In a note to investors published Monday, analysts at Sanford C. Bernstein provided an overview of key trends that will influence Big Pharma's third-quarter results, which are due to be unveiled over the course of the next two weeks.
Drug pricing, they note, remains a key factor on the pharma landscape, particularly in Western Europe – where austerity measures have significantly shaped the market access environment – but also in emerging markets, where the gold rush mentality seen among Big Pharma five years ago has been blunted somewhat by government measures designed to control the rate of spending expansion.
At present, note analysts "the US is about the only market where drug pricing remains in positive territory year-on-year." There is a view among many, however, that something will have to give at some stage. The Bernstein note suggests as much: "At some point in time the federal government may revisit drug pricing again, but it seems the rate of change will be anything but gradual."
Perhaps, but there were also signs on Monday that this gradual change may gather some pace sooner rather than later. In an editorial  written for the New York Times, Peter Bach, Leonard Saltz and Robert Wittes from the Memorial Sloane-Kettering Cancer Centre provided an overview as to why the facility does not plan to use Sanofi and Regeneron's Zaltrap for the treatment of advanced colorectal cancer on the grounds of cost.
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The central argument made by Bach, Saltz and Wittes is that Zaltrap offers no additional benefit over Genentech’s Avastin in the advanced colorectal cancer setting, but costs on average more than twice as much ($11063 per patient per month for Zaltrap versus approximately $5000 per patient per month for Avastin).
Despite a market environment in the US that has allowed drug manufacturers to not only set the price for pharmaceuticals freely, but also implement subsequent price increases (in many cases to offset volume declines), the decision by Memorial Sloane-Kettering Cancer Centre does not come as a particular surprise. "I think it is a sign that the US is getting to the stage where healthcare is no longer a bottomless pit that it can keep digging into," Keiron Sparrowhawk – a director at PriceSpective – told FirstWord. Indeed, the authors of the article state that "ignoring the cost of care is no longer tenable. Soaring spending has presented the medical community with a new obligation. When choosing treatments for a patient, we have to consider the financial strains they may cause alongside the benefits they might deliver."
In essence, this is not something that the US system – or pharmaceutical manufacturers - has had to previously consider, notes Sparrowhawk, but "the system has to give and in this case it has." Melanie Senior – an analyst at Real Endpoints – told FirstWord that "what has been just words for some time is now action it seems," adding "it was only a matter of time."
To what extent this decision will influence other providers in the US remains to be seen. Senior postulated on Twitter  that if the decision sits well with patients, a flood gate of similar decisions could open. One passage in the article is likely to send shivers through pharma boardrooms: "the drug has proved to be no better than a similar medicine we have for advanced colorectal cancer." Rhetoric that could have been lifted directly from Germany's AMNOG legislation, which has become a troublesome obstacle for the industry (see ViewPoints: Will Witty’s call to support innovation fall on deaf ears? )
Senior also points out that cancer has traditionally been "somewhat insulated from pricing and market access pressures" given its high-media profile and the emotive nature of this disease, a fact that makes the decision more meaningful, she adds. "No payer, until now, wanted to be the one cited in the New York Times as being first to say no to a cancer drug. But here they are doing it, and justifying why," she adds.