New expensive treatments for hepatitis C infection: have

New, High-Priced Treatments for Hepatitis C
Infection: Have US Payers Reached a Tipping
Point?
Wednesday 24th September 2014
© 2014 Evidera. All Rights Reserved.
Have payers have reached a tipping point in terms of their willingness
or ability to accept high-priced, specialty drugs?
THE HEADLINES
“WHO, Express Scripts attack
cost of Sovaldi”1
“US lawmakers want Gilead to
explain Sovaldi's hefty price”2
“Gilead's $1,000 Pill could
eradicate Hepatitis C, but
ethical and financial challenges
loom”3
?
What are the key dynamics in the HCV
market that have focused so much
attention on the cost of new treatments?
Aside from the rhetoric, in practical terms
what actions have payers taken to contain
costs?
What further strategies could be
considered, and how practical or
acceptable would these be to the US
system?
What broader implications could there be
for the US market, and new, effective
treatments of the future?
What guidance can Evidera offer for
pharmaceutical companies who have
launched or are launching high-cost,
speciality drugs into the US marketplace?
1Genetic
Engineering and Biotechnology News, 15-April 2014; 2Reuters, 21-March-2014; 3Forbes, 19-December-2013
2
What are the key dynamics in the HCV market that have
focused so much attention on the cost of new
treatments?
3
Hepatitis C presents a significant clinical and economic burden,
and is a major cause of liver-related morbidity and mortality
3.2M
persons in the US
with chronic HCV
infection1 and
expected to
increase
Leading indication for
liver
transplants
in the US1
60-70% will develop chronic liver disease
5-20% will develop liver cirrhosis
1-5% will die as a result of liver cancer or
cirrhosis1
$
$577,100
average cost of a liver
transplant2
1Centers
for Disease Control and Prevention http://www.cdc.gov/hepatitis/HCV/HCVfaq.htm#section1 (accessed September 2014) 2Milliman
Research Report. 2011 US organ and tissue transplants cost estimates and discussion
4
Standard of care has evolved with increased understanding of HCV
molecular biology, and the introduction of direct-acting antivirals
“Goal of treatment is to reduce all-cause mortality and liver-related health adverse
consequences, including end-stage liver disease and hepatocellular carcinoma, by
the achievement of virologic cure, as evidenced by SVR”1
Evolving standard of care
SVR rates for patients with HCV infections
(genotypes 1–3)2
100
1968
1998
2001
2002
2011
90
~75
80
SVR Rate (%)
70
54-56
60
50
42
40
34
10
0
16
6
IFN
6 mths
IFN
12 mths
IFN/RBV IFN/RBV
6 mths
12 mths
PEG
12 mths
 Significantly increased SVR rates (~75%) for HCV
genotype 1 in combination with PEG-IFN +
Ribavirin
 However, considerable unmet needs remained
-
39
30
20
 2011 launch of first direct-acting antivirals,
Protease Inhibitors (PIs) Telaprevir (Incivek) and
Boceprevir (Victrelis)
PEG/RBV BOC/TVR
12 mths
Only approved for genotype 1
Complex regimens
Treatment duration 12-44 weeks
Safety and tolerability issues
 As a result, significant numbers of patients were
warehoused in anticipation of new therapies on
the horizon
1American
Association for the Study of Liver Diseases and the Infectious Diseases Society of America guidelines http://www.hcvguidelines.org
(accessed September 2014), SVR defined as the continued absence of detectable HCV RNA at least 12 weeks after completion of therapy; 2Strada
DB and Seef LB (2012) Clinical Liver Disease 1:6-11
5
Launch of Sovaldi and Olysio heralds a new era of highly active
anti-HCV therapeutic drug regimens, with more on the horizon
HCV pipeline
1
Direct-acting antivirals
New approvals expected within 6-12 months




Oct-14: FDA decision on sofosbuvir + ledipasvir FDC
Nov-14: FDA decision on daclatasavir
Dec-14: FDA decision on Abbvie’s all-oral regimen
2015: Launch of Merck’s IFN-free regimen
Interferon-free
regimens with
improved:
 2014 launch of Sofosbuvir (Sovaldi) and Simeprevir
(Olysio), both recommended in AASLD guidelines
 Benefits of Sovaldi over standard of care:2
-
Approved for use in genotypes 1, 2, 3, and 4
Improved SVR rates (up to >90%, depending on the genotype)
Shortened treatment durations (12-24 weeks)
First all-oral regimen for genotypes 2 and 3
Reduces or completely eliminates the need for IFN injections,
depending on the genotype
1Adaptedfrom
• EFFICACY
• TOLERABILITY
• COMPLIANCE
Differentiation
based on:
• POTENCY (BY GENOTYPE)
• CONVENIENCE
• PRICE?
