The Oncology Burden Of Proof: Learning From The PD-1 Market

As more and more immuno-oncology products reach the market, the sustainability challenge persists: biopharmaceutical companies are seeking fair reimbursement deals that recognize their innovations, and struggling health care systems worldwide are pushing the burden of proof back onto the shoulders of drug developers.

Experts from consulting group Charles River Associates (CRA) analysed the PD-1/L1 market in Europe to better understand the challenges facing novel immunotherapies when it comes to reimbursement and access. Eva Marchese, vice president at CRA, speaks to In Vivo about the lessons learnt so far for immune-oncology (IO) products when it comes to market access, pricing and value, and how the PD-1 market has laid the reimbursement groundwork for other drug development breakthroughs in cancer.

Pharmaceutical companies developing immune-oncology (IO) drugs are able to move from research and regulatory approval in one indication to several other cancer indications in a very short time frame; this is one of the major developments in the last few years that has disrupted the cancer drug development and commercialization model. “From the health care system perspective, there are concerns in terms of the availability and sustainability of the system,” says Marchese, who specializes in competitive strategy, pricing, market access, and research primarily in the pharmaceutical, biotech, and life science industries.

CRA’s analysis was sparked by this pressure on the current drug development model. “The way in which the traditional process is managed is not really fitting the need for IO drugs, especially in Europe,” notes Marchese. There are issues from both the pharmaceutical company’s perspective and payer perspective.

Focusing on two of the earliest IO drugs to be approved in Europe, the programmed cell death protein 1 (PD-1) inhibitors nivolumab and pembrolizumab, CRA has outlined three key areas where lessons could be learnt for current and future IO drug developers. These are: trial design and regulatory data packages, entry strategy, and indication launch sequencing.

The Right Data

Marchese notes that some of the challenges nivolumab and pembrolizumab faced in the early days after their approvals in Europe were because of the way some payers viewed and interpreted the clinical trial data for each product. She highlights that for pembrolizumab (Merck & Co. Inc.’s Keytruda), during clinical trials, PD-1 expression was a key factor and included in the analysis. But nivolumab (Bristol-Myers Squibb Co.'s Opdivo) did not have this included in its initial label. “From the payers’ perspective it is seen to be better to have the PD-1 expression included as a label stipulation; even if from the clinical perspective, there are fewer added interests.”

Marchese says specific PD-1 expression recommendation soothes payers. “From the payer perspective, adding the PD-1 expression was a way of being reassured that the drug was going to be prescribed to the patients who were right, who were a better identified patient population. I think the perception was that the earlier pembrolizumab trials were a little bit more accurate.” As a result, she says pembrolizumab had a better deal than BMS across Europe. 

The advantages of PD-1 stratification for immunotherapies has been confirmed by Datamonitor Healthcare’s research into the pricing and reimbursement landscape for immunotherapies. Louisa Joseph, the author of this analysis, notes that most payers agree that the use of well-validated biomarker tests and robust cut-offs allow for easier placement of drugs in the treatment algorithm and reduces the size of the target patient populations. Datamonitor Healthcare anticipates that with improved standardization of PD-1 inhibitors, drugs targeting the PD-1 expressers will have advantages in negotiating access. Drugs without biomarker expression qualifications will need to concede on pricing to attain a larger patient segment or will have a more difficult path in convincing the payers and health technology assessment (HTA) bodies of their value.

Both products were first approved in advanced/metastatic melanoma, for use as a late-line treatment following progression after treatment with ipilimumab or (for BRAF V600 mutation-positive patients) a BRAF inhibitor. Initial approvals were followed by approvals in non-small cell lung cancer (NSCLC) and other indications.

However, nivolumab was approved in squamous cell non-small cell lung cancer (sNSCLC) 11 months ahead of pembrolizumab. This was due to a combination of earlier availability of pivotal clinical trial outcomes and tactical submissions of two separate regulatory filings (under the final brand, Opdivo, for melanoma, and as Nivolumab BMS for NSCLC) to the European Medicines Agency (EMA).

