That was the message from Citi’s healthcare conference held in New York back in February. It’s not a new message, but as with any information that’s vital to a sector’s future, it has to be told again and again.
So just how ugly is this ugly truth: well, really ugly if you’re GSK with a payor-unfriendly portfolio including the likes of primary care drug Advair (class competition from Symbicort) and late-stage pipeline candidates like diabetes me-too Syncria. No wonder GSK’s comments on the EU reimbursement environment in particular were “more negative than peers’”, writes Citi analyst Andrew Baum. Some of this was playing safe to avoid missing expectations, as GSK did in its last quarter results; most of it is just reality.
Things aren’t, apparently, so ugly if you’re Roche: Baum claims the cancer specialist suggested there have even been signs of improvement on the European pricing front since last year. But it’s all relative: that optimism just reflects a slower rate of price decrease.
By and large, writes Baum, “company momentum to build the value proposition for their products is poor.” And that will matter increasingly as pricing and access pressures in the EU worsen, and as the US enters a “deflationary pricing environment” in the second half of this decade.
So to the good and the bad: the good is that Citi expects new drug approval rates to improve over the next five years as R&D productivity increases. ”We anticipate a material increase in the number of NCEs approved per annum,” writes Baum. But this happy picture is tainted by the bad: falling peak sales as a result of therapeutic crowding.
In other words, payors ain’t gonna pay premium prices for all of the 60-odd VEGF small molecules in development. Look out Astellas and AVEO with your Phase III tivozanib, then — a message highlighted in Real Endpoints’ June 14 webinar outlining the reimbursement take-homes from ASCO and ISPOR. (Click here if you’d like to hear a replay and download the slides.)
Regardless of what happens to Obamacare before the US Supreme Court later this month, biopharma firms need to not only take home these reimbursement messages, but unpack them and wear them too. Infinity halted two mid-stage cancer trials on Friday because of lack of efficacy: more firms need to consider doing the same thing, at a similar stage, because of lack of cost-effectiveness.
While pharma gets to grip with the new, ugly reality, payors have their work cut out, too: figuring out how to fund the growing treatment armamentarium. We at Real Endpoints are trying to help: Cancer pathways show promise, palliative care is worth a closer look, and risk-shares aren’t just for Europeans.
The beauty treatments needed to make health care reimbursement a prettier place are varied and multiple. And they likely can’t all be applied at once. We welcome your suggestions and comments on what’s most important.