By the end of March, the FDA is expected to approve Biogen Idec's Tecfidera (formerly known as BG-12) for the treatment of multiple sclerosis. It is poised to be the third disease modifying oral MS therapy to reach the market, but is widely expected to become established as the dominant first-line treatment. Despite these pre-launch credentials, however, there is a growing sense that Biogen Idec's pricing strategy could prove crucial in shaping its early revenue trajectory.
Insight, Analysis & Opinion
Pricing considerations may be particularly pertinent with the cost of specialty drugs in the US increasingly coming under the microscope. Despite US spending on prescription drugs declining for the first time in 2012 (by 1 percent according to IMS, as recently reported by the New York Times), expenditure is expected to increase again over the next few years as the patent cliff subsides and a reduced number of high-profile generic medications reach the market.
When Express Scripts published its annual Drug Trend report earlier this month, it revealed that among its members, MS therapies were the second most expensive treatment type (in terms of spend per member per year). Notably, Express Scripts reported a 17.3 percent year-on-year increase in costs for MS treatments.
As a result of substantial price increases, third-party payers are increasingly pushing back on reimbursement of higher priced MS therapies such as Gilenya, wrote Bank of America Merrill Lynch analysts in a recent note to investors. MS drugs as a class are overvalued for the benefit they provide, they add.
There is already some suggestion that Biogen Idec will price Tecfidera below Gilenya, however, key opinion leader (KOL) Bruce Cree recently suggested to a number of analysts (both those at Bank of America and BMO Capital Markets) that growing reimbursement pressures should dictate a greater discount for Biogen Idec's new product if price is to avoid troublesome scrutiny. He has suggested pricing should be on a par with that for Sanofi's Aubagio (approximately $45k per patient per year, versus approximately $60k for Gilenya).
FirstWord's own interviews have found similar advocacy for such a strategy. One KOL told FirstWord's Therapy Trends team "in terms of what's going to happen with the orals, it's going to really depend on price. If Biogen [Idec] prices BG-12 at a reasonable level, much lower than Gilenya, then people en masse will switch to BG-12. BG-12 has a good safety profile. When this drug becomes available, if it's not too expensive, these patients will be switched left and right to BG-12."
Price could also be dictated by the label that Tecfidera receives from the FDA, which remains an additional area of debate until approval occurs. One question mark concerns whether Biogen Idec's product will receive a disability claim. Statistically significant disability delays were demonstrated in the DEFINE study (versus placebo) but not in the CONFIRM study (versus Copaxone). Whilst failing to secure a disability claim may not provide too much of an issue in commercial terms, note analysts at Credit Suisse, Biogen Idec may be able to leverage some commercial benefit from the CONFIRM study given that Copaxone was used as an active comparator. Whilst not a head-to-head study, Tecfidera is the only product to trial against Copaxone in this way. There could be subtle opportunities for Biogen Idec sales reps to promote against the incumbent market leader, analysts add.
For further analysis of the multiple sclerosis market see Therapy Trends: Multiple Sclerosis – On the cusp of a treatment revolution.
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