Storm brewing over Roche cancer drug price

pharmafile | August 8, 2014 | News story | Medical Communications, Research and Development, Sales and Marketing |  Cancer, Haslam, Kadcyla, NICE, Roche, Yervoy, rejection 

The Breakthrough Breast Cancer charity and England’s drug pricing watchdog NICE have both attacked Roche for not lowering the price of its new breast cancer drug Kadcyla.

The drug has been knocked back by NICE today in its final draft guidance for patients with HER2-positive breast cancer that has spread to other parts of the body, cannot be surgically removed and has stopped responding to first-line treatment.

Kadcyla (trastuzumab emtansine) has been recognised in the research community as an innovative and efficacious medicine and works in a unique way, combining with Roche’s ageing breast cancer drug Herceptin (trastuzumab) into one new treatment. 

The latest Phase III study for the drug showed Kadcyla reduced the risk of disease worsening or death compared with GlaxoSmithKline’s Tyverb (lapatinib) plus Roche’s Xeloda (capecitabine).

The so-called EMILIA trial also showed overall survival of 30.9 months, compared to 25.1 months for patients treated with that existing combination, while Kadcyla patients experienced median progression-free survival of 9.6 months, compared to 6.4 months.

But despite the impressive survival data, NICE says the drug will cost the NHS more than £90,000 per patient, making it one of the most expensive drugs that the watchdog has ever assessed.

NICE believes around 1,500 women a year could benefit from Kadcyla, meaning total NHS cost for the drug could potentially reach £135 million.

This would make the drug the most expensive cancer treatment for NHS England; currently it spends the most on Roche’s Herceptin at a cost of around £110 million a year.

Kadcyla is currently only available in England through the government’s Cancer Drugs Fund, which injects £200 million a year into the NHS for new cancer medicines not recommended by NICE.

In a statement, the body says it ‘wants to secure’ the treatment’s long-term future in the NHS by making a recommendation for routine funding from NHS England’s specialised commissioning budget, but says that Roche will not budge on price.

The Swiss firm has offered a patient access scheme which lowers the overall cost of the medicine, but this was rejected as not being good enough in draft guidance issued by NICE in April.

The cost-effectiveness body says Roche has not offered a new discount the second time around, meaning its hands are tied on recommending the medicine.

In an unusually critical statement Sir Andrew Dillon, NICE’s chief executive, says: “Although Roche proposed a discount to the full list price of Kadcyla, it made little difference to its value for money, leaving it well above the top of our specially extended range of cost effectiveness for cancer drugs.

“We are really disappointed that Roche were not able to demonstrate more flexibility to help us make a positive recommendation. The company is well aware that we could not have recommend Kadcyla at the price it proposed.”

In a statement sent to Pharmafile, Roche says that NICE’s decision underlines the ‘systemic failure’ to implement the recently negotiated Pharmaceutical Pricing Regulation Scheme (PPRS) that caps the overall drugs budget in the NHS so that patients get access to the latest treatments.

Roche says: “NICE has declined to factor in the cost assurance guaranteed by the PPRS in its calculations which would mean the future drug bill cannot be overspent and would remove the burden of additional cost to the NHS.”

This guarantee includes UK pharma firms paying back money that goes over the agreed growth limit each quarter. In the first quarter of this year, UK pharma companies had to pay a total of £74 million back to the government.

Foreseeing this criticism, Sir Andrew went further in his statement, adding that Roche is mistaken in its belief that the PPRS includes an expectation that NICE will ‘ignore the price’ a company asks for its product.

He says the “agreement does not contain this expectation because both the ABPI and the Department of Health agree that obtaining value for money from new drugs is in the interests of the industry and the NHS”.

NICE adds that it has allowed this appraisal to be looked at under it ‘end of life criteria’ policy, which can allow more expensive medicines through its system, but the cost-effectiveness of Kadcyla was still found lacking.

It will not escape most people’s notice the irony of this statement as it is usually a pharma firm (and in fact quite often Roche itself) who are disappointed in a NICE decision.

In fact Roche said back in February that NICE’s decision not to recommend its lung cancer drug Tarceva (erlotinib) for funding in a new setting was ‘perverse’.

But the eye-watering price tag for Kadcyla has clearly been a tipping point for NICE, given that it has taken the unusual decision to come out against Roche publically.

‘Incredibly expensive’

Speaking to Pharmafile Sally Greenbrook, Breakthrough Breast Cancer’s senior policy officer, echoes NICE by saying that Roche must re-think its price for Kadcyla.