Manns M and von Hahn T (2013) Nature Reviews Drug Discovery 12:595–610; 2Prescribing information, Sovaldi, Dec-2013
6
Analysis of the payer mix shows the majority of Q1 Sovaldi sales
were covered through Medicare / Medicaid
$
HCV
Payer Mix
Chronic Hepatitis Cohort Study1
 Baseline data on 8,810 patients with
chronic HCV infection
 During the period 2001-2010:
- 38.4% had liver biopsy
- 44.3% had at least 1 hospitalization
- 4.7% underwent liver transplant
Q1-2 2014 US Earnings:2,3
Sovaldi sales $5.1bn
70K patients treated
Q1 payer mix:2
7%
45%
 Insurance coverage:
45%
12%
23%
62%
Medicaid
Medicare
Private insurance
1Moorman
Note on Q2:3
“Most commercial Medicare and state Medicaid plans take a full 6
months to review new drugs… As anticipated we saw a slight shift
in the payer mix in Q2 due to more patients from the VA and other
non-retail coming on to treatment”
AC et al. (2013) Clinical Infectious Diseases 56:40-50;
2ihttp://www.streetinsider.com/Analyst+Comments/Goldman+Sachs+Comments+on+Gilead+Sciences+(GILD)+Q1/9401869.html
3Gilead
Sciences, Inc. (GILD) Q2 2014 Earnings Conference Call July 23, 2014
(accessed Sept 2014);
7
Looked at in context, the price of Sovaldi is not an outlier
?
Just how expensive
is Sovaldi?
$1,000 per pill
$84,000 per 12 wk regimen
…In the context of other HCV
regimens?1
…In the context of downstream
cost savings?2
…In the context of other
specialty medications?
1Brennan
Over the long-term: potential avoidance of liver cancer, transplant,
and associated costs
Over the short- to medium-term: reductions in resource use for
managing and monitoring HCV infection, ~$2,648 per patient per yr
Keytruda (pembrolizumab, Merck) – melanoma – $150,000 per yr
Xalkori (crizotinib, Pfizer) – lung cancer – $115,000 per yr
Yervoy (ipilimumab, BMS) – melanoma – $120,000 per course
T and Shrank W (2014) JAMA 312(6):593-594; 2Manos MM et al. (2013) J Manag Care Pharm 19:438-47
8
However, its high cost, combined with a very large population eligible
for treatment, has raised serious questions around affordability
Budget impact
 Size of eligible patient population
- Covers most genotypes
- Covers most patient populations
 High demand
- Warehousing effect, screening
 Advocates combination use
Other factors/concerns
 Affordability
 Short-term acquisition costs versus long-term savings
 Population turnover and impact on long-term ROI
- Could be changing with ACOs retaining patients for longer and changing focus from acute
to chronic care
 Context of increasing health spend and escalating costs of specialty medications
9
As a result, Sovaldi remains in the spotlight and at the center of a
debate around the future of drug pricing and cost containment
“The US will spend 1,800% more on hepatitis C medications in 2016 than it did in 2013. No
major therapy class has experienced this high of a spending increase in the 21 years we’ve
measured drug trend data.”