A key lesson learnt here is that clinical trial design elements need to be discussed with payers at an earlier stage, not just with regulators, Marchese notes. “It is difficult for these kinds of drugs, especially when they are entering indications where there are no treatments approved or old chemotherapy options are used for treating patients. But the raw business of the clinical trial is something developers must be more proactive in discussing with payers, especially in Europe, before reaching the actual price negotiation phase.” She adds that manufacturers are working more closely with regulators now to create or develop a trial that is responsive to the regulatory requirements, but companies do not always consider payer concerns and issues during the development stage.

There are attempts in Europe to create parallel consultation processes for regulators and health technology appraisal bodies (the drug pricing watchdogs in Europe). These newer initiatives provide some direction in terms of what these agencies would like to see in the trial in order to speed up the process when the drug is coming onto the market. “The problem we still have in Europe is that each country requires something different,” Marchese says. While it seems impossible to make all parties happy across the spectrum of European regulators and pricing bodies, decisions need to have clinical rationales and not be based on commercial strategies only. “If you develop a trial where you are able to answer all the questions that payers across countries may have, and you can justify why you decided to develop and design the trial in a specific way, so you have a clinical rationale behind that, then it is fine. But when payers see that there is no clinical rationale, but it is more of a commercial-driven trial, this is when they begin to be skeptical.”

Early Access Programs: Pros And Cons

Still focusing on these two PD-1 inhibitors, Marchese notes that Merck and BMS both used the early access programs in Europe, but the companies approached these systems in different ways across different countries. 

Marchese highlights that reimbursement for NSCLC was managed differently for each product across countries. This is, in part, due to the different access approach pursued by each manufacturer. Nivolumab’s inclusion in early access programs did not lead to faster reimbursement across countries. In Italy for example, CRA notes: “Nivolumab accessed the market in second-line squamous NSCLC through the inclusion in the 648-law drug list just after the EMA approval and was then reimbursed in six months. Pembrolizumab was not included in an early access program but received the reimbursement status in six months as well, in April 2017. The reimbursement of pembrolizumab happened simultaneously with the reimbursement of nivolumab in 2L non- squamous NSCLC, which faced a 12-month reimbursement process.”

When looking at newer PD-1 or programmed death-ligand 1 (PD-L1) products that have made it to market in Europe, CRA notes that HTA timelines have not improved yet. Marchese notes that “little progress seems to have been made… and indication characteristics, population size, and availability of alternative treatments appear not to have impacted the overall duration of the process.” For example, Marchese noted that Merck KGaA and Pfizer Inc.'s avelumab (Bavencio) was approved in September 2017 for metastatic Merkel Cell Carcinoma (mMCC), and Roche's atezolizumab (Tecentriq) was approved in July 2017 for both metastatic Urothelial Carcinoma (mUC) and 2L NSCLC. Both drugs faced lengthy negotiations with HTA bodies in Europe. For example, after 12 months and 10 months’ negotiations for mUC and 2L NSCLC, respectively, atezolizumab only managed to achieve reimbursement in its lung indication in Italy.

“We believe that contributing factors for the status quo have been budget concerns due to the anticipated expansion plan of PD1s/PD-L1s and the opportunity that payers see in negotiating more than one indication simultaneously,” Marchese notes.

Reimbursement Across Multiple Indications

Another difference between the initial strategies used by BMS and Merck in Europe was the indication launch sequencing and the timeline. “When you move across different indications in a very short timeframe, what happens at country level is that payers tend to wait and then merge more indications together. They prefer to deal with more indications in one negotiation,” Marchese says. “As a result, you may have a delay in some indications because payers wait until you have two or three approved, and then they move into a pricing position.”

Is The European Oncology Market Sustainable?

Marchese believes “the system is sustainable if payers want to make it sustainable.” 

She cited a drug launch outside of oncology as an example of health care systems adapting to higher costs if the value of a product is clear. “We saw a very challenging situation when sofosbuvir was commercialized, launched, and then payers did not have enough money to afford the drug,” she highlights, “but the funding system has been flexible enough to find money.”

Sovaldi (sofosbuvir), developed by Gilead Sciences, was approved in Europe in January 2014 for the treatment for hepatitis C; and European sales for Sovaldi totalled $164 million in the first quarter of that year. In the UK, the drug was reimbursed at a cost of around £37,400 per 12-week course of treatment.

