Drug Pricing is Shaping Oncology Partnerships

Gilles Toulemonde, Inova CEO.

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A lot is happening in the field of Oncology. Cancer remains a leading cause of death, but innovative new treatments, often developed through oncology partnerships, have caused this number to decline steadily. For example, from 1991 – 2015, the number of deaths attributed to cancer fell 26% [1]. In contrast, the cost of cancer has skyrocketed, driven by the rising cost of research, development and manufacturing, coupled with the risk of failure (Phase 1 oncology drugs have < 8% chance to make it to market [2]) and challenges imposed by global distribution, varying regulatory requirements and inconsistent health insurance policies. To cope with these costs, biopharma companies are increasingly turning to partnerships.

In our newest white paper 14 Best Practices for Maximizing Your Meetings’ ROI at the BIO Convention, we reported that one-third of all partnering meetings at the BIO International Convention were arranged to discuss collaboration opportunities within the field of oncology. Specifically, for immuno-oncology treatments, more than 130 biotechnology and 20 pharmaceutical companies were working together, with the number of deals rising to 58 last year from just 6 in 2013 [3]. As CEO of Inova Software, the most widely used biopharma partnering platform, I am happy to see these partnerships come to life. However, it also makes me wonder about the risks these pharma companies are taking in these oncology partnerships.

As new oncology drugs are approved, and established treatments gain new indications, more and more oncology collaborations are being established to facilitate research, development, commercialization and global market access. There is an assumed, inherent risk with discovery and a calculated risk with each in licensing or out licensing deal. But anyone contemplating such a deal needs to evaluate one additional risk: oncology pricing. Here, we discuss the need for creative, cross-industry and cross-functional oncology collaborations. They will be essential to spur innovation in the discovery of new treatment modalities as well as new oncology pricing strategies. Such strategies may include outcome-based or value-based pricing and more strategies are needed because the financial toxicity of cancer is equally aggressive, and the battle must be fought on this front, too.

Cancer by the numbers

The statistics for cancer are staggering. Perhaps most alarmingly, approximately 1 in every 3 people alive on the planet today will be diagnosed with cancer. It is a leading cause of death: in 2018, there will be an estimated 18.1 million new cancer cases and 9.5 million deaths worldwide. [4]. With over 200 cancers identified, the challenge of discovering and developing effective treatments is great, indeed, but oncology collaborations, even those considered co-opetitive, are already helping transform the landscape of cancer care.

As of today, there over 72,000 trials listed on Clinical Trials which are dedicated to new oncology treatments, each trial with multiple sponsors and research collaborators working together to find new cures. Globally, nearly 1,100 of the 7,000 new drugs, vaccines and/or therapies under development target cancers. Three-quarters of these could represent first-in-class treatments which could open up new avenues for future therapies [5] and pave the way for additional oncology partnerships. Since President Nixon “declared war on cancer” in 1971, the USA boasts that the resultant oncology effort can be correlated to 73% of survivorship gains and 15.5 million cancer survivors. In the face of these positive gains in the fight against cancer, a new challenge has arisen: the cost of treatment and oncology drug pricing is in its cross-hairs.

The rising costs of cancer treatment

The cost of treating cancer has exploded. Prior to the year 2000, the average drug price for one year of therapy was < $10,000. Today, it is $135,000. The question of sustainability of producing and paying for these oncology drugs, is, unfortunately, becoming inevitable. If you look at all the cancer drugs approved by the FDA since 1981, the average monthly cost has increased by a factor of 10 from about $1,000 in the mid-80's to $10,800 earlier this decade [6]. And the trend is accelerating. Beyond the cost of treatment itself, the hidden costs of transportation), lodging, food, childcare and so on is enormous. Other significant hidden costs include mental health support, cosmetics, prosthetics, fertility treatment, legal costs, lost wages and the inability to find or maintain work [7].

When Rituxan®, an essential blood cancer treatment, was approved in 1998, it raised eyebrows with its whopping $5,000 per intra-venous bag. By 2010, Provenge® (sipuleucel-T), a prostate cancer immunotherapy drug by Dendreon Corp., was listed at $93,000 for a three-course treatment. While it caused some outrage, the unprecedented move set the new course for cancer drug pricing. By 2012, eleven of the twelve cancer drugs approved by the FDA carried a price tag in excess of $100,000 [8]. Between 2013-2017, the median price of a new cancer drug doubled. With the introduction of alternative treatments such as immunotherapies, these numbers are bound to propel, due to the high prices that come with it. This puts an enormous financial burden on patients and their families.

However, it’s important to keep in mind that not all cancer treatments run in the hundreds of thousands of dollars: 80% of the total annual spending on cancer medicine can be attributed to prescriptions for the Top 35 cancer drugs. In contrast, the vast majority of cancer drugs boast less than $90 million in annual sales – a far cry from fully loaded costs of research and discovery. To balance the risks and reduce the rising costs, biopharmaceutical companies must seek out oncology partnerships that not only help control drug pricing, but also that include more stakeholders, including health professionals, genetic counsellors and financial planners.

Innovation: We need better treatments and better pricing

What’s the secret behind better treatments – is it better partnerships? Better tools? Or is better drug pricing? I believe it is all three.

