A draft report aimed at facilitating payer negotiations on the price of the PCSK9 inhibitor drugs for cholesterol recommends dramatic discounts in the list prices of Amgen Inc.’s Repatha and Sanofi and Regeneron Pharmaceuticals Inc.’s Praluent based on a cost-effectiveness review and a novel US budget impact analysis.

The cost-effectiveness analysis indicates the price that “best represents the overall benefits these drugs may bring to patients” would be up to $4,811 per year, about 67% less than the list prices for the drugs, according to the draft report, which was released for public comment by the Institute for Clinical and Economic Review on Sept. 8.

The report also suggests that in order for the US health care system to afford treating an estimated 2.6 million patients, the cost for the drugs should be even lower, only $2,711 per year, or as much as 85% below list prices. Repatha (evolocumab) has a wholesale acquisition cost of $14,100 per year, and the annual WAC for Praluent (alirocumab) is $14,600.

The $2,177 figure is “the alarm bell price” – ICER's Steven Pearson

After winning FDA approval in July and August, Praluent and Repatha are launching at essentially the same time for the same basic indications at roughly the same price, and payers are poised to use the competition between them to get the deepest discounts possible ([A#00150831010]).

ICER is an independent, non-profit health care research organization focused on conducting comparative value and price assessments for prescription drugs. It previously released a widely read analysis addressing optimal pricing for hepatitis C treatments including Gilead Sciences Inc.’s Harvoni (sofosbuvir/ledipasvir) ([A#14141120002]).

ICER cites “commonly-accepted” cost-effectiveness thresholds of $100,000 per quality-adjusted life year (QALY) and $150,000 per QALY in the PCSK9 analysis. QALY is a measure of health improvement attributable to a medical intervention, taking into account both the quality of life and overall survival benefits. Treatments that cost less than or up to the $100,000 or $150,000 thresholds could be considered a better value than those costing more.

At current list prices, the incremental cost-effectiveness ratios for PCSK9 drugs range from $500,000 per QALY to $687,000 per QALY, depending on the patient subgroup, the report estimates. To meet the $100,000 and $150,000 thresholds, PCSK9 pricing should be between $3,615 and $4,811, respectively, it concludes.

Report’s Next Steps

Public comments on the draft report are due Sept. 22.
A final version will be released following consideration of comments and discussions at a public meeting of ICER’s New England Comparative Effectiveness Public Advisory Council (CEPAC) on Oct. 27.
The meeting also will address strategies to implement “evidence-based recommendations that support effective coverage and use of PCSK9 inhibitors,” ICER said. CEPAC is a core program within ICER.

To date, US payers have not explicitly referenced QALY measures when considering coverage policy to the extent they are used in Europe. The approach generally is disliked by drug firms and patient groups, who worry it puts too much of an emphasis on the cost of a treatment and not enough on its clinical benefits. However, the emergence of high-cost specialty drugs has refocused interest in QALY measures ([A#14140826005]).

The cost-effectiveness assessment includes projected cost offsets from treatment, such as reductions in spending on hospitalization, but those values may change when outcomes data become available for the PCSK9 drugs beginning in 2017. “It could be that [the outcomes data] line up very closely to what the models predict or it could be they’re slightly off … So we’ll have to keep our eyes firmly on this space and make sure that, as necessary, we come back and update things,” ICER President Steven Pearson said in an interview.

Budget Impact Analysis

ICER’s budget impact analysis suggests that a price of $2,177-a-year for each drug would help ensure that Repatha and Praluent do not cause overall US health care expenditures to rise faster than the economy, which is defined by ICER as exceeding the growth of the gross domestic product plus 1%.

“I probably shouldn’t comment on how likely it is that anybody would reach that price,” Pearson acknowledged in an interview. The $2,177 figure is “the alarm bell price. If it’s going to be more than that, we feel that’s a signal that manufacturers and insurers and doctor’s groups and others may need to sit down and sort out some ways to make the drugs more affordable.”

