The Drug Pipeline 2017: What’s in it and why it matters

Today’s pipeline for new drugs bears witness to an era of research characterized by breakthrough therapies for relatively small patient populations. In most cases, these therapies dramatically prolong and improve the quality of life.

Pricing for these drugs can also be described as “breakthrough,” and put growing pressure on pooling and stop-loss mechanisms, as well as cost-management measures for traditional drugs. The pipeline also includes therapies for more common conditions: one for eczema and for migraine headaches. Both are first-in-class and clinical trials show promising results that can translate into more productive workforces. However, like the other drugs in the pipeline, they are priced significantly higher than the average prescription medication—and underscore the value of a rigorous prior authorization process to ensure appropriate use.

This article summarizes which new therapies are anticipated to have an impact on private drug plans. While most will put pressure on cost management, a handful of generic launches—most notably in asthma treatment—could provide some measure of relief.

New drugs for larger populations

Eucrisa for eczema

Ten to 20 per cent of people suffer from a chronic skin condition called eczema, or atopic dermatitis, which is prone to flareups that can require treatment. For nine out of 10 of these people, the eczema is classified as mild to moderate. Eucrisa is the first novel prescription ointment to enter the scene in more than 10 years—and may cost significantly more than predecessor prescription therapies.

Launched in the U.S. early this year, we anticipate regulatory approval and a market launch in Canada in 2018. The first line of therapy for mild to moderate cases of eczema consists of topical corticosteroids, which typically cost no more than $0.25 per gram depending on potency. These steroid ointments can, however, thin the skin with overuse. The second line of therapy uses immunomodulators (Elidel and Protopic), which do not contain steroids, and cost between $2 and $3 per gram.

Eucrisa is also steroid-free, and stands apart because it seeks to inhibit the enzyme that is linked to inflammation in the body, including in the skin. U.S. pricing has been set at $9.67 per gram ($580 for a 60-gram tube), which translates to more than $12 per gram in Canadian dollars ($720 per tube). Final Canadian pricing may be lower, however, following review by Canada’s Patented Medicine Prices Review Board (PMPRB).

Psoriasis is a possible secondary indication for Eucrisa, with phase 2 clinical research underway. While pricing would again be well ahead of existing topical treatments, its superior efficacy could position it as a cost-effective alternative to biologics, which cost tens of thousands of dollars annually.

Biologic “blockbuster” for migraine?

At least eight per cent of Canadians (2.9 million) experience migraine headaches, a prevalence comparable to diabetes (nine per cent). Worldwide, prevalence is estimated to be 14%, and migraine is one of the leading causes of disability.

With these numbers in mind, the emergence of new therapies that can markedly reduce the frequency and severity of the condition could have a significant impact—not only in terms of spending by private drug plans, but also in terms of reduced disability claims and improved productivity in the workplace. A new class of biologic drugs promises to make such an impact, and market analysts point to the potential for a “blockbuster” impact on drug-plan budgets.

Currently four pharmaceutical manufacturers are at various stages of development. Two of them (a Novartis-Amgen partnership, and TEVA) are expected to apply for regulatory approval in the U.S. by the end of this year. Pricing information has not yet been released; based on clinical trials for episodic migraines, treatment consists of one injection per month for six months.

New drugs for small populations

Ocaliva for liver disease

Health Canada is assessing Ocaliva, a new oral drug for liver disease, for two indications: the first, primary biliary cholangitis (PBC), has a relatively small potential patient base (approximately 10,000 in Canada) and therefore the drug will not likely have a widespread impact on private drug plans. Ocaliva will also likely be approved as a second line of therapy, for those who do not get adequate results or cannot tolerate the only other medication currently used to treat PBC (available for about 20 years).

Approval of Ocaliva for the treatment of PBC is expected by summer this year. Pricing is still to be announced, though is expected to be about $75,000 annually. The second indication—for nonalcoholic steatohepatitis (NASH)—is prevalent in two to three per cent of the general population. That translates into a potential pool of 1.1 million Canadians.

Moreover, Ocaliva will be the first treatment available for this condition, which can lead to cirrhosis and liver cancer. Recommended dosages to treat NASH will be up to 10 times higher than dosages to treat PBC; however, this does not mean that pricing will increase tenfold. Details on pricing have not been released, and Health Canada approval for Ocaliva to treat NASH is expected in 2018.

Roxadustat for chronic kidney disease

People who require dialysis for chronic kidney disease (CKD) often suffer from anemia, which can negatively affect productivity. Roxadustat will be the first oral medication specifically indicated to treat chronic anemia associated with end-stage CKD. Until now, treatments for anemia associated with CKD were limited to infusions of drugs such as Eprex.

In Canada, approximately 22,000 people with CKD require dialysis and are the likeliest candidates for this medication. Drug pricing is still to be determined, though anticipated to be similar to pricing for current injection medications, at about $500 per dose. As a chronic medication, Roxadustat will likely be taken three times a week for the first eight weeks, then once monthly for maintenance treatment. Estimated costs for the first year of treatment would be approximately $17,000 to $18,000, with an ongoing annual cost of $6,000. Health Canada approval is anticipated in 2018.

Epidiolex for epilepsy, possible off-label use?