Asked whether the price tag was too much, she says: “I think that £90,000 is not realistic for an NHS that is operating under a tight budget so yes, £90,000 is too high.

“I mean it’s a really good drug; it can give around six months additional life for women who are nearing the end of their life and we don’t really believe we can put a price on that.

“And we appreciate that drugs cost money to develop, and that pharma needs to recoup for further investment; however I don’t think it’s in anyone’s interest for the drug to not be available on the NHS.”

When asked about how Roche has come to this price, she laments that negotiations between NICE and the Department of Health and the pharmaceutical companies does happen ‘behind closed doors’.

“But we do appreciate that NICE has a very difficult job,” she explains, “and they need to make sure that they are getting value for money, but I don’t think I understand pharmaceutical drug pricing any more than the next person, especially when we can’t see how it’s being done.

“I’d say that NICE has done everything it could under its current system to recommend this drug, and I know they wanted to recommend as well, but they are simply unable to given their current remit, and the very high price they are facing from Roche.”

She adds: “We want patients to access the drugs that they need; we encourage Roche to go back to NICE and offer a better patient access scheme for this drug to make it more affordable for the NHS – the industry pays a lot of money for investment into these drugs and having them sit on the shelf is not a good use of that money for anyone.”

Roche hits back

But in a statement to Pharmafile, Roche has been equally vocal about the rejection and says it will appeal NICE’s rejection of its drug.

In a strongly written release Dr Jayson Dallas, general manager at Roche UK, says: “NICE’s rejection of Kadcyla demonstrates quite simply that their current system is broken, not fit for purpose and in need of a complete overhaul when it comes to advanced cancer.”

He goes on: “Despite Roche offering a significant discount [details of which will not be released] we are once again disappointed that NICE has not shown any flexibility on access to Kadcyla. Refusing patients access to this drug is an incredible injustice and tantamount to turning the clock back in cancer research and development. We plan to appeal this decision.”

The Swiss firm also says that under NICE’s current process, Kadcyla would need to be discounted by 60% to meet the NICE cost-effectiveness threshold, something the company is not willing to do.

Cancer Drugs Fund

As NICE points out, the drug is currently available to patients in England who can access it under the Cancer Drugs Fund (CDF).

Discussing the Fund, Greenbrook says the CDF means that patients who need cancer drugs now can access them now and not have to wait, “and that can only be a good thing”.

But says that her charity is concerned about the future of the Fund as it runs out in 2016 with no promise of any extension, and adds that it is not available in Scotland, Wales or Northern Ireland.

“So it’s clearly not a sustainable solution – but that’s what we need: a longer-term solution,” she says.

Roche tells Pharmafile that since being licenced in in the UK in February, the total CDF notifications (or requests) for Kadcyla to June has been 362 – if all of these were paid for at its current price, that would mean the CDF has already given out £32.5 million for this medicine, a large chunk of the Fund’s total £200 million for the year.

Pricing and ethics

In a recent interview with Pharmafile NICE’s chairman, Professor David Haslam, said it was right for NICE to be bullish about its negative decisions, saying that it is ‘absolutely essential’ that NICE defends its position against any attacks against a ‘no’ for a new drug.

On oncology drugs, he said: “Cancer drugs are extremely expensive. There’s no doubt that the real issue is: is that the best use of the money for the health service? For any individual patient, of course you can come up with a powerful emotional argument that a drug for them should be spent on that person. But that isn’t extra money; that’s money that can only be spent once.”

On the question of cost and whether these medicines were becoming too expensive for the NHS to pay for, he said he simply couldn’t answer that question as no one outside the boardroom of any given company currently knows how a pharma firm comes up with a price for a drug.

“It’s not just that drugs are expensive and NICE says ‘no’,” he explains. “If we could understand why – I mean really why – these drugs are so expensive; well, this might have an impact on the way decisions are made.”

He also explained the frustration and confusion he felt when pharma came out blasting NICE when it says ‘no’.

He said: “There’s a predictability about the ‘dance of positions’ that happens whenever we’ve said ‘no’. I’m always slightly puzzled by the criticism from the media which is normally aimed at NICE for saying no rather than at the industry for having high prices. You know it takes two to tango.

“Again, if we could have greater transparency about pricing, that would help; and this links up to the general transparency agenda, which includes us wanting to see more clinical trial data made available publically.”

He adds: “Of course we normally say ‘yes’; overall cancer appraisals from March 2000 to February this year we have said ‘yes’ 58% of the time.”

