Express Scripts Indication-Based Contracts For Inflammatory Drugs Begin In 2017

Program may provide drugs with narrower labels an opportunity to gain preferred formulary status versus entrenched market leaders.

Indication-specific pricing may begin to reshape US reimbursement for anti-inflammatory drugs in the first half of 2017, when pharmacy benefit manager Express Scripts Holding Co. launches its new approach to contracting.

In a move away from paying for anti-inflammatory drugs as a broad category, Express Scripts will negotiate separate pricing for the crowded class within four smaller indications: 1) rheumatoid arthritis; 2) psoriasis/psoriatic arthritis; 3) ankylosing spondylitis; and 4) inflammatory bowel disease (including ulcerative colitis and Crohn’s disease).

The approach will aim to match prices more closely to value, leading to lower reimbursement for indications that are less effective and higher reimbursement for more-effective uses, according to Express Scripts.

It will be the first indication-specific pricing program for anti-inflammatory drugs to be launched by a major US payer and will follow a similar contracting initiative for cancer drugs that Express Scripts introduced in March. Rival PBM CVS Health Corp. is also planning to roll out indication-specific contracting for oncology drugs in the coming months. (Also see "CVS Indication-Based Pricing For Cancer Drugs May Roll Out Later In 2016" - Pink Sheet, 4 Mar, 2016.)

Like its indication-based pricing program for oncology drugs, the upcoming initiative for anti-inflammatory agents will focus on treatments that are reimbursed under the pharmacy benefit, an Express Scripts spokesman said. In general, that means drugs that are orals or self-injectable.

“At some point we are going to have to go to war with Amgen and AbbVie.” – US payer.

Most of the anti-inflammatory treatments are injectables and could be self-administered. A couple – Celgene Corp.’s Otezla (apremilast) and Pfizer Inc.’s Xeljanz (tofacitinib) – are orals.

But one of the category’s largest drugs, Johnson & Johnson’s Remicade (infliximab), is administered intravenously and it is unclear whether it would be included in the program. An Express Scripts spokesman declined to comment on specific drugs.

The current approach to contracting in the anti-inflammatory category has favored older, entrenched drugs in the TNF-inhibitor class, such as AbbVie Inc.’s Humira (adalimumab) and Amgen Inc.’s Enbrel (etanercept).

Those drugs have a wide range of approved indications as well as high volume use. That has made them more financially attractive targets for contracting and a significant source of rebates for payers. In return, Humira and Enbrel control a significant majority of the market and brought in US sales of more than $8bn and $5bn, respectively, in 2015.

Those large sales figures have made the products tempting targets for biosimilars, and FDA advisors endorsed a potential competitor for each last week. (Also see "Biosimilar Non-Medical Switching: Advocacy Groups, FDA Advisors Push For Action" - Pink Sheet, 14 Jul, 2016.) How much cheaper the biosimilars would be – and even when they might reach the market – remains uncertain, however. (Also see "Enbrel Biosimilar Market In Sandoz's Grasp; Will Cost, Litigation Derail It?" - Scrip, 11 Jul, 2016.)

In the shorter term, indication-specific pricing may offer drugs with relatively narrow labels new opportunities to gain favorable formulary status and expand access, especially if they are more effective than the category leaders for certain uses.

Among the drugs that could benefit are the interleukin inhibitors, including Johnson & Johnson’s Stelara (ustekinumab), Novartis AG’s Cosentyx (secukinumab), and Eli Lilly & Co.’s now launching Taltz (ixekizumab). Stelara is approved for psoriasis and psoriatic arthritis. Cosentyx is approved for those two indications plus ankylosing spondylitis and Taltz is approved for psoriasis (see chart).

ICER Reviews Could Inform Contracting Changes

Express Scripts’ contract negotiations may be aided by upcoming comparative effectiveness review of some anti-inflammatory classes by the Institute for Clinical and Economic Review. ICER reviews include recommended pricing benchmarks based on cost per quality-adjusted life year measures.

ICER is planning to release a final report on drugs for psoriasis in October and a report on treatments for rheumatoid arthritis in January 2017. The group is also considering a review of drugs for psoriatic arthritis.

Responses to a recent survey of US payers conducted by Datamonitor Healthcare illustrate the access challenges facing drugs with fewer indications. Excerpts from survey responses are included in a new Datamonitor report on reimbursement for drugs for psoriatic arthritis.

One payer commented that Cosentyx is becoming the “gold standard” for psoriasis “but it is not a preferred drug because it is a narrow-spectrum drug and if I contract for that, which of my broad-spectrum drugs am I going to boot off [formulary] and take a hit on? ... So the challenge has been how to allow access to these more narrow-spectrum drugs that probably work a little bit better, but not take a financial hit that would be unacceptable.”

