Facing stepped-up competition for its critical multiple sclerosis business, Biogen CEO Michel Vounatsos contends his company is “ready and well-equipped” to forge ahead. And that includes "value-based and innovative contracting" with payers, the helmsman told analysts on Tuesday.
Biogen’s MS franchises turned in $2.183 billion in first-quarter sales, a 3% jump over 2016’s first-quarter haul of $2.114 billion. But with new competition, notably from Roche’s Ocrevus, the biotech’s management is working to get creative with payers.
Biogen “has the opportunity to benefit from a complete portfolio in MS,” Vounatsos told analysts on a Tuesday conference call. Biogen can tout its spectrum of products as an end-to-end solution for doctors and their patients and potentially leverage them in portfoliowide arrangements with receptive payers.
And in order to “change the landscape” for its MS franchise overall, the drugmaker will work to “progress on value-based and innovative contracting,” he said.
Biogen's big-selling MS pill Tecfidera got off to a quick start after its 2013 launch, quickly overtaking Novartis' Gilenya and Sanofi's Aubagio, which each beat Biogen's med to the market. Amid increased competition in recent years, though, the drug's sales trajectory has taken a turn for the worse as pricing pressure has mounted in the disease area.
In response to the Tecfidera slowdown, Biogen axed 800 staffers in 2015 and used part of the $250 million in annual savings for DTC advertising on its struggling blockbuster. Though controversial, the company's TV ad did the job, according to execs; Biogen stopped advertising on televisions last year when the campaign expired.
To the companies suffering from amped-up payer pressure in a variety of disease areas, value-based contracting is a familiar concept. Drugmakers including Novartis, Amgen, Sanofi, Regeneron, Eli Lilly and Merck & Co. have tried the approach as a way to secure coverage for their meds in crowded markets.
Multiple sclerosis is one area that's become increasingly crowded, and one in which it’s tough for a pharma company to generate growth. That trend is likely to accelerate with the entry of Roche’s Ocrevus, approved just last month to treat not only relapsing-remitting forms of the disease but the harder-to-treat primary progressive variety as well.
Roche priced Ocrevus at a discount to existing MS drugs to try to “reverse the trend” of growing drug costs, a spokesperson told FiercePharma.
Analysts quickly predicted the drug would dig into Biogen and Novartis' MS revenues. Leerink’s Geoff Porges predicted Biogen could lose nearly $1 billion in annual MS sales by 2020. In a small compensation, Biogen is set to receive Ocrevus royalties.
Offering his position on Biogen’s first-quarter results, Piper Jaffray analyst Joshua Schimmer wrote on Tuesday that "we are seeing the effects of limited price increases for MS drugs as the franchise stagnates, which heightens” the company’s dependence on new, superpricey spinal muscular atrophy drug Spinraza.
One piece of good news for Biogen? That launch is ramping up faster than previously expected.
Biogen’s MS meds treated 38% of the disease’s patients globally in the first quarter, according to the company’s calculations. In the first quarter, Tecfidera demand in the U.S. remained “stable” with demand growth elsewhere. Tysabri demand grew in the U.S. and overseas, according to the company’s Tuesday presentation.