Novo Nordisk AS says it won’t seek the highest price it believes its next-generation insulins, the ultra-long-acting Degludec and Degludec Plus, could command on the basis of health economic data alone.

The Danish company filed for regulatory approval of both therapies in Europe and the United States in late September. "We could probably justify a higher price premium [for Degludec] than in reality we can ask for," acknowledged EVP & Chief Scientific Officer Mads Krogsgaard Thomsen in a Sept. 28 phone call. He explained that "the financial crisis and the focus on short-term financial optimization rather than long-term societal costs" means Novo won't push its luck.

It's right not to. Even without the financial crisis, insulin pricing is becoming a hot issue as governments and payers try to cut the costs of treating diabetes, whose worldwide prevalence has doubled since 1980, according to a study in The Lancet.

The pricing pressure exists even though the value proposition of relatively low-cost insulin still is significantly better than that of many cancer drugs, and even though regular insulin use is shown to lead to hefty longer-term cost savings as complications and hospitalization are avoided.

Older Insulins: Cheaper, And Not That Much Less Effective

The bottom line is that payers in Europe are increasingly prepared to prioritize products that are good enough – rather than the best – if they are available at a significantly lower price. And the benefits of newer insulins, including Degludec, are incremental, rather than revolutionary: it's more important from a disease-control and cost-saving point of view that type 2 diabetes patients take insulin at all, than that they take any particular variety thereof.

This point – that older insulins are cheaper and not that much less effective – was laid out in a study published in the BMJ Open on Sept. 22. It declared that the U.K. National Health Service could have saved more than £600 million ($930 million) between 2000 and 2009 if it had prescribed human instead of analog insulins.

The Germans reached a similar conclusion in 2006, when they forced manufacturers to lower the price of analog insulins to the level of human insulin, or face de-listing.

The BMJ study wasn't perfect, however. Many – including the major manufacturers of modern insulins –would dispute the size and value of analogs' advantages over the human version. "Analog insulins are associated with a significantly lower incidence of hypoglycemia," noted Sanofi SA in an emailed statement, concluding that the BMJ Open analysis was "unbalanced and misrepresentative."

Both Sanofi and Eli Lilly & Co. believed the study to be too narrowly focused on the cost of drugs, rather than the overall cost of treatment.

Still, by underscoring the high cost of insulin therapy, and by referencing four recent studies that question the broader safety of insulin therapy, the BMJ Open study reached a conclusion that nevertheless "should scare the daylights out of the major insulin companies," according to Diabetic Investor publisher David Kliff. Indeed, NICE, the cost-watchdog for England and Wales, was quick to jump on the bandwagon, issuing a Sept. 26 press release reminding the world that it actually recommends using human insulin treatment as first-line, and that had those guidelines been followed, those millions would have been saved. Canada's Health Technology Assessment agency also recommends human insulin first line, with analogs only in those patients with significant hypoglycemia.

The U.S. health care system isn't as overtly cost-focused as those in Europe, but according to Kliff, it would be "foolish" to believe that these studies will not impact decisions made in the world's largest market.

Can The Newest Insulins Win Premium Pricing?

If some payers still aren't convinced as to the clinical added value of analog or 'modern' insulins (the oldest of which have been around for 15 years) and still recommend versions first introduced in the 1980s, what hope is there for the futuristic Degludec, a next-next-next generation version of this hormone first discovered in 1921?

Thomsen claimed that the additional benefit the Degludec range brings over older insulins like Novomix (a mix of rapid- and intermediate-acting insulin) is "of greater magnitude than when we went from human to analog insulin." The question is, how much greater? Novo management itself hinted back in 2007 that Degludec may represent the last round of innovation in injectable insulin, effectively saying that the field has reached the point where it can't get any better (Also see "Novo Nordisk: Riding High on Diabetes" - In Vivo, 1 June, 2007.).

The remaining challenges are education, adherence, convenience and delivery – all of the things that Sanofi, lacking a new generation of insulin in its pipeline and seeking to shore up its market-leading Lantus (glargine) brand of basal insulin, is pushing via an integrated service strategy ([A#2010200005]).

In the meantime, though, Novo has a host of health economic outcome research supporting Degludec and DegludecPlus (combination with rapid-acting insulin) carried out since Phase II, "including well-defined, societally-relevant measures of cost and quality of life," said Thomsen. The Phase IIIa trials supporting the recent filings of Degludec and DegludecPlus were the field's largest ever, according to Novo, with almost 10,000 patients in total.

The company will use its outcomes data to justify a premium price, even if it's "a more modest" premium than the health economic research justifies, Thomsen explained. It's a sacrifice worth making, he continued, to get a positive recommendation from cost-effectiveness bodies like NICE and thus to ensure the new insulin gains traction.

Novo may still have to work hard to prove Degludec is worth even a modest premium over existing insulins. The company has data suggesting that Degludec reduces the incidence of night-time hypoglycemic events compared to Lantus, but this may not be enough to convince everyone (and Sanofi, as might be expected, has disputed the fairness of the study in question.)

Degludec's flexible dosing and long half-life will help – it can be given at any time of day, and has a long, Lantus-beating half-life of more than 24 hours. Novo also has leveraged its recognized device expertise to create a user-friendly FlexTouch pre-filled delivery device for Degludec – a device it has already market-tested on other products since 2010.

Insulin Pricing Battles Wage Among Lower Ranks

Novo's remarks on pricing arguably represent its opening hand in payer negotiations that will occur against a backdrop of already-raging pricing battles in the ranks of less innovative insulins.

Lilly in particular is attempting to squeeze whatever it can from a market-trailing franchise: when Novo withdrew its human insulins from the U.K. market in 2010, Lilly lowered the price of its human insulins to secure Novo's patients.

Lilly, whose diabetes pipeline is considered to be weaker than Sanofi's and Novo's, is likely to continue to use the price tool to win converts. The company said it "continually evaluates its pricing structures and market dynamics to ensure its medicines remain both competitively priced and accessible to those who use them." Meanwhile, Lantus goes off patent in 2015, after which biosimilars (including one from Lilly that's approaching Phase III) could start to pull down the price not just of Lantus, but of other basal insulins including Novo's own Levemir. Biosimilar insulin may not be the most attractive target for large-molecule copycats, but several players still consider it a significant opportunity, whether to build up a broader diabetes portfolio, and/or to tap emerging market dynamics (Also see "Biosimilar Insulin Worth The Effort? For Some, Maybe" - Pink Sheet, 25 July, 2011.).

The overwhelming trend in insulin pricing in downwards; the BMJ Open study reported declining human and analog insulin prices in the U.K. since 2004 (though the 27% drop in human insulin price-per-ml exceeded the 7% fall in analog prices). Diabetic Investor's Kliff refers in a Sept. 22 post to a "cost-cutting freight train that has already decimated the glucose monitoring market and now is headed towards the insulin market."

Against this backdrop, Novo's pricing caution as it seeks to maximize uptake of its latest insulin innovation is understandable. The question is whether it will get a premium at all.

By Melanie Senior

Pricing Under The Spotlight As Novo Files Next-Generation Insulins

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