The drug market for relapsing remitting multiple sclerosis has changed little in the last decade, but is now in the midst of transformation. New launches could be a bonanza for drugmakers, but new drugs will need to demonstrate more than just convenience benefits over existing injectables to warrant premium pricing.
Managed care is changing its laissez-faire handling of the MS drug category. Payors continue to prioritize medical and disability costs over drug spending in MS, but barraged by skyrocketing prices, they are implementing the first prior authorization and step edit programs aimed at reducing costs.
The availability of more drugs in MS will give payors additional wiggle room for negotiating on drug prices and implementing step therapy protocols. The launch of generic Copaxone would offer payors even more leverage, even if the product is only modestly discounted.

Two new oral drugs for relapsing remitting multiple sclerosis are poised for a near-term launch, and more drugs that work through different mechanisms of action could soon follow. It is good news for patients who stand to benefit from a wider range of treatment options, and the new products could be a windfall for drugmakers too. But new drugs are expected to enter the market at premium prices, which will add pressure to a therapeutic area that has already become a cost reduction priority for payors.

New drugs will run up against an increasingly restrictive reimbursement environment as payors become more comfortable applying cost management tools across the category. Negotiating a strong formulary position will require solid data and persuasive rebates. But as more treatments become available – eventually even the first generics – payors will have more options too; more drugs will give them more leverage to negotiate on drug prices and introduce broader step therapy protocols.

Just a few years ago, managed care wasn’t inclined to manage the MS category. The illness is a serious and debilitating one, and the expense of broader medical and disability costs when patients relapse or go untreated outweighs drug spending. Other factors keeping payors at arm’s length were the limited treatment options and little, if any, comparative data to distinguish between them. The absence of generic alternatives to substitute for high-priced brands, which are mainly biologics or complex small molecules, has also kept payors on the sidelines.

Payors’ hands-off attitude is changing. Escalating drug costs, driven both by recent launches and general price hikes across the category, the approaching launch of additional high-priced drugs, and eventually the even more expensive proposition of combination therapy, have led payors to look at the category anew. (See Sidebar: The Next Frontier: Combinations.)

[Sidebar#2012800082]

They are implementing the first prior authorization and step therapy programs and see more opportunities to introduce management policies down the road.

“Because of the therapies that have been on the market, the traditional levers that we would pull haven’t necessarily been there,” says Medco Health Solutions Inc.’s Richard Faris, the national practice leader for the pharmacy benefit manager’s rare and specialty therapeutic resource center. “But with more drugs and categories of drugs becoming available, preferred therapy programs within a plan design are being used more and more.”

Sanofi’s Aubagio (teriflunomide) and Biogen Inc.’s BG-12 (dimethyl fumarate) could be the first new drugs to test the cooler reimbursement climate. They are both oral drugs, which may offer convenience and adherence benefits over injections, but the products will need to stand up to older injectables on safety and efficacy to win favor with physicians and payors, especially if they are priced at the high end of the market, as expected. A regulatory application for Aubagio has been pending at FDA since August 2011, setting it up for a June action date. (See [A#111025d1].) Biogen submitted an application for BG-12 more recently, in February, positioning it for approval in December if granted a standard 10-month review. If approved, the drugs will join Novartis AG’s Gilenya (fingolimod) as the only oral disease-modifying drugs for relapsing remitting MS.

Gilenya launched in October 2010 as the first disease-modifying oral and is performing moderately well. Global sales of the drug were $494 million in 2011, its first full year on the market in the US. But payor reception has been tepid. Novartis’ decision to price Gilenya higher than other disease-modifying drugs in the category, even though it is an oral small molecule, disappointed payors. Gilenya gave managed care, barraged by higher costs, an offender to point to, and that launch has put them on the defensive ahead of other oral launches.

“When [Gilenya] came out, it set a high standard for high cost. This was really unfortunate,” says Jeremy Schafer, senior director of utilization management at Prime Therapeutics Inc., the pharmacy benefit manager for Blue Cross Blue Shield plans. “There were those in the industry hoping that because it was a small molecule agent and oral it may have bucked the trend and been [priced] lower, but this certainly was not the case.”