Epidiolex is an interesting entry in the drug pipeline in that it is a form of medical marijuana, yet the manufacturer has opted to go through the approval pathway for prescription drugs in order to obtain orphan drug status. The drug manufacturer is seeking approval for several rare disorders associated with epilepsy.

While prevalence data is not available for Canada, it’s estimated that the potential market would be 12,000 to 15,000 Canadians. We expect the drug, which is swallowed in liquid format, will be approved in Canada in 2018, at an anticipated cost of between $3,000 and $6,500 per month. When prescribed appropriately, Epidiolex should not have a notable effect on drug-plan spend. However, private plans need to be alert to the risk of off-label use.

With the level of public interest in medical marijuana in Canada today, the drug will likely attract attention when launched. This may in turn put pressure on physicians to prescribe it for other, far more prevalent conditions. For that reason, prior authorization is recommended as a tool to control utilization.

New drugs for extremely small populations

Tagrisso for lung cancer

Tagrisso is representative of the growing number of cancer drugs available in pill format—which means that private drug plans, rather than hospital budgets, could be picking up the costs. In the case of this drug for lung cancer, that comes to approximately $97,000 for a typical course of treatment. The estimated patient population in Canada is only about 1,000, which certainly mitigates its potential impact on private plans.

Tagrisso is also a prime example of personalized medicine, as it is prescribed only when companion diagnostic testing determines it is appropriate for the patient. This drug is the first to target the tumours of metastatic non-small cell lung cancer that test positive for two specific genetic mutations. Currently the public purse picks up the cost for the diagnostic testing, since it requires collecting samples of tumour tissue by biopsy.

Health Canada approved Tagrisso in July 2016 and the drug is currently being assessed by the pan-Canadian Oncology Drug Review, the advisory board which makes reimbursement recommendations for provincial drug plans.

Spinraza for spinal muscular atrophy

Spinal muscular atrophy is one of the leading genetic causes of death among infants—and until the development of Spinraza, recently submitted to Health Canada for approval, treatment has been non-existent. It is a rare disease, occurring in 1 in every 6,000 births, and those who live to adulthood suffer from a range of mobility restrictions, including the inability to stand or walk. Spinraza’s recent approval in the U.S. generated significant media attention—but not just for its impact on patients, which quoted physicians have described as “transformative.” American patients and payers alike are also reeling over the cost: US$750,000 for the initial year of therapy, and US$375,000 every year after that (which is approximately $980,000 and $490,000, respectively, in Canadian dollars).

The drug must be administered by spinal injection, which is possible on an outpatient basis with the use of injection pumps. Therefore, it’s unclear whether the first payer will be public (if the drug is administered in hospitals) or private (if administered in private, non-hospital settings) here in Canada. We can expect to hear much more about this medication as approval approaches, likely by the end of this year. See Chart 1.

Biosimilars

A handful of biosimilar drugs, which are biologic drugs that come to market following the patent expiry of an original biologic, seek to establish footholds in Canada.

List prices for biosimilars are generally 20 to 30 per cent less than prices for the originator biologic, and public payers typically negotiate additional discounts. In Canada, the pan-Canadian Pharmaceutical Alliance performs such negotiations on behalf of the provinces, and its guidelines require manufacturers of biosimilars to publicize negotiated discounts so that other payers, including private drug plans, can benefit. Most recently Brensys, a biosimilar for Enbrel, was launched in September 2016. It treats rheumatoid arthritis and ankylosing spondylitis.

A summary of other biosimilars known to be near regulatory approval in Canada is summarized in Table 2, keeping in mind that patent litigation can affect forecasted launches. See Chart 2.

Generics

Private drug plans will likely benefit from at least a dozen launches of generic drugs this year, though patent litigation may cause delays for some of these entries. Of particular note is the long-anticipated generic version of the Advair Diskus medical device, which delivers medication by inhalation for asthma sufferers.

More than three million Canadians have been diagnosed with asthma and regularly use inhalers to manage their condition. The drug patent for this product expired several years ago, but patents on the device have delayed generic entry. One generic manufacturer with a Canadian presence, TEVA, has worked around the challenges of duplicating the device by creating its own. While this means its product is technically not a generic and therefore not interchangeable with Advair, pricing is still expected to be lower.

Meanwhile another Canadian manufacturer, Mylan, anticipates U.S. regulatory approval for its interchangeable generic version of Advair by the end of March 2017. If that occurs, approval in Canada is likely not far behind. See Chart 3.

Conclusion

Without exception, today’s pipeline drugs carry higher price tags compared to previous years. While launches of generics should relieve some of the pressure on drug plans, their impact will be far less than several years ago, during the heyday of generic price reform and expired patents for highvolume drugs.

At the same time, specialty drugs are creeping into high-utilization categories, such as treatments for migraine. And while biosimilars offer savings, their impact will be somewhat muted until they are interchangeable with originator biologics—which will not happen for years, if it happens at all. Last but not least, oncology therapies represent one of the most significant areas of research effort in the pipeline.

As touched upon in this article, the trend is toward individualized cancer therapies using companion diagnostic testing. The net result is a steady escalation in drug plan spend due to increased expenditure on higher-cost specialty drugs—for rare and common, acute and chronic conditions. Plan sponsors and insurance carriers will be under growing pressure to prepare and evolve benefit plans to respond to potential market disruptions.

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