The roll-out of Pfizer Inc.’s new personalized non-small cell lung cancer therapy Xalkori blends right in with the prevailing trends in cancer drug launches, proving that six-figure pricing now seems to be the new black in oncology.

Pfizer is playing up the patient assistance it is offering for the newly approved Xalkori (crizotinib), cleared Aug. 26 for locally advanced and metastatic NSCLC in those testing positive for an abnormal ALK gene. Pricing for the oral agent has been set at $9,600 per month, but Pfizer will ensure that eligible patients do not have out-of-pocket costs in excess of $100 per month.

Based on the median duration of treatment in the initial clinical assessment – early stage studies in 250 patients – treatment costs would fall in the range of $52,800 and $76,800. But for those patients who do well on treatment and live for a year, the cost of therapy would exceed $115,000.

For patients who live for a year, the cost of therapy would be over $115,000.

About a year ago, Dendreon Corp.’s prostate cancer vaccine Provenge was getting a lot of flak for its high $93,000/regimen price tag (Also see "Provenge Poised For Broad Insurance Coverage, Despite Grumbles On Price" - Pink Sheet, 24 May, 2010.).

In 2011, three other new cancer therapies have been introduced at prices exceeding or with potential to exceed $100,000 in a single year: Bristol-Myers Squibb Co.’s Yervoy (ipilimumab), priced at $120,000 for the treatment regimen; Roche/Genentech’s Zelboraf (vemurafenib) at $9,400 a month; and Seattle Genetics’ Adcetris (brentuximab vedotin), which will cost $94,500 to $121,500 per patient for a typical treatment period, based on clinical trials, but could go as high as $216,000 per patient (Also see "Seattle Genetics Will Test Oncology Pricing Acceptance With Adcetris" - Pink Sheet, 29 August, 2011.).

All of these drugs have offered major advances in treatment – either with a demonstrated survival benefit or encouraging early results.

Xalkori is a significant advancement on a number of fronts: a personalized medicine, it easily gained approval ahead of the review deadline, even on extremely early data from single-arm trials. Approval came in just under five months, based on a Phase I expansion and initial Phase II results showing dramatic improvements in overall response rates (Also see "Pfizer’s Crizotinib Eases Past FDA With Targeted Population" - Pink Sheet, 29 August, 2011.). The label specifies Xalkori is intended for patients who test positive for the ALK mutation on an FDA-approved test. The companion diagnostic – the Vysis ALK Break Apart FISH Probe Kit – was developed by Abbott Molecular and approved simultaneously with the drug, also ahead of its user fee deadline.

The Now-Requisite Patient Support Program

The high price tags for these oncology innovations have generally come along with programs to help patients deal with the costs, a move most notably spearheaded by Genentech for Avastin. For several years, the company has capped the price of bevacizumab for labeled indications.

As part of the Xalkori launch, Pfizer has pledged a co-pay assistance program for privately insured patients including the $100 cap on monthly co-pays. Co-pay assistance is capped at $24,000 per year; the higher cap will help include patients who have insurance plans that don’t limit out-of-pocket pharmacy expenditure. Initially, co-pay assistance will insulate patients from the high cost of therapy, but the program expires at the end of 2011, about four months after launch.

Pfizer also is offering co-pay assistance for uninsured patients.

“Pfizer is going to step up with assistance in both categories,” said Garry Nicholson, president and general manager for the Pfizer Oncology Business Unit, during a press conference on Aug. 30.

The company did not respond to inquiries about eligibility requirements and whether it was considering capping total cost.

In comparison, the wholesale acquisition cost for Avastin, for its NSCLC indication, is about $9,300 per month. Cost varies depending on the indication and dose, which is based on weight. The company offers a program that caps the price at $58,000 for approved indications. For patients enrolled in the program, Genentech offers the usual co-pay assistance up to the $58,000 cut-off point, covering 80% of out-of pocket expenses for privately insured patients, up to an annual maximum of $4,000. After the $58,000 threshold, there is no charge to the patient, provider or payer – all further vials are replaced for free, according to the company.

Oncologics that are physician-administered come under in-office medical benefits, whereas oral drugs – such as Xalkori – come under pharmacy benefits, which can have higher cost-sharing for patients.

The WAC for Roche/Genentech’s Tarceva (erlotinib) – also approved for NSCLC – is set at about $4,400 a month, and the company said the typical cost for a treatment regimen is $10,000 to $12,500. Generic chemotherapy with carboplatin/paclitaxel costs roughly $150 per three weeks, based on Medicare reimbursement data.

“New therapies used to be launched in the $50,000/year range, but the benchmark now seems to be $100,000,” commented Eric Cannon, chief of pharmacy at SelectHealth, a pharmacy unit of the Intermountain Health Group, a multi-hospital system.

“The fact that we are seeing more and more $100,000 treatments is alarming,” he commented.

Similarly, Bernstein Research analyst Tim Anderson cited an increasing number of newly approved cancer drugs have treatment costs around the $100,000/year mark in an Aug. 26 note, commenting that the Xalkori price tag “is about what we had expected.”

The reality is that the health system does not have good mechanisms for restraining cost of cancer therapies, said Peter Bach, a pulmonologist and health policy expert at Memorial Sloan-Kettering Cancer Center, and a former advisor to the Centers for Medicare and Medicaid Services.