Roche has not said why it believes its drug should cost £90,000 or released details of how it came to the pricing decision – in fact its statement to the media does not mention the price of Kadcyla at all.

The discount offered by the first patient access scheme has not been made public, although it is unlikely to be near the 60% mark.

Working together

In another recent interview with Pharmafile the new general manager of Bristol-Myers Squibb UK and Ireland, Johanna Mercier, says her company managed to overcome an impasse with NICE by working closely with the body, whilst also offering a discount.

Earlier this year its breakthrough immuno-oncology drug Yervoy (ipilimumab), which ‘teaches’ the body to find and attack melanoma tumours in late-stage patients, was given a NICE ‘yes’ for first-line treatment.

This came after it initially rejected the medicine given its £80,000 price tag – a similar situation to what Roche is facing.

In the end, NICE did recommend Yervoy in first-line in final guidance published in June.

Mercier says BMS worked with NICE to help get this positive recommendation, and adds that the watchdog was keen to have the drug funded by the NHS, given its impressive overall survival data in a difficult-to-treat cancer.

Lowering the price via a patient access scheme also would have made the drug fit with NICE’s cost-effectiveness threshold, and made the body more willing to recommend the treatment.

“I’m really impressed that NICE came through with a positive decision,” she says. “I mean I would not have been happy with a negative decision, but I would have understood, because of their process. So I think they were actually quite flexible in their approach.”

She adds, however, that she still believes NICE needs reform as the issues of uptake and market access in the UK cannot be fixed by collaboration alone – a belief shared by both Roche and the UK pharma lobby group the ABPI.

On the issues of reform, Breakthrough Breast Cancer’s Greenbrook says: “There’s no doubt that the current NICE system isn’t set up for the very high cancer drugs that we’re seeing; but then again, every single cancer drug we see coming through is more expensive than the last, and there’s no reason we think that will change.

“So given that reality, I do think NICE does need to look at its systems, but the pharmaceutical industry does need to come to the table as well and be a bit more flexible about their pricing.

“On the broader issue of cancer drug prices, we’d encourage NICE, the pharma industry and the Department of Health to come together to find a sustainable solution so that these drugs can be approved for routine use on the NHS, and at a price that is still acceptable to the pharma firms involved.

“The industry is hugely important to the economy and of course we want it to remain – to have that, we need to have negotiations on all sides to break this impasse.”

Editor’s comment

I have been writing about NICE rejections, and pharma’s reaction to them, for nearly five years now, but this latest disagreement feels like a major tipping point given the highly public nature of the debate, and the strong language used.

It is also being fuelled by a debate over drug pricing in general, which is coming from the US, a traditionally laissez-faire market that is now beginning to question the high price of many new cancer medicines.

In fact at this year’s ASCO cancer conference in Chicago, price was top of the agenda – higher even than the science of new oncology products – as some US oncologists told delegates that they needed to do more on helping reduce costs.

US insurers are also bulking at the high price of medicines and not just from cancer, but from other therapy areas as well, such as hepatitis C.

The debate is now coming to a head as cash-strapped governments and insurers tighten their belts, and the spotlight is fast turning onto pharma and how they are pricing medicines.

It is also important to point out that Roche isn’t exactly struggling for money: it made CHF22.9 billion (£15 billion) in  sales for the first half of this year, whilst also making CHF9.4 billion in profit, up 7% on last year.

Kadcyla also brought in CHF277 million in the same period, up 188% and setting up a good trajectory to become a major blockbuster for the firm, and shore up the impending generic competition to Herceptin.

Last year Roche invested CHF8.7 billion in R&D whilst posting sales of CHF46.8 billion, meaning around a fifth of its total revenue goes back into research – a large sum of money by any account, but it is certainly being rewarded handsomely for that investment.   

From a UK perspective, there is also still some confusion over just what the new PPRS deal is doing for the drugs budget.

The marketing behind it, coming from both the DH and the ABPI, is that it ‘underwrites’ the £12 billion patented medicines bill by paying a rebate every quarter when it grows over the agreed limit, which for 2014 is flat.

This was not meant to be a blank cheque however, and I agree with Sir Andrew that Roche has got the wrong end of the stick if that was what it believed the new deal involved.

NICE is currently undergoing a consultation that could see its health technology assessment policies changed, potentially allowing more drugs through the NHS, although the ABPI has told Pharmafile it doesn’t think this will happen as there is no reform being directed by Whitehall.

The pricing debate will not end here, but it’s just become a lot more public, and lot more serious.

Ben Adams