June 2015 Edition Vol.9, Issue 6

What Are Payers Pondering about the New Wonder Drugs?

What Are Payers Pondering about the New Wonder Drugs?

By Debbie Warner, Vice President, Oncology Commercial Strategies, Kantar Health

Looking Through a Value Lens

Value has become such an important topic at ASCO that the opening session of the conference was led by a lecture titled “Value-Based Health Care Delivery” from renowned economist Michael Porter.  The plenary session, which opened with a lecture from the recipient of the Science of Oncology Award titled, “Immune Checkpoint Blockade in Cancer Therapy: New Insights, Opportunities, and Prospects for a Cure,” was concluded with a presentation by Leonard Saltz, MD, of Memorial Sloan Kettering titled “Perspectives on Value.”  He defined value within a framework of clinical benefit relative to toxicity and cost (which he frequently refers to as “financial toxicity").

From a clinical benefit perspective, the recently launched PD-1 inhibitors, Opdivo® (nivolumab, Bristol-Myers Squibb) and Keytruda® (pembrolizumab, Merck) were the highlights of ASCO 2015.  Opdivo showed substantially prolonged overall survival (OS) and progression-free survival (PFS), with survival nearly doubled in patients with a particular biomarker, PD-L1 expression of at least 1%. (J Clin Oncol 33, 2015 (suppl; abstr LBA109)).  However, even patients without this biomarker treated with the combination of Opdivo and Yervoy lived nearly a year without their disease progressing, four times longer than either drug alone.  Given these clinical benefits, it is not a stretch to place these drugs in the category of clinical impact shared by Gleevec® (imatinib, Novartis) and Herceptin® (trastuzumab, Genentech/Roche).  While Dr. Saltz praised the clinical value of the combination as being “truly, truly remarkable,” he added that with the combination costing nearly $300,000 (if continued for 11 months) “these drugs cost too much–unsustainable.” While Dr. Saltz is an unabashed critic of cancer drug prices, $300,000 would give most people pause. 

The potential financial impact of immunotherapy has made it onto payers’ radar screens. First showing up in 2010 with the launch of Provenge® (sipuleucel-T, Dendreon), the drug rapidly shot to the top of the list of cancer treatments actively managed by payers. Costing $93,000 for a course of treatment and offering a median 4.1-month survival benefit, its value was broadly called into question by payers, providers, and the press. A year later, Yervoy (ipilimumab, Bristol-Myers Squibb/Ono Pharmaceuticals) was launched. Its price was even higher, at about $120,000 for a full course of treatment. The median OS of 10 months, compared with about six months in the control group, is impressive considering the lethal nature of metastatic melanoma. However, it was the 20-25% of patients who have shown a durable response extending for years that provided the first robust data that immunotherapy could represent the big “C” …as in cure. 

Patients treated with chemotherapy, monoclonal antibodies, and tyrosine kinase inhibitors are monitored regularly for signs of treatment progression. If the drug isn’t benefiting the patient, progression is usually detected after only a few months and the treatment discontinued. This limits expenditure on a drug that didn’t work for that patient. In the cases of Provenge and Yervoy, the patient must undergo the entire course of treatment, incurring the full cost without any indication as to whether the drug worked until after the fact. These cases unfortunately account for 75% to 80% of the patients treated. Placed in the value framework discussed by Dr. Saltz, one can clearly see how value is rapidly diluted when only a relatively small minority of patients responds to treatment. 

The response rates of Opdivo and Keytruda shown in the CheckMate and Keynote studies in NSCLC and melanoma ranged from about 20% to 45%.  When Opdivo was combined with Yervoy in melanoma patients with at least 5% PD-L1 expression, response was as high as 72%. Even more important however, are the impressive survival rates.  As monotherapy, the monthly wholesale acquisition cost (WAC) prices of Opdivo and Keytruda are similar to those of recently launched oral novel therapies.  Considering the relative benefit and cost, even the combination of these two drugs appears to represent tremendous value among oncology drugs launched over the last several years. However, concern about increasing costs arises as we consider the number of immunotherapies in development for breadth of solid tumor types as well as hematologic malignancies.  In fact, 279 (or 1 of every 22) clinical trials in www.ClinicalTrials.gov studying response or survival in cancer, are specifically studying immune checkpoint inhibitors. The concern about cost is heightened, considering that at least 33 of these are trials studying immune therapies in combination with each other and/or in combination with other novel agents. Costs of combinations may be the most important factor in limiting these treatments moving forward, and it’s no surprise that discussions of the game-changing nature of immunotherapy are often accompanied by questions of cost sustainability.