When oncology drugs are expensive, patients suffer, and treatments are less effective. Studies have shown that financially burdened patients skip their medications, “stretch them out” over extended time periods and deliberately forego additional scans or treatments in an effort to conserve their cash or to better manage their ability to keep working at their jobs. This often results in an unfavorable clinical outcome, including death. Along the way, the patient will typically require hospitalization which further multiplies the cost, thus their strategy for cash conservation ultimately backfires, not to mention the toll on their health.

With the rising cost of cancer care for payers and patients alike, one might wonder, is the current drug pricing trend sustainable? In keeping with the spirit of innovation, perhaps this is an opportunity for FinTech to partner with Biotech and forge new oncology collaborations that could help plan for financial health in combination with physical and mental health. As global economic drivers, advocacy groups and patients themselves continue to dial up the pressure, we expect to see drug pricing shaping more oncology partnerships with outcomes-based contracting and pharmaceutical value-based pricing likely becoming a standard part of the dialogue.

Janssen, under the leadership of its parent company J&J, is investing heavily in centers of innovation excellence and spawns >150 new partnerships each year. One noteworthy example of partnering is with the chemotherapy drug, Velcade®, which was the first drug of its kind within the class of proteasome inhibitors. The story began as an oncology partnership between Dr. Julian Adams of ProScript with the National Cancer Institute (NCI). Soon thereafter, Millennium Pharmaceuticals acquired the promising asset, forged an oncology partnership with the Dana Farber Cancer Institute, and moved the drug through clinical trials. Oncology collaborations to expand distribution into the EU and Japan were then sought out. At that time, Takeda acquired Millennium and J&J paid a reported $535M to co-market the drug. What’s most interesting in the story of Velcade as a series of innovative oncology collaborations is how J&J worked with the UK government and health and wellness practitioners to launch and market the drug with a rebate. Anyon who had a minimal response to the drug would be credited with a rebate in one of the earliest examples of outcome-based oncology drug pricing.

In 2017, the FDA approved a world-first, Kymriah® by Novartis, which genetically alters a patient’s own cells to combat a particularly aggressive form of cancer in children and young adults, B-cell acute lymphoblastic leukemia. Many were aghast when the $475,000 price tag for a one-time CAR-T treatment was disclosed, yet an even greater number of analysts were actually relieved to learn that the cost was lower than expected. Novartis rightly defended the cost, citing the complexity and effort required to craft a personalized therapeutic and that bone-marrow transplants for other forms of leukemia cost even more ($540-800,000). Further, Novartis has pledged to refund any of the 600 patients diagnosed each year who do not respond within 30 days of treatment [9]. In essence, Novartis requires payment only when it achieves a clinical response. This approach is a strong nod to a new developing business model: outcome-based pricing. That won’t be without risks for future oncology partnerships but is probably necessary for the sustainability of oncology efforts.

For the price to be justified, the outcome based practice requires that we look more closely at the medical benefits of the drug and examine the price in the context of saving a child’s life. Kymriah is approved in the US for children and young adults (up to 25 years): in the clinical trials, 83% of the trial participants achieved full remission in only three months. Without such a treatment, the outcome is bleak. Novartis has taken a similar approach with other drugs: Entresto; a heart failure drug, Gilenya; a relapsing multiple sclerosis medicine and Tasigna; a treatment for a certain type of leukemia. Novartis also established partnerships with insurance companies to develop outcome based business model.

We have yet to see the results, but so far, the drugs are doing well in the market [10]. According to analysts, these drugs would have had only limited uptake if it were not for the outcome-based pricing model. From a business standpoint, this outcome-based model also enables Novartis to look back on the process of developing Kymriah and to evaluate redundancies that may lead to the same outcomes. It allows the company to test and see pricing models and adjust based on the most-efficient way possible. By taking this approach, Novartis is taking great financial accountability that will make them stick to reevaluating their processes and making the company more efficient which can then, in turn, impact oncology pricing and future oncology partnerships.

The ongoing trend of approving pricey therapies and the increasing number of partnerships in the field of oncology makes me feel optimistic: we are on an exciting path to develop even more innovative breakthrough oncology drugs that may possibly one day cure cancer. However, in order to ensure that these products do not get discontinued due to the unsustainable pricing models, partnerships in oncology have become the new imperative and go well beyond good science. We all look forward to seeing new oncology partnerships, more collaborations across disciplines, clear definitions of success and a concerted effort by all stakeholders to ensure that oncology drug pricing is no longer a matter of life and death.

 

SOURCES :

[1] https://www.cancer.gov/about-cancer/understanding/statistics

[2] http://www.fdareview.org/03_drug_development.php

[3] https://www.genengnews.com/the-lists/top-15-immuno-oncology-collaborations/77900737

[4] https://www.cancer.gov/about-cancer/understanding/statistics

[5] https://www.phrma.org/report/medicines-in-development-for-cancer-2018-report

[6] https://www.thespec.com/news-story/6367581-new-cancer-drugs-cost-more-than-10-000-each-month/

[7] https://www.fightcancer.org/sites/default/files/Costs%20of%20Cancer%20-%20Final%20Web.pdf

[8] https://pharmaintelligence.informa.com/resources/product-content/every-new-cancer-drug-in-2017-cost-100000-or-more

[9] https://www.nytimes.com/2017/08/30/health/gene-therapy-cancer.html

[10] http://www.fiercepharma.com/corporate/after-a-slow-start-novartis-gains-market-traction-heart-drug-entresto