Last week, Mike Wokasch did two nice posts in his Pharma Reform blog dealing with the concept of "comparative value" for new drugs. The first highlighted the concept and the second spoke to what it likely will mean to the design of clinical trials to prove value.
Mike explained that it used to be that earning regulatory approval was THE target for new drug programs. In today's environment, that may no longer be enough. Today, not only does one need to gain regulatory approval one needs to be accepted by 3rd party payers (formularies, etc) as delivering comparative value over other options. In fact, the 3rd party payer hurdle may become the more important as we move into more managed and cost conscious healthcare. No longer can companies depend on getting a drug licensed for market by being "the same as" or "not worse than" a competitor's product and expect to also be a shoo-in for payer acceptance.
Companies will need to show true differentiation from competitors, and - here's the big one - also prove that this differentiating characteristic has true value for patients and payers. The differentiation has to be worth paying for! Clinical trials will need to be designed to generate the data to prove this difference is real and valuable.
This change in "value of healthcare" is not confined to the US -- it is global. The value assessment will clearly pit generic (and soon biosimilar) competitors against branded products, as well as sharpen need for branded products in same categories to prove their worth. It can't be assumed that "me-toos" are marketable.
This competition may play out in different ways. In India, we've already had some controversy surrounding the issuing (or not) of patents to drugs that can't meet this differentiation/comparative value hurdle. In that market, the India Pharmaceuticals Association has strongly challenged whether drugs showing only monor incremental improvement without clinical benefit are worthy of patents. No patent protection - due to unproven value - creates much greater competition with generic providers. A similar situation could be expected to develop in US and EU markets where the "value is not there". The "non-value discount" will be decreased patent protection perhaps and decreased formulary acceptance - certainly decreased acceptance at a price premium.
We are already seeing tangible evidence of this in the market. Generics now account for more than 75% of the prescription volume as they've proven their worth in reducing drug prices dramatically - i.e. providing the value sought by 3rd party payers. With the new healthcare reform law, providing a pathway for biosimilars in the US, coupled with existing pathways for biosimilars in EU and the emerging pharma markets - this will create additional pressure to show value with bio-drugs too. Last week,Teva/Lonza announced they will begin trials with a competitive product (TL011)to Roche's Rituxan for the treatment of rheumatoid arthritis. Their product, called MabThera, is targeted to gain approval as early as 2014.
Teva expects its joint venture with Lonza, established in January 2009, to help it establish a position in the forefront of the emerging biosimilars field by developing, manufacturing and marketing a portfolio of biosimilars. Thus, challenges to Rituxan's comparative value will eventually come from Teva's new product and this is just the beginning.
The stage is set for the pharmaceutical industry to increasingly establish the comparative value of new products and to effectively "prove its worth".
Posted by Bruce Lehr May 31st, 2010.