Growing Pressures on Oncolytics to Demonstrate Value

Caroline Helwick

October 2013, Vol 4, No 8 - AVBCC 2013 3rd Annual Conference

Hollywood, FL—Oncology growth for the next couple of years will be driven by several strong trends, according to Doug Long, Vice President of Industry Relations, IMS Health, who described these trends at the 3rd Annual Conference of the Association for Value-Based Cancer Care.

IMS analyses of the oncology landscape indicate the following trends:

  • A continual increase in all tumor types, with high unmet needs for many of them
  • A strong cancer drug pipeline, with more than 470 new chemical entities in phase 2 trials or later development
  • Fierce competition as a result of the robust pipeline, which includes agents from midsize and large pharmaceutical companies
  • Prices are not diminishing, but questions are being raised by payers and providers
  • Payers respond by cost-cutting and requiring companion diagnostics and real-world evidence of benefit.

Specialty medicines in the United States were an $89-billion business in 2012. Oncolytics are the number one category in the specialty class, currently growing by 8% annually. Two cancer drugs—rituximab (Rituxan) and bevacizumab (Avastin)—are among the top 10 specialty drugs, but the growth in cancer drugs is actually slowing down, largely because of multiple agents coming off patent.

Today, many new agents are replacing rather than adding on to regimens, and payers are being more attentive to the “crowded” oncology space, where there are multiple options for the same indications, Mr Long said.

Targeted Therapies Dominate
Although global growth in oncology has slowed, there are signs of a rebound as a result of emerging treatments for neglected cancers. Several classes are predicted to demonstrate the most growth by 2016, with specialty drugs far outpacing traditional retail-dominated areas and with oncology by far the biggest piece of this pie.

Figure: The Late-Stage Pipeline Is Dominated by Targeted Therapies, Mostly in Solid Tumors.
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The dominance of targeted therapies in the marketplace will shape the future, Mr Long predicted. In 2002, targeted therapies accounted for just 2% of the market, but this rose to 15% by 2007, and skyrocketed to 33% in 2012. More than 200 targeted agents are in the pipeline just for non–small-cell lung cancer and breast cancer (Figure).

Pricing Cancer Drug
Although new cancer drugs are coming at a great expense, “downward pressures” provide counterbalance, Mr Long said.

“On one side of the equation you have price elasticity of demand, physician reimbursement confidence, patient out-of-pocket expense, payer/employer actions, physician moral outrage (at drug prices), and competitors and substitutes. On the other side, insurance separates the financial responsibility from selection and benefit; you have a rising benefit to patients, increasing duration of therapy, improved ability to identify responders, and recent launches and analogs. It is a balancing act, and we’re seeing these products see-saw in terms of their pricing,” he noted.

There are signs that prices are coming down, with the average monthly cost for oncology/supportive therapies declining from $10,725 to $9304 per patient, according to IMS analyses. The adoption of expensive drugs is slowing, he noted. Prices pushed beyond the $10,000 monthly in 2010, but they have since moderated slightly. However, branded drugs have achieved sustained price increases despite the average sales price “supposed restraints,” he said.

To justify their cost, new agents need to show greater benefit. “The market does not value incremental improvements anymore. A drug has to be much better than what it is replacing….It has to prove value,” he said.

Companion diagnostics will also be playing a greater role in future drug launches to ensure access to and demonstrate value for expensive oncolytics. The benefit of companion diagnostics has been demonstrated in metastatic melanoma, where the companion diagnostic for vemurafenib (Zelboraf) that tests for BRAF mutations may be responsible for this drug’s significantly greater market growth versus ipilimumab (Yervoy), Mr Long suggested.

Need for Real-World Evidence
Scrutiny of a drug’s benefit across the life cycle, along with requirements of real-world evidence of benefit, will impact the continued use of a drug. In Germany, drugs receive conditional approval with a conditional price tag, and are reevaluated later to determine whether the outcomes justify the cost. “I think we will see that if a drug doesn’t show value, the price will come down,” Mr Long predicted.

The emerging importance of real-­world evidence for benefit will likely impact new drugs, he said. New agents will receive access at launch, but some reevaluation will occur, including phase 4 clinical trials and other metrics. As was observed with bevacizumab in metastatic breast cancer, drugs may not always live up to their initial promise.

Also on the radar are biosimilar monoclonal antibodies, which could enter the market by the end of the decade. But although welcomed by many, biosimilar monoclonal antibodies may not greatly impact the cost of cancer care, because of their production expense—an investment of $102 million per biosimilar compound versus $1 million to $2 million for a small monoclonal generic. “It’s 100 times more investment, suggesting there’s not going to be a lot of players in the marketplace. Some savings will be there, but it will be more like 25%, not 90%,” Mr Long predicted.

“The oncology business has to prove value,” Mr Long concluded. “Manufacturers have to prove value and practices have to prove value, because healthcare expenditures are rising at an unsustainable pace.”