The Institute for Clinical and Economic Review (ICER) started giving Novo Nordisk a hard time about the cost-effectiveness of its oral version of semaglutide, Rybelsus, before the drug was even approved in September.
Now the product has its price tag— $772 per month, on par with comparable injectables—yet ICER still isn’t happy.
ICER released a report Friday concluding that if Rybelsus is prescribed as an add-on treatment to metformin in Type 2 diabetes, it will be less cost-effective than Eli Lilly and Boehringer Ingelheim’s Jardiance in the same setting. Rybelsus is the first GLP-1 receptor agonist that’s available in pill form, but Jardiance—a widely prescribed SGLT-2 inhibitor—is also an oral option.
Hence “judging from the list price of oral semaglutide, its net price is likely to be much higher than that of competitor oral treatments…that appear to have similar benefits with fewer common side effects,” ICER said in a statement.
ICER’s report came on the same day that Novo released its third-quarter earnings, and during a conference call with investors, chief financial officer Karsten Munk Knudsen griped that the cost-effectiveness review didn't take a broad enough approach. "Over decades, this is clearly cost-effective," he said of the new drug.
Questions about the pricing strategy around Rybelsus had been dogging Novo CEO Lars Fruergaard Jørgensen for more than a year before the approval. Last August, he told investors the company was trying to figure out whether to price the newcomer competitively to injectables or charge more for it, in light of the fact that tablets are more expensive to produce. But analysts worried that if Novo went for the higher-priced option, heavy discounting would have forced the net price down.
To calculate cost-effectiveness, ICER used estimates from SSR Health, arriving at a prediction that Rybelsus’ net price after discounts will be $508.62. That’s way more than Jardiance ($174.01) and only slightly less than Novo’s GLP-1 injectable Victoza ($667.74).
But it wasn’t just pricing that concerned ICER—it was also side effects. GLP-1 drugs have high rates of gastrointestinal side effects, and both Rybelsus and its injectable predecessor Ozempic produced higher rates of diabetic retinopathy over placebo in clinical trials.
“Although overall benefits appear greater with [Rybelsus], we have some concerns about adherence in the real world given the higher rates of side effects,” said the ICER report (PDF).
In its review, ICER reiterated concerns about cardiovascular complications, which it had noted in the cost-effectiveness comparison it released prior to Rybelsus’ approval. In that report, it determined that Novo’s pill did outperform competitors in preventing cardiovascular complications, but not in fending off congestive heart failure. And ICER reviewers expressed their worries that there isn’t enough long-term data on any of these diabetes drugs to determine adherence rates and cardiovascular outcomes.
ICER calculated that the cost-effectiveness ratio for Rybelsus vs. Jardiance would be $480,000 per quality-adjusted life-year gained. So even though Rybelsus would meet ICER’s threshold for cost-effectiveness when compared with standard “background” therapies, it doesn’t stack up when compared with Jardiance, the report said.
During Novo's third-quarter report, it increased its revenue expectations for 2019 based largely on the success of its GLP-1 contenders. Sales of Ozempic officially reached blockbuster status at 6,872 million Danish crowns ($1 billion) so far this year. During the conference call, Knudsen said discussions with payers about the drug are ongoing and reimbursement updates would be forthcoming.
It’s too early to handicap Rybelsus’ market prospects, of course, but Novo executives are clearly optimistic. At the European Association for the Study of Diabetes (EASD) in September, more than 2,000 attendees showed up for the company’s symposium on the drug and were “enthusiastically listening,” chief scientific officer Mads Krogsgaard Thomsen said.