Kudos to the commercial team at Regeneron for understanding that reimbursement is an environment. That is: Regeneron doesn’t think that payers are the only ones who matter in the reimbursement decision.
Just before Thanksgiving, the company took the unusual step of announcing it would price its newly approved wet AMD treatment Eylea at a discount to the standard-of-care Lucentis. “We feel the price is fair to physicians; it is also fair to Medicare,” SVP of commercial Bob Terifay noted in a November 18th conference call outlining Eylea’s pricing strategy.
That price is $1850 an injection — $100 cheaper than competitor Roche/Genentech’s Lucentis, but still significantly more than microdoses of Avastin used off-label.
As the smart folks at “The RPM Report” note here (subscription required), in a buy-and-bill model this pricing decision, which is a financial disincentive to retinal specialists, plays specifically to the payers, particularly Medicare.
But the company hasn’t forsaken the physician constituency. Without specifically citing Dendreon, Terifay noted in an interview that Regeneron had studied what had gone wrong with its launch. In a model where docs have to first buy the drug outright, the “real challenge” he says “is to appropriately protect physicians against the risk that they won’t be reimbursed” for Eylea.
Thus, at launch it’s put in place what it calls a comprehensive program, Eylea4U, with a reimbursement hotline designed to help office staff triage patients and determine their eligibility for the medicine, a process fast enough, Terifay said, “so that physicians could have confidence that a particular patient is eligible for the product if [he/she] wanted to use it.”
That reassurance is particularly important because Eylea won’t have a permanent reimbursement code – a so-called J code – for billing purposes until 2013.
I give Regeneron a lot of credit for these moves. Still it may not be enough. In a note issued December 6, Leerink analyst Joshua Schwimmer, who is bullish on the Eylea opportunity, recapped commentary from three high volume retinal specialists all of whom “expressed caution on reimbursement,” and the likelihood of a “go-slow” approach.
Certainly Eylea’s uptake wasn’t helped by data released Monday December 5 showing the primary advantage to the Regeneron drug – more convenient, patient friendly dosing — drops to an incremental 0.5 fewer injections (on average) over Lucentis in the second year of treatment.
Without a meaningful dosing advantage, Regeneron will likely have to compete on price, a message the company isn’t keen to highlight. Instead, says Terifay, “the message we have to promote is that we offer value and that starts with reducing the challenges of monthly office visits and injections for patients and physicians.”
And then there’s the financial burden to the patients. Even though it’s cheaper than Lucentis, Eylea’s price tag requires significantly more monetary outlay from patients than off-label Avastin. Meanwhile, Regeneron’s co-pay assistance program will help patients in commercial plans but not the majority of patients, who are using Medicare to pay for their wet-AMD prescription. And in Medicare programs, co-pay coupons and discounts issued directly by the drug sponsor are considered a form of kick-back and thus illegal.
Furthermore, busy doctors and an older patient population may not have the patience to work the only other co-pay alternative – third-party co-pay foundations like the Chronic Disease Fund, especially if there’s a real financial worry about being on the hook for an expensive treatment.
Far easier to spend the $50 dollars and default to Avastin.
All of which means Eylea may have to forgo the broader AMD market, and settle for sharing the premium market where the comparator is the – for now – more expensive Lucentis. And while Regeneron has said it isn’t interested in discounting, who knows what strategy Roche/Genentech might take to woo payers to pursue better access for their product in the period when Eylea is still without a J-code?
Editor’s note 12/8: This post has been updated to reflect the pricing of Eylea relative to Lucentis.