The Payoff for Payers

December 1, 2011

Pharmaceutical Executive

Pharmaceutical Executive, Pharmaceutical Executive-12-01-2011, Volume 0, Issue 0

Thorough risk assessment is essential before placing bets on good evidence that clears a path to approval.

To some extent, evidence is a commodity that one can always buy with money. The question becomes how much one is willing to invest and how much benefit one can expect to receive in return. Within payer evidence planning, a tradeoff is always needed to balance the benefits, costs, and risks of various evidence scenarios. It is imperative that market access teams begin working early in development to understand how payers will likely react to various clinical scenarios and then determine what value propositions will be most supportive of the evidence anticipated to be generated. If conducted properly, this will be beneficial in helping the product secure optimal levels of reimbursement and timely access in its target markets.

Lujing Wang, MD

The benefits to the company of having a firm understanding of how various clinical, outcomes, and observational evidence will resonate with payers will come in the form of clearer determinants on pricing, reimbursement, access potential, and potential market size. The cost of generating such data, meanwhile, is significant and comprises several components.

The Costs

The first and most obvious cost is the absolute price tag associated with conducting the trial, including the expense of site enrollment, patient recruitment, paying investigators, and cost of clinical research organizations (CROs). A second, less immediately apparent component is the cost of delayed market entry. Delayed market entry means potentially facing generic competition earlier in the life of the brand or losing first-to-market status to a branded competitor.

The third potential cost is the risk of failure. Trial failure by itself is a major setback, but companies face greater loss if the impact of a negative trial directly affects existing business. For example, when an oncology product is trying to extend coverage to include other indications, a company must carefully consider, if the trial fails, the amount of damage this could potentially have on expected revenue in the currently marketed indication(s).

Finally, one must consider the opportunity cost. While this is less of a consideration for large pharmaceutical companies with deeper pockets, for small or midsize companies, in particular those backed by venture capital investment, the options they are able to pursue are often limited. Trial failure can also mean that the company loses the advantages that it may have enjoyed by designing a trial in a different way, for example, in a different trial population.

Case Study No. 1: Avastin

Genentech's Avastin is a vascular endothelial growth factor-specific angiogenesis inhibitor indicated for the treatment of metastatic colorectal cancer (mCRC). The product has experienced significant commercial success since it was launched in 2004 for the treatment of mCRC.

In 2008, FDA later granted marketing approval for Avastin in the first-line treatment of HER2 negative metastatic breast cancer on the condition that further clinical trials be conducted to establish clinical benefit. Genentech was able to successfully launch and market the product even with a minimal level of efficacy data in the breast cancer indication. But Avastin's low level of product differentiation and questionable efficacy data, combined with its large budget impact, led to a heightened need to generate additional supportive evidence for the breast cancer indication. Genentech used this opportunity to focus on patient outcomes to establish a clinical benefit that would meet FDA requirements and at the same time address payer needs.

Genentech/Roche conducted two pivotal outcomes trials to address regulatory and payer concerns as part of the conditional approval. However, these trials not only failed to show improved outcomes, they also raised significant concerns over Avastin's safety profile. Questionable clinical efficacy in the treatment of breast cancer combined with an unfavorable safety profile led FDA to fainlly—after much debate—withdraw Avastin's breast cancer indication on November 18.

The takeaway: Launching early with conditional approval is not a silver bullet. Making future promises comes with inherent risk. Therefore, thorough risk assessment is essential before placing bets on future evidence-generation.

Case Study No. 2: Multaq

With the cardiovascular drug Multaq, the decision facing Sanofi-Aventis was whether to focus on clinical endpoints or patient outcomes for the product's development. Multaq was challenged to demonstrate product differentiation, particularly after receiving a non-approvable letter from FDA in 2006 and showing lower efficacy versus the generic standard of care (amiodarone) in 2008. Multaq also posed a high budget impact for payers in terms of pharmacy spend given the large size and recurrent nature of the population with atrial fibrillation (AF).

Given Multaq's inferior efficacy and safety profile, Sanofi-Aventis had to refocus its clinical development program on a different set of value drivers that did not revolve around the product's clinical attributes. The company's new clinical development program took advantage of the opportunity to focus on outcomes that can demonstrate cost savings through reductions in hospitalizations and, at the same time, shift focus away from the short-term clinical efficacy of the drug.

Sanofi-Aventis succeeded in this task, while simultaneously differentiating Multaq from the generic standard of care without having to conduct a direct head-to-head study. The company's development strategy improved the safety profile by redefining the target patient population to exclude high-cardiovascular-risk patients and addressed regulatory and payer requirements by focusing on long-term patient outcomes. Their goal was to show reduction in cardiovascular hospitalization.

While Sanofi-Aventis did not include outcomes measures in early development, an outcomes-based trial was successfully used to address both regulatory access and reimbursement requirements, and led to the approval of Multaq in the US and the EU in 2009. Although valuable time was lost due to the change in development strategy, delaying Multaq's commercial launch and shortening its available patent life, Multaq is still forecasted to become a blockbuster by 2012.

The lesson learned: Superior efficacy is not strictly essential. Surrogate patient outcomes, when unique, compelling, and relevant, can adequately address regulatory requirements and support a compelling value proposition for payers.

Case Study No. 3: Humira

Abbott's challenge with Humira was how to differentiate a third-to-market anti-TNF drug launching approximately five years after Enbrel and Remicade in order to become the biologic market leader for the treatment of rheumatoid arthritis. Given Humira's high product differentiation at the time of launch, Abbott had to decide whether or not to focus on patient outcomes to further differentiate the drug.

As one of the first biologic treatments for a large patient population, Humira posed a high economic impact for payers. Abbott realized that robust payer evidence would be necessary to develop a strong value proposition for Humira, which would support the long-term success of the drug. Abbott committed to a mix of clinical and outcomes research to address regulatory and payer requirements for new indication approval and patient access to therapy.

Humira was able to differentiate based on strong efficacy data, favorable dosing frequency compared with Enbrel, a Crohn's disease indication, and an influential marketing campaign.

As part of Humira's clinical development, Abbott conducted more than 20 clinical trials. A relevant mix of clinical efficacy and outcomes data further differentiated Humira, allowing it to become the biologic market leader for RA treatment. The drug has secured favorable formulary status for a costly biologic treatment for RA, and the drug has received multiple NICE recommendations, even as the category becomes more competitive.

Because Humira has been able enter the market quickly, generate significant product awareness through effective marketing campaigns, and offer a more convenient dosing schedule, it is expected to experience continued growth and capture a larger share of the RA market.

Long-Term Interests

Developing an appropriate strategy in order to successfully compile evidence requires substantial time, money, and resources. Because clinical development is a long-term, high-risk investment, it is necessary to obtain payer input early in development so that if a company needs to kill a product in the pipeline, it can do so more rationally to avoid any unnecessary waste in investment.

As a result of these considerations, organizations need a stable and consistent decision-making authority that can focus on long-term interests. Simply stated, the goal of evidence generation needs to be to provide the necessary means to achieve commercial goals in a cost-effective way. Whether or not a branded product meets manufacturers' expectations will all depend on how the evidence is generated to appropriately address these concerns and how the risk/benefit equation that accompanies this often-costly endeavor is weighed.

Lujing Wang, MD, is Practice Area Leader, Pricing and Market Access, Campbell Alliance. He can be reached at lwang@campbellalliance.com

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