Candidate Observations to Be Added to Equinox’s Oncology Normative Pricing Model

Equinox Group has recently analyzed six more observations that are candidates for inclusion in our oncology normative pricing model.  The graphic below shows the new observations (green dots) as a holdout set compared to the original observations (blue dots).  The benefit vs. cost (price) ratios for the new set closely match those in the original set and should provide an even more robust basis for predicting pricing potential for new agents once  incorporated into the next generation of the model in early 2020.

Pale dots: original observation set

Green dots: new candidate observations

Background: Equinox Group’s oncology normative pricing model allows drug development teams to estimate the pricing potential of their developmental programs as a function of their anticipated clinical attributes. The model is based on analysis of clinical improvement vs. cost (price) for a set of oncology agents that have achieved favorable market access in recent years. That analysis shows that there is a clear and quantifiable relationship between clinical benefit and cost among successful drugs. Development teams can easily explore how alternative clinical outcomes for an agent will affect its pricing potential in each of its target indications.

Tecentriq and Imfinzi Both Offer Modest Improvements in SCLC

Conclusion: The clinical improvement of Tecentriq (atezolizumab, Roche) in untreated extensive-stage small cell lung cancer is positive, but modest.  New data recently announced for Imfinzi (durvalumab, AstraZeneca) looks about the same.  The impact on incremental cost in this population (driven by the drugs’ prices), however, are not far outside recent historical norms, which suggests both regimens will be reimbursed by payers.

Roche’s Tecentriq won FDA approval in March 2019 as the only immuno-oncology therapy for previously untreated extensive-stage small cell lung cancer. AstraZeneca plans on introducing competition soon; in September 2019 the company reported positive results from their Imfinzi study. Each drug was trialed as an add-on to carboplatin plus etopiside. Imfinzi reported slightly higher median overall survival than Tecentriq showed (13.0 vs. 12.3 months).  Unsurprisingly, its overall improvement as measured in Equinox Group’s analytical model is about the same as Tecentriq’s.

Although not negligible, Tecentriq’s and Imfinzi’s clinical innovation scores of 4.7% (shown above) and 5.4%, respectively, leave significant room for improvement in a population with high unmet medical need that includes 11% of all lung cancer patients. These clinical innovation scores are well below those recently achieved in other lung cancer populations, e.g., Keytruda in adNSCLC and sqNSCLC, and Tagrisso in EGFR+ Lung cancer (shown below).

Plotting clinical benefit against cost, the figure below confirms that both drugs offer modest innovation compared to other recent launches, but the incremental cost (prices) for both regimens are not high relative to recent historical norms for new oncology agents that have achieved favorable market access.

Our analysis incorporated data from the CASPIAN and IMpower133 clinical trials and the full prescribing information for Tecentriq and Imfinzi.

Pricing a new oncology agent across multiple indications

If the patients are sick enough, the theory goes, you can charge a lot for your drug.  How much of a difference your drug makes also matters.

Consider an immuno-oncology agent to be added to the current standard of care in each of the four indications listed in Table 1.  The assumed clinical attributes for the new combination regimens are shown.  They include changes in median overall survival (adding 8 months), median time to progression (adding 4 months), response rates, safety/tolerability and dosing.

Applying our analytics, we can quantify the disease burden (mortality and morbidity) and the degree of improvement offered in each patient population. This allows an informed comparison with recent successful launches, and we can thus calculate the US WAC “normative price” for the added agent in each target population (second row in Table 2), based on the value delivered.

The normative prices for the new drug are translated into implied prices per cycle (third row), which in this example range from $2,500 to $11,700. 

These results allow the team to assess the opportunities and inform the clinical and commercial development strategy.  For instance, with a normative price of $63,100 and a large patient population, 2nd line CRC has high revenue potential (this tool also estimates peak-year patient share and revenue).  If this agent’s price were set at its CRC normative per-cycle price ($3,100), then it would also be seen as appropriately priced in 2nd line ovarian, but it would be somewhat expensive in 1st line melanoma, likely leading to downward pricing pressure and a greater likelihood of access limitations there.  It would however be underpriced in 2nd line head and neck cancer (normative = $11,700), leaving money on the table in that smaller population. 