Gilenya launched in the US with an annual price of roughly $45,000 per year, but Novartis has already hiked the price by 16%, to $52,365 annually. With the makers of older injectable drugs anticipating the increased competition, they implemented their own price hikes ahead and after the Gilenya launch. The result has been ballooning drug costs that are impossible for payors to ignore. For example, Teva Pharmaceutical Industries Ltd. increased the list price of the market leader Copaxone (glatiramer acetate) 14.9% in January. Teva declined to provide the current price of the drug, but it is listed as $52,757 per year on the web site DRX (formerly DestinationRx), which provides current drug pricing information for consumers.

MS Drug Spend Grows Double-Digits

MS, along with autoimmune disease and oncology, is one of the three largest contributors to specialty drug costs, the fastest-growing area of drug spending. MS drug spend increased 20.9% in 2010, according to Medco Health Solutions’ 2011 Drug Trend Report. MS drugs accounted on average for 20.8% of a health plan’s total specialty drug costs in 2010.

MS drug spending increased 22.5% to $7.1 billion in the US in 2011, according to data from IMS Health Inc. The MS category ranked 14th in terms of drug spend by therapeutic category, but the growth outpaced the growth of the other top 20 therapeutic areas. US sales of interferons – one of the primary treatments for MS – grew 5% to $4.16 billion in 2011, despite the fact that prescriptions fell 3% to 1.2 million, according IMS. US sales of Copaxone were up 31% to $2.95 billion, according to IMS, while prescription growth was only 3%.

“It is not unusual to see 15% to 20% price inflation year-over-year,” says Schafer. “The higher cost of the drugs brings higher cost down to our clients’ health plans, which in turn can increase the cost to members.”

At United HealthCare Services Inc.’s internal PBM OptumRx Inc., MS drug spending increased 13% in 2011 and is expected to increase 16% in 2012, says pharmacy services SVP Randell Correia.

Skyrocketing costs have made MS a top cost control priority for payors. It ranked as the third top specialty management priority behind RA and oncology in a survey of 100 managed care decision makers conducted in fall 2011 by the managed care consulting firm The Zitter Group. However, payors haven’t had many options for controlling costs in MS. Until recently, many of the disease-modifying drugs in the category worked through a similar mechanism of action, and there aren’t any updated third-party treatment guidelines for payors to follow. They mainly rely on aggressive contracting with manufacturers to secure rebates in exchange for preferred formulary placement as a means to manage the category.

Generic Copaxone, Please!

The availability of a generic alternative would change the game. Most of the existing disease modifiers to treat MS are biologics or complex small molecules for which there are no low-cost copies. In addition to Teva’s Copaxone, the MS market is dominated by multiple versions of the cell signaling protein interferon beta, led by Biogen Idec’s Avonex (interferon beta-1a). Merck KGAA’s Rebif (interferon beta-1a), Bayer AG’s Betaferon/Betaseron (interferon beta-1b) and Novartis AG’s Extavia (interferon beta-1b) are also on the market. In addition to those drugs, Biogen Idec markets Tysabri (natalizumab), an integrin receptor antagonist relegated to later stages of treatment due to its link to the deadly brain infection progressive multifocal leukoencephalopathy. All of the drugs except Extavia are blockbusters. (See Exhibit 1.)

Exhibit 1

A Blockbuster Category

Drug Manufacturer	Brand	Worldwide Sales 2011
Teva Pharmaceuticals	Copaxone	$3.57 billion
Biogen Idec	Avonex	$2.69 billion
Merck KGaA	Rebif	$2.21 billion
Bayer	Betaseron	$1.46 billion
Biogen Idec	Tysabri	$1.08 billion
Novartis	Gilenya	$494 million
Acorda Therapeutics	Ampyra	$210.5 million
Novartis	Extavia	$154 million

Company reports

Janurary 2010 also saw the introduction of Acorda Therapeutics Inc.’s Ampyra (dalfampridine), not a disease-modifying drug, but an adjunctive therapy MS patients can take to improve walking ability.. Because Ampyra, which costs about $16,000 per year, is used on top of disease-modifying therapy and has been shown to work in only some patients, it has disgruntled payors. (See Also see "Launching Ampyra: What Drug Companies Can Learn From The Experience" - In Vivo, 1 November, 2010..)

