Pharma’s Cutting Edge

Just a quick update on NICE’s technology appraisal of Exubera, Pfizer’s inhaled insulin.  In May, I reported on the draft NICE tech appraisal in an in-depth review.  NICE issued their Final Appraisal Determination on October 12th, and the period for appeal ends tomorrow.  If Pfizer does not appeal the FAD, it will be used as the basis for a NICE guideline.

This appraisal provides good insight into stringent requirements for cost-effectiveness demonstrations, particularly regarding evidence standards.  Whatever you might think of it, this is where evidence-based medicine lives today.  If you’re not already familiar with it and you work in the industry, this appraisal is a good opportunity to gain familiarity.

As Andrew Jack of the Financial Times (FT.com) first reported Sunday, GSK has apparently reached agreement with two EU countries’ to flexibly price its new medicines based on their demonstrated cost-effectiveness.  The agreements were further elaborated upon in an article Monday by Ben Hirschler of the Scotsman.  Details of the agreements weren’t disclosed, nor were the identities of the countries, although France is speculated as being one.

I’m very curious about the details of these agreements.  Certainly, there is great potential benefit to a pharmaceutical company if it can reach agreement prior to marketing on a pricing scheme that allows for near-automatic increases in reimbursed price based on demonstrated value.  It’s a clear departure from current reference-pricing schemes that set a price based on the perceived value of a drug (relative to its reference group) at the time of launch, with little room for value-based price changes thereafter. 

But there is a potential downside as well, should the drug’s value not live up to its promise.  Under the scheme as described, GSK would have to reduce its prices in these circumstances. 

Agreements as described raise a host of implementation questions.  I assume that the initial drug price in these schemes would be determined as it is today–a reference-based price determined via negotiation.  What I am not at all sure of is how prices would be adjusted for future demonstrations of value (or lack thereof).  How would a country enforce its agreed to pricing adjustments if they are unfavorable to the manufaturer?  Wouldn’t a manufacturer put up a hell of a fight before it subjected its drugs to price deflation?  What if a manufacturer simply refused to cut a drug’s price, or the health system refused to increase its reimbursement, each citing scientific arguments supporting its decision?  Would each disputed pricing adjustment end up in court, or is there an arbitration scheme built in?  How would demonstrated safety or tolerability issues be reflected in the price; would quality-of-life be used to determine price revisions?  What all these questions boil down to is this:  How will value be determined, who will determine it and how will it be reflected in price?

The linked NYT article briefly discusses one of the more salient economic points faced by sponsors and academics interested in developing predictive tests of drug efficacy with established drug classes. It’s also a point that I’ve seen very little attention paid to in the lay media. I’m taking about the issue of class effects. Predictors of efficacy when the clinical read out (i.e. time to definitive efficacy determintation) is protracted have the potential to be useful, even when the drug class is associated with low toxicity and low cost. This utility is heightened when the disease being treated is serious. CHF fits this profile tightly. Beta blockers are cheap and relatively non-toxic and CHF is serious with a protracted time between therapy initiation and definitive efficacy. But they’re an established class, with many members. It’s likely that a predictive test will exhibit specificity spill-over among class members, as the article implies. The only way to to test for such spillover is a very large clinical trial that no single sponsor will want (or be able) to conduct. Even a consortium of sponsors would not be able to study every beta blocker, and only those beta blockers that will still be under patent protection after the trial is over would be considered worthy of study by the industry.

Governments have not even begun to come to grips with the implications of this situation. In the U.S., absent a single point of responsibility for public health economic policy, agencies such as CMS, AHRQ, NIH and FDA should ideally collaborate to determine whether and how such studies should be conducted and funded. The calculus will boil down to likelihood of finding predictive markers, the cost of developing the markers (including the mega study), the predictive value of the markers and the cost to use them routinely, and the potential cost savings to the healthcare system (particularly the publicly funded portion of that system) resulting from deployment of such tests. My sense is that we are unlikely to see such mega studies in the forseeable future, as the potential risk-adjusted, discounted cost savings will be found to be marginal relative to the costs of deployment in nearly all cases. As a result, when such tests are introduced after being studied for one member of a class, researchers will undoubtedly study them retrospectively (i.e. apply the tests to case series and prospective clinical studies done for other reasons) and then apply the tests clinically (usually off-label and without insurance coverage) based on these post hoc inferences. It’s far from ideal scientifically or policy-wise, but it’s going to be the reality for many established drug classes. It’s the main reason why governments should continue to encourage predictive tests of efficacy as new members of recent and new classes are developed.

It’s a sign o’ the times, as I’ve said countless times in these pages. Payors are attempting to squeeze every last penny from between the links of the prescription-drug value chain. I single out the case of IBX (that’s Independence Blue Cross, the Philadelphia Region’s largest insurer with coverage of ~3.5 million lives) only because I’m a customer–hurray! The same thing is happening everywhere; there’s no place to hide. Recently, IBX announced two “cost-saving” initiatives that will limit consumer choice of new drugs (by limiting reimbursement and/or raising co-pays for innovative medicines) and hit innovator Pharma in the bottom line.

The first initiative is called FutureScript. It’s a PBM run by IBX (IBX is ending its relationship with Caremark for in-person Rx purchases; they will continue using Caremark for mail-in scripts) that will initially manage IBX’s commercial Rx drug program and soon thereafter its Medicare program as well. Basically, IBX argues that having its own PBM allows it to better control costs. What that means for consumers, however, is that owning its own PBM allows IBX to offer less choices at higher co-pays for its customers compared with Caremark, which faces the pressure from a larger, less-captive customer base.

The second initiative is the Select Drug Program formulary. This is an aggressive formulary management program that automatically excludes all new branded drugs from from Tier 1 and 2 co-pays (IBX uses a three-tier co-pay structure) and subjects new drugs to pre-authorization (case-by-case; nothing new there). Generics are automatically added to the formulary at the first tier (i.e. lowest co-pay) and the innovators they replace are automatically consigned to the third tier (i.e. highest co-pay). Again, that’s not new.

What is new is a practice that IBX describes as a convenience to some consumers: shifting some self-injected meds from medical benefits to drug benefits (and from doctor’s offices and hospitals to retail drug-store shelves). These drugs can now be conveniently picked up at the pharmacy, where they might or might not be covered with a Tier 3 co-pay. How convenient (use Dana Carvey’s Church Lady voice for maximal impact when reading the foregoing).

In addition, IBX is clamping down on the practices of docs who routinely inject meds in their offices by hooking up with vendors who will monitor the use and cost of such injections to provide IBX with the most “cost-effective” purchases. If you’re a doc in the Philly area, you may read this as further invasion of your practice for the sake of saving insurers money. But don’t bother complaining, lest you risk insurers exhorting you to climb down from your big blue cross.

I had kind of an “interesting” morning. I use that word because I don’t have a “nice day” anymore. Frankly, I don’t bother with them. I feel as if I’ve outgrown the nice day. Why should I be hogging all the really nice ones? –George Carlin

Let’s hope Pfizer was in the mood for a really crappy day on or about April 13th, because that’s what NICE delivered to them in the form of a technology evaluation report for the recently approved inhaled insulin, Exubera. The nice thing for readers of this blog is that this month I’ll review the NICE decision to see whether it was at least fair, if not nice, and what other companies might take away from it.

Readers, please note that I will put a PDF copy of this post on the PGS library, which will serve as a repository for selected blog posts of broad interest. Eventually, I’ll set up a mailing list, so that readers can receive notices of updates to the library.

One of the points that should strike any reader of the assessment report at the very outset is that Pfizer spends more than any pharma on R&D, and they didn’t slouch on the development of Exubera. Indeed, the development program was more than adequate for regulatory approval and was clearly designed with pricing and reimbursement in mind. Yet, Pfizer failed to make a positive impression with the hard-to-please NICE reviewers: Corri Black, Ewen Cummins, Pam Royle, Sam Philip and Norman Waugh. Skeptics will argue that NICE’s decision was pre-ordained and that they fudged the numbers in their evaluation to make the data fit their preferred outcome. I usually count myself among the skpetics, but I will instead argue that one of NICE’s mandates is to place the burden of proof for incremental cost effectiveness (ICE) squarely on the shoulders of the sponsor; they have no mandate to give sponsors the benefit of the doubt in their independent assessment.

To save time and space, I’m not going to summarize the entire NICE report. Instead, I’ll point you to the brief overview document and ask you to read that prior to continuing. I’m also not going to dwell on details of the economic arguments made by either side. Rather, I’m going to focus on reasons NICE used to accept or reject the assumptions and data from the sponsor for economic modeling, because these assumptions and data drive the modeling results and thus the final decision. Sponsors have control over the design, conduct, analysis and reporting of economic-supporting studies. They do not have control over the assumptions NICE or other independent agents use for their ICE models, but they do have the ability to adequately justify and support the choice of their own assumptions. So, did Pfizer spend their money wisely? Where could they have done more or better during study design and execution? What might they have done differently during reporting? Most importantly, is it feasible to demonstrate the ICE of new drugs prior to first launch, or should sponsors instead focus on approval and enough ICE evidence to get high co-pay (e.g. Tier 3) coverage in the U.S. and limited to no coverage in Europe?

NICE Conclusions and Arguments
Background Information from NICE of Special Importance to NICE Opinion

1. As Type 2 diabetes [N.B. Type 2 diabetes, because of its much higher prevalence than Type 1, accounts for roughly 80% of all insulin users in the U.S. and U.K. and an even higher proportion of insulin doses administered] severity (as reflected by HbA1c) changes, the relative significance of fasting and pre-prandial versus post-prandial glucose levels likewise changes. At low HbA1c levels, post-prandial glucose accounts for up to 70% of HbA1c elevation; at HbA1c levels above 8.4, fasting and pre-prandial glucose account for the majority of HbA1c elevation. This is important for Exubera, because it is a short-acting insulin that primarily affects post-prandial glucose. 
2. Type 2 diabetes progresses, and most patients will eventually require exogenous insulin. In the UKPDS (the largest prospective, controlled study of Type 2 diabetes), only a small proportion of patients who required insulin refused it.
3. Exubera has a short-acting profile and would not, therefore, remove the need for a long-acting insulin injection for nearly all patients who might require insulin (assuming a stepwise approach to insulin therapy, where insulin is a therapy of last-resort).
4. Use of Exubera would not obviate the need for self-monitoring of blood glucose.
5. Given above, NICE limited its review to just three clinical scenarios where the use of Exubera would be considered “reasonable”: as an alternative to short-acting injected insulin in Type 1 diabetes; as an alternative to injected insulin regimens in Type 2 patients failing maximal oral therapy; as an alternative to intensifying the insulin regimen in Type 2 patients failing once-daily long-acting insulin.

Safety and Effectiveness of Inhaled Insulin

1. Inhaled insulin is clinically effective, and is as good as short-acting soluble (i.e. regular) insulin in controlling blood glucose. 
2. The frequency of hypoglycaemia is similar to regular insulin.
3. Long-term studies are needed to rule out uncommon but serious adverse effects of inhaled insulin on the lung.
4. None of the published trials have compared Exubera with short-acting injected analogs.
5. Clinical trial subjects used combinations of short-acting, and either long or intermediate-acting insulin, and both were changed, making it more difficult to assess the change from soluble (i.e. injected) to inhaled. 

Patient Preference

1. Most patients preferred inhaled to injected short-acting, but bias due to trial design could have impacted this finding
2. The sponsor provided no evidence to support the assumption that a switch to insulin would be more acceptable if inhaled insulin was an option, yet used this assumption in their models. 

Cost-Effectiveness

1. Sponsor’s model is high-quality, but their key assumptions (QOL improvement size and acceptability of switch to insulin—see #2 under “Patient Preference) are not supported by the evidence; the ICE results depend more on the assumptions than the model. 
2. The cost of inhaled insulin will be much higher than injected.
3. Inhaled insulin is unlikely to be cost-effective. Read the rest of this entry »
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