We have used this framework to help clients evaluate pricing potential for new oncology and hematology drugs across as many as 25 candidate indications for a given asset.  Naturally, other factors affect how indications are prioritized: probability of technical success, strategic fit, and the length and cost of late-stage clinical trials.  Having a sound analysis of pricing potential can make for better development decisions, including not only which indications but also which combinations to pursue.    

Contact Equinox Group to see more details about this application of our tools.

Calquence: The price is right

Conclusion: Our Cost vs. Benefit analysis indicates that Calquence is appropriately priced.

Calquence offers moderate clinical benefit compared to Imbruvica, the standard of care in relapsed/refractory mantle cell lymphoma. Calquence delivers a solid efficacy improvement, the effects of which flow through to improved mortality and morbidity. Combine these factors with somewhat favorable side effects and only slightly worse convenience and Calquence makes for a solid upgrade from Imbruvica. Calquence charges about $170,000/ year (WAC price) compared to Imbruvica’s $157,000. Given its level of clinical benefit, it is appropriately priced.

Our Cost vs. Benefit tool allows us to plot Calquence within a historical data set of new oncology drugs that have achieved favorable market access. Incremental cost is plotted along the y-axis and clinical benefit along the x-axis. Our historical data set shows a clear relationship between clinical benefit and cost, forming a cloud of data points. In general, drugs that fall within this cloud are priced appropriately given the level of clinical benefit they offer. Calquence lands just barely above the cloud, which means given the level of clinical benefit it provides, it may have been able to warrant a slightly higher price, but is well within the range of historical analogs.

In relapsed/refractory chronic lymphocytic leukemia, Calquence has shown promising 12 month data, but these data are not yet sufficiently mature to allow us to estimate its clinical benefit in that population. We will update our analyses as more mature data becomes available.

Radicava: Not Innovative Enough to Sustain Strong Start

Conclusion: Despite the early success of Radicava, the new ALS treatment provides little clinical innovation. After the buzz surrounding the first new drug for ALS treatment in 22 years passes, we expect patient share to decline. Radicava’s modest efficacy barely improves patient outcomes; our rare diseases model shows that it’s priced too high relative to its clinical benefit.

Strong Start

According to Mitsubishi Tanabe Pharma America, more than 3,500 ALS patients in the US have been treated with Radicava (edaravone), representing around 20% of ALS patients in the US. This patient share is likely driven by excitement from advocacy groups: following Radicava’s approval, ALS Association president and CEO Barbara Newhouse shared her organization’s hope that the approval “signals the beginning of a new chapter” in ALS treatment. Calaneet Balas, an executive VP for the organization, stated there was “a great amount of excitement” surrounding the drug’s approval and that she thinks the new agent “has brought true hope to [the ALS] community.” Disease burden in ALS in extremely high, and the heavy press coverage surrounding the approval propelled a strong first-year of sales: Radicava tallied $110 million in sales in the US alone in the drug’s first full year.

Skepticism

Despite the strong start, we don’t believe Radicava’s growth in the ALS market will be sustained. Radicava is an expensive addition (WAC=$137,400/yr) to riluzole and offers only small efficacy improvements compared to riluzole alone. That modest slowing of disease progression is offset by the inconvenience of near-daily IV infusions in two-week intervals and an absence of data on damage reversal and survival benefits. For Radicava’s price to match the clinical benefit vs. cost of other drugs in rare diseases, its WAC price should be about $55,000/yr.

In addition, although Radicava was approved for all ALS patients, it has only shown results in a small subset of patients who were recently diagnosed (within 2 years) and whose symptoms have rapidly progressed. It is estimated that only 7% of ALS patients meet these criteria, and the authors of the pivotal study state, “There is no indication that edaravone might be effective in a wider population of patients with ALS who do not meet the criteria.”

This limitation has not been lost on payers, with companies such as United Healthcare and Tufts Healthcare requiring patients to meet the trial inclusion criteria in order for their treatment costs to be covered. Lastly, while Radicava boasted strong initial sales figures, we don’t yet have data on rates of treatment discontinuation, which could be high given the modest efficacy, high cost, and inconvenience.