While the patent expiration for Copaxone is approaching in 2014, because of the complexity of the molecule a launch of a lower-priced generic is no guarantee. Mylan Pharmaceuticals Inc. and Novartis AG’s Sandoz Pharmaceuticals Ltd. have both filed ANDA applications with FDA to market generic glatiramer acetate. The two companies are also awaiting the outcome of a patent infringement case brought against them by Teva. A ruling in their favor could open the door to a generic launch before 2014. But ultimately, the launch timing hinges on a green light from FDA. Teva believes ANDA filers should have to conduct clinical trials comparing the generic formula to both placebo and Copaxone. They have presented their case to FDA via several citizen petitions, arguing that glatiramer acetate is not fully characterized and the polypeptide sequences contributing to Copaxone’s therapeutic effects has not been identified. (See Also see "The Lovenox Benchmark: Copaxone "Far More Complex," Teva Argues In Anti-Generic Petition" - Pink Sheet, 3 January, 2011..) Concerns over therapeutic equivalence are similar to those Sanofi raised in opposing ANDAs of its low molecular weight heparin Lovenox (enoxaparin), though FDA ultimately approved a generic Lovenox in 2010 without additional clinical trials. (See (Also see "FDA Approves Momenta/Sandoz' Lovenox Generic Without Need For Clinical Studies" - Pink Sheet, 26 July, 2010..)

What kind of data FDA will ultimately require for Copaxone to determine therapeutic equivalence remains to be seen, but payors would certainly embrace a generic option. Still, the expectation is that the price erosion of such a product would be relatively modest, at least initially given the lack of competition in the marketplace. Nonetheless, in a survey of 20 managed care pharmacy directors conducted by the market research firm Decision Resources Inc., 90% said the availability of generic glatiramer acetate would lead their managed care organization to move branded Copaxone to a less favorable tier, even if the launch price of the generic is only modestly discounted. And 80% said they would institute cost controls to encourage the use of generic glatiramer acetate over the branded drug.

A generic version of Copaxone – even at a modest discount – would put another tool in payors’ pockets. For now, payors are mainly relying on prior authorization and step edits. Payors are advantaging Avonex, Copaxone and Rebif over other agents primarily via step failures, according to data from The Zitter Group’s Prior Authorization Tracking Tool in MS, which analyzes data from the top 100 commercial payors, comprising 87.5% of commercially covered lives in the US Betaseron, Extavia, Gilenya and Tysabri have biologic step edits impacting over 30% of covered lives among those evaluated. Copaxone is preferred at 76% of plans and Avonex and Rebif are preferred at 65% of plans, but that translates to 85% of covered lives for Avonex and Rebif.

Among those surveyed, Copaxone is covered with no prior authorization for 64% of lives, and Avonex and Rebif are each covered with no PA for 60% of lives. In contrast, Gilenya is covered without a PA for only 4% of lives. Another 9% of lives are “moderately managed” for Gilenya (involving restrictions like specialist approval required/patient must be ambulatory/initial authorization time limit greater than three months but less than six). Thirty percent of lives are “BioManaged 1” (involving restrictions like initial authorization time limit, relapse requirement, prior failure or contraindication with one or more disease modifiers) and 30% are “BioManaged 2” (requiring prior failure or contraindication on two or more disease-modifying drugs). (See Exhibit 2.)

Exhibit 2

Commercial Management Ratings: Multiple Sclerosis

The Zitter Group

“I think in some ways the manufacturer bet the plans wouldn’t make people take an injection before an oral, but a lot of plans have because they can fall back on 15 years of experience versus one year of experience,” says Gary Owens, a managed care consultant and former VP at Independence Blue Cross.