ICER estimates 2.6 million patients would have access to the drugs after five years on the market and that level would represent peak uptake for the treatments. The total includes 453,443 patients with familial hypercholesterolemia, 64,948 patients with cardiovascular disease who are statin intolerant, and 1,817,788 with cardiovascular disease who have failed to reach LDL cholesterol goals.

However, the projection does not take into account payer efforts to manage access, so actual uptake might be lower, Pearson pointed out.

A $904M Threshold For New Drug Costs

ICER’s approach to evaluating and addressing the impact of drugs on the US health care budget involves setting an annual threshold for the amount a new drug could cost to keep overall health care expenditures from rising faster than the gross domestic product plus 1%.

The GDP plus 1% benchmark is in line with the Affordable Care Act’s threshold for growth in Medicare spending that could trigger cost cutting by an Independent Payment Advisory Board. (The concept of an IPAB, which could fast-track Medicare payment reductions through Congress, is a deeply unpopular provision of the law).

For the ICER analysis, the five-year annualized potential budget impact threshold that should trigger policy actions to manage affordability is calculated at $904m per year for each PCSK9 inhibitor. The $2,711 annual cost benchmark would keep the drugs within that $904m limit.

“If it’s over that $904m … we may have to think hard about patient eligibility or possibly stretching out the payments” or “lowering the price,” Pearson suggested. The budget impact analysis “is a way to keep us honest about the budget in a way that is very real to the health system but isn’t always fully captured when you’re looking at the long-term cost-effectiveness.”

Addressing whether the approach rewards innovation, Pearson said “everyone wants to help produce the incentives for new treatments that make a difference for patients. But the question is not whether there is a reward, it’s how much and how do we scale it? And to scale it to how many patients benefit seems like a good place to start, it certainly is part of what you should consider.”

Early Reactions

Pharmacy benefit manager Express Scripts Holding Co. expressed support for the PCSK9 analysis in a statement. “We appreciate the work done by ICER and welcome its analysis. These data will help us as we consider the long-term cost-effectiveness of this new class of drugs,” a spokesman said in an email.

But other reactions were more negative. American Enterprise Institute scholar Joseph Antos took issue with the calculations in the report in a Sept. 9 blog post.

“The ICER study assumes that 2.6 million patients would receive PCSK9 therapy for one or more years over a 5-year period, resulting in a net increase in health spending of $21.6bn per year. That is less than some reports claiming that the new drugs could cost as much as $100 to $150bn a year, but the ICER estimate is still an overstatement,” he said.

Antos also predicted the report will reinvigorate interest in government price controls on prescription drugs. “The ICER report arrives just as Congress is returning from summer vacation, and it will renew the claims that the government can get a better price. Indeed, the government can get a better price, but that would discourage research pharmaceutical companies from investing the hundreds of millions of dollars and years of work necessary to bring innovative new treatments to market.”

Drug industry stakeholders also challenged the methods and conclusions of the report. Amgen said in an emailed statement that it “welcomes a balanced discussion of value, but we disagree with ICER’s methodology, assumptions, and preliminary conclusions, none of which have undergone public comment or formal peer-review.”

The company adds “we are concerned that ICER’s review does not place value on addressing a significant unmet medical need, and its short-term budgetary focus will be used to create access barriers to innovative medicines like Repatha for appropriate patients.”

Sanofi and Regeneron said in a joint statement that “we need to better understand the ICER analysis, particularly their model and methodology, as we performed our own cost-effectiveness model to help us determine the appropriate price. These calculations are complex and a robust and open peer-review process is essential.”

The Pharmaceutical Research and Manufacturers of America expressed similar concerns, maintaining the ICER conclusions are “based on untested, short-term budget impact thresholds that do not reflect overall health care value and are biased against new innovative medicines. If properly structured, value assessment tools can help private insurers evaluate available evidence for new medicines and empower patient choices, but if tools are misapplied they can harm patients by preventing access to needed medicines."

PCSK9 List Price Discounts Of 67% To 85% Suggested By ICER Analysis

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