Monday, October 03, 2011

Insulin Pricing: Let The Battles Begin

In the same week that Novo Nordisk filed its latest-generation insulins, ultra-long-acting Degludec and the DegludecPlus combo, in Europe and the US, the drug makers says it won't be seeking the highest price it feels its new offerings could command.

"We could probably justify a higher price premium [for Degludec] than in reality we can ask for," acknowledged EVP & CSO Mads Krogsgaard Thomsen in a Sept. 28 phone call. He alluded to a host of health economic outcomes research the Danish group has carried out on its new products from Phase II onwards, but admitted that "the financial crisis and the focus on short-term financial optimization rather than long-term societal costs" means Novo won't push its luck.

You bet it won't. Even without the financial crisis, insulin pricing is becoming a hot issue as governments and payers try to cut down on the costs of a disease that's spreading fast. Never mind that insulin's value-proposition is still significantly better than that of many cancer drugs. Never mind the argument about long-term cost-savings from effectively controlling diabetes. The bottom line is that older insulins are cheaper, and not that much less effective, at least according to this BMJ Open article published Sept. 22 . That piece went on to declare that the U.K. NHS could have saved over £600 million between 2000 and 2009 if it had prescribed human instead of analog insulins. (The Germans reached a similar conclusion years before).

Now as with any analysis, the BMJ study wasn't perfect. Many would dispute the size and value of analogs' advantages over the human version. But by underscoring the high overall cost of insulin treatment, it comes to a conclusion that "should scare the daylights out of the major insulin companies," according to Diabetic Investor publisher David Kliff.

Indeed, NICE, the cost-watchdog for England and Wales, was quick to jump on the bandwagon, issuing a release Sept. 26 to remind the world that it recommends using human insulin treatment as first-line, and that had those guidelines been followed, those millions would have been saved.

If some payers aren't even convinced about the relative value of so-called 'modern' insulins (now 15 years old) and still recommend versions first introduced in the 1980s, what hope for the positively futuristic Degludec, a next-next-next generation version of this hormone first discovered in 1921?

Novo management itself hinted in this IN VIVO feature from 2007 that Degludec may represent the last innovation round in injectable insulin -- in other words, we're reaching the point where it can't get any better. The remaining challenges are education, adherence, convenience, delivery -- which, along with lack of new products, explains Sanofi's integrated service strategy.

Still, Degludec is better, Novo argues. But the company will have to work hard to prove it. A decrease in night-time hypoglycemic events may not be enough to convince all, though flexible dosing ("at any time of day, on any day"), a Lantus-beating half-life and a nice device will help.

Novo's remarks on pricing arguably represent its opening hand in payer-negotiations that will occur against a backdrop of already-raging pricing battles in the ranks of less-innovative insulins. Lilly in particular is attempting to squeeze whatever it can from a dwindling, market-trailing franchise that lacks new products: when Novo (prematurely, as it turned out) withdrew its human insulins in the UK in 2010, Lilly lowered the price of its human insulins to secure Novo's patients.

Meanwhile, Lantus goes off patent in 2015, after which time biosimilars (including one from Lilly) could start to pull down the price not just of Lantus, but of other basal insulins including Novo's own Levemir (though admittedly, biosimilar insulin isn't the most attractive target for large-molecule copycats).

In sum, we're not surprised Novo's saying it won't be greedy. The question is, will it get anything at all? And as regards the BMJ paper: "I expect there will be a reaction from leading diabetologists," predicted Thomsen.

In other words, keeping watching this space. There will be more to come.

image by flickrer james.gordon6108 used under creative commons

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