Gilenya is a Tier 3 drug at OptumRx, while Avonex, Rebif and Copaxone all have Tier 2 status. Gilenya is in a non-preferred tier at many of Prime’s plans, Schafer noted. “This goes back to looking at it clinically first,” he says. “It’s not that we think Gilenya is necessarily unsafe but it is a new drug in a new category and … we really want to know more about the safety picture first.”

The sphingosine 1-phosphate receptor modulator has been associated with serious risks, including abnormal heart rate, and patients are required to have six hours of monitoring after initial dosing as a result. Reports of deaths among patients treated with Gilenya surfaced earlier this year, leading FDA and the European Medicines Agency to review the drug’s safety. Neurologists have been cautious about prescribing Gilenya in any event, given the drug’s limited track record in the real-world setting.

Prime Tries New Tact With Rebif: Reimbursement Linked To Total Costs

In March, Prime announced it had signed a unique “CareCentered Contract” with Merck’s EMD Serono for Rebif. Under the agreement, EMD Serono will pay rebates to Prime if patients using Rebif have a higher overall total cost to their plans than patients on a different MS drug, or if the medication adherence rate remains above a specified level, translating into more use. The Rebif contract is being rolled out to Prime’s 13 Blue plans, which cover about 20 million people.

Prime will evaluate data pertaining to the health outcomes and adherence of patients a number of times throughout the contract to determine the total cost of care, the PBM said. To evaluate total cost of care, Prime will be comparing Rebif to Avonex, Betaseron, Copaxone and Extavia. Another payor, Cigna Corp., announced an outcomes-based contract for Rebif in March 2011. Measures in that deal focused on adherence as well as a reduction in emergency room visits and hospitalization for MS patients.

But Prime’s deal breaks new ground in product contracting, according to Prime Therapeutics cost of care SVP Peter Wickersham. “What we love about this is that it’s focused on understanding what the total cost of care inclusive of both pharmacy and medical spend is for these patients as compared to patients on competitor products. That I think is a novel concept. I don’t think that’s been done before,” says Wickersham. He says PBM will have “complete interchangeability and sharing of data with those plans” to verify the costs associated with the use of Rebif and other MS drugs.

As for adherence, Prime is taking charge of that effort. Wickersham says Prime’s predominant method for promoting adherence is phone calls and letters to physicians and members about their drug regimens. Wickersham noted that while manufacturers see adherence as important, Prime views it as “something that is the PBM’s responsibility to look to improve.”

The adherence rebates recognize Prime’s effort and expense in promoting adherence, but, as Wickersham notes, “there’s certainly a return on it for the pharmaceutical manufacturer to have increased payments for increased adherence levels. Obviously of course they get increased sales through that as well.”

Compliance will be measured by medication possession ratio, which measures how much drug a patient has on hand through prescription fills. While Wickersham would not reveal the exact MPR that will trigger rebates, he noted that “typically 80% is a magic threshold for what’s considered good adherence. … So if you filled enough over a year period to cover 80% of the days, then it would be 80% MPR.”

Some plans are studying other pilot programs for cost reduction. For example, OptumRx’s Correia noted some insurers are exploring provider incentive programs, where treatment outcomes are measured and linked to costs. Health plans could score physicians on quality of care and provide the results to members when selecting physicians. In other instances, he says, some are implementing cost sharing pilot programs in place of copays for patients. One concern there, however, is that by setting the cost of care too high patients may abandon therapy.

With No Guidelines, Payors Try To Reach Consensus

One pitfall for payors in MS is that there are no clear third-party consensus guidelines to use as a reference in determining an appropriate treatment protocol. In oncology, the National Comprehensive Cancer Network Clinical Practice Guidelines have become a peg on which payors can hang reimbursement decisions. (See Also see "How To Withdraw A Drug: FDA’s Final Decision on Avastin" - In Vivo, 27 December, 2011..) In autoimmune disease, key treatments work through the same mechanism of action, at least for now, making payors more comfortable with reimbursement decisions. However, in MS, some drugs work through different mechanisms of action, and increasingly so as more drugs reach the market. That leaves payors weighing safety and efficacy data, and in the absence of comparative data, meaning over-dependence for some reimbursement decisions on rebates and price.

