Preparing For A Pricing Shift: Roche Admits Cost Is An Issue In Oncology And Beyond

From The Pink Sheet
Preparing For A Pricing Shift: Roche Admits Cost Is An Issue In Oncology And Beyond
Pricing by indication could be one approach to the growing problem of the cost of oncology drugs, Roche Pharmaceuticals Chief Operating Officer Pascal Soriot suggested at the firm's analyst event at the recent American Society of Clinical Oncology annual meeting.
"It is clear that cost is going to be an issue," Soriot said. "We are certainly starting to think about it, and over the next few years we will develop strategies for this."
Though it has come up with increasing frequency in recent years, the need to address oncology pricing was a clear takeaway from the ASCO annual meeting, where mentions of emerging data on Avastin (bevacizumab) in ovarian cancer were paired with comments about the cost of the therapy.
Genentech was pioneering with its payment assistance program for Avastin, which caps the price for on-label uses at $58,000 a year (after a patient hits 10,000 mg of use, the company provides the drug free for the remainder of the year). But ovarian cancer holds the potential for longer durations of use, as evidence suggests Avastin could play a role as a maintenance therapy ("Roche's Long View: ASCO Marks Progress In Shifting To Lengthier Treatment Duration For Avastin, Rituxan," "The Pink Sheet," June 14, 2010).
Beyond Roche, Dendreon's $90,000 price tag for Provenge and Bristol-Myers Squibb's $120,000 for Yervoy – the most expensive oncology therapies to date – have cost considerations moving up the agenda. Pharmacy benefit manager Medco highlighted growth of oncology drug and companion diagnostic costs in its "2011 Drug Trend Report" ("Payers Are Preparing For Coming Companion Diagnostics, Medco Notes," "The Pink Sheet," June 20, 2011). And some payers are exploring "clinical pathway" programs to establish standards of care for high-cost cancers (“What New Cancer Pathway Programs Mean For The Drug Industry,” IN VIVO, May 2011).
Soriot noted that the cost problem transcends oncology, pointing to rheumatology as an example.
"Over the next few years, the payers of course are going to be helped a little bit by the fact that some other drugs will lose patent protection, but it is not going to be enough, I think," he said. "We have to definitely tackle this issue, and I believe … more and more we will have to start thinking of pay-for-performance but also pricing for an indication."
The executive did not elaborate but mentioned that he had been meeting with opinion leaders and decision-makers from European countries to talk about setting up a different approach where pricing is done by treatment of cancer type.
While such talk is in the early stages, the groundwork needs to be laid now. "We need to put in place the tools," Soriot concluded. "That's why we need to partner with payers and decision-makers in various countries, to put in place the tools so we can do that."
But, he added, "we have an incentive and we are in a very good position as a company to do it because we have a very broad portfolio. So we have various products that we can leverage to do that."
Price also came up as part of Roche's business rationale for personalized medicine: a slide on the benefits of patient stratification listed pricing power alongside increased market share, time to market, lower development costs and higher probability of success.
Personalized health care, and its advantages for R&D productivity, was the theme as Roche/Genentech talked up its oncology prowess for investors.
Protecting Its Dominance
"We are a leader in oncology today, and we intend to remain one," Soriot pronounced at the on-site analyst event. The firm has a comfortable margin, with 31% of the global market in 2010 followed by Novartis with 11% ("Global Oncology Rankings: It’s A Long Way To The Top," "The Pink Sheet," June 6, 2011).
Oncology has a high profile within Roche's overall business as well. "Half of our investment and half of our projects are in oncology," Soriot noted, with 52% of the big pharma's new molecular entities in clinical development for cancer. There is a move to do more in other areas, like inflammation/immunology and CNS. "But oncology remains, clearly, the mainstay of our research and development investment."
The execs also touted Roche/Genentech's above-average success rate in development, although 2010 was dogged by a series of failures. "We actually dropped to an average success rate like the rest of the industry," Karl Mahler, head of investor relations, boasted. But since October, the firm has now had 18 trials in a row that were positive, he noted.

