While the National Institute for health and Care Excellence (NICE) approved Novartis’ Kymriah for children with R/R B-cell acute lymphoblastic leukemia at the beginning of September, the regulator rejected the treatment for use in adults with refractory/relapsed (R/R) diffuse large B-cell lymphoma (DLBCL) due to concerns as to the cost effectiveness of the drug.
Nevertheless, while traditionally the US had led the development of CAR T therapies, China recently took the lead. Significantly, the rapidly expanding potential superpower contributed 126 clinical trials in the second quarter of 2017, compared to the US’ 121 during the same period. However, despite coming in third the UK, trailed far behind,having conducting just nine clinical trials looking into CAR T therapies over the same duration.
Nevertheless lack of access to treatments in the UK could further limit Britain’s potential and act as an additional hindrance to the development of these treatments. Furthermore the lack of development could in turn limit patient access to innovative therapies through clinical trials.
As expanded upon by Dr Edit Kovalcsik, Managing Analyst at GlobalData: “Beyond access to clinical trials, the uncertainty of NHS patients to receive the best cancer treatment needs to be addressed. Exploitation of digital technology and artificial intelligence in the analysis of the NHS electronic health records could increase effectiveness of drug development and as a result reduce the cost of breakthrough medicine.”
Evelyn Warner, Senior Associate in Valuations Advisory at Duff & Phelps offered exclusive insight into NICE’s decision making: Novartis recently announced its intention to provide its new CAR-T therapy, Kymriah, to patients with acute lymphoblastic leukaemia for £282,000 each, and this price represents a steep discount to the U.S. list price of $450,000. NICE’s rejection of Gilead’s Yescarta, a similar product for diffuse large B-cell lymphoma, no doubt cast a shadow on negotiations between Novartis and the NHS, encouraging the drug maker to accept a price that would be palatable to the cost-effectiveness watchdog. Though NICE ultimately rejected the price, it is encouraging to see a drug company negotiate a deal with a healthcare provider that would improve patient access in exchange for what it feels is appropriate compensation for an innovative and clearly effective technology. However, prices on the European market may be more flexible and companies more willing to accept lower profit margins than in the U.S.
Drug makers generally expect to make the bulk of revenues from the U.S. market such that for a drug sold in the EU, value beyond recouping the cost of goods sold might be seen as additional upside. This trend is tied to the power dynamic between European buyers and pharmaceutical companies as sellers. Europe has centralised pricing and reimbursement systems that maximise buyer power, allowing healthcare systems to drive hard bargains such that prices are usually set much lower. In contrast, though the U.S. government is the world’s single largest buyer, its healthcare system is fragmented without much leverage relative to its European counterparts.
A multifaceted debate about pricing in Europe and the U.S. is ongoing, and while lower prices in Europe have been the status quo, there are signs this may shift. Vertex is testing the limits of European bargaining power with its cystic fibrosis drug Orkambi. In 2017, the company projected annual sales of €1.3bn largely based on timely reimbursement by certain European countries. While the drug is reimbursable in seven of the ten European countries that spent the most on healthcare per capita in 2016, including Germany, the Netherlands and Ireland, Orkambi is unavailable in France, Belgium and the UK and consequently at the centre of some ugly disputes.
Vertex rejected France’s demand for an 80.0% discount and has since discontinued trials, warning patients about the potential unavailability of the drug in February 2018. In the UK, discussions between NICE and Vertex reached another impasse in July this year: NICE’s offer of £500.0 million for 5 years and £1.0bn for 10 years (a discount of 30.0%) remains on the table, and though Vertex seems willing to engage, the company has yet to make a counteroffer. Patient pressure to reach a deal is mounting, but neither party has indicated it will make further concessions. The outcome of this battle may portend the results of future negotiations between pharmaceutical companies and European payers.