The American Academy of Neurology has guidelines on the use of disease-modifying therapies in MS, but they date from 2002. Although the academy reaffirmed them in 2008, they do not address recent launches like Gilenya and Ampyra. The AAN has no plans to update the guidelines in the next year, the association said.

“Part of the reason there aren’t good guidelines is because there are not a lot of supportive data to enable the creation evidence-based guidelines,” says Owens. “There have been a lot of studies. There’s lots of data, but the data doesn’t help you find a clear pathway through the woods.”

Owens was the moderator for a panel of managed care experts that met last year with the goal of developing a series of consensus statements payors could use as a resource for MS. Following two rounds of Web-based surveys, the group held a live panel discussion in December 2011, involving eight pharmacy directors and six medical directors from 12 health plans, one specialty pharmacy, and one consulting company, Xcenda, the consulting arm of wholesaler AmerisourceBergen Corp. The results were published in the January/February issue of the Journal of Managed Care Pharmacy.

The panel reached 25 “consensus statements” to address the management of patients with MS. One key decision was that health plans should include preferred access to Copaxone and at least one interferon, though the group did not reach consensus on which interferon should be preferred. The panel also agreed that access to Gilenya and Ampyra should be managed by prior authorization.

“The biggest underpinning challenge is that there isn’t a clear and comprehensive guideline that physicians have put forth for payors to follow, so in the absence of guidelines, payors have to make management decisions without the information it would be ideal for them to have,” says one of the study’s authors, Laura Happe, associate professor of pharmacy administration at Presbyterian College School of Pharmacy.

Ultimately the consensus statements are in line with many of the steps payors are already taking. The panel agreed that if efficacy and safety are determined to be comparable among interferon agents, then cost and contracting should be weighed.

A Wave Of New Orals, But Will They Be Well Received?

How new drugs – including the upcoming orals – are received by payors will ultimately come down to data: efficacy, safety and adherence. Oral molecules have to be more than just convenient alternatives to injectable therapies. (See Also see "Oral Molecules In An Injectable World: What Developers Need To Do Now" - In Vivo, 1 February, 2011..) What payors most want to see is evidence that treatment with a particular drug therapy helps to bring down broader medical spending for a patient.

A drug manufacturer that can demonstrate their oral pill impacts relapses and disability outcomes, with a solid safety track record, will have payors’ ears. But demonstrating an adherence benefit is difficult to do before a drug reaches the market. Drug manufacturers monitor for adherence in studies but the controlled environment of a clinical trial is different from the real world.

“Based on the fact that BG-12 is a twice-a-day oral pill, I think you can expect that adherence will be very good,” says Biogen’s EVP of Research and Development Doug Williams. “The best outcomes come from the best adherence to therapy so from the standpoint of effectively treating the disease, adhering to therapy is an important part.”

During Sanofi’s fourth quarter conference call R&D President Elias Zerhouni, MD, noted that “Aubagio is an oral molecule, once-daily therapy with comparable efficacy to an injectable interferon. That’s the value proposition. We can’t complicate things too much,” he said. Sanofi has demonstrated that patients taking Aubagio have a lower rate of discontinuation than those on injectable medicines, he added.

Payors readily acknowledge the benefits of adherence when it comes to MS. “We are looking at the drug cost and we are looking at adherence and how adherence impacts both relapse rate as well as hospitalizations, ER visits, the medical spend side of it,” says Medco’s Faris. “We have been able to show that an increase in adherence can help reduce hospitalizations and ER visits, and it keeps patients more active in the workplace.”

“Some new oral agents that are coming to market could be helpful in driving down overall costs,” adds Deb Sternaman, director of formulary and clinical operations for the PBM Catalyst Rx. “It is ultimately the total cost of care and not just the drug cost that counts.”

