Lilly starts new diabetes price war

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If any company looks like it is preparing to go to war for market share in America’s fierce diabetes market it is Lilly. Tomorrow it is scheduled to launch its Lantus lookalike Basaglar, just two days after announcing a new discount programme in partnership with the pharmacy benefit manager Express Scripts.

After more than doubling the price of its diabetes flagship Humalog over five years, the Indiana-based big pharma is seeking to avoid the woes of the two other insulin makers, Novo Nordisk and Sanofi (see table). Having the first biosimilar long-acting insulin is an obvious advantage, but pairing this with a discount programme it has thrown down the gauntlet to its rivals (Biosimilars emerge as winners in annual payer muscle flexing, August 3, 2016).

Shifting market

The discount programme is pitched to uninsured diabetics and those in high-deductible health plans. The latter component is important as these plans are growing quickly as a share of employer-provided health plans – 38% of workers have out-of-pocket exposure of $1,000 a more a year in 2016, according to the Kaiser Family Foundation.

Meanwhile, the maximum deductible allowed in low-premium public health insurance marketplace plans offered under the Affordable Care Act is $14,300 for a family in 2017, while the maximum contribution that can be made to health savings accounts to cover those costs is $6,750, leaving a gap of thousands of dollars for enrolees in this type of coverage.

Moreover, leading plans to replace the Affordable Care Act from President-elect Donald Trump and congressional Republicans lean heavily on these types of coverage arrangements, so Lilly clearly sees where the marketplace could be heading (Trump win brings uncertainty to pharma, November 9, 2016).

And given that the full retail price may be charged to diabetics paying out of pocket for insulin, offering discounts might be the only way to ensure compliance – insurers have an incentive to keep patients from hospitalisation due to uncontrolled blood sugar.

The programme uses Blink Health to provide a discount of up to 40% on Humalog, Humulin and Basaglar starting on January 1, 2017. It will be the first time that branded drugs are offered through Blink Health.

Lilly tipped to win

Lilly already looks to be in a position to win the US basal insulin derby in the next six years thanks to Basaglar, and do so in a market that is shrinking by 2% a year.

Novo has sought to replace Levemir with Tresiba – failure by the latter to get first-cycle FDA approval being a huge missed opportunity – while Sanofi is doing the same with a Lantus-Toujeo succession. Lilly will gain $774m in US basal insulin sales between 2015 and 2022, while Novo will see a net gain of $580m as Tresiba replaces Levemir. Sanofi, meanwhile, will see sales erosion of $2.2bn over the same time.

Winners and losers in the US insulin market
    US sales ($m)  
  Product 2015 2022 Franchise growth ($m)
Novo Nordisk Tresiba - 1,721  
  Levemir 1,978 836  
Novo total   2,557 +580
Sanofi Toujeo 152 1,186  
  Lantus 4,463 1,108  
Sanofi total   2,294 -2,169
Eli Lilly Basaglar - 774 +774
Merck & Co MK-1293 - 231 +231
Total  6,593 5,856  
Source: EvaluatePharma

Both Toujeo and Tresiba have targeted a weakness of Lantus, hypoglycaemia, but offer only a modest advantage from the payer perspective. The Institute for Clinical and Economic Research estimates that, compared with Lantus, Tresiba on a basal-only injection plan costs $353,000 more per quality-adjusted life year.

Diabetes shows what can happen when a perfect storm of growing patient numbers, cost pressure and biosimilar entry hits, and Lilly for now appears poised to seize opportunities. Not every biosimilar will be as disruptive as Basaglar, but it does show what is at stake as other complex drugs lose intellectual property protection. 

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

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