The survey also revealed that like Express Scripts, other US payers are considering “carving out” indications like psoriasis for the purpose of contracting.

According to another US payer, “as the data continue to emerge that the interleukin [inhibitor] drugs … are more effective and safer, at some point we are going to have to go to war with Amgen and AbbVie and say: ‘Guys, we are going to carve psoriasis out of this package deal. You are still going to be our preferred anti-TNF for all of the other things but we are taking psoriasis out of the category. You will have a chance to bid for the business in psoriasis as well, but your competition is now going to be the narrow-spectrum, safer drugs.'”

Price Increases, Product Development Driving Costs

The indication-specific program will give Express Scripts more leverage to drive down prices in the category, which has ranked as the highest-cost specialty drug class tracked by the PBM for the past several years.

Spending in the inflammatory class rose 25% in 2015, driven by unit cost increases of greater than 17% for Humira and Enbrel that reflect higher pricing and utilization, according to the PBM’s most recent Drug Trend Report (Also see "Rx Spending Growth Won’t Exceed 8% In Coming Years – Express Scripts" - Pink Sheet, 15 Mar, 2016.).

List prices for Humira and Enbrel are at the high end of the range of prices in the category at around $48,000 per year, according to Truven Health Analytics’ Red Book. Newer agents like Cosentyx and Taltz have list prices of more than $50,000 per year.

Higher spending in the category has persisted in 2016. Virtually all of the branded drugs recorded significant increases in first quarter US sales, reflecting price increases and new product development. For example, Cosentyx added new indications in psoriasis and psoriatic arthritis and Xeljanz gained an extended-release dosage form in early 2016.

New product activity will continue this year and into 2017. Two new drugs for rheumatoid arthritis are on track to launch in the US in late 2016/early 2017 – Lilly’s baracitinib (Also see "JAK Inhibitors Start To Come Of Age In Rheumatoid Arthritis" - Pink Sheet, 16 Nov, 2015.) and Sanofi and Regeneron Pharmaceuticals Inc.’s sarilumab (Also see "Why There’s Still Room For Sarilumab In RA, According To Sanofi" - Pink Sheet, 9 Nov, 2015.).

AndValeant Pharmaceuticals International Inc. is developing brodalumab for psoriasis and psoriatic arthritis after licensing the candidate from AstraZeneca PLC. (Also see "AstraZeneca Unburdens Itself Of Brodalumab" - Scrip, 1 Sep, 2015.) But the drug has been associated with serious side effects and seems to be facing regulatory headwinds. (Also see "Valeant's Brodalumab Faces Conflicting FDA Views On Suicide Risk" - Pink Sheet, 15 Jul, 2016.)

US Branded Anti-Inflammatory Specialty Drugs
Drug	Company	Indications: rheumatoid arthritis (RA); juvenile idiopathic arthritis (JIA); psoriasis (Ps); psoriatic arthritis (PsA); ulcerative colitis (UC);; hidarentitis suppurative (HS)	US Q1 sales	Year-to-year change
Tissue necrosis factor inhibitors
Humira (adalimumab); injectable	AbbVie	RA, JIA, Ps, PsA, AS, UC, Crohn’s, HS	$2.2bn		+32%
Enbrel (etanercept; injectable)	Amgen	RA, JIA, Ps, PsA, AS	$1.3bn		+26%
Remicade (infliximab); intravenous	J&J	RA, JIA, Ps, PsA, AS, UC, Crohn’s	$1.2bn		+15%
Simponi (golimumab); injectable	J&J	Ra, JIA, PsA, AS, UC	$216m		+39.4%
Cimzia (certolizumab); injectable	UCB	RA, PsA, AS, Crohn’s	$193.8m		+20%
Selective T-cell co-stimulation modulator
Orencia (abatacept); injectable RA, intravenous JIA	Bristol-Myers Squibb	RA, JIA	$321m		+24%
Interleukin(IL)-6, IL-12, IL-17, IL-23 antagonists
Stelara (ustekinumab); injectable	J&J	Ps, PsA	$511m		+40.4%
Actemra (tocilizumab); injectable RA, intravenous JIA	Roche	RA, JIA	$147.5m		+12%
Cosentyx (secukinumab); injectable	Novartis	Ps, PsA, AS	$123m		NA
Taltz (ixekizumab); injectable	Eli Lilly	Ps	NA		NA
Integrin receptor antagonist
Entyvio (vedolizumab); intravenous	Takeda	Crohn’s, UC	$524m		192.5%
Phosphodiesterase-4 inhibitor
Otezla (apremilast); oral	Celgene	Ps, PsA	$174.8m		194%
Janus kinase inhibitor
Xeljanz (tofacitinib); oral	Pfizer	RA	$175m		98%