Payers: Late for the Party?

PHARM EXEC'S TWO KEY FEATURES THIS MONTH illustrate the strategic contradiction facing today's industry. On the one hand, our annual survey of R&D pipeline prospects reveals an open well of potential from the scientific discoveries associated with the mapping of the human genome. That was nearly a decade ago, and its legacy is now bearing fruit, in the form of a more precise targeting of trials and treatments that promise to save more lives, at lower cost. The larger meaning here is that the case for the blockbuster product—at least in clinical terms—is due for a revival.

William Looney

But when we raise the other hand, we see a blank wall of indifference to this bounty. After a seven year hiatus, Pharm Exec returns this month with a roundtable panel of experts to examine the state of market access in medicines—a state that our participants define as one where that market is being managed to slow or even reduce access, particularly for new originator products that once were referenced as innovative. Now they are reference priced—often against the oldest generic product in its class.

In most countries today, there is little or no premium allowed for innovation. Germany, the world's fourth largest economy and surely one of the richest, is subjecting companies to a bewilderingly complex new drug benefit assessment process. In the case of life-saving oncology products, this requires delivering as primary endpoints evidence of progression free survival projected toward overall survival—a virtually impossible measurement for any new cancer product. Failure to meet this hurdle risks a product being priced within fixed reference price classes, where older generics are the main comparator.

This is unfortunate because, as senior editor Ben Comer notes in the pipeline profile, all this new science carries a potentially large benefit on the cost side. It speeds up the development process. More precise molecular targeting enhances the selection criteria for clinical trials and thus provides more accuracy in test results. Companies are also faring better in focusing R&D spending around areas of unmet medical need. For example, our survey tags a slow but steady resurgence of Big Pharma interest in next-generation antibiotics to treat hospital borne infections that kill 23,000 people each year in the United States alone. Controlling antibiotic resistance with a single effective new drug could produce billions in savings on costly acute care services.

Hepatitis C is another silent consumer of healthcare dollars, with Gilead's sofosbuvir emerging as 2014's biggest new launch. But payers are likely to sound a skeptical note given the potential cost exposures—this is a ticket punched at rare disease prices—as well as the fact that the drug's constituency includes many from society's marginalized elements, who are unfamiliar with the concept of the "empowered patient." It will be interesting to see if the hype around sofosbuvir ends up confirming an unpleasant truth about even the best planned product launches: the pace of market uptake is today measured in years, not months.

Advances are also emerging to add value to patients, even in the most crowded therapeutic segments. Despite all the options that exist in the anti-hypertensive class, thousands of patients are still non-responsive to conventional treatment and face heart disease, kidney failure, and an early death. In yet another indication of how technology is building a stronger treatment convergence between drugs and devices, Medtronic has developed a new last-ditch invasive procedure called renal denervation that can reverse the decline. It underscores the point that, for sick patients, no treatment arsenal for their condition can ever be considered too big.

Of course, none of these advances matter if they don't get the opportunity to prove their clinical value to patients. Our panel on market access offered a blunt assessment of the industry's state of play with payers, contending that in most countries the drug assessment process is opaque and overtly politicized; that good evidence rarely, if ever, moves the needle on access or reimbursement decisions; and the invitation to dialogue early in the development cycle is not grounded in commitments that extend to the final stage of marketing authorization and reimbursement. Unfortunately, the process motivates both sides to lower their tolerance for risk—even though the best clinical innovations require more up front risk, not less.

It is also apparent from the discussion that those who drive the market access function are often isolated from their company's top decision-makers, many of whom have had virtually no exposure to the messy work that goes into analyzing and understanding that "payer perspective." Ultimately, the market access function is all about education—and the need to enlighten extends not just to the payer, but to the "c suite" as well. Remember: It's the balm of consensus that perfumes the pipeline.

William Looney Editor-in-Chief wlooney@advanstar.com Follow Bill on Twitter: @BillPharmExec