Pharmaceutical Executive Europe - IMS Oncology Supplement September 2007 - (Page 8) ONCOLOGY ECONOMICS company pays for the first two courses of therapy. extending the time, complexity and costs of the trials themselves. Manufacturing. For manufacturers, perhaps the biggest challenge will be to demonstrate the value of their medicines and price their products in accordance with that value. If prices are too high, companies face access As the economics of oncology begin to show signs of weakness, we must either redefine the means to success or risk a tapering off of future investment… restrictions or the need to consider creative contracting. If too low, they are forced to live with it, and economic returns are diminished. To justify premium pricing or achieve unrestricted access, companies will have to show that their products deliver improved outcomes. Says a German oncologist: “If I have a product that increases survival by one month in a certain tumour type and it costs €1000 instead of €100, then I would think long and hard about using this product.” The message is clear — pharmacotherapies must show more than mere ‘statistical significance’ as a measure of their effectiveness. Hard evidence of meaningful improvement in survival and benefits on quality of life is the new mantra. Cost In the maelstrom of the perfect storm, just as we see signs of oncology returns under threat, we simultaneously see the cost of developing and commercializing oncology drugs increasing. This is in part because so many products are competing to recruit the same limited clinical trial population in the developed world and payers and regulators are standing firm on the geographies in which they will accept data. We also see payers and regulators holding pharma companies to more stringent levels of demonstrable value, thereby 8 Biomarkers. As previously noted, biomarkers have the potential to improve demonstrable value, but they reduce volumes and rarely obtain commensurate price premiums. In many cases, this places the onus on the pharmaceutical company to work with diagnostics counterparts in order to develop reliable and practical tests and to have them accessible and reimbursed simultaneous to the drug itself. In effect, this is tantamount to incurring the cost of developing, launching and supporting two products. And although payers appreciate the ability to ethically restrict access to expensive oncology therapies through diagnostic tests, they will, without hesitation, attempt to offload the cost of testing patients on to the pharmaceutical company. Products without biomarkers are not off the hook. We believe post therapy monitoring will become more commonplace with payers in countries like Canada, Australia and Italy making reimbursement for certain oncology therapies contingent upon defined levels of patient response to therapy. Such an arrangement is currently being negotiated in the UK for Velcade in multiple myeloma. Not only is this risky for pharmaceutical companies from a revenue standpoint, but it is also expensive to register patients and monitor and record their treatment and response level. Adding insult to injury, as more new oncology products enter a market in which the growth rate of oncologists is stable, it is not difficult to foresee pharmaceutical companies face increasing difficulties garnering the same level of attention to communicate and inform the market of the value of therapies. Historical methods of educating the market will likely become less efficient and require new approaches or risk a lower return on investment. Zero sum As it has turned out, an erroneous assumption made by many in the cancer arena was that new drugs would be much like their predecessors, reaping huge rewards for bringing marginal improvement acceptable to all stakeholders in an area of very high unmet need. Based on that assumption, pharmaceutical companies set their pricing strategies and payers accepted them. Now, however, with payers under pressure, oncology budgets are no longer expanding at the rate of new drug introductions, and manufacturers may soon have to fight it out for a share of a relatively finite pie. Manufacturers are not likely to stand by idly while payers decide their fate. Given the likelihood that progress in the battle to defeat cancer will markedly diminish the profits available for any one company, new business models will have to be created to deal with the emerging market realities of tomorrow. These adjustments may cut into present earnings but they could mean the difference between extinction and viability down the road. As the economics of oncology begin to show signs of weakness, we must either redefine the means to success or risk a tapering off of the future investment needed to close the door on this disease. And consensus might just work. But only ‘might’. About the authors Pamela Santoni is senior principal, consulting and services, at IMS Health, with more than 10 years consulting experience focusing on pricing, reimbursement, clinical development and contracting strategies in support of formulary acceptance. Her oncology experience spans supportive and palliative care as well as primary therapy. Thomas Foster is vice president, leading IMS’ client thought leadership efforts in the Americas, helping pharmaceutical companies create and execute strategies to enhance the commercial value of new products. He has particular expertise in the neuroscience, inflammation, cardiovascular, metabolic and oncology therapeutic areas. SEPTEMBER 2007 ONCOLOGY
Table of Contents Feed 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 Pharmaceutical Executive Europe - IMS Oncology Supplement September 2007 - (Page 1) Pharmaceutical Executive Europe - IMS Oncology Supplement September 2007 - Contents (Page 2) Pharmaceutical Executive Europe - IMS Oncology Supplement September 2007 - Riding the Wave (Page 3) Pharmaceutical Executive Europe - IMS Oncology Supplement September 2007 - Riding the Wave (Page 4) Pharmaceutical Executive Europe - IMS Oncology Supplement September 2007 - Riding the Wave (Page 5) Pharmaceutical Executive Europe - IMS Oncology Supplement September 2007 - Zero Sum Game (Page 6) Pharmaceutical Executive Europe - IMS Oncology Supplement September 2007 - Zero Sum Game (Page 7) Pharmaceutical Executive Europe - IMS Oncology Supplement September 2007 - Zero Sum Game (Page 8) Pharmaceutical Executive Europe - IMS Oncology Supplement September 2007 - Zero Sum Game (Page 9)
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