Interview – Repatha risk-sharing could be just the beginning


Value-based pricing for drugs in the US became a reality this week, at least for one health plan and one new agent, Repatha. The Massachusetts-based Harvard Pilgrim Health Care signed a deal with Amgen that will deepen discounts if the antibody does not achieve agreed benchmarks on low-density lipoprotein (LDL) lowering or patient utilisation.

While launch of Repatha at virtually the same time as another product from the same class offered a unique chance to ask for a risk-sharing pricing structure, Harvard Pilgrim's chief medical officer, Michael Sherman, says the plan will be looking for other opportunities. “It’s not a one-off. We hope it will be the start of a trend,” Mr Sherman tells EP Vantage.

More receptive

Public discord over drug pricing has grown with the launch of the $1,000-a-pill hepatitis C drug Sovaldi last year and revelations about price increases imposed on old drugs by speciality pharma companies. As a result Dr Sherman says his plan, which covers 1.2 million lives in four northeastern states, has been seeking to extend pay-for-performance pricing principles they have agreed with physicians and hospitals to the pharma sector.

“I’ve been out there for a good two years challenging big pharma on these kinds of deals. Generally I’ve been told, ‘Here’s why we can’t,’” he says. “It’s been very clear that they didn’t feel they needed to and they were happy just being paid for scripts under the old model.”

However, Dr Sherman says there has been an evolving view as the spotlight has turned onto the business practices of companies like Valeant and Turing Pharmaceuticals. “As I say when I speak publicly on this – and I think they’re starting to believe this – either you demonstrate that you’re being paid for value or you’re going to face regulation. So I think that’s also encouraging companies to come to the table with a different mindset.”

Before reaching the Repatha agreement, Harvard Pilgrim and Amgen had been in dialogue in advance of the drug's approval in late August, which made it the PCSK9 inhibitor to reach the market after Sanofi and Regeneron’s Praluent. Both came in with a list price of greater than $14,000 a year per patient, but when Amgen dealt with Harvard Pilgrim in post-approval formulary talks it was receptive enough to Dr Sherman’s message to agree to a pay-for-performance scheme – in return for exclusivity.

“Given that the cost is high, and higher than any analyst or health plans expected, and given that there are clear outcome measures of success, I think it was a good drug for the first major deal of this type,” he says.

How much? Not as much as we could have

As usual in health plan pricing decisions, the companies are not disclosing the size of the rebate being offered. Referring to an analysis by the Institute for Clinical and Economic Review (ICER), which found that the drugs would need to be about half their list price to be cost-effective if each patient quality adjusted life year (QALY) was valued at $150,000, Dr Sherman says, “We’re not anywhere near that.”

“Ultimately, it was more about a negotiation, versus fundamentally agreeing that there’s a dollar value to [a QALY], which is where I’d like to be,” he says. “Maybe when there are other drugs on the market and more competition, we may get there.”

Amgen is, of course, at risk from the prescribing practices in the Harvard Pilgrim network, but Dr Sherman says he is confident that the plan’s utilisation management systems are robust enough to avoid exceeding the threshold – which paradoxically would see Amgen get stung if too many people were prescribed the drug.

“Just because there’s this agreement doesn’t mean anyone can prescribe [Repatha]. You can prescribe it if you can meet the criteria,” he says. “There are certain criteria about trying multiple statins and about how we define statin intolerance. Amgen understands that, and they’re fine with it.”

Opportunities like the PSCK9 class do not come around every day, and given the sector’s migration toward orphan indications, it may not be possible to negotiate similar risk-sharing agreements with these.

“Vertex and Orkambi is an example,” he says. “Generally if there’s one drug out [in a class], pharma companies have not been overly eager to be paid for outcomes.”

Even with certain drugs from novel classes hitting the market on similar timetables – namely the anti-PD-1/PD-L1 agents like Keytruda and Opdivo in cancer – Dr Sherman is a little less definite about applying similar pricing principles.

“It’s a little more complex,” he says. “There are different indications. Are you tying it to months of life? Cancer tends to be emotional.”

But he adds: “If one of those companies came to us and tried to do something that aligned with outcomes I would not be averse to it.”

To contact the writer of this story email Jonathan Gardner in London at or follow @ByJonGardner on Twitter

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