Low-Priced Oncology Disruptors: The Cuckoo in the PD-1/PD-L1 Nest or the Runt of the Clutch?

Part I

Novel oncologic drugs continue to command premium pricing, driven by a combination of unmet needs, and delivering often-iterative, sometimes-significant improvements in survival or maintenance of a progression-free state. The stable of PD-1/PD-L1 checkpoint inhibitors, led by Keytruda (pembrolizumab), represents the current generation of high value, high price drugs to tackle a variety of cancers in mono- or combination therapy. However, despite the growing number of available products focusing on the same target, prices are not showing the significant decrease that one might expect from a rapidly commoditising market.

While it is typical, in Europe at least, to see prices fall with subsequent indication expansions, these decreases have perhaps not been as significant as payers may have hoped. Although the sticker shock that was at first associated with Yervoy (ipilimumab) in 2011 – in the early days of immuno-oncology monoclonal antibodies – has fallen by the wayside, especially in light of CAR-Ts and other “one and done” cell and gene therapies, the field of non-orphan oncology remains a target for cost savings by payers.

Lower-pricing intentionality and global possibilities

Rumblings have emerged in recent months and years of the emergence of intentionally lower-priced new molecular entities; something that was traditionally associated with biosimilars. New manufacturers, such as EQRx, have been vocal in their desire to bring new PD-1/PD-L1 checkpoint inhibitors (e.g. sugemalimab) to market at “radically lower”, disruptive price points when compared to current options1. Perhaps more interestingly, similar signals have also emerged from traditional biopharma heavyweights, such as Novartis and Lilly, which one would typically associate with more conservative approaches to pricing. Both have partnered with Chinese manufacturers in the development of tislelizumab and sintilimab, respectively. The former of these drugs, BeiGene’s tislelizumab, launched in China at prices over 60% lower than Keytruda. Such pricing approaches could feasibly be implemented on a global scale with the additional marketing clout associated with these heavyweights.

However, the question remains as to what the tangible impact will be on both the indications they launch in, and in the broader oncology pricing space, across geographies.

North America: a not so golden opportunity

The US, unsurprisingly, continues to remain the biggest market for oncology drugs with prices remaining relatively high across the field. At first glance, this would appear to be a golden opportunity for a disruptively priced entrant, especially considering payers’ continued commentary on the high price per patient. However, this reveals one of the chinks in the lower-priced entrants’ armour: their limited volume potential.

In something of an ironic twist, the Great Rebate Wall of the USA presents a sizeable challenge for new Chinese-developed entrants. The volume-based rebate contracts used by so many payers in the US means the seemingly high-priced products make more sense from a profit perspective. This means that drugs such as Keytruda, which has received almost 40 FDA approvals since its launch, can offer significant volume-based rebates.

In comparison, drugs such as sugemalimab, which is looking to launch initially in NSCLC following significant results from its recent GEMSTONE-302 trial, face a significant uphill battle. Although they may fulfil a payer’s desire to see lower-priced drugs enter the US market, it remains to be seen how much traction they can make in terms of uptake. While it could be that EQRx is held up as an example of how pharma should innovate on price, it could be unlikely to translate into revenue for the upstarts in the face of the Great Rebate Wall.

The potential of new and emerging markets

The picture may, however, be different ex-US, where strict health technology assessment (HTA)-driven payer negotiations and out-of-pocket patient spend can significantly impact the trajectory of a new oncology launch. As mentioned, several of these new entrants are already launched in China at sizeable discounts relative to other PD-1/PD-L1 products. This pattern, if repeated across other emerging markets, could drive uptake by reducing the biggest barrier to uptake for many patients in these countries: affordability.

[NB: This article continues in Part II, where the authors explore further the practical affordability of implementation outside of the United States, weighing up the possibilities offered within Asia, Africa, and South America, as well as the power Europe and the UK yield in any potential outcome.]

About CRA and the Life Sciences Practice

CRA is a leading global consulting firm that offers strategy, financial, and economic consulting services to industry, government and financial clients. Maximizing product value and corporate performance, CRA consultants combine knowledge and experience with state-of-the-art analytical tools and methodologies tailored to client-specific needs. Founded in 1965, CRA has offices throughout the world.

The Life Sciences Practice works with leading biotech, medical device, and pharmaceutical companies; law firms; regulatory agencies; and national and international industry associations. We provide the analytical expertise and industry experience needed to address the industry’s toughest issues. We have a reputation for rigorous and innovative analysis, careful attention to detail, and the ability to work effectively as part of a wider team of advisers. To learn more, visit crai.com/lifesciences.

About the authors

Justus Dehnen is a vice president in the Life Sciences Practice at CRA with more than 20 years in the industry. His consulting experience focuses on pricing and market access, contracting and loss of exclusivity (LoE) strategy development projects for national and international life science companies. He works across multiple therapeutic areas for pharma, biotech, and medical device companies. Dehnen has helped life science companies to develop and maintain access, pricing, and reimbursement along the product lifecycle from early pipeline to LoE.

Dr Aaron Everitt is an Associate Principal in the Life Sciences Practice at CRA. He has almost 10 years of consulting experience in pricing and market access, across the EU and US, with experience in LATAM, APAC, and MEA. Everitt has a PhD background in immunology and virology.