Applying the CER Assessment Framework
The framework of potential budget impact and availability of comparable alternatives can be applied to an individual indication
or competitive grouping with adjustment for the narrower frame of reference. Within an individual area, potential budget impact
is a function of drug cost relative to others in the group and of the number of patients targeted, which can vary by product
given potential subgroup strategies and label indication. The availability of comparable alternatives within a single category
varies as a function of the product's level of differentiating evidence relative to the group.
Figure 3: Application to Colorectal Cancer Pipeline Products
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Figure 3 illustrates this ranking for colorectal cancer (CRC). The anti-EGF monoclonal antibody therapies Erbitux and Vectibix
initially faced the unfortunate combination of high potential budget impact and weakly differentiated evidence. However, these
therapies improved differentiation and reduced potential budget impact through evidence of effectiveness in the subgroup of
CRC patients with KRAS wild-type tumors. Although this limited the total available market for the products, it greatly improved
the commercial results.
Looking forward, a number of products currently in Phase III CRC trials (aflibercept, brivanib, cedarinib, and Sutent) could
face particularly rigorous evidence review. Already, despite its strong evidence, Avastin has experienced the effect of heightened
payer scrutiny and the lack of a subgroup in this competitive category, as evidenced by markedly reduced revenues in EU5 markets
(UK, France, Germany, Spain, and Italy) relative to the US and a negative decision from NICE.
New Tools for Evaluating Potential CER Outcomes on P&R
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Without a successful subgroup strategy and/or compelling demonstration of outcomes superiority in the broad population, would-be
entrants in categories such as CRC or RA face the threat of experience like that of Johnson & Johnson's Simponi. Recent evaluation
of an antithrombotic agent in clinical development revealed that, although efficacy projections based on early trials appear
able to meet regulatory hurdles for safety and efficacy, superiority to current standard of care is likely to be demonstrable
only in a subset of high-risk patients (see sidebar). The company's clinical and commercial strategy had been to aim at the
broad indication for which the product will likely be approvable and comparable to existing agents. But in that broad indication
the product likely would not fare especially well under a comparative effectiveness assessment. Five years ago this might
have been the right strategy for US commercialization, but this no longer appears to be the case for a program in Phase II
today.
Most organizations have recognized the need to approach these markets with a greater level of evidence, but fewer are using
tools like this to force systematic consideration. Eli Lilly has been an early adopter in considering CER; its executive in
charge of that area, Mark Berger, has written that "the companies that survive and thrive in this new environment will be
those that embrace comparative effectiveness research."
Integrating Risk and Opportunity
Figure 4: CER Expected Revenue Impact, Large Pharmaceutical Portfolio
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While the challenges of comparative effectiveness are increasingly recognized, a consensus approach for integrating these
risks into formal portfolio and financial planning has not emerged. Assessment of risk for one manufacturer, a leading global
company with a broad portfolio in the US market, revealed a 10 percent swing in revenue expectation (see Figure 4) associated
with CER scenarios and also highlighted the opportunity to enhance portfolio value with a more proactive evidence stance,
though this implied dropping marginal programs to enable the incremental investment.
Portfolio realignment is still a work in progress in this organization, as individual programs are evaluated in detail and
the likelihood of an "aggressive" CER scenario is weighed against the cost (and risk) of developing the evidence needed to
counter it.
While the decisions are difficult, the direction is clear. Even if a Republican-controlled Congress in 2011 were to withdraw
funding from the newly mandated PCORI, comparative effectiveness is becoming firmly entrenched in the commercial payer market
in the US. The companies adapting their portfolio decision making to this new reality will have the best chances of thriving
in it.
Article authors include Managing Principal Edward Tuttle (etuttle@analysisgroup.com
); Vice President Anita Chawla, Ph.D.; and Managers Dave Nellesen, Ph.D., and Justin Works of economic and strategy consulting
firm Analysis Group, which provides strategic consulting to clients in the biopharmaceutical industry
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