Spotty US patient assistance gives pharma another headache

Charitable patient-assistance programmes are a stopgap for the fragmented US healthcare system, an answer to rising drug prices and ballooning insurance cost sharing. But they have developed gaps of their own.

Clovis Oncology is the latest company to feel the pinch from the collective underfunding of these programmes, acknowledging in its third-quarter report that it has given away $9.4m worth of the ovarian cancer drug Rubraca so far this year. These charitable funds are likely to have frequent periodic closures in the future, meaning that more biopharma companies might surprise investors with lower sales numbers because they have provided their drugs for free.

The issue is particularly relevant for small companies that market only one product, like Clovis, making it very noticable when quarterly sales do not meet the numbers that prescription trends have been pointing to.

Closed for business

The biggest charity of this kind is the Patient Access Network (PAN) Foundation, which currently has 51 of its 66 disease programmes closed because they have run out of money, including the one for ovarian cancer. Daniel Klein, the foundation’s chief executive, said closures have become more frequent because the donors, most often pharma companies, have switched from ad hoc topping up of dwindling funds to quarterly or annual payments.

The need to schedule payments has been driven by pharma’s budgetary constraints as the demand for patient assistance rises. “What happens is we get donations for a particular quarter. We give out as many grants as we can, and then the fund will close,” Mr Klein told EP Vantage.

Mr Klein said the funds that have had the fewest problems staying open are ones affecting big patient groups, like hepatitis C, while autoimmune diseases have had the most difficulty obtaining sufficient support.

As a sign of the growing demand, PAN’s spending – which primarily defrays cost-sharing for Medicare patients – grew from $18.7m in 2006 to $784.8m 2016. Rather than putting the blame fully on rising drug prices, Mr Klein said the expansion in the number of patients in high-cost-sharing health plans has been a big factor – among Americans receiving insurance through employers, the proportion now enrolled in a so-called high-deductible plan has climbed to 28% (Spotlight – Slowing Acthar sales are a warning about rising patient costs, November 9, 2017).

The warning sign

The dearth of funding struck prostate cancer earlier this year when Pfizer and Johnson & Johnson reported slipping sales numbers for Xtandi and Zytiga, which were likely being given away to patients eligible for the companies' own patient assistance programmes while the big pharma companies waited for charitable funding to come back on stream (Vantage point – Are charities the best way to pay for costly drugs?, May 17, 2017). As EP Vantage noted at the time, that was a warning for the rest of the sector, especially with the launch of expensive new drugs and the shift of costs onto patients.

This forecast has turned out to also be true in ovarian cancer. Clovis publicly acknowledged the role that underfunding played - it forced more patients to seek assistance from the company's own programme. This gave away $4.4m worth of Rubraca in the third quarter alone, around 20% of the overall supply; the company expects the supply of free drug to remain in this range for the foreseeable future.

Rival Tesaro, without mentioning patient assistance programmes, did say 25-30% of prescriptions in the third quarter were free samples.

Both companies’ Parp inhibitors were launched in the past year and have a list price of around $14,000 a month. Neither company responded to a request for comment.

Mallinckrodt’s troubles with H.P. Acthar gel, meanwhile, also hinted at these issues. Its executives said sliding sales in the third quarter were caused by unfilled prescriptions, particularly among patients who had undergone a course of therapy.

More aggressive payer review could be the culprit here, but it is worth noting that Acthar has the highest patient cost-sharing of any drug covered by Medicare and that the PAN Foundation’s multiple sclerosis programme is currently closed – the product is used to treat MS exacerbations.

Clovis’s Rubraca and Tesaro’s Zejula are expensive new drugs launched into a cancer that until recently was treated with older chemotherapies, providing a signpost for the sort of disease that might have charitable funding shortages in the future.

Without dramatic shifts in how the US pays for healthcare, the demands on charitable funding are only going to grow. And the current political environment does not appear to make it likely that insurance coverage, either through government or employment, will get any more generous for expensive new medications.

Thus investors should temper their enthusiasm for new drug launches with concern about how much might be given away – and try to make good guesses about the next one that will be hit.

To contact the writer of this story email Jonathan Gardner in Virginia at jonathang-us@epvantage.com or follow @ByJonGardner on Twitter

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