“If everyone in the US with hepatitis C were treated with Sovaldi at its list price, it
would cost $227 billion, compared with the estimated $260 billion spent a year in the
country for all drugs.”
“Our concern is that a treatment will not cure patients if they cannot afford it…”
"The value to these patients, and to their loved ones and society - you
can't put a price tag on it."
“This unanticipated cost could put health plans at severe
financial risk…This will potentially compromise the ability of
health plans to provide access to other life-saving services
and medications”
10
In practical terms what actions have payers taken to
contain costs?
11
Payers have taken a number of steps to contain costs, but to date,
impact has been limited
Private insurers
• Sovaldi reimbursed by
majority of insurers within
Tier 3 but can only be
prescribed by hepatologists
or gastroenterologists
(increasing barriers of use
by immunologists treating
HIV patients with Hep C)1
• Express Scripts asking
doctors to hold off treatment
if possible until competitors
available, and aiming to
form coalition to refuse use2
Actions
taken
• Administrative barriers
(prior author., specialist use)
• Early price negotiations
with future products likely
Impact
Medicare
• Nearly all Medicare plans
have accepted Sovaldi
without restrictions, despite
estimated cost to Part D of
$2-6 billion dollars in 2015
alone3,4
• Sovaldi included within
specialty tiers (Tier 4/5)
across most plans5
Medicaid
• Many states delayed
reimbursement for several
months but now 47 states
covering Sovaldi6
• Half of states enforcing prior
authorization (patients with
cirrhosis, no drug use etc)6
‒ Illinois has 25 prior
authorization criteria
• Many Medicaid plans asking
states to fund costly Hep C
treatment outside usual
drug-coverage contract2
• Delayed reimbursement
• Higher co-payment rate
• Administrative barriers
(prior authorization)
Negligible?
1 http://bit.ly/1rSD1p1 2) http://bit.ly/Q9xB9V 3) http://bit.ly/1wAbV6B 4) http://on.wsj.com/1nlAkGj 5) http://bit.ly/1v3Dp3C 6)
http://bit.ly/1oXKbma 7) http://bit.ly/1pn2Gkn
12
What further strategies could be considered, and how
practical or acceptable would these be to the US
system?
13
Outside the US, most countries have accepted Sovaldi without major
restrictions, but at a lower price than the US
• Unlike in US, Europe and Canada have nationally restricted Sovaldi based on efficacy in specific
subpopulations/genotypes rather than through local, healthcare provider restrictions
• Few restrictions despite European concern over cost given Sovaldi value on all economic measures (e.g.
cost-effectiveness); must be noted that cost of Sovaldi is lower in ex-US markets
Country
Reimbursement decisions (HTA)
England1
• Draft “yes” from NICE in select populations (genotypes 1, 2,
and 3, with restrictions)
Scotland2
• Accepted by SMC but restrictions on genotypes 2 and 3
(i.e. Ineligible/unable to tolerate peginterferon alfa)
France3
• Awarded ASMR II/III for all patients except genotype 3. For
very early-stage patients, recommended clinicians postpone
prescription pending potential other strategies. TC requires
updated information on cost and place in pathway in 2 years
Germany4
• G-BA split Sovaldi eligible patients into many subpopulations,
most of which considered to have no or only minor additional
benefit. Only genotype 2 has major benefit
Canada5
• CDEC allowed reimbursement in genotypes 1-3 only with
following conditions: price discount (not known), only 12
week duration
• Provinces starting to assess, hinted will restrict (e.g. No HIV
patients, patients with drug abuse)
Local
restrictions
Price
~£35,000 ($56,000)
per 12 wk course
~£37,000 ($60,000)
per 12 wk course
None yet
visible,
discounting at
local level
possible
Unknown as
hospital only
product
~€60,000 ($78,000)
per 12 wk course
CND$55,000
(~$50,000) per 12
wk course
1 http://www.nice.org.uk/news/press-and-media/NICE-consults-on-draft-guidance-on-the-drug-sofosbuvir-for-treating-hepatitis-C 2) https://www.scottishmedicines.org.uk/SMC_Advice/Advice/964_14_sofosbuvir_Sovaldi/sofosbuvir_Sovaldi 3) http://www.hassante.fr/portail/upload/docs/evamed/CT-13392_SOVALDI_Insc_PIC_Avis%201_CT13392.pdf 4) https://www.g-ba.de/downloads/39-261-2029/2014-07-17_AM-RL-XII_Sofobuvir_2014-02-01-D-091.pdf 5) http://www.cadth.ca/media/cdr/complete/cdr_complete_sovaldi_august_20_2014.pdf
