Regulation

Wrong again

Why Sarepta's $300K price for DMD drug invalidates reasons for accelerated approval

Despite the fact that Sarepta Therapeutics Inc. did many, many things wrong in the development of Exondys 51 eteplirsen, in early May we took the position that FDA should grant accelerated approval to treat Duchenne muscular dystrophy.

We still believe accelerated approval was the right decision. Unfortunately, judging by the $300,000 annual net cost for a drug that at this point is only "reasonably likely" to produce a clinical benefit, it looks like Sarepta is continuing to get it wrong.

Unless the company engages in risk-sharing or pay-for-performance deals with payers, the high price will prevent broad access to the drug -- and giving patients broad access was the best reason to grant this drug accelerated approval.

Our reasons for supporting accelerated approval of Exondys 51 were largely the same as those cited by CDER Director Janet Woodcock in her decision memo last week. To recap: accelerated approval is intended precisely for drug candidates like Exondys 51 where the medical need is great and efficacy is likely -- but not yet proved.

Looking at the totality of the evidence, Woodcock determined it is reasonable to conclude that Exondys 51 is likely to be efficacious for some DMD patients -- "some" being the key word.

Woodcock's statements at an April advisory committee meeting also addressed a key rationale to provide access to the drug: There was an obligation to consider the enormous risk that some DMD children would die if they were denied a drug that is reasonably likely to be efficacious in some patients.

Moreover, the drug appears to be safe. Although there aren't a lot of data on this, BioCentury has spoken with parents who are active in the DMD community and believe they are very well aware of the limitations of the data. They understand the benefit-risk trade-off and have judged it acceptable.

Unlike many critics who assume that DMD parents' desperation is so great that they would do anything and try anything for their children, we emphatically believe that patients and caregivers living with any disease are the only stakeholders who are in a position to say what benefit-risk trade-off is acceptable.

No one, including proponents of access to Exondys 51, can take lightly the unsavory fact that accelerated approval has rewarded Sarepta for its woefully inadequate development program, its stubborn refusal to heed FDA's advice and its irresponsible public communications about early data and its interactions with regulators. But the point is that the patients should not pay the price for the company's hubris.

Unfortunately, the company is now expecting public and private payers to foot an enormous bill of $300,000 per year, on average, for a drug whose benefits will have to be proven and quantified postmarket.

On a call announcing the approval, Sarepta President, CEO and CMO Ed Kaye said the company tried to be thoughtful and had set the price "in the middle of the range" for Orphan drugs. SVP and CFO Sandy Mahatme added that in setting the price, the company considered the time and cost of developing Exondys 51 and its commitment to reinvest in R&D of new medicines.

While recouping an investment is an essential incentive to pursue risky innovation, a company's R&D expenses have no bearing on value delivered to patients or healthcare systems.

If Exondys 51 really does slow or stop muscle degeneration in boys with DMD, giving them more years of being able to walk and play and care for themselves, then maybe $300,000 is fair value.

But if the drug doesn't work, the value to patients is $0. Any fair pricing or reimbursement scheme needs to account for that possibility.

Even setting aside the state of public outrage over drug pricing and its impact on industry as a whole, it is simply unconscionable to demand that public and private payers shell out top dollar for a drug whose efficacy, in management's own words, has not yet been established.

Limited access

Sarepta declined to provide an interview. But the company told BioCentury via email that it has been talking with payers for six months to understand their position on pricing and reimbursement of Exondys 51. The email said Sarepta expects wide reimbursement based on those discussions, which have not included risk-sharing or pay-for-performance deals.

Payers who spoke to BioCentury were not optimistic.

Michael Sherman, CMO at regional insurer Harvard Pilgrim, told BioCentury he'd not had any discussions with Sarepta. But, he said, "I do not think we will be able to get any pricing concessions from Sarepta for this drug, given the lack of competing treatments for this condition."

Exondys 51's label has no restrictions based on age or level of function. But if the company does not agree to develop a value-based arrangement, payers will almost certainly restrict coverage to patients who meet the same criteria as those in Sarepta's trials: ambulatory boys 7-13 years old.