Sustainable Value – Can the right patients be selected by PDL1 status?

While the easiest way to address the issue of cost may be to dramatically cut prices to a sustainable level, development and innovation will no longer be sustainable.  A more realistic approach would be to limit treatment to those patients most likely to respond. Payers and providers would agree that this makes sense in principle. After all, retrospective analyses of data from clinical trials have shown positive correlations between PD-L1 expression and efficacy.  However, researchers are unanimous that there is too much scientific evidence that PD-L1 expression is not an appropriate biomarker for patient selection.

Evidence includes:

  • Non-squamous NSCLC patients with low PD-L1 expression still benefited from Opdivo, at least as much as those treated with docetaxel, with less toxicity
  • Patients in the CheckMate-067 study had a significantly higher PFS compared with Yervoy alone, regardless of PD-L1 expression
  • PD-L1 is a dynamic biomarker and levels can change with time due to immunological or other clinical factors 
  • Measurement of PD-L1 levels is very imprecise: multiple antibodies are used, and depending on the biopsy, some sections of a tumor may have high levels of PD-L1 while others have low levels 
  • Each compound in development has its own companion diagnostic with no common standardization

Similarly payers seem unconvinced that biomarkers are the solution. In an April 2015 Kantar Health Oncology Market Access survey, 86 commercial payers expressed tepid enthusiasm about the value of biomarkers. 

Further, only about 30% of payers require submission of a positive biomarker test before approving utilization of drugs with biomarker status specified in their label.

In the same survey, however, nearly half of payers identified NSCLC and malignant melanoma as the top targets for utilization management. So what are the alternatives?

Sustainable Value – The role of pathways, novel reimbursement and
creative pricing

Clinical pathways in oncology have garnered tremendous attention over the last few years as a useful tool in improving the value derived from cancer treatment. Though only 20% of payers surveyed identified pathways as the measure most likely to succeed in slowing the growth of treatment costs, 37% of payers indicated that they currently have pathway programs in place; an additional 36% plan to implement pathway programs within the next three years. Similarly, 37% of the 150 community oncologists participating in Kantar Health’s Oncology Market Access research indicated that they participate in pathway programs. While nearly half of payers’ currently implementing pathways have them in place for NSCLC, fewer than a quarter have pathways for malignant melanoma.

With the cost of treatment of NSCLC and metastatic melanoma likely to increase significantly as use of Opdivo and Keytruda increase, especially if the Opdivo and Yervoy combination is used, pressure to control costs will also increase prompting further pathway implementation and revisions. The National Comprehensive Cancer Network (NCCN) updated its Guidelines, (which serve as the foundation of most pathway programs) for NSCLC in June 2015, changing the evidence category for Opdivo as subsequent therapy in squamous NSCLC from category 2A to category 1. NCCN is also adding this language: “Nivolumab improves survival when compared to docetaxel.”  It also recommends use of nivolumab in non-squamous NSCLC based on the results of CheckMate-057. Though the Guidelines note the efficacy correlation with PD-L1 status, they explicitly recommend against testing for PD-L1 expression (NCCN Guidelines Version 7.2015 for Non-Small Cell Lung Cancer, accessed 6/18/2015).

Though the NCCN guidelines for melanoma have not been updated since ASCO, Version 3.2015 specifically recommends both nivolumab and pembrolizumab as “preferred” agents for first-line therapy for melanoma treatment despite their more limited FDA-approved indication as subsequent treatment. 

However, as of April 1, 2015, Anthem’s cancer treatment pathways program are considerably more restrictive than the NCCN Guidelines. Yervoy and Tafinlar® (dabrafenib, GlaxoSmithKline) are covered for first-line treatment of metastatic melanoma, depending on BRAF status. Keytruda is covered in second-line, non-BRAF-mutated patients and in third-line, BRAF-mutated patients.

Opdivo though, is not included at all in either Anthem’s NSCLC pathway or melanoma pathway. Though a single example, Anthem’s pathways indicate the possibility, if not the likelihood, that payers’ treatment pathways and prior authorization criteria could be more prescriptive than NCCN guidelines, and even the FDA approved label. 

While it is unlikely that payers will absolutely deny coverage of these drugs when they are clinically appropriate, payers’ definition of clinically appropriate may take into consideration performance status, line of therapy, specific prior therapies, and potentially PD-L1 expression.

Recognizing that they may be fighting an uphill battle in their efforts to strictly manage the utilization of immunotherapies, payers could rely on novel reimbursement approaches that shift away from buy-and-bill and toward reimbursement models that include financial accountability for oncologists. Models such as episode of care reimbursement, Accountable Care Organizations (ACOs), and drug carve-outs, can limit payers’ exposure to drug costs while leaving to oncologists, clinical and fiscal judgment as to which treatment approach makes the most sense for any particular patient.  In fact, payers surveyed by Kantar Health (n=86) considered this approach—up significantly since last year—to be the most likely to succeed in holding cost growth in check.

Finally, value-based approaches are being developed, such as ASCO’s Value in Oncology and McKesson’s Value Pathways, powered by NCCN. However, payers are skeptical that simply developing a rating system will have any impact on utilization, especially in the absence of financial risk for oncologists, patients and/or manufacturers.

That leaves the question of drug prices and the often asked question “Where is the breaking point?” Actually, that point will only be known after the breaking point is passed; and presumably no stakeholder wishes to get to that point. Enter the concept of performance-based pricing. Not a new concept (it is commonly employed in several European countries) it has received significant media attention, most notably calls from Express Scripts to price a drug differentially by indication depending on its efficacy.

In an interview with The Wall Street Journal, Express Scripts Chief Medical Officer Steve Miller said, “One of the big frustrations has always been people paying top dollar for drugs that aren’t always giving them the best response. If pharma is truly sincere about wanting value-based reimbursement, we now have the sophistication to do that.”[1]


The concept of pricing based on efficacy of indication or providing rebates on a patient-by-patient basis has merit, but will be very difficult to implement due to a broad array of challenges, one of which quite literally will take an act of Congress to close. These challenges include but are not limited to:

  • Arriving at a consensus on the definition of efficacy
  • Siloed budgets between the medical benefit and the pharmacy benefit
  • Ability to capture the necessary data
  • Need for manufacturers to recoup amortized development costs
  • Expected Wall Street reaction to cut in net price
  • Likelihood that payers will “undervalue” even dramatic benefit, technical difficulty in identifying the patients who are most likely to benefit
  • Government pricing, such as Medicaid and Federal Supply Schedule, that would at best result in minimal price for all of the drugs paid by these programs regardless of indication and at worst, severe penalties, including being banned from participation in all government health programs

A prospectively based approach would be ideal, but would rely at its core on the ability to limit treatment to those patients who will benefit. Unfortunately, the current state of the science is not there yet for immunotherapy. If and when researchers find an appropriate biomarker, confidence in the reliability of the test will remain a critical issue.  Given the potential curative nature of immunotherapy, what level of false negatives will physicians and patients tolerate? This is yet another example of technology outpacing policy.

About the Contributor

Debbie Warner is Vice President, Oncology Commercial Strategies at Kantar Health

Kantar Health is a leading global healthcare advisory firm and trusted advisor to the world’s largest pharmaceutical, biotech, and medical device and diagnostic companies. It combines evidence-based research capabilities with deep scientific, therapeutic and clinical knowledge, commercial development know-how, and marketing expertise to help clients launch products and differentiate their brands in the marketplace.

One of Kantar Health’s oncology-related offers is Oncology Market Access US (OMA US), which provides strategic and tactical insights into the evolving oncology landscape. Combining Kantar Health’s commercial and clinical expertise in oncology, OMA US provides cutting-edge information and analysis on critical reimbursement, coverage and competitive issues in the U.S. oncology marketplace.

If you would like us to act as catalysts for you, contact us at www.kantarhealth.com/contactus.


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