ViewPoints: Soliris and the orphan drug pricing conundrum – too effective for reimbursement in UK market?

In January, the UK government rejected a positive recommendation for Alexion's Soliris as a treatment of atypical haemolytic uraemic syndrome (aHUS) by the Advisory Group for National Specialised Services (AGNSS), referring reimbursement review to the National Institute for Health and Clinical Excellence. NICE typically reviews drugs designated for larger populations and the decision to refer Soliris was an unprecedented move for an orphan drug in the UK market.

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At the time, analysts sought to play down the impact of this decision. Nevertheless, negative reaction to the news shaved nearly $1 billion off Alexion's market cap. Investor concerns are likely multi-faceted; Soliris has now entered an "as yet, undefined evaluation process," wrote Stifel Nicolaus analyst Stephen Willey in January, adding that the government decision is also illustrative of "a growing concern over drug pricing in ultra-orphan indications."

New information arising from the UK government's original review in June 2012 appears to back up this assertion. According to Bank of America Merrill Lynch analyst Rachel McMinn, "quandary about Soliris reimbursement relates to the drug being so effective for the treatment of aHUS that the market will increase substantially." Furthermore, the new details indicate that the cost of Soliris falls at the lower end of a typical ultra-orphan therapy.

The effectiveness of Soliris appears to be in little doubt. The condition aHUS is described by government officials as being "devastating" in nature, while use of Alexion's product would be expected to drive "transformational" benefits in terms of survival and morbidity.

Despite this overwhelmingly positive assessment, however, government officials appear committed to a cost cap for Soliris in the aHUS setting due to the fact, highlights McMinn, that "substantial efficacy will translate into a growing treatable aHUS population over time," and that Soliris may subsequently be approved for additional rare diseases, thus further expanding the drug's eligible patient population. In short, is Alexion's product too effective for its own good?

It should be noted that Soliris is reimbursed by the NHS in the indication of paroxysmal nocturnal hemoglobinuria (PNH) and Willey argues that unmet medical need is "significantly greater" among aHUS patients.

Financial impact – be it temporary or permanent – in the UK market would be minimal for Alexion. Management estimates that the country accounts for approximately 5 percent of the global aHUS patient population. Perhaps unsurprisingly, management has also inferred that this issue appears specific to the UK reimbursement process and should not be construed as having notable read-across to other markets.

Nevertheless, McMinn conceded in January that the delayed UK process will "feed into an undercurrent of fear that reimbursement for Soliris will become increasingly difficult as the treatable population expands into additional indications."

This is an issue that potentially applies not only to Soliris, but the broader market for ultra-orphan therapies. Speaking to FirstWord last year, Henry Dummett – a director at the consultancy Double Helix – noted that while orphan and ultra-orphan patient populations are small (and less cost prohibitive in isolation), continued investment in these disease areas could ultimately lead to a more pronounced impact on costs and an inevitable pushback from payers.

As evidenced by the decision regarding Soliris in the UK, payers are likely to focus attention on the risk of expanding patient populations for individual drugs, notes Melanie Senior – a freelance market access analyst. "The UK authorities are suggesting a price cap in case the population for Soliris creeps out of control," Senior told FirstWord. This represents something of an inverted process to the norm, where developers – such as Johnson & Johnson with the prostate cancer treatment Zytiga – have reduced their patient population estimates in order to secure reimbursement.

Cancer products with the potential to target multiple indications – i.e. so a single indication can be labelled or designated with orphan status – are more likely to be targets for payer pushback versus ultra-orphan products indicated for rare diseases, says Senior. Nevertheless, the case of Soliris blurs these boundaries.
Soliris' review at the hands of NICE is expected to commence in April. Its current predicament is an interesting outcome and demonstrates a very narrow 'winning line' to hit says Senior; "if a drug's not effective, it won't get reimbursed; yet if it's too effective, its price will be capped."

See also:

ViewPoints: Shire and Alexion demonstrate robust long-term outlook of speciality-focus players

FirstWord Lists: The 20 biggest growing pharma products in 2012 - Sanofi's Lantus leads the way

ViewPoints: World's most expensive product could move into another $1 billion market

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