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WHAT IS A FAIR AND REASONABLE PRICE FOR HIGHLY EFFECTIVE DRUGS? CHSPR CONFERENCE: Sticker Shock… Sean R. Tunis MD, MSc | 3 March 2015
WHAT IS A FAIR AND REASONABLE
PRICE FOR HIGHLY EFFECTIVE DRUGS?
CHSPR CONFERENCE: Sticker Shock…
Sean R. Tunis MD, MSc | 3 March 2015
Streptomycin treatment of pulmonary tuberculosis
Philip d’Arcy Hart Marc Daniels Austin Bradford Hill
Courtesy of David Sackett
The Challenge
4
FAIR AND REASONABLE PRICE
• Benefits justify the amount paid
• Good “value” for money
• In line with alternative options
• Affordable (in light of opportunity costs)
Peter Bach, et al, NBER working paper, Jan 2015.
Peter Bach, et al, NBER working paper, Jan 2015.
7
INVESTMENT ANALYST VIEW
• “Thus, as concerned as we are that traditional
drug pricing power (specifically the ability to
inflate prices of existing products) will be
seriously impaired, we have very little concern
that specialty drug pricing power (the ability to
launch new products at substantial premia to the
products they replace) faces any major threat in
the near to mid-term.”
– SSR, July 2014
The pipelines are back
H E A L T H & G R O W T H 8
1 Copyright © 2014 Evaluate Ltd. and EP Vantage. All rights reserved.
PD-1s make way for the next wave of blockbuster launches
Product Company Lead therapy area Pharmacology class NPV ($bn)