Marchese says this case showed that if a novel therapy can display its benefit and value to society, then health care systems will pay for it and find a way to make the market sustainable. 

So far, pharma companies developing IO drugs have followed more traditional market access strategy approaches. However, there are examples and some attempts in which pharmaceutical companies have tried to have a dialogue with payers to propose something that is more creative and innovative. The problem here is that payers are not cross-country, and they are not ready to manage these drugs and to control the use of these drugs, Marchese says. “They don’t have the infrastructure for wider monitoring in the real-world. Therefore, at the end, what happens is payers are asking for traditional, very simple financial agreements because this is what they can manage and control easier.” However, she notes that there are countries where the infrastructure for managing pharmaceuticals is more advanced. “But it depends on the organization of the health care system and how many stakeholders are involved in the decision-making, because we have countries where the decision-making is very fragmented.” For example, countries like Italy, “where you have the national system, but then you have regions, and then you have the local authorities, and then you have the hospitals and depending on the region the health care system is organized in a different way.”

The use of simple, financial agreements for immunotherapies across Europe has been confirmed by Datamonitor Healthcare’s research. Joseph highlights how price-volume and budget ceiling agreements are utilized heavily in France, Spain and Italy in order to control the expenditure of the drug class. In France, the government has set the budget ceiling for all PD-1/PD-L1 inhibitors across their approved indication at €700 million ($808 million) per year, however this amount is subject to change following further approvals/label expansions.

Payers that Joseph interviewed suggested that other simple financial agreements were likely to be negotiated in the future, including per patient caps on pricing implemented at an indication-by-indication level.

Combinations pose new pricing challenges

Datamonitor Healthcare’s research also reveals that combinations involving checkpoint inhibitors pose a particular challenge to payers. Developing new policies to manage the cost of these treatments is likely to be a major focus given the burgeoning combination pipeline. Joseph highlights that whilst mechanisms allowing for the negotiation of different prices for combinations are currently absent, several payers report that the establishment of new tools is likely to emerge in the near future. The new tools will be used to ensure that the cost of individual components is lower when used in combination compared to use as a monotherapy, and as a result the maximum net price that can be achieved will be lower.

Adding to the complexity in combination therapies are various reimbursement hurdles that arise when the components are produced by two different manufacturers, as payers lack the ability to bring both manufacturers into joint pricing negotiations. This is particularly relevant when one component of the combination wins approval for use with another agent that is already used in the indication. Payers also currently face the challenge of tracking the use of a drug alone or as a combination therapy, although some do report the ability to do so. Payers in EU countries expect new policies aimed at the pricing and reimbursement of combinations to emerge in the next one to three years that would enable them to manage price negotiations for combinations more effectively. In the absence of national regulations, Datamonitor Healthcare expects fragmented strategies will be adopted at regional and local levels, with new national-level policies introduced in the next one to three years.

Creativity Can Prosper 

While “immune-oncology is quite unique,” Marchese believes developers in the IO segment need to continue to push for novel reimbursement deals, to move the whole sector forward.

“Developers should try to go for an innovative negotiation, or at least propose something which is creative in terms of assessing or negotiating the price of the drug,” she says. “While this will not change the model, it may speed up the process. So, the process will be the same but with some creative approaches it could be managed in a smarter or quicker way.” Getting to market faster is a key aim for the innovative oncology R&D segment because treatment shifting medicines are appearing in waves, and at a greater pace than ever before in oncology drug development.

CRA notes that as oncology treatment moves from IO to cell and gene therapies (with two novel CAR-T therapies approved in 2017 for B-cell malignant disease), both launched and near-to-market IO products could potentially see lower usage than expected due to future advanced therapies.

“The pace of change in oncology treatment is accelerating... Even with high prices, manufacturers have a narrowing window of opportunity to recoup development investment and build a pipeline for the future,” the authors say.

The views expressed by Eva Marchese are her own. Datamonitor Healthcare’s report, Payer View And Management Of Immune Checkpoint Inhibitors, will be published in November.