Many doctors share our skepticism. In Discussing edaravone with the ALS patient: an ethical framework from a U.S. perspective, Yeo & Simmons argue that physicians should see past the excitement from advocacy groups. In line with our analysis, these authors urge physicians to take the time to understand the costs and impact of administration demands on patients’ quality of life, and weigh them against the modest efficacy seen in trials.

Our prediction has already started to come true. Mitsubishi Tanabe expects Radicava sales to decline in 2019. In line with our analysis, Mitsubishi expects the inconvenience of frequent infusions to be a deterrent for patients, and the company is already trialing an oral suspension formulation of Radicava that would help justify its current price.

How to Price an Oncology Drug

It is widely agreed that drugs should be priced to reflect their value, or clinical benefit.  But how does one measure clinical benefit?  Equinox Group uses a proven method to quantify clinical benefit, derived from our deep experience in assessing unmet medical need.

A new drug’s proposed cost (on Y-axis, inverted scale) should align with its promised clinical benefit (on X-axis) to place it in the “cloud” of successful recent launches.

Locating clinical benefit on a specific scale allows us to examine how benefit is related to drug price in many recent launches that have gained good market access. Our analysis of drugs that have achieved favorable market access shows a clear relationship between cost and benefit. That observation allows us to advise companies on appropriate pricing for their emerging oncology agents.

Our measure of clinical benefit reflects efficacy, safety/tolerability and dosing, and how efficacy affects disease burden – mortality, morbidity, and cost. 

We can model the expected attributes of a new agent against the background of disease burden in a specific patient population to test the clients’ desired price for the asset.   We can plot the results on the graph above to determine if the new drug falls within “the cloud” of successful agents.  If it does, the drug will most likely achieve favorable market access at the desired price. If not, a rethinking of the pricing strategy may be called for. Our analysis can be applied to the US and each of the five major EU countries, and the same framework can deliver estimates of peak-year patient share and revenue.

Clinical benefit and drug cost vary by patient segment because of duration of treatment, disease seriousness, and a host of other factors, so we analyze each target indication separately. That way, agents with potential in multiple populations can be analyzed in each indication to find the optimizing price for the asset across the board. 

Hemlibra: A Strong Leader in Hemophilia A

Conclusion: The clear leader for hemophilia A patients with factor VIII (FVIII) inhibitors, Hemlibra (emicizumab, Roche) also brings competitive heft to the larger, more crowded, space of hemophilia A without inhibitors. Combining improved efficacy and convenience, Hemlibra offers significant clinical innovation over the current standard of care (SOC), Advate (Shire).

First approved in November 2017, Hemlibra is well positioned within the hemophilia A market. For patients with inhibitors, it wins in a landslide when compared to bypassing agents such as recombinant activated factor VII (NovoSeven®, Novo Nordisk). Among this small group, Hemlibra substantially reduces cost and administration frequency in addition to improving efficacy.

But how does Hemlibra look in the much larger (and more brand-loyal) population of patients without inhibitors, an indication Hemlibra won in October 2018?

Compared to Advate, the current SOC among patients without inhibitors, Hemlibra shows meaningful improvements in efficacy, tolerability, and convenience, leading to an 8.7% reduction in unmet medical need, as seen in the waterfall chart. While Advate requires at least three IV bolus administrations a week, Hemlibra can be given as a weekly subcutaneous injection with better outcomes in annualized bleeding rate and in the proportion of patients experiencing zero bleeds per year. 

So far, Hemlibra sales have backed analysts’ high expectations. Hemlibra brought in $224 million in 2018 revenue and looks to claim an even larger market share in hemophilia A patients, both with and without FVIII inhibitors, moving forward.

Our analysis combined clinical trial data from both Hemlibra and Advate prescribing information labels as well as the HAVEN 3 study.

Oral semaglutide: A game changer in type 2 diabetes

Conclusion: Oral semaglutide’s clinical improvement over Januvia (sitagliptin, Merck) is 17 percent – a historically high level of innovation. In type 2 diabetes, nearly every new entrant over the last 20 years has offered an improvement in the low single digits or less. 

At this writing, oral semaglutide (from Novo Nordisk) is expected to win approval by the end of 2019. Our analysis compares it to Januvia (with metformin in the background).  The waterfall chart shows that oral semaglutide reduces unmet medical need in type2 diabetes by over 17 percent, compared to Januvia. 

