Diabetes drugs must prove their value to payers, analysts say

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Promising new data for Novo Nordisk's experimental diabetes drug semaglutide debuted last week, but the promise of superior clinical data alone may not be enough to drive access among payers.

Last week analysts had been quick to forecast how the drug, a GLP-1 agonist, could unseat Eli Lilly's Trulicity if it is approved by the FDA. Lilly CEO David Ricks has previously said that Trulicity, which is in the same class as semaglutide, is expected to be major sales driver going forward. Trulicity was the company's best-selling new drug in 2016, bringing in $337 million.

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In the new topline data, Novo reported that patients taking semaglutide had better reductions in blood sugar and lost more weight compared to patients taking Trulicity. GLP-1s are typically prescribed to patients who are unable to control their diabetes with a tablet, like the generic drug metformin.  

Trulicity already owns an estimated 34% of market share among GLP-1s, a class which includes Novo Nordisk's Victoza, according to Jefferies analyst Jeffrey Holford. “Payer dynamics remain a key question for the GLP-1 space,” he wrote in a research note. “Payers could potentially use exclusive contracts to pit this drug against Trulicity and push down pricing for the class.”

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Health insurers and pharmacy benefit managers are more and more relying on exclusionary contracts to keep down costs.

On August 2, CVS Health announced that it would eschew Boehringer Ingelheim and Eli Lilly's Jardiance in favor of Johnson & Johnson's Invokana. This news was met with surprise for two reasons: this year the FDA said that Lilly can promote Jardiance's ability to reduce the risk of death in patients with heart disease, and Invokana was slapped with a black box warning — the FDA's strongest — advising that people taking the drug were at higher risk for amputations. (Jardiance and Invokana are part of a different class of diabetes drugs, called SGLT2 inhibitors.)

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When asked why CVS Health removed Jardiance, a spokesperson said the decision was made by an independent advisory board of pharmacists and physicians — and also downplayed the amputation risks of Invokana. A Boehringer Ingelheim spokesperson said in an emailed statement that the company was “very disappointed” by the decision.

Credit Suisse's Vamil Divan noted at the time that the move was unexpected as Jardiance has a “better, more differentiated” label, and that the decision “speaks to the pressure payers can apply in diabetes and other primary care markets where there are many competitors.”

See also: Johnson & Johnson is big winner in CVS diabetes formulary changes

He later said that the stakes for the GLP-1 agonists are high, as “prescriptions [for GLP-1s] “are growing nearly 25% year over year due to increased adoption by primary care physicians.”

Also, last week, Jefferies' Holford also wrote that “price will continue to be the most important dynamic in the diabetes space,” adding that “J&J's Invokana being preferred on some formularies seems to be a fairly strong confirmation of this thesis.”

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