GSK seeks risk-sharing deal for Tyverb
pharmafile | September 17, 2008 | News story | Sales and Marketing | Cancer, GSK, NICE, par
GlaxoSmithKline has approached the government for a new pricing deal on its breast cancer drug Tyverb, which could make it more cost-effective to the NHS and guarantee patients have access.
NICE preliminarily rejected Tyverb for NHS use saying it didn't represent good value for money, but now GSK is looking to reverse the decision by offering a capped price arrangement that could ease its introduction to the health service.
The approach is part of a growing trend in pharma known as 'risk-sharing', which can enable companies to get new and expensive drugs past NICE and into the NHS.
Such agreements benefit pharma because they give patients access to a drug without cutting its price. And once a number of NHS patients have access to a treatment, it is difficult for Trusts to deny the next patient with the same condition.
Noel Staunton, an independent consultant in the industry, said: "You [pharma] get a foot in the door, and then you can push the door a little further open all the time. And if it's that, or no prescriptions at all, then obviously it's a beneficial situation."
Tyverb was calculated to cost over £25,000 per patient per year, which led to its subsequent rejection by NICE. But according the Financial Times, GSK has now proposed a cap on its total cost to the NHS, no matter how many patients use it.
This was preceded by another risk-sharing agreement last year involving Janssen Cilag and its cancer drug Velcade. The company agreed the NHS would only pay for its use where patients showed a positive response to the drug. If they did not, Janssen would refund the cost back to that NHS trust.
Staunton said once a scheme is set up, it is extremely difficult to cancel, and pharma can then grow the product's market share in the NHS: "If NICE has said no altogether, or if NICE has said yes, but with strict criteria, you can break those criteria down. But once its up and running, the chances are that it will carry on indefinitely, because it'll be very difficult to stop."
And there are further benefits to pharma. It is more profitable to keep a high UK list price on a drug and refund it when it doesn't work, rather than lower the initial entry cost. This is because the UK price is often used as a benchmark across Europe, but this approach has left industry open to criticism.
Pharma pricing criticised
NICE's chairman, Sir Michael Rawlins recently accused pharma of setting inflated prices in the UK to protect profits. He told the Observer: "Pharmaceutical companies have enjoyed double-digit growth year on year and they are out to sustain that, not least because their senior management's earnings are related to the share price. It's not in their interests to take less profit, personally as well as from the point of view of the business. All these perverse incentives drive the price up."
But the Department of Health and NICE can glean some benefit from risk-sharing deals. Such schemes, particularly those involving cancer drugs, can help assuage mass criticism over poor patient access to new medicines in the UK.
On August 7, NICE rejected four new medicines for kidney cancer, and wreaked a public backlash against itself and the government. In response, Pfizer, Roche and Bayer, who respectively manufacture the rejected products Sutent, Avastin and Nexavar, have proposed their own risk-sharing bids for the medicines. Staunton believes these will inevitably be arranged, "as sure as night follows day." And if patients then get access to the drugs, "it is a plus for the government and for NICE, as they stop the bad publicity and avoid the front page of the Daily Mail." NICE will deliver its final decision on the technologies in January 2009.
NICE leader Andrew Dillon told Pharmafocus it was happy to consider new pricing options within its decision-making process, but said companies need an initial go-ahead from the Department of Health.
He commented on the new approach: "It has happened in circumstances where companies face the reality that the recommendation from NICE is going to be restrictive, but it is entirely up to companies to take the initiative to do that."
Though he does not see the trend taking off. He said: "There have been a few [cases], but it's hardly an avalanche, given the number of pharmaceutical and other technologies that we're reviewing. But clearly to some companies in some circumstances it feels like the right thing to do."
Novartis has also opted to risk-share, though not in oncology, and agreed a deal over Lucentis, for age-related macular degeneration (AMD). NICE first advised restrictive access due to its high cost, but the company then said the NHS need only fund 14 injections of the drug, and it would pay for any further doses needed. The deal has just seen NICE reverse its decision, increasing the number of patients who can access the drug – a satisfactory result for Novartis.
Conversely, GSK's potential deal with the government over Tyverb is not yet confirmed, and so far both sides have downplayed its significance. The Department of Health said only that discussions are underway, and a spokesperson at GSK claimed this tack was nothing new for it.
A statement said: "We remain committed to developing innovative pricing methods to ensure patients have access to medicines that will be of benefit to them and we will continue to work closely with UK payors to this end."
It is unclear how deals on individual drugs will affect the PPRS, which is still under discussion, though more risk-sharing deals seem inevitable.
Staunton said: "I think you want to get your drug made available as soon as possible, so companies will do that and worry about the PPRS later on."
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