Pharma herd faces hurdles with pricey new drugs

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There was a time when specialty care drugs for diseases such as multiple sclerosis, cancer and rare genetic disorders flew under the radar of payers, as the treatments gobbled up a modest piece of the overall prescription-drug spending pie. That time is over. With drugmakers flocking to these lucrative drug markets, the bar has risen to get reimbursement and physician uptake of the expensive products. But there are ways to hedge bets in the specialty care game.

We covered several such strategies during a panel I moderated at the 2012 BIO International Convention called "Are Healthcare Reimbursement Policies a Barrier to Specialty Care Treatment?" The easy answer to this question is "yes." Unlike cheap generics, for instance, an insured patient's out-of-pocket costs for an expensive specialty care drug can be thousands of dollars. The uninsured might have to go without the treatments. So the real focus of our panel--which included expert speakers from Biogen Idec ($BIIB), Millennium: The Takeda Oncology Company, and Shire Human Genetic Therapies--ended up being what are biopharma companies going to do to win over payers and provide access to their medicines for patients.

Here are some of the key takeaways from the panel:

Specialty drug companies start thinking about market challenges during clinical development. Eyeing ways to prove the value of its next-gen multiple sclerosis drug, BG-12, Biogen opted to compare the oral drug head-to-head with the marketed MS drug Copaxone in a Phase III trial, noted panelist Erik Schultz, director of pricing and reimbursement at Biogen. BG-12 won the battle with Copaxone, too. Cancer is another area where trial results have a major impact on the marketability of new meds. Lorrie Carr, senior director of U.S. market access at Millennium, said her company's reimbursement team has worked with R&D folks to align clinical trials with payer expectations. However, Millennium hasn't actually changed endpoints in a trial to cater to payers, as oncology has very established goals for studies to gauge efficacy.

Payers aren't rubber-stamping bids for reimbursement of specialty meds. The panelists showed how their companies are using a range of strategies to prove to payers that their medicines are valuable and worth the investment. Payers also realize that many of the specialty drugs are given for the rest of a patient's life, and drug companies benefit from showing long-term economic benefits of their treatments, which could reduce doctor visits and hospitalizations that rapidly drive up overall care costs. Payers have also been pushing back on the cost of expensive specialty care drugs, spending on which has risen at a faster clip than other kinds of prescription drugs. The good news for payers is that general medicine drugs for depression and high cholesterol have become generic, reducing the percentage of total prescription drug spending on branded meds.

Co-pay programs are in play. Given the high costs of their treatments, Shire HGT, Millennium and Biogen are all offering various programs to assist patients in gaining access to their meds. Shire HGT and Biogen have even helped patients with co-pays. Mike Blum, vice president of U.S. commercial operations at Shire HGT, said the dynamics of co-pay programs are different in specialty care drugs from in general medicine drugs. He didn't get into many details, but you can assume that Shire HGT isn't leaving co-pay cards in doctors' offices. That's a trick that drug reps often use to, say, keep a branded med popular when generic alternatives are available.

In recent news, the U.K.'s drug pricing watchdog NICE denied payment for Roche's ($RHHBY) pricey melanoma pill Zelboraf, which doctors have hailed as a breakthrough for combating deadly skin cancer. And expect to see the issue of reimbursement of specialty care drugs crop up often as payers push back. -- Ryan McBride (Twitter | email)

Clarification: The word "test" was replaced with "compare" in the fourth paragraph to clarify that Biogen used data on the efficacy of Copaxone as a reference comparator in a Phase III study of BG-12, in which both drugs were studied versus placebo.

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