient costs, as (likely) premium-priced individual treatments are teamed up. Roche seems to be aware of the tension. Even as it promoted more effective versions of existing blockbusters like Herceptin, it also discussed a new model for how such drugs ought to be paid for: patient-based pricing. Marketing chief David Loew talked about moving “from pack-based to patient-based pricing”, borrowing from a concept that is gaining traction scientifically –personalized medicine—and applying it to the commercial marketplace. “Different prices will be applied…depending on indication, setting, and combination,” he told investors. How this works without causing administrative chaos is unclear — but the alternative, sum-of-the-parts pricing, is equally nightmarish. Those holding their breath for the era of cheaper Herceptin (whose patents are due to expire in 2014 in Europe and five years later in the US will likely have to wait far longer. That’s because Roche has redefined the boundaries on  its Her-2 breast cancer franchise, conveniently expanding Herceptin’s commercial life cycle with...

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Europe’s New Season HTA: German System Beds Down; NICE Grip Tightens

Posted on Wednesday, September 5, 2012

European HTA officers return to their offices after the summer break with more job-confidence than many other health care stakeholders.  Rather like lawyers, their role will become more important as budget pressures mount amid continued European economic turmoil. Indeed, the Germans are patting themselves on the back for their new early-benefit assessment system: G-BA Chairman Josef Hecken on Sept. 3 in Berlin declared the system “transparent, legally secure and predictable” with decisions based on “clear, evidence-based criteria.”  Sponsors of drugs including Zytiga, Jevtana (prostate cancer) and Gilenya (MS), which will soon emerge from the pricing process, will be wishing it was more predictable still. Pharma associations criticise the choice of (often cheap) comparators. And there have been other wrinkles: around whether negotiated prices would be published (they will); around VAT (expected to be payable on the full, not discounted price); and around pharmacy software struggling to cope with discount data. But even after just two medicines have been priced (Brilique and Esbriet),  the 20-month old system looks here to stay. There’s no suggestion that UK cost-watchdog NICE is going away, either. But there were mixed messages over the summer. On August 20, the agency appeared to have got its claws clipped –again — , with news that its appeals panel...

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The Healthcare Round-Up: August 3 -19

Posted on Monday, August 20, 2012

The Olympics (and shark week) are over, the dog days have officially arrived, and here at the West Coast branch of Real Endpoints, it’s back to work as the little people head back to school. (Already!) Given Mitt Romney’s choice of Paul Ryan as his running mate, it’s a sure bet healthcare (especially Medicaid and Medicare) will remain a subject of debate in the run-up to the presidential election. So will the subject of “big medicine” and standardization. Atul Gawande’s New Yorker piece on the topic continues to generate discussion in the blogo- and twitter-spheres as well as #longread recommendations. And it’s no wonder. If you’re like me you’ve probably taken for granted (or refused to believe) that a chain like the Cheesecake Factory can provide high quality food and service for a reasonable price. What Gawande does so well is show you the non-obvious steps that CF uses to manage the process and highlight where—and how—such standardization would make a difference in healthcare delivery. Even better are the specific examples he cites, whether it’s Steward Hospital’s tele-ICU service or Brigham and Women’s Hospital’s attempt to standardize joint-replacement surgery. In the latter case, it’s interesting to see how the creation of a dedicated process –for instance, one that requires...

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Are Choppy Reimbursement Waters in the Forecast for Oncotype Dx?

Posted on Thursday, August 16, 2012

Genomic Health’s Oncotype Dx, a 21-gene assay to predict breast cancer recurrence and chemotherapy response, is one of the market leaders in the brave and expensive new world of molecular diagnostics. Influential payers like Medicare and Blue Cross Blue Shield have endorsed the test, which lists for more than $4000; powerful societies like the National Comprehensive Cancer Network and the American Society of Clinical Oncology have also given the diagnostic their blessing. Meantime Oncotype Dx’s position as standard-of-care has been further codified by clinical pathway providers such as Cardinal’s P4 Healthcare, McKesson’s US Oncology, and Via Oncology. The upshot:  competitors such as Agendia’s MammaPrint and Clarient’s Mammostrat have thus far failed to challenge Oncotype Dx’s primacy. But that doesn’t mean Oncotype Dx’s reimbursement case remains a slam dunk, especially in Europe where payers are demanding more proof of the test’s cost-effectiveness. In provisional guidance released earlier this year, the UK’s health technology assessment agency NICE noted it “could not recommend” Oncotype Dx “because of uncertainty in the evidence of clinical effectiveness leading to uncertainty about the cost-effectiveness.” Final guidance has been delayed until a subsequent September committee meeting. As outlined in this recent Real Endpoints’ Insight, NICE’s stance on Oncotype Dx should be a cautionary reminder to developers of...

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Could German Pricing Reform Lead to More US-Style Payer Competition?

Posted on Tuesday, July 31, 2012

It’s an odd, chalk-and-cheese notion: that a typically European, rather socialist form of pricing and reimbursement reform such as AMNOG, Germany’s system of early added-benefit assessment for new drugs, could help drive more free-market-style competition between the country’s statutory health insurance (SHI) funds. There are signs that it’s happening, though — albeit via a roundabout route. That matters to pharma, since more competition among payers means a more aggressive efficacy drive. That may in turn call for direct contracting with individual drug firms, be it to help generate compelling outcomes data, improve adherence or whatever. Unlike most other European payers, Germany’s SHIs are awash with cash. That’s in part thanks to an increase in individuals’ health care contribution rate, as a percentage of gross wage, to 15.5% from January 2011. But AMNOG helped too, causing a drop in drug expenditure of 6.5% in the first half of 2011. This comfortable position means few, if any, SHIs have to charge top-up premiums to their insured in order to cover costs. That means less competition, since, to any individual, all of the 150 or so funds look similar. But less competition is precisely the opposite of what government has been trying to promote since 2009, with reforms designed to increase pricing...

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Orphan vs Effectiveness: German Payers Win 11% Discount on Esbriet

Posted on Tuesday, July 24, 2012

InterMune’s orphan drug for idiopathic pulmonary fibrosis (IPF), Esbriet, on July 23 became the second product to be priced within Germany’s new reimbursement system.  The result: an almost 11% discount on the drug’s initial ‘free’ price in Germany (in place since September 2011), on top of the 16% mandatory rebate that for now affects all drugs in Germany. Superficially, that looks like a clear win for payers. But it’s not entirely bad news for pharma either — particularly those developing orphan drugs. Indeed, Intermune management on a same-day conference call declared the net $33,000 per patient, per year price tag for the drug — published clearly for all to see — as “fabulous”. How so? After all, Esbriet’s price in Germany — which used to top the drug price rankings — is now lower than that in at least half of the other six European countries for which prices have been set (in Iceland, Esbriet sells for $43,700 per patient, per year). Yet in fact, Esbriet, as the pioneer orphan within Germany’s hastily-implemented new system, has emerged relatively unscathed after a very rocky ride.  In late 2011, it received the lowest possible ‘added benefit’ score from HTA body IQWiG, which advises the German reimbursement authority, G-BA. These scores, granted to new...

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