Kalydeco + lumacaftor Vertex Cystic fibrosis CFTR corrector 13.83
LCZ696 Novartis Heart failure AT1 antagonist & neprilysin inhibitor 12.45
Obeticholic acid Intercept Liver diseases FXR agonist 7.84
Fovista Ophthotech Macular degeneration Anti-PDGF-B aptamer 6.19
Alirocumab Sanofi Hyperlipidaemia Anti-PCSK9 MAb 5.73
MPDL3280A Roche Lung cancer Anti-PD-L1 MAb 5.41
MEDI4736 AstraZeneca Lung cancer Anti-PD-L1 & CTLA4 MAb 5.33
PB272 (neratinib) Puma Biotechnology Breast cancer pan-HER inhibitor 4.81
MK-5172/MK-8742 Merck & Co Hepatitis C NS3/4A & NS5A inhibitor 3.87
AZD9291 AstraZeneca Lung cancer EGFR inhibitor 3.55
Bosatria GlaxoSmithKline Asthma IL-5 MAb 3.09
Abemaciclib Eli Lilly Breast, lung cancer CDK 4 & 6 inhibitor 3.02
Dupilumab Sanofi Eczema/dermatitis IL-4 & IL-13 antagonist 2.97
Selexipag Actelion Pulmonary hypertension PGI-2 receptor agonist 2.36
Dengue vaccine Sanofi Dengue fever Dengue fever vaccine 2.35
A
2 Copyright © 2014 Evaluate Ltd. and EP Vantage. All rights reserved.
Product Company Lead therapy area Pharmacology class NPV ($bn)
Palbociclib Pfizer Breast cancer CDK 4 & 6 inhibitor 8.67
Evolocumab Amgen Hyperlipidaemia Anti-PCSK9 MAb 5.44
Interferon-free combo AbbVie Hepatitis C NS3/4A protease & NS5A inhibitor 5.27
Brexpiprazole Otsuka Holdings Schizophrenia, depression 5-HT1A & D2 agonist & 5-HT2 antagonist 2.64
Cosentyx Novartis Psoriasis Anti-IL-17A MAb 2.50
Toujeo Sanofi Type I and II diabetes Insulin analogue 2.26
RLX030 Novartis Congestive heart failure RXFP agonist 2.23
V503 Merck & Co Cervical cancer prophylaxis HPV vaccine 2.17
Asfotase Alfa Alexion Pharmaceuticals Hypophosphatasia Alkaline phosphatase enzyme therapy 2.16
Lynparza AstraZeneca Ovarian cancer PARP inhibitor 2.11
Lenvatinib Eisai Thyroid cancer VEGFr tyrosine kinase inhibitor 1.93
Natpara NPS Pharmaceuticals Hypoparathyroidism Parathyroid hormone 1.29
Blinatumomab Amgen Acute lymphocytic leukaemia Anti-CD19 MAb 1.25
Farydak Novartis Multiple myeloma Pan-deacetylase inhibitor 1.09
Aripiprazole lauroxil Alkermes Schizophrenia 5-HT1A & D2 agonist & 5-HT2 antagonist 1.09
Source Evaluate Pharma report October 2104
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Definition of Value
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VALUE: SIMPLE VERSION
• Health outcomes achieved per dollar
spent
– IOM 2006
• Health outcomes are inherently condition
specific and multi-dimensional
– Michael Porter, NEJM, 2010
The Elements of Value
• All stakeholders appear to agree that patient health is at the core
of value
• Forum found it helpful to distinguish between:
Core Elements of value
Health benefit for the patient, e.g., improved prognosis/survival, symptom/pain relief, improved functioning, reduced risk/side effects
Wider Elements of value
Other benefits for patient, e.g., financial, convenience, choice, reduction in uncertainty
Benefits for caregivers/family, e.g., health, financial
Benefits for society, e.g., public health benefits, improved productivity, support for needy/disadvantaged groups, economic benefits of innovative industries
Benefits for health & social care system, e.g., quality and cost/efficiency of care
Best Practices for Assessing the Value
of Drugs for Formulary Decisions
Copyright ICER 2015
The ICER “value flowchart”
Comparative Clinical Effectiveness
Incremental cost per outcomes achieved
AdditionalBenefits
ContextualConsiderations regarding the illness and therapy
“Care Value” Affordability “HealthSystem Value”
Copyright ICER 2015
Vote Vote
Care Value
Comparative Clinical
Effectiveness
Incremental cost per outcomes
achieved
Additional Benefits
Contextual Considerations Care Value
Copyright ICER 2015
Care value is a judgment comparing the average per-patient costs, clinical
outcomes, and broader health effects of two alternative interventions or
approaches to care.
Health System Value
Managing Affordability
Health System Value
Care Value
Copyright ICER 2015
Rarely, when the additional per-patient costs for a new care option are multiplied by the
number of potential patients treated, the short-term budget impact of a new intervention of
reasonable or even high care value could be so substantial that the intervention would be
“unaffordable” unless the health system severely restricts its use, delays or cancels other
valuable care programs, or undermines access to affordable health insurance for all patients
by sharply increasing health care premiums.
Therefore, health system value is a judgment of the affordability of the short-term
budget impact that would occur with a change to a new care option for all eligible
patients, assuming the current price and payment structure.
A test case: Harvoni vs. previous Rx (PR)
Copyright ICER 2015
Harvoni vs. Previous triple therapy
Comparative Clinical Effectiveness
Incremental cost per outcomes achieved
Additional Benefits
Contextual Considerations regarding the illness and therapy
“Care Value” Affordability “Health System Value”
SVR 95% vs. 70%
Cost per additional SVR ~ $100K
Cost per QALY ~ $10-30,000
•Reduce new
infections•Improvesupply of livers for
transplant
• Existing Rx toxic
• National drive to screen for Rx
PMPM impact ~5% if known eligible patients treated
SuperiorBelow
comparator; or below threshold?
Yes
YesPositive
considerationsHigh
Below threshold at
$95,000?