In addition, if drug manufacturers can demonstrate their new orals have solid safety data, they may have an easier time securing a good formulary position for their drug than Novartis had with Gilenya. In restricting Gilenya, payors’ have largely pointed to uncertainty about safety. That may be harder to do if a drug’s safety profile seems to stack up to the interferons. “If the newer oral drugs don’t have the safety profile that Gilenya has…it’s going to be harder for plans to say you really do have to try glatiramer or an interferon first,” says Owens. “I think [payors] were able to do that with a straight face because Gilenya was perceived to have some safety issues.”

In clinical studies, Sanofi’s Aubagio appears to have a benign side effect profile but also limited efficacy. It has shown benefits compared to placebo, but a Phase III study comparing the safety and efficacy to Rebif failed to demonstrate its statistical superiority. Meanwhile, Biogen Idec’s BG-12 appears more promising. The safety and efficacy seems up to par, and in a Phase III trial that included a reference arm with Copaxone, BG-12 reduced annualized relapse rate at two years by 44% twice a day, compared to an AAR of 28% in Copaxone-treated patients. The trial wasn’t powered to compare BG-12 to Copaxone but it does show how the drug would fare in practice. (See Also see "Biogen Idec To Pursue Disability Label Claim For BG-12 Despite Missed Endpoint" - Pink Sheet, 1 November, 2011..)

Teva is also developing an oral MS drug, laquinimod, which it had hoped to file this year. However, the development was set back after the drug underperformed on efficacy in a Phase III study called BRAVO. Earlier this year, Teva revealed that it would initiate a third Phase III study for the drug, one that would use disability as the primary endpoint rather than annualized relapse rate, which was the endpoint in BRAVO. (See Also see "Third Trial For Teva’s Laquinimod Hinges On SPA From FDA" - Pink Sheet, 27 February, 2012..) Beyond those three orals, other new drugs are waiting in the wings. The most notable is Sanofi’s Lemtrada (alemtuzumab), an anti-CD52 antibody gained through the acquisition of Genzyme Corp. last year. [See Deal] It is not an oral, but it could have an efficacy edge. Sanofi plans to file the drug – which has demonstrated notable efficacy but also serious side effects in clinical trials – in the second quarter of 2012. (See Also see "Sanofi Targets 18 Drug Launches From 2012 To 2015" - Pink Sheet, 8 February, 2012..)

In Decision Resources’ survey of 20 pharmacy directors, 50% said they would cover emerging agents based on the profiles and price points presented (prices were in the ballpark of Gilenya). Approximately 25% said they would cover each drug on tiers one or two. Most PDs surveyed who said they do not expect to cover emerging agents based on the profiles presented frequently cited the proposed cost (priced at a premium to a currently available comparator – Avonex for emerging orals, Tysabri for Lemtrada) as a key reason, Decision Resources said.

Neurologists are certainly keen to try new products to drive better outcomes. A survey of 100 neurologists showed they expect more of their patients will be taking BG-12, Aubagio and Lemtrada in place of Copaxone, Avonex and Rebif in 2013. (See Exhibit 3.)

Exhibit 3

Neurologists’ Forecast 2013 Patient Share

*In September 2011, when this survey was fielded, we forecast an early 2013 launch for Teva/Active Biotech’s laquinimod based on the companies’ previously announced intention to submit regulatory filings in early 2012. However, in November 2011, the companies announced that after discussions with regulators, filings for laquinimod would require an additional clinical trial. The primary end point in the second of two pivotal studies was not met, although statistical significance was achieved after prespecified adjustments were made to correct for baseline imbalances.

Decision Resources

Ultimately, payors are likely to await real-world data before making any preferential decisions. “If a new oral were to get approved and the safety data looked strong, we would certainly consider that,” says Medco’s Faris. “But we would also be watching it closely to see … what happens over the next year or two.”

MS Boon: Many Drugs On The Way, But Will Payors Swallow The Cost?

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