Pharmaceutical Executive Europe - IMS Oncology Supplement September 2007 - (Page 7)

ONCOLOGY ECONOMICS forward the introduction of directly competing products threatens to further divide the market. Take the case of Herceptin — highly effective in women with the aggressive HER2 form of breast cancer but appropriate only for the 20–25% of breast cancer patients in whom the HER2 gene is over-expressed, and now forced to compete with Tykerb for a smaller piece of the pie. We see a potentially similar competitive environment with Erbitux and Vectibix in colorectal cancer (CRC), with Gleevec, Sprycel and Tasigna in chronic myeloid leukemia (CML) and with Sutent and Nexavar in renal cell carcinoma (RCC), where the similarities in mechanism of action make the products more substitutable than complementary. In fact, with up to 55 new chemical entities (NCEs) entering the oncology market in the next five years, the potential for overlapping indications and mechanisms of action may further reduce the volume opportunities for these products. Indeed, the oncology market, which could never have been said to be crowded or competitive in the past, is about to become so. Without significant increases in survival, the volume opportunity for new products will be diminished and divided. As a result, there will be pressure to push up prices in order to maintain revenue opportunities. Volume price Since the burden of illness in cancer is considered so significant and has proven so difficult to overcome, payers have thus far responded more to the benefits than the costs of new oncology products, allowing manufacturers more pricing latitude than in any other therapy area. As a result, payer budgets for oncology therapies have been growing consistently. Small wonder, then, that payers are beginning to react by reevaluating historic pricing freedom and imposing access restrictions on drug initiation and continuation. an elderly disease and oncology therapies were mostly given intravenously (IV), the burden of cost for these treatments was held by Medicare under Part B. Thus, health plans had very little financial motive to limit access to these therapies. However, the implementation of the Medicare oral drug benefit (Part D) coupled with the mounting use of oral oncology therapies makes health plans a more significant payer. Moreover, as these plans migrate their Medicare members from a drug only benefit (PDP) to the more profitable medical and drug benefit (MA-PD), thereby taking on the cost of IV therapies too, their exposure to the cost risk of oncology products increases further. According to one MAPD medical director, “The oncology drug budget has increased by 150% in the past five years compared with 10% for cardiovascular disease during the same period.” In addition, the move by employers from defined benefits to defined contributions is transferring even the commercial risk for drug costs to the health plans thereby giving them more motivation to control expenditures. As timing would have it, the motivation to control oncology therapy expenditures is in sync with the ability to do so. Since so many directly competing products are coming onto the market, it will not be difficult to imagine coverage contingent upon aggressive contracting thereby reducing pricing freedom in the US market. impact of oncology therapies by limiting treatment access to certain populations. In the UK, Avastin and Erbitux (in CRC) have been deemed cost-ineffective by the National Institute for Health and Clinical Excellence (NICE) and the Scottish Medicines Consortium (SMC) and are therefore not covered by the National Health Service (NHS). “There is an endless tide of increasingly expensive, The oncology market, which could never have been said to be crowded or competitive in the past, is about to become so. Europe. In the European Union, health authorities have already clamped down on the budgetary potentially marginally better oncology therapies, and the evidence base is routinely woeful,” says Dr Christopher McCabe, former director of the NICE Decision Support Unit. Sutent and Nexavar (RCC) have yet to be evaluated by NICE, making access to these therapies highly discretionary — if not impossible to obtain. Moreover, the historic strategy of launching a product into a cancer that has a small prevalence and a high unmet need with the goal of obtaining unfettered access and a high price is already proving elusive. For example, in Italy, the health ministry is refusing to pay for Sutent and Nexavar in RCC until the patient demonstrates failure on interferon alfa and also shows sufficient response to either Sutent or Nexavar after the pharmaceutical Figure 1 Targeted therapies and directly competing products have the potential to limit the size of the patient opportunity. Breast cancer patients 100% Unsustainable pressure: US. In the US, health plans are still recommending ‘appropriate use’ for cancer drugs, rather than mandating outright restrictions, but it is a mistake to believe this will continue in perpetuity. In the past, because cancer is largely www.pharmexeceurope.com Non-HER2 75%–80% HER2 Over Expression 20%–25% Herceptin plus Taxotere ?% Tykerb plus Xeloda ?% Source: IMS Health 7 http://www.pharmexeceurope.com

Table of Contents for the Digital Edition of Pharmaceutical Executive Europe - IMS Oncology Supplement September 2007

Contents
Riding the Wave
Zero Sum Game

Pharmaceutical Executive Europe - IMS Oncology Supplement September 2007