With drug pricing now front and centre of the political debate in the US and Europe, it's perhaps an opportune time to take the pulse of payers in both of these key regions in relation to the cost of treating cancer. Moreover, it's a particularly pertinent time to gage payer opinion on the potentially game-changing area of cancer immunotherapy.
With Bristol-Myers Squibb securing FDA approval for its Opdivo (nivolumab) and Yervoy (ipilimumab) combination regimen as a treatment of advanced melanoma this month – and putting an eye-watering price tag of $250,000 per patient for the first full year on the regimen – the hopes and fears of payers come into sharp focus.
This much needed insight on what payers are viewing as the biggest challenges and opportunities in the field of cancer immunotherapy is provided in a new report from FirstWord; Cancer Immunotherapy: Payer Insights. Some of the key questions that the report focuses on provide an interesting insight into the psyche of a payer, and what they're expecting – and fearful of – in the future.
Does money continue to be 'too tight to mention'?
Wars usually cost a lot of money to fund. And the war against cancer, while experiencing success in certain areas, is not immune. The question perhaps prompts an obvious answer, and nobody will be surprised to understand that cancer immunotherapy has done little to take the pressure off healthcare budgets as it relates to the costs of cancer therapies. Costs associated with the treatment of the most prevalent cancer indications, including lung cancer and melanoma, are creating the most concern for payers. And now that various immunotherapy options are being approved in these indications, these concerns are growing.
"The disease burden is very high in terms of the patients who are refractory to first-line therapy with NSCLC or melanoma, the prognosis is especially poor. So the burden is very high. The financial burden of the prices of these drugs is putting a very high strain on the overall budget for CMS and managed care." - US Payer
Is 'real-world data' that important? You betcha!
A growing trend is for payers to ask "do we really need this new medication?", even before the drug has been approved – such are the long horizons that payers scan. For payers, the ultimate aim is to understand the real value of a new treatment option. This is where 'real-world' data becomes so important. While the initial decision to reimburse a new immunotherapy is often based on progression-free survival, 'real-world' data is the ideal requirement for payers to be able assess the real value of a new cancer immunotherapy regime.
"[Real-world data] is critically important; however, many times when a product comes to market, we may not know what the impact on survival is." EU Payer
Can payers still stomach the old '1+1=2' combo pricing strategy?
Despite payers being impressed by the outcomes that combinations are able to deliver, the cost of combination therapies is a matter of serious concern. As discussed previously, these concerns seem to have been vindicated with Bristol-Myers Squibb seeking $250,000 per patient for an Opdivo/Yervoy combination in the treatment of advanced melanoma.
Future combination regimens of cancer immunotherapies will be particularly challenging in terms of cost, especially if pharma's pricing strategy is simply to add the cost of the individual components together to get to the final price. While payers expect initial disagreements in terms of discounting and rebating, they remain hopeful that the actual acquisition costs to the health service will be reasonable.
Perhaps a future strategy for companies in the cancer immunotherapy field is to follow AstraZeneca's lead and look to the biosimilars market for inspiration. Its joint venture with Fujifilm Kyowa Kirin Biologics to develop a biosimilar version of bevacizumab (Avastin; Roche) has been touted as a way that AstraZeneca can enhance long-term optionality around cancer drug combinations, particularly ones that include its PD-L1 inhibitor durvalumab (see Spotlight On: What scope for in-licensing opportunities in the biosimilar market?).
"It’s big interest, because [the Opdivo/Yervoy combination] is going to be a huge cost. Well, this is the challenge. We’re going to have to sit down with both manufacturers and try to work out a rebate. That’s never been done before so this is completely new ground that this combination that will open up." EU Payer
Will payers start asking pharma to 'show me the money'?
The ever increasing cost of cancer drugs, especially cancer immunotherapies, continues to irk payers around the world. Perhaps US payers have the right to be more aggrieved, as a recent study found that US patients pay up to three times more than European patients for cancer therapies, a financial burden that payers themselves are often lumbered with. Pharma companies need to become more attuned to the budget limitations that exist within health services and provide value to payers in order to obtain optimal reimbursement. Setting prices at what pharma companies believe the market can bear cannot continue as a pricing strategy.
"Pharma sets the price at what they think the market can bear. There’s no negotiation. We have no ability to manage these drugs on the back end." US Payer
What does the future have in store for cancer immunotherapy?
With more cancer immunotherapies expected to come to market in the next few years, treating cancer is likely to remain a critical area of concern for payers as they seek to balance budgets and deliver the best quality care they can afford. Pharma companies and payers need to work more closely on sharing the burden of cost – potentially via risk sharing deals and creative pricing strategies. With 'value' becoming the new buzz word in pharma, companies need to have this front and centre of everything they do.
"I think the future is going to have more rigour around defining value. I think the point will be about showcasing how they compare to alternative therapies and how they get to a certain price point." US Payer
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