Payers can predict budget implications of high-cost drugs in the pipeline

Assessing the potential clinical and economic impacts of investigational specialty drugs is key to forecasting their budgetary implications for payers, according to a speaker at the Academy of Managed Care Pharmacy (AMCP) 2017 Nexus in Dallas.

Innovative-and expensive-investigational gene therapies, for example, could represent real clinical advances against very specific patient subpopulations, said Nicole Trask, PharmD, Clinical Consultant Pharmacist at the University of Massachusetts in Shrewsbury.

But their high prices can also represent budgeting challenges. “Approval of high-cost gene therapies might highlight the need for innovative payment models,” she said.

Trask reviewed budget impact assessment and spotlighted potential high-impact drugs in the 2018-2019 pharmaceutical pipeline during the October 18 session.

Predicting impact

High-impact drugs are those agents with clinical impact, offering improved efficacy over existing medications, and economic impact, a function of cost and volume, or patient population, she explained. Clinical impact is assessed with clinical trial data and evaluations of the therapeutic alternatives-“‘me-too’ drugs versus first in class,” Trask said. Market competition and consensus treatment guidelines also affect the clinical impact of new approvals, she added.

Economic impact, in contrast, is a function of cost and volume. High cost, high volume drugs will have the highest impact. Cost includes pricing, supplemental rebates, and increasing evaluations of value, reflected in value-based contracting and value assessments by bodies like the federal Agency for Healthcare Research and Quality or Institute for Clinical and Economic Review. Volume is determined by the incidence or prevalence of the disease, duration of therapy, and dosing schedules.

A drug’s economic and clinical impact hinge partly on patient characteristics. High cholesterol or hypertension patients might be less motivated to take a medication regularly, because they are not always symptomatic, Trask explained. Value-based contracts affect economic impacts as well, because they allow payment based on prespecified clinical outcomes.

Forecasting the budget impacts of new drugs requires proactive pipeline monitoring, Trask said. “Focus on the high-cost disease states, specialty drugs like gene therapy, CAR-T therapy, NASH, monoclonal antibodies,” she advised.

“Proactive pipeline monitoring and a solid understanding of plan membership are key to anticipating the budget impact of new drugs.”

Budget impact analysis should be prioritized for drugs with potentially high clinical and economic impact, based on pharmacy or medical claims data on disease prevalence for a beneficiary population and estimates of market share, uptake, and cost, she said.

“It is difficult to predict uptake of new drugs,” she cautioned. Clinician or patient skepticism surrounding safety or efficacy can lead to “clinical inertia” and slow uptake of new agents, she said. “Prescribers may not be keen to be the first to adopt a new drug.”

She added: “We project net costs to our budget of cost increases, to take into consideration shifting utilization and cannibalization.”

Trask described several investigational drugs in the 2018-2019 pharmaceutical pipeline to illustrate impact-analysis methodologies, including treatments for non-Hodgkin lymphoma (NHL), multi-drug resistant HIV-1, and non-alcoholic steatohepatitis (NASH).

Next: Non-Hodgkin lymphoma

Non-Hodgkin lymphoma

An estimated 662,000 Americans live with NHL. Relapse rate following conventional chemotherapy exceeds 50%. The newly-FDA-approved CAR-T therapy, axicabtagene ciloleucel, might improve NHL patients’ outcomes. It was approved Oct. 18, 2017.

“T cells are extracted from the patient’s blood, sent to a lab, engineered to express a chimeric cell surface receptor, and then sent back to the clinic for infusion into the patient,” Trask explained. “We are talking about a totally different approach to treating cancer than we’ve seen before.”

The Phase 1/2 ZUMA-1 clinical trial showed that at a median follow-up of 8.7 months, 82% of patients responded and 44% enjoyed an ongoing response, Trask said. Complete response was seen in 54% of patients, with 39% ongoing, she added.

“In terms of therapeutic alternatives, there are many modalities for treating NHL,” Trask said. That, and other agents in the CAR-T pipeline, must be assessed to understand the potential impact of axicabtagene ciloleucel.

“Axicabtagene ciloleucel might provide an effective treatment option for patients who have failed with all alternative options,” Trask said.

CAR-T therapies also have very complex manufacturing processes.

“They take about 17 days from when cells are taken from the patient and reinfusion into the patient,” Trask said. “Cost data is not yet available but analysts predict a range of $300,000 to $750,000 per patient.”

There might be opportunities for value-based contracting based on the durability of response, Trask noted-meaning payers would only pay for treatment if it yielded prespecified benefits for the patient.

“For a plan of 100,000 covered lives, 20 would likely have NHL, of which 10 would have refractory NHL and may require treatment,” Trask said, estimating a budget impact of $4.75 million per year. FDA approval for axicabtagene ciloleucel is expected in November.

Multidrug-resistant HIV-1

Trask offered another case study on multidrug-resistant HIV-1.

About 2% of HIV-1 patients have multidrug-resistant disease, leaving them at risk for disease progression. Approximately 12,000 require regimen modifications following virologic failure.

Ibalizumab is an investigational humanized monoclonal antibody viral entry inhibitor that prevents infection of CD4+ immune cells and is active against HIV-1 resistant to all FDA-approved antiretroviral agents, Trask said. In the Phase 3 TMB-301 trial, ibalizumab was associated with significant reductions in viral load.

“A significant proportion of patients (82.5%) achieved the target decrease in viral load by day 14,” Trask reported. “It may offer treatment options to patients whose HIV is resistant to other agents and who are running out of options.”

If approved, ibalizumab would be the first anti-HIV agent approved with a new mechanism of action in a decade.

Cost data is not yet available but manufacturer remarks suggest a cost of $60,000 per patient per year. There is limited market competition but it might compete with the investigational PRO-140, another humanized monoclonal antibody viral entry inhibitor administered as a weekly SC injection, Trask noted.

“There are potential opportunities for value-based contracting based on reductions in viral load or maintenance of viral suppression,” she said.

Treatment is indefinite because the condition is chronic. So for a plan with 100,000 covered beneficiaries, ibalizumab could represent a $480,000-per-year budget impact, Trask said.

“That may sound like small potatoes, but remember: this is for a very small plan of 100,000 members,” she said.

FDA approval could come in January 2018, she said.