No
Low
CTAF and Hepatitis C
• December 2014 report on Harvoni and other newest all-oral regimens– Clinical effectiveness of all new regimens excellent and
indistinguishable
– Harvoni list price known at $95,000
– Voting on value assuming current price and payment mechanisms:
• “Reasonable” or “high” care value (cost/QALY < $50,000)
• “Low” health system value (budget impact ~ 5% PMPM)
• “Pricing benchmark” to meet both care value and health system value thresholds = $34,000-$42,000
Copyright ICER 2015
$34,000-$42,000
• Original maker of Sovaldi disclosed in SEC filing an anticipated list price of Sovaldi of $36,000
• At the list price of $95,000 for 12 weeks only those patients with advanced liver fibrosis could be treated in order to remain below the budget impact threshold
• At $34,000-$42,000 all eligible patients could be treated
• Approval of competitor for Harvoni in December triggered active negotiations and sole drug contracts– CTAF price benchmark discussed among major PBM clients
• Gilead announces that 2015 average discounts in the U.S. market will be 46%– Average regimen cost is now ~ $40,000 given 8/12 week mix
Copyright ICER 2015
The Evidence Problem
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VALUE AND PRICE
• Health outcomes achieved per dollar
spent
– IOM 2006
• Evidence of improved health outcomes
needed to determine value
• Need to understand value to determine a
“fair and reasonable price”
Evidence Summary: Radiation Therapy for Clinically Localized Prostate Cancer
Comparisons Disease specific survival
Freedom from biochemical failure
GU/GI toxicity
RT vs NT insufficient insufficient insufficient
SBRT vs EBRT insufficient insufficient insufficient
SBRT vs HDBRT insufficient insufficient insufficient
SBRT vs LDBRT insufficient insufficient insufficient
EBRT vs HDBRT insufficient insufficient insufficient
EBRT vs LDBRT insufficient insufficient insufficient
HDBRT vs LDBRT insufficient insufficient insufficient
Combined mod. insufficient insufficient insufficient
Intra SBRT insufficient insufficient insufficient
Intra EBRT insufficient moderate moderate
Intra LDBRT insufficient insufficient insufficient
Source: Tufts Evidence-based Practice Center: Draft AHRQ Technical Assessment, March 25, 2010
Level of Evidence ACurrent Guidelines*
*Guidelines expressing
Level of Evidence
11.7%
26.4%
15.3%
13.5%
12.0%
22.9%
6.4%
6.1%
23.6%
0.3%
9.7%
11.0%
19.0%
4.9%
4.8%
0% 10% 20% 30%
AF
Heart failure
PAD
STEMI
Perioperative
Secondary prevention
Stable angina
SV arrhythmias
UA/NSTEMI
Valvular disease
VA/SCD
PCI
CABG
Pacemaker
Radionuclide imaging
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THE EVIDENCE PARADOX
• 19,000+ RCTs published every year
• Tens of thousands of other clinical studies
• Systematic reviews intended to inform payers,
guideline developers, patient education
material routinely conclude that evidence is
inadequate or poor quality
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WHY WE KNOW SO LITTLE
• Gaps in evidence result from inadequate
involvement of decision makers (e.g. payers,
patients and clinicians) in all phases of clinical
research enterprise
27
28BMJ, 2013
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• More and better evidence of real world
comparative effectiveness critical to
determining fair and reasonable prices
for drugs
Streptomycin treatment of pulmonary tuberculosis
Philip d’Arcy Hart Marc Daniels Austin Bradford Hill
Courtesy of David Sackett
31
REVIEW
• Drug R&D pipelines are full; with expectation of very high
launch prices
• The elements of value are well understood, and in some
cases generate plausible value-based prices
• Gaps in evidence of comparative effectiveness are a
major barrier to determining fair and reasonable prices
• The good news is that the drug pricing debate has
shifted from focus on investment risk to focus on value
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CONTACT INFO
• www.cmtpnet.org
• 410-547-2687 x120 (D)
• 410-963-8876 (M)
End / Extra Slides
GREEN PARK COLLABORATIVE - USA
• A multi-stakeholder forum to clarify the evidence
expectations of public and private payers
‒ Informed by input from patients, clinicians, regulators,
methods experts, life sciences, others
• Produce “effectiveness guidance documents”
‒ Analogous to regulatory guidance
‒ Condition and technology-specific study design
recommendations for researchers
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RECOMMENDATION 5: MONITOR EFFECTS OF WEIGHT
GAIN OR LOSS
Patients report they find treatment effects on
weight extremely important
POPULATION
Recommendations
1 3
OUTCOMES
Recommendations
5
METHODS
Recommendations
6 7 8
REPORTING
Recommendations
9 102 4
Studies should report more information
about treatment effects on weight,
including how many patients lost or
gained 5%, 5-10% and more than 10%
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RECOMMENDATION 4: REPORT QUALITY OF LIFE
MEASURES
Quality of life is an important factor for patients
evaluating treatments
POPULATION
Recommendations
1 3
OUTCOMES
Recommendations
5
METHODS
Recommendations
6 7 8
REPORTING
Recommendations
9 102
Studies should include quality of life measures,
specifically the Audit of Diabetes-Dependent
Quality of Life (ADDQoL-19) and the Diabetes
Treatment Satisfaction Questionnaire before
treatment and after 1 year of treatment
4
