Kantar Health Blog

When will the price horizon for oncology drugs top $10,000 a month?

by User Not Found | Feb 08, 2013

Pricing a drug is a hugely important aspect of pre-launch and launch planning as it can directly influence market share. Forecasting the dollar value of an oncology drug presents many challenges and caveats and takes into account price, duration of therapy, the eligible population, and market share of the eligible population. Price influences market share in two primary ways: It can inform the degree of payer utilization management (hassle factor can diminish confidence in reimbursement under the “buy-and-bill” model), and it can inform the patient cost share, which can lead to treatment abandonment or prescriptions not being filled.

This leads to the question asked of me several times recently: When will the price horizon for drugs top $10,000 per month? A handful of recent approvals put the current price ceiling at approximately $120,000 per year of therapy, including Xalkori® (crizotinib, Pfizer), Zelboraf® (vemurafenib, Roche/Daiichi Sankyo), Stivarga® (regorafenib, Onyx/Bayer), and Yervoy® (ipilimumab, Bristol Myers Squibb). Of course, some oncolytics shot through that ceiling, including Adcetris® (brentuximab vedotin, Seattle Genetics/Takeda), Folotyn® (pralatrexate, Spectrum), and Istodax® (romidepsin, Celgene), but these are targeting near-micro-orphan indications such as relapsed or refractory T-cell and Hodgkin’s lymphoma, which often have short durations of therapy. Several near-term potential approvals could signal when manufacturers will be able to commonly price drugs in much larger markets beyond the current ceiling.

The Prescription Drug User Fee Act (PDUFA) date for Roche’s trastuzumab emtansine (T-DM1), an antibody-drug conjugate, is February 26 with a likely indication in second-line HER2-positive breast cancer. However, the company has high hopes that T-DM1 will be pushed into first-line in combination with Perjeta™ (pertuzumab) if the MARIANNE trial (NCT01120184) is successful. Perjeta ($5,900/month) is currently indicated for use in combination with Herceptin ($4,500/month) and primarily generic chemotherapy, putting the monthly cost of first-line chemotherapy for HER2-positive breast cancer at just over $10,000. T-DM1 has a strong value proposition and is viewed as a more active and less toxic version of the traditional combination of Herceptin plus a taxane, so it could easily be priced higher than Herceptin. The combination of the launch price of T-DM1 and the price of Perjeta could push beyond the $10,000 threshold, signaling to the market what the next price ceiling might be.

Other interesting cases that could signal a new price ceiling are GlaxoSmithKline’s two tyrosine kinase inhibitors targeting unresectable BRAF-mutated melanoma, the MEK inhibitor trametinib and the BRAF inhibitor dabrafenib. The company filed both with the FDA simultaneously on August 3, 2012. This summer dabrafenib will likely be awarded a first-line indication, while trametinib will likely gain a second-line indication. However, the company has high hopes to combine both in first-line; promising results from a randomized Phase II study suggest the combination leads to longer progression-free survival than dabrafenib alone. The company has initiated two Phase III trials (NCT01584648 and NCT01597908) to confirm the results, but before the Phase III trial results there is a strong possibility that the combination will receive a position in the highly influential NCCN Guidelines and NCCN Compendium, which guide payer reimbursement.  With Zelboraf and Yervoy already priced at approximately $120,000 a year, the combination of the launch prices of the two GSK drugs could signal what an acceptable launch price might be for future drugs, particularly in melanoma.

This signal could be particularly beneficial to the pricing of Bristol-Myers Squibb’s PD1 antibody, nivolumab (BMS-936558), which is another entry in the company’s autoimmunity portfolio. In expanded Phase I results, nivolumab produced higher response rates (and favorable toxicity profile) than Yervoy in advanced melanoma, advanced renal cell carcinoma and non-small cell lung cancer. The company has initiated two Phase III trials in unresectable melanoma (NCT01721746 and NCT01721772) to confirm whether the solid response rates are durable and contribute to long-term survival. If nivolumab lives up to physicians’ and the market’s excitement, it could be priced at a premium above Yervoy.

Learn more about the unique challenges associated with forecasting the commercial potential of oncology products during our workshop on March 7, 2013, in Las Vegas. Click here for more information or to register for this event.

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