Amgen's Repatha Contract With Harvard Pilgrim Includes A Full Refund

Harvard Pilgrim Chief Medical Officer Michael Sherman said the full warranty behind the agreement is the right kind of deal to balance access and cost.

Amgen Inc. will provide a full refund for the cholesterol-lowering medicine Repatha (evolocumab) if the treatment does not live up to expectations of reducing heart attacks and strokes in a new outcomes-based reimbursement contract with Harvard Pilgrim Health Care.

The companies announced the new outcomes-based reimbursement contract for Repatha, billed as the "first of its kind," after market close May 2.

Under the new contract, Amgen guarantees the health plan and its members will receive a full refund of their cost for the drug if a member is hospitalized for myocardial infarction or stroke after taking Repatha for six months or more and maintaining an appropriate level of compliance on the drug.

"The reason this is getting a lot of attention is because of the warranty nature of the agreement," Chief Medical Officer Michael Sherman said in an interview. "That kind of full refund is the right type of agreement that we're going to need to balance access and cost. It's the first that goes that far."

Harvard Pilgrim has 10 other value-based reimbursement contracts in place, he said, including one with Novartis AG for the heart failure drug Entresto (sacubitril/valsartan) that ties value to hospitalizations. The insurer already had a value-based reimbursement agreement in place with Amgen for Repatha, relying on LDL-cholesterol lowering as a value measure. Under the prior contract, signed in 2015 after Repatha was approved by FDA, Harvard Pilgrim was eligible to receive higher discounts if patients taking the medicine experienced less LDL-lowering than the level seen in clinical trials. (Also see "Amgen's Repatha Pricing Deal With Harvard Pilgrim Hinges On Results, Utilization" - Pink Sheet, 9 Nov, 2015.)

Amgen approached Harvard Pilgrim with the refund offer, according to Sherman, but he said it is an idea payers have been pushing for more broadly for high-priced drugs.

Amgen announced it was offering new value-based contracts, including the refund option, for payers after releasing the first cardiovascular outcomes evidence for the PCSK9 inhibitors, its FOURIER trial. (See sidebar.)

"To the extent companies like Amgen are willing to face the risk, that tends to give us greater confidence and [we] tend to be more likely to cover it – in conjunction with the evidence," Sherman said. "If [the drugs] are priced for success and failure to reach success results in a lower price, it reduces the barrier."

Repatha Preferred Over Praluent

Harvard Pilgrim, in exchange, has agreed to reduce some of the access restrictions for Repatha, including a requirement that patients must first try Merck & Co. Inc.'s Zetia (ezetimibe). Repatha also has a preferred position versus rival Praluent (alirocumab). The insurer still will limit use to patients consistent with the FDA-approved labeling – high-risk patients and those struggling to reach their cholesterol-lowering goals who have tried at least two statins.

"When we have these conversations, it becomes a two-way conversation where we say, 'If the payer is going to reduce access barriers, what can Amgen do?'," said Amgen's Head of Global Health Economics Martin Zagari. "Harvard Pilgrim has agreed to reduce some of the restrictions and onerous barriers to access. Both sides are putting some skin in the game."

Both Repatha and the competing PCSK9 inhibitor, Sanofi/Regeneron Pharmaceuticals Inc.'s Praluent, have struggled to gain coverage for their approved uses to lower cholesterol in high risk patients, despite evidence that they significantly lower LDL-cholesterol below the level seen with statins.

Payer pushback is the major reason the drugs haven't gained much commercial traction, because they are biologics and are priced leaps and bounds above statins, which are now available as generics. One study presented at the American College of Cardiology meeting in March showed that 80% of Repatha and Praluent prescriptions are initially rejected, and more than half are never approved.

Amgen is using the release of the first cardiovascular outcomes data for a PCSK9 as a new opportunity to re-engage with payers on Repatha. The data from the FOURIER trial, presented at ACC, showed that treatment with Repatha resulted in a 15% reduction in a composite of major cardiovascular events, and a 20% reduction on the harder secondary endpoint of cardiovascular death, myocardial infarction or stroke, although the results did not show a mortality benefit. (Also see "Will Physician Demand For Repatha Put Pressure On Payer Restrictions?" - Pink Sheet, 19 Mar, 2017.)

The company plans to submit the data to FDA in mid-2017 so that it can be added to Repatha's label.

One of the challenges with implementing value-based reimbursement contracts is determining a value measure that can be monitored appropriately and developing the administrative tools needed to follow through on the contract. Harvard Pilgrim's Sherman said the Repatha deal is fairly straightforward, partly because use of the drugs remains limited. The value measure also is not that complicated, he said, since a heart attack or stroke will result in hospitalization and a hospital claim.

The fact that these outcomes are easily tracked via claims is an important element for this type of contracting. Payers have a harder time following medical progress via lab work or other methods.

"The fact that these are tied to claims makes it fairly straightforward to collect data," he said. Patient adherence to the medication will be measured by monitoring prescription refills. If a patient taking Repatha for six months or more does experience a heart attack or stroke, Harvard Pilgrim will write a check to the patient to reimburse them the cost of the medicine and work with Amgen to receive the refund.

The six-month window for measuring the drug's efficacy was a compromise, according to Amgen, but is long enough for a patient to have reasonable exposure to the drug's therapeutic effect and a potential event. The annualized event rate for these high-risk patients is believed to be in the range of 12% to 13%, the company said.

Amgen insists the price of Repatha appropriately reflects its value, though there has been extensive analysis by third parties critiquing the pricing. The annual wholesale acquisition cost is $14,523, but the company previously indicated that the actual net price is in the range of $7,700 to $11,200 per year after discounts. (Also see "Amgen Says Repatha Outcomes Trial Backs Up Its Pricing Math" - Pink Sheet, 19 Mar, 2017.)

Almost two years after hitting the market, Repatha still has a lot of ground to make up if it is going to become the blockbuster contender many investors had hoped. The drug generated $49m in the first quarter, significantly more than the $16m reported in first quarter 2016, but still well below original expectations. (Also see "Amgen Hit By Enbrel 'Peculiarities' And Repatha Resistance" - Scrip, 27 Apr, 2017.)