In most states in the U.S., insurers are bound by law to cover drugs for life-threatening illnesses, cancer in particular, and Medicare is similarly limited in its ability to control rising spending on cancer drugs, as Bach published in the New England Journal of Medicine in February 2009. Cases where coverage is denied attract media attention, and so a public relations threat also looms, Bach points out. Discussions about value vs. cost are common, but in reality those are “completely academic,” Bach said.

Five years ago, no one would have priced at this level, he said, but now that some companies have broken the path to the six-figure ballpark, the pricing is not surprising. “This is essentially a question of corporate chutzpah,” Bach maintained.

Ultra premium pricing came into play with the introduction of specialty treatments for genetic diseases, such as Genzyme’s Gaucher’s disease therapy Cerezyme at $250,000/year on average, but those have ultra small patient populations and thus do not represent huge total burdens on payers. Specialty drugs are now the fastest growing segment of drug spend and are projected to account for 40% of total U.S drug spend by 2014, according to pharmacy benefits manager Express Scripts (Also see "Express Scripts Reports Specialty Drug Spending Steadily Rising, And Pipelines Show More To Come" - Pink Sheet, 1 April, 2011.).

So far most of the highest cost cancer drugs are for small total populations, possibly molecularly identified. In delivering a treatment with a higher likelihood of response to a specifically selected population they echo the ultra orphan drugs, and share the pricing rationale.

That could become the norm if industry pipelines deliver. According to Medco’s 2011 drug trend report, 38 genetic tests for oncology have reached the market since 2006. And the oncology pipeline includes about 300 candidates in Phase II or later stages that have potential for testing against a biomarker ([A#001106250005]).

Prices in oncology have been rising faster than in other indications, according to the Medco report.

The Value Proposition

Xalkori was cleared under the accelerated approval process by FDA, based on a Phase I expansion and a Phase II trial, both single-arm. One study, in 136 patients, the median duration of response was 41.9 weeks and the objective response rate was 50%. The median duration of treatment was 22 weeks. In the second trial, in 119 patients, the median duration of response was 48.1 weeks and the ORR was 61%. The median duration of treatment was 32 weeks

The data from those trials continues to mature. At the American Society of Clinical Oncology meeting in June, Pfizer presented updated data showing an overall survival rate of 77% at one year and 64% at two years. The company is conducting two Phase III randomized NSCLC trials, which will serve as the post-marketing confirmatory support for the accelerated approval, but no data are available as yet.

The medians indicate it is not unlikely patients will live for a year. At the Aug. 30 press conference, Pfizer highlighted a patient who had been successfully treated for over a year. Asked about duration of treatment, Senior VP of Clinical Development and Medical Affairs Mace Rothenberg said “there is no stop time for this as long as they are benefiting from this.”

Company execs have pointed out that the patient population is small, which limits the costs.

From 1% to 7% of the NSCLC patient population test positive for the mutation and will be eligible to take Xalkori.

In contrast to the general NSCLC population, those testing positive for the mutation tend to be non-smokers and younger. That means more would be covered by private commercial plans, as opposed to the majority of patients with the disease, who would be covered by Medicare, commented Kantar Health VP Richard Wagner.

Accelerated approvals get drugs to patients in need faster, but present a challenge for some payers in terms of measuring value vs. cost.

The Xalkori indication in labeling notes explicitly: “This indication is based on response rate. There are no data available demonstrating improvement in patient reported outcomes or survival with Xalkori.”

Without that data, reimbursement decisions can be difficult. Both Cannon and Marissa Schlaiffer, director of pharmacy at the Academy of Managed Care Pharmacy, noted that despite the small population, the high costs can have an impact in terms of insurance premiums and cost sharing.

“At the end of the day, we pay for it – we the employer, the employed, and we the taxpayer – in premium increases,” Bach said.

There is a “long, long list” of therapies that affect response rates and progression, but not survival, and which in fact can worsen quality of life, said Bach. “We are surprised by the results all the time. We do randomized trials because we have shown so many times that early indications are wrong,” he said.

However, Cannon also points out that on the other hand, the drug is targeted to patients with a particular genetic mutation: “I don’t know that we will ever have comfort with a treatment that [costs] over $100,000 a year, but that helps,” he said.

Payers are expected to require prior authorization for Xalkori prescriptions based on FDA’s stipulation that patients should test positive for the ALK mutation.

Pathway Programs Target Lung Cancer

In response to the high cost of cancer care, some payers have been experimenting with pathway programs that steer physicians toward particular evidence-based regimens (Also see "What New Cancer Pathway Programs Mean For The Drug Industry" - In Vivo, 1 May, 2011.).

These programs move beyond prior authorization requirements toward step therapy protocols, reimbursement based on FDA labeling and compendia listings. Pathway programs make the most sense in disease areas where many different therapies are available and for larger patient populations. In some programs, providers may be rewarded for sticking to particular regimens.

And lung cancer is one of the tumor types payers typically target in pathway programs, said Wagner. As a subset of this population, treatment of ALK-positive patients would draw scrutiny.

“If you have a lot of options, then you can put together a pathway program that compares and directs treatment to the best options defined by pathway. A comprehensive lung cancer program considers all segments,” he said.

Some pathway programs limit the total number of therapies, which is spurring more conversations between patients and providers about the benefits versus costs and side effects of particular therapies, said Cannon.

“As pathway programs disseminate, more and more of these discussions take place. It appears to me that oncologists are more comfortable having discussions and that more patients are opting not to continue therapy,” he said.

By Emily Hayes

Pfizer’s Xalkori Joins The Six-Figure Oncology Drug Club

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