14
We have identified a number of other potential strategies payers might
consider as new products come through
Feasibility in US setting
High
 Increased cost sharing to patient – minimal
pushback feasible in conservative plans but
increasing presence of non-traditional plans
could make this a viable option, but raising cost
share too high may result in public scrutiny,
especially if applied to fixed income patients
(e.g. elderly)
 Contracting with competitors before market
entry – including potential preferred status or
lower administrative barriers to allow for high
uptake as soon as possible after launch
 Step therapy through interferon-based
treatments – potential for cost savings given
lower price than Sovaldi but not universally
applicable (given interferons only indicated for
specific genotypes) and may result in
considerable pushback
 Managed entry agreement/ performancebased contracting* – high potential given
Sovaldi short-term trials, although risk-sharing
agreements relatively new in US setting
 Controlled patient selection through guidelines
– potential to require step therapy or restrict
population but unlikely guideline body open to
argumentation when such an effective
treatment is being discussed
 Closed formularies – possible, but only for highcontrol plans (e.g. Coventry). May allow for
higher cost containment if used in combination
with higher out-of-pocket payment by patient
 Price negotiations by insurance bodies –
potential within specific programmes such as
VA and Oregon Medicaid, but unlikely to have
universal applicability
Low
Cost containment potential
High
*Defined as ‘an arrangement between a manufacturer and a payer/provider that enables access to (coverage/reimbursement of) a health technology
subject to specified conditions. These arrangements can use a variety of mechanisms to address uncertainty about the performance of technologies or
to manage the adoption of technologies in order to maximize their effective use, or limit their budget impact
15
What broader implications could there be for the US
market, and new, effective treatments of the future?
16
Are issues within HCV influencing payers more broadly, and their
evaluation of new products in other disease areas?

Indications that issues within HCV are having a broader influence on
payer behaviors1
“Finally we have hit a point where we have to have a public dialogue about the cost of treating
disease…prompted by the costs of hepatitis C treatments. We are all scrambling over how to pay
for them, when the system just can’t afford it. What could the outcome look like? Well, rationing is
one scenario that no one wants to talk about, but it’s happening. And now that precedent is
there…for these breakthrough drugs that we can’t afford.” CEO, commercial health plan
“We’ve reached a critical point, and this latest hep C product could be the tipping point. We have
to make some hard decisions.” VP, commercial health plan
“We can’t afford to fund everything, we have to be selective. The sky-high prices of the new HCV
treatments have been a wakeup call in this respect” Medical director, Managed Care Organization

Likely outcomes?
– Greater formulary restriction
– Higher bar of evidence
– Proliferation of plans with more tiers and higher co-pays to manage member cost

One thing for certain: this issue is not going away
– 15-September 2014: “The next generation version of Gilead Sciences Inc's
$84,000 hepatitis C drug, already under fire for its record-breaking costs, is going
to be even more expensive”
1Quotes
extracted from Evidera payer research within other disease areas
17
Contact information
Cheryl Ball
Tim Wright
US Practice Lead – Global Payer Strategy
[email protected]
+1 781 960 0332
Senior Vice President – Global Payer Strategy
[email protected]
+44 (0) 208 576 5096
Sandra Ford
Managing Consultant
[email protected]
+44 (0) 208 576 5091
www.evidera.com
18

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