Analysts: Payers moving to address MS market as prices rise
The traditional multiple sclerosis market was upended by the introduction of three new oral drugs starting in 2010 with the approval of Novartis's Gilenya, followed by Sanofi's Aubagio in 2012, and Biogen's Tecfidera in 2013.
When the dust settled, Tecfidera was the clear winner: the drug brought in sales of $273 million in its first three months on the market and surpassed both Aubagio and Gilenya in market share within that same 90 days. At the time Biogen CEO George Scangos explained the drug's success rather simply: “Patients were really desirous of a drug that was easy to take, worked well, and seemed to be safe. And that's the niche Tecfidera filled.”
Those simpler times may be coming to an end, according to the perspectives of several analysts. They say it is no longer a question of if, but when, payers will begin to confront the rising costs of MS drugs with new restrictions and exclusions.
Commercial insurance pays for 9 out of ten MS prescriptions in the U.S. and the total cost of disease modifying therapies (DMTs) — a category that spans 14 drugs and includes Aubagio, Gilenya and Tecfidera — doubled from $4 billion to nearly $9 billion annually from 2008 to 2012, according to a Bernstein analysis and IMS Health data. With payers holding the purse strings, and costs rising sharply, drugmakers that can navigate these formularies in the future will be the ones to reap market share. As this adolescent market matures over the next three to four years, the MS market may prove to be a test case on how payers will look to drive down costs in other specialty drug classes, according to Bernstein analyst Ronny Gal.
Adoption of oral MS drugs has reportedly dropped off — suggesting that patients who wanted to make the switch from an injectable to an oral drug had already done so — with the market now expected to plateau, according to Gal. He forecasts that overall market growth for oral MS drugs will drop in half, from 5.4% in 2015 and gradually decline to 2% in 2016. Express Scripts most recent drug trend report, too, noted that three injectable MS drugs Biogen's Avonex, Bayer's Betaseron, and EMD Serono's Rebif, saw a drop in usage in 2015.
For drugmakers, one way to combat a drop in volume is a rise in the drug's price — a strategy that Biogen and other companies are employing. When Tecfidera launched in March 2013, it was priced at $55,000 annually; as of October 2015, it runs $70,614 per year. The average price of MS drugs grew 4.5% in 2015 when taking volume into account, according to Gal. A study published in Neurology in 2015 found that no MS DMT is currently priced under $50,000 when not accounting for manufacturer rebates. That same analysis found that the costs of Aubagio and Tecfidera each increased between 8% and 17% annually since their launches.
An advertisement for Biogen's Tecfidera, titled Relapsing Multiple Sclerosis, that launched in October 2015 and ended in 2016.
That dramatic price hike has likely put payers on notice. Vamil Divan, an analyst for Credit Suisse, wrote in June that there have been limited price reductions from payers in MS, but that his firm expects “price pressures to evolve next” in the category. Gal, too, noted that signs have begun to surface, with overall coverage for all MS drugs already narrowing.
In 2016, overall coverage fell from 69% in 2015 to 54% in 2016, noting that all MS drugs had more restrictive coverage, except for Bayer's Betaseron, which went off patent earlier this year, he wrote, noting that “it is clear that MS is becoming a more managed category.”
But if this market is ripe for a payer crackdown, then why hasn't it already happened?
Payers have been quick to blast high-priced drugs in other areas, like the hepatitis C and cholesterol drug markets. Gal surmised that it's largely because physicians view different oral MS therapies as different drugs, rather than separate drugs in the same class. For example, Tecfidera is a fumaric acid ester and Gilenya is a sphingosine-1-phosphate receptor modulator. Despite both being taken orally, they act differently once inside the body. MS drugs in general do vary considerably from one another, whether it be by frequency of administration, dosage or device.That same Neurology study posits that pharma companies raise the prices of both old and new DMTs, leaving few effective options for payers in terms of what to restrict or exclude.
Divan found in his research, too, that “net price across different therapies in MS is relatively similar.” Another possible reason, he pointed out, is that the disease affects young people, with most diagnosed between ages 20 to 50 years old, according to the National Multiple Sclerosis Society. This could make payers more hesitant to restrict access to newer treatments.
However, there are other forces at play, and some drugmakers may find ways to skirt the typical price levers. Consider the case of Sanofi's Aubagio. The drug's commercial formulary coverage worsened from 2015 into 2016 for top commercial plans. In spite of that change in insurance coverage, the drug's market share actually increased from 5% in March 2015 to 7.2% in March 2016 — in what Gal calls a misalignment and suggests that the company is providing copay or coinsurance assistance to patients to lower their out-of-pocket costs.