Efficacy drives oral semaglutide’s improvement, reflecting superior glycemic control and reduction in CV events. The efficacy advantages ripple through to mortality and morbidity, conferring still more clinical benefit.  Oral semaglutide has a modest disadvantage in safety/tolerability and slightly higher cost relative to Januvia (we assume the oral form will cost the same annually as the subcutaneous Ozempic).  The net benefit is impressive and will be diminished only marginally when generic sitagliptin reaches market.

The clinical data used in this analysis for Januvia comes from its package insert, and for oral semaglutide, most of the information comes from its phase 3 clinical trials: PIONEER 1, PIONEER 2 and PIONEER 3. 

Tymlos: A new force in the osteoporosis market

Conclusion: In postmenopausal osteoporosis patients at high risk of fracture, Tymlos offers improved efficacy at a much lower price than Forteo. We expect Tymlos to slowly but significantly cut into Forteo’s share.

Tymlos to Overtake Forteo in PTH-treated Market Segment

Direct competitors, Tymlos (abaloparatide, Radius) and Forteo (teriparatide, Lilly) are both anabolic agents, delivered subcutaneously, and indicated for postmenopausal women at high risk of fracture.* In a study comparing both agents to placebo (ACTIVE trial), Tymlos outperformed Forteo on almost every endpoint, including percent reduction in patients with vertebral and non-vertebral fractures and increased bone mineral density at various bone sites. At less than half the price of Forteo (WAC = $17,000 versus $40,000 /yr), Tymlos is well-positioned to cut deeply into Forteo’s market share. Since osteoporosis patients are unlikely to switch medications, we expect Tymlos will rely on capturing newly diagnosed patients. So far, Tymlos has been successful in this approach: Radius claims that Tymlos captured 40% of new anabolic patient starts in December 2018. The impact Tymlos will have on Forteo’s market share is already emerging. After years of constant growth, Forteo’s revenue decreased steadily throughout 2018.

Evolution of the Osteoporosis Market

The osteoporosis market continues to become stratified into lines of therapy. Payers will likely require all newly diagnosed patients (except those with very high fracture risk) to try a generic bisphosphonate first. Next, a patient will likely be directed towards Prolia (denosumab, Amgen) due to its moderate efficacy, better convenience, and lower cost compared with the anabolic agents (Prolia costs $2,400 per year and is administered subcutaneously every 6 months). Patients failing Prolia would then try Tymlos or Forteo.

On the Horizon

Amgen and UCB’s drug Evenity (romosozumab) will soon win approval and will directly compete with Tymlos and Forteo in the high-risk population. Evenity looks inferior to Tymlos in our model because its advantages in side effects and convenience don’t make up for its poorer efficacy. However, with its efficacy on par with Forteo and with better convenience, Evenity should further erode Forteo’s patient share and challenge Tymlos if priced similarly.

*Advanced age, frailty, glucocorticoid use, very low T scores, and increased fall risk are indicators of higher fracture risk in osteoporosis patients.

Xeljanz: Is ulcerative colitis finally the place for JAKs to shine?

When the first JAK (janus kinase) inhibitor, Xeljanz (tofacitinib, Pfizer), was approved for rheumatoid arthritis (RA) in 2012, many thought it would quickly eat up a large piece of the market.  Sales since then, however, have been disappointing.  Some believe this has to do with its initial failure to get approved in Europe, while others believe that there were lingering safety issues that were not recognized in the label. Regardless, sales have continued to climb.

Six months ago, Xeljanz hit the ulcerative colitis (UC) scene –the first JAK to do so. Compared to the current standard of care, Entyvio (vedolizumab, Takeda), Xeljanz shows significant improvement in ­­­both efficacy and convenience, demonstrating that having an oral route of administration could be a game-changer in the world of ulcerative colitis.

Now that Xeljanz has an EMA approval in RA (as of March 2017) and more long-term safety data has been released, we expect it to quickly eat up a corner of the UC market. With four other JAKs in late development, this class could pose a serious threat to anyone else hoping to compete in ulcerative colitis.