The combined company currently has 32 new molecular entities in oncology, including four in Phase III and four in Phase II (see chart).
Hal Barron, chief medical officer and head of global product development, pointed out that the company is moving outside of its core area of expertise – monoclonal antibodies – to an "increasingly large portfolio of molecules" that include small molecules, oral agents and combinations of antibodies and small molecules.
Antibody-drug conjugates, which link an antibody to a small molecule cytotoxic, make up the lion's share of Roche/Genentech's oncology pipeline. Behind the lead project, trastuzumab-DM1 (which stalled after the company tried an early submission in breast cancer), the company has 37 additional ADCs.
The company believes ADCs will change the way cancer is treated, and having that platform technology with a wide stable of molecules (now targeting 11 cancers) could be very good positioning. But although the company's attempt to be first to market may have backfired with the "refuse to file" action on its T-DM1 submission, it continues to accrue evidence. At ASCO it presented data showing T-DM1 was effective in Herceptin-refractory patients, "highlighting the fact that not only can these molecules be safer, they can have activity that might be in excess of what you would see with a naked antibody," Barron said.
Like most of the pharmaceutical industry, Roche espouses the personalized health care movement. Most of its development projects have a biomarker program, and the theme of the oncology pipeline is "really to develop drugs in a very targeted way, to identify which patients need which drugs and ensure that we study them in a robust manner," Barron said, noting that this means a more pronounced treatment effect and more accentuated benefit/risk profile.
Taking Advantage Of In-House Assets
It also means an evolving business model. "In the future, more and more what we actually will be commercializing is not a medicine; it's actually a solution, a medicine and a test," Soriot said. "It sounds easy when you talk about it, but I can tell you it is not that easy to engineer and operationalize that."
That's where the company thinks it has an advantage: Roche's legacy diagnostics business gives it an in-house source for the companion diagnostic work to go along with the personalized therapies. It is "a great advantage in the marketplace," Soriot said, "because both teams are in the same company and have the same rules and [are] able to cooperate and coordinate their activities much better than we would if we were two separate companies."
"We are trying to leverage the strengths of having pharma and diagnostics under the same roof and across the entire value chain," he continued. In the research stage, that involves sharing knowledge from the beginning and working together to understand the biology and the pathways, "by making sure that the teams share data very early on, in a very free fashion, and hopefully leveraging IP each time we can." In development, it means prospectively identifying biomarkers and doing the right sample collection. And, "from a commercialization viewpoint, we are working hard on defining the label at launch and coordinating the launch of the two products."
Soriot acknowledged that the company has been talking the personalized medicine talk for awhile. "And I must say, for a number of years we didn't have a lot to show for it." But he argues that in the last year the company has come closer to turning the strategic vision into reality.
"In particular, since the merger of the two companies, you can see an enormous acceleration of [the] number of projects [and] collaborations that exist between our diagnostics unit and the pharma team." And over the next three to four years, he expects an acceleration of that trend and multiplication of the number of joint projects.

It is a costly process, but Soriot thinks it will pay off in terms of increased R&D productivity. Nodding to analyst criticism that big pharma has been spending too much on R&D with little to show for it, he admitted that "we haven't been very popular … because we are one of the highest spenders in the industry."
"The way we see it is that it's not a question of cutting investment, it's a question of increasing productivity of the investment," Soriot said. "And clearly personalized health care is a massive lever to improve this productivity by reducing attrition rates and identifying biomarkers prospectively." It will also help with development costs by enabling shorter studies in smaller sample sizes because of patient selection. It can also mean a quicker path to market, he said, pointing to the BRAF inhibitor vemurafenib under FDA review for treatment of metastatic melanoma in patients with a certain BRAF mutation.
The Saving Grace Of A Biomarker
Roche will get a test of the benefits of starting out with a personalized medicine from day one with MetMAb. The monoclonal antibody is in development for lung and triple-negative breast cancers and shortly in colorectal cancer, all stratified by levels of the MET protein. "If you look at MetMAb, it would not be a product without the biomarker," Soriot said.
The initial Phase II trial in lung cancer did not show a benefit in the overall population; a retrospective analysis showed advantage in the cohort of patients with high levels of MET, and a survival analysis of this group was presented at ASCO ("Roche's Diagnostic Foothold Gives Genentech A Leg Up In Oncology," "The Pink Sheet" DAILY, June 2, 2011). Phase III is slated to begin later in the year.
The company is also attempting to retrofit some of its marketed products with a personalized health care strategy. With the lung cancer therapy Tarceva (erlotinib), Roche has taken research about EGFR mutations and re-run studies ("NSCLC Market Snapshot: Promising Biomarkers, Testing Challenges," "The Pink Sheet," May 30, 2011). The EURTAC trial presented at ASCO gave proof that erlotinib has better effect in patients with EGFR mutations and is helping move the drug into the first-line setting (it is approved for second-line and maintenance use in the overall population).
In the initial studies of Tarceva in the front-line setting there was no benefit on top of chemo. "And if you think about the history of drug development in any field, particularly in oncology, once a molecule would fail in a certain disease … the idea that you would actually repeat the study and not only go head to head with a chemotherapy but actually be superior to that was essentially unheard of," Barron said. "But by selecting out … these EGFR mutations, the biology was telling us this could be a viable study." The data now show a 63% reduction in risk of death or progression.
Tarceva and MetMAb also exemplify another of Roche/Genentech's oncology tenets: the impact of synergistic combinations. Based on research showing that amplification of cMET played a role in resistance, and preclinical evidence of synergy, the company ran a Phase II trial of erlotinib +/- MetMAb. The combination was well-tolerated and had a marked improvement in progression-free survival and overall survival; a Phase III study in MET-positive patients is slated to start later this year.
The company is also hoping a biomarker can support Avastin's continued marketing in metastatic breast cancer. In response to CDER's determination that the indication should be withdrawn, Genentech has offered to run another confirmatory trial using plasma VEGF-A levels as a predictor of efficacy ("Genentech Banking On Biomarker Data To Save Avastin In Breast Cancer," "The Pink Sheet," June 6, 2011).
Multiple sessions at ASCO, however, addressed the difficulty of identifying a biomarker for VEGF inhibitors.
By Mary Jo Laffler


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