By Emily O’Connor, Jillian Scaife, and Ryan P. Million
Biopharmaceutical drug discovery companies have progressively tailored their pipelines to specialty therapeutic areas and smaller patient populations.
However, the specialty business model has lately shown signs of strain and outright constraints in continued scalability. Agents such as Gleevec, Zaltrap, and Sovaldi have been under fire from physician groups and government officials in recent months for high price points. Companies have also increased the prices of drugs already on the market in recent years, raising questions about the overall costs to the healthcare system. A careful review of the market environment yields three key challenges to the focus on specialty indications that are particularly critical for drug companies.
- Increased competition.
- Finding patients who benefit.
- Market access (including accessibility, pricing, and reimbursement).
As the market for specialty biopharmaceuticals has become more lucrative, companies have naturally responded by moving aggressively into these therapeutic areas. The result has been a dramatic increase in clinical development pipelines, particularly oncology. Whether viewed through the lens of new mechanisms of action (MOA) or specific indications such as multiple sclerosis or renal cell carcinoma, multiple branded agents are now available. Even the most promising emerging MOAs such as PD-1 and CDK-4/6 inhibitors have multiple entrants in the pipeline despite their newer status and compressed clinical development time frames. This has put incredible pressure on companies to move quickly, as many of these markets exhibit advantages for early entrants or even a “winner-takes-all” dynamic due to a new product’s potential to significantly raise the efficacy standard.
Once on the market, the challenge of finding the patients who stand to benefit has also emerged, especially for drugs that target biomarker-defined subpopulations. Timely and efficient patient identification is often essential to getting the best outcomes. However, implementing best practice screening, diagnosis, and treatment paradigms is a work in progress, often with evolving goals due to rapidly progressing scientific and clinical advances.
Global healthcare systems have reacted to specialty brands in different ways. In the US market, both commercial and government payers have had limited tools to manage the usage of these high-priced medications. Despite letters from Congress and negative headlines, these agents are typically managed by cost sharing with patients, through co-insurance and/or tiering for commercially insured patients and the donut hole/catastrophic coverage in Medicare. This has raised affordability issues for many patients even though they are covered by medical insurance.
Evolution of the specialty business model
To manage these challenges, leading companies are focusing more than ever on innovation, partnership, differentiation, and value. Traditional pharmaceutical companies have been adopting new R&D models that seek to identify innovation early through new partnership structures with biotechnology companies and academic institutions alike.
Further, companies are reacting to increased competition by seeking evidence of clinical and commercial differentiation much earlier in the development process to drive resourcing decisions and mitigate future risk. As clinical and commercial teams work closer together, this emphasis will result in first-in-class, best-in-class drugs that separate from current competition and existing treatment options.
Close coordination with diagnostic partners and other technology providers are also often required to find patients who stand to benefit from these novel therapies. Once identified, companies are focusing on additional services such as affordability support, adherence programs, call centers, and other patient support platforms. Although adjacent to traditional drug therapy, companies that pay attention to the entire patient journey will develop their markets more effectively.
Finally, in response to global markets’ focus on cost containment, leading companies are working on building health economic and outcomes research (HEOR) capabilities to demonstrate value through evidence-based medicine and comparative effectiveness. In the last 10 years, membership to the International Society for Pharmacoeconomics and Outcomes Research (ISPOR), the premier HEOR society, has more than quadrupled to over 13,000 members worldwide, a testament to the growing importance of this field.
Emily O’Connor is a Senior Manager at Amgen, Jillian Scaife is a Principal at Trinity Partners, and Ryan P. Million is a Partner at Trinity Partners.