Analyst: Payer hurdles hit dispense rates on Sanofi and Regeneron's eczema blockbuster-to-be Dupixent

The road to blockbuster land is steeper, rougher and riddled with more potential detours than it used to be, and payers have put their footprints all over it.

Consider Dupixent, the Sanofi and Regeneron drug recently approved to treat severe atopic dermatitis. Before it rolled out, the companies dug in with payers to negotiate what they considered fair pricing. The likes of Express Scripts, a vocal critic of high drug prices, proclaimed satisfaction, even with the drug’s $37,000 list price.

But Bernstein analyst Ronny Gal, intrigued by a flattening-out in the number of new prescriptions dispensed, dug into Dupixent coverage and found that even that drug faces considerable obstacles on its way from prescription pad to patients’ hands.

Though those early payer negotiations helped deliver a 50% prescription fill rate at first, that figure has since dropped to 40%, Gal wrote in a note to investors this week. That’s a rate that could give Sanofi and Regeneron an uncomfortable sense of déjà vu; the companies are still fighting payer hurdles to their PCSK9 cholesterol drug Praluent, he said.

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That fill rate three months after launch is “relatively low,” Gal said, “with the only other products underperforming it being the PCSK9s.”

Amgen has its own fill-rate tale to tell about Repatha, the PCSK9 that competes with Praluent. Novartis suffered similar setbacks with Entresto, the heart failure drug it had expected to outclass all its previous drug launches. And so on and so on.

The payer tools that are limiting Dupixent’s dispensing aren’t novel: They’re the upfront reimbursement deal—the steep part, if you will; prior authorization for coverage (sometimes rocky); and step therapy, which can amount to a detour through other meds that don’t work, or work as well, before getting to the newer, presumably more expensive, new brand.

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Gal put together a handy flow chart showing that Dupixent’s makers negotiated that steep bit quite well, with 78% of plans covering the med; that’s a fraction that comprises 85% of “covered lives,” or the number of people in the overall pool of people with commercial insurance.

Prior authorization, not so much. Only 8% of plans and 8% of lives can get to Dupixent without upfront permission from their health plans or pharmacy benefits managers. And that authorization would include proof that patients have tried other treatments—via step therapy—in almost half of all plans, Gal’s research showed. Only 21% of plans don’t require step therapy.

Exactly how these hurdles are affecting Dupixent sales won’t be known until later this month or early next, when Sanofi and Regeneron talk about the launch during their second-quarter earnings calls. The good news is that Gal sees no reason to back off of Dupixent’s long-term value, which he puts at $8 billion to Regeneron alone. What Gal does advise is some pause before pumping those expectations up further based on early launch numbers.

RELATED: Just what Sanofi and Regeneron wanted: A Dupixent rollout so zippy, it's fueling bigger sales forecasts

“Dupixent’s strong early launch reflects early coverage, but the rejection rate suggests adoption among payers is not higher than comparable launches,” Gal concludes. “It appears that there is a level of proof required for eligibility, which attritions some patients. Thus, the argument that early launch reflects likely higher peak sales is probably incorrect.”

The kicker is that 2018 formulary negotiations could smooth Dupixent’s path. Sanofi and Regeneron may persuade payers to lower prior authorization hurdles. And major 2018 formularies are due out soon—early August, if history serves as a guide.

Of course, the 2018 formularies are crucial to far more meds than Dupixent; far more new launches, for that matter. So, Gal’s assessment of their importance to the new eczema med apply to other drugs chafing under payer strictures. (Formulary negotiations themselves have attracted some scrutiny, in fact.)

“If the 2018 contracts allow broad access, there will likely be a step up in near-term adoption as patients/physicians will have to go through fewer/simpler steps to access the drug,” the analyst notes. “If the 2018 contracts are not much improved vs. current coverage status, we'll likely see a more moderate launch curve for Dupixent.”