Is There a Breaking Point for Immunotherapy Costs?

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

Value was an overarching theme at ASCO 2015 and has been a topic of ongoing focus, as have been the burgeoning pipeline of immunotherapy agents, with the recently launched PD-1 inhibitors, Opdivo® (nivolumab, Bristol Myers Squibb) and Keytruda® (pembrolizumab, Merck), being the highlights of ASCO 2015. Presenter Leonard Saltz, M.D. of Memorial Sloan Kettering praised the clinical value of an Opdivo + Keytruda combination as being “truly, truly remarkable,” but 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. Concern about the increasing cost of breakthrough cancer treatment heightens when one considers the number of immunotherapies – like Opdivo and Keytruda – in development for a broad range of solid tumors as well as hematologic malignancies. In fact, at least 33 of the 279 trials studying immune therapies are for combinations with each other and/or in combination with other novel agents. Cost of novel therapy 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.

While the easiest way to address the issue of cost may be to dramatically cut prices, development and innovation would no longer flourish. A more realistic approach would be to limit treatment to those patients most likely to respond, as assessed by some objective biomarker. 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 it to be used for patient selection. Further, 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?

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% indicated that they currently have pathway programs in place. Similarly, 37% of the 150 community oncologists participating in Kantar Health’s Oncology Market Access research indicated that they participate in pathway programs.

While it is unlikely that payers will absolutely deny coverage of these drugs when they are clinically appropriate, their definition of clinically appropriate is increasingly likely to 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 reimbursement away from buy-and-bill and toward models that include financial accountability for oncologists. Models such as episode of care reimbursement, accountable care organizations and drug carve-outs can limit payers’ exposure to drug costs while leaving to oncologists’ clinical and fiscal judgment which treatment approach makes the most sense for any particular patient.

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 “Where is the breaking point?” That point can only be known after it has passed; presumably no stakeholder wishes to get there. 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.

The concept of pricing based on efficacy in an indication or providing rebates on a patient-by-patient basis has merit but will be difficult implement due to an array of challenges, one of which would literally take an act of Congress to close. These challenges include:

  • 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
  • Government pricing that would at best result in minimal price for all of the drug paid by these programs and at worst severe penalties

A prospective approach would be ideal but would rely on the ability to limit treatment to patients who will benefit. Unfortunately, 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.  The question is, when and how will payers and policy-makers catch up?

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