"I anticipate that we will limit the drug to the 13% of those with DMD with the appropriate mutation, as well as to the demographics consistent with the evidence that has been presented. Any other request would be subject to individual consideration," said Sherman.

J. Mario Molina, president and CEO of Molina Healthcare, agreed such restrictions are likely: "How do we pay for it and how do we handle requests for things not covered by the study?" he said.

Molina Healthcare is a Medicaid provider. According to Annie Kennedy, SVP of legislation and public policy at patient advocacy organization Parent Project Muscular Dystrophy (PPMD), Medicaid covers about 60% of DMD patients.

Restricting access is a tactic familiar to Medicaid programs. They have successfully restricted HCV drugs like Harvoni ledipasvir/sofosbuvir and Sovaldi sofosbuvir from Gilead Sciences Inc. to only the sickest patients, despite their broad labels and impressive data demonstrating high cure rates.

Medicaid programs also have restricted access to Orphan drugs that cost less than Exondys 51 and have much better data.

In 2014, three cystic fibrosis patients sued the Arkansas state Medicaid program for denying coverage of Kalydeco ivacaftor from Vertex Pharmaceuticals Inc. The program required that patients progress on standard of care before allowing them to add Vertex's drug.

Compared to Exondys 51, Kalydeco had a much more robust data package and a well-designed and executed clinical program. Kalydeco's wholesale acquisition cost was and still is $300,000 per patient. WAC does not account for discounts or rebates, including the mandatory Medicaid rebate of at least 23%.

On its call last week, Sarepta said its $300,000 annual net cost figure did account for government rebates, but management declined to answer analyst questions about the gross to net discount.

It is possible to estimate a gross price based on the per-vial WAC of $1,600 for 2 mL and $8,000 for 10 mL that management reported on the call. A 2 mL vial contains 100 mg and a 10 mL vial contains 500 mg according to Exondys 51's label. Using either one 10 mL vial plus three 2 mL vials, or eight 2 mL vials to treat a 25 kg patient with 30 mg/kg/week translates to an annual cost of $665,600.

Fair is fair

In Kalydeco's case, the Arkansas Medicaid agency eliminated the need for progression on other SOC. However, the agency maintained reauthorization criteria for refills.

Arkansas requires demonstration of a treatment benefit defined as stabilization or improvement in FEV1; stabilization or improvement in weight gain; or reductions in exacerbations and/or hospitalizations. The reauthorization criteria did not stipulate how soon the treatment benefit must be demonstrated.

Similarly, Harvard Pilgrim restricted use of Vertex's CF drug Orkambi ivacaftor/lumacaftor after the biotech declined to negotiate a pay-for-performance deal for the agent, which has an annual WAC of $259,000.

Harvard Pilgrim will cover the first six months of therapy, but the payer will review the evidence of treatment benefit before it provides further reimbursement. The predetermined continuation criteria include favorable changes or stabilization in FEV1, weight gain and exacerbations.

PPMD's Kennedy told BioCentury that restrictions on access to Exondys 51 would be a huge disappointment. "We know that treatment and therapy will be most optimal if we can start treating and diagnosing early and we don't want the patient to be declining, and have fibrosis before treating," she said.

A fair alternative would be for Sarepta and payers to develop risk-sharing schemes that enable payment only for patients who benefit from treatment, given the uncertainties about the extent to which Exondys 51 works -- and the lingering possibility it does not work at all.

Flaws in Sarepta's development program and the small numbers of patients tested will make it very difficult to determine what constitutes a response and when it could be detected. Moreover, given the drug's price and the amount of time it could take to figure out how to determine responses, the postmarket experiment is likely to be an expensive one.

If Sarepta does not play ball, it would be reasonable for payers to develop their own criteria. However, this only should take place with input from patients and clinicians who treat DMD. Patients and parents can help determine what constitutes a meaningful benefit, and clinicians can advise when response should be evaluated.

PPMD wouldn't comment directly on whether developing response criteria for reimbursement decisions was reasonable. However, said Kennedy, "people with Duchenne and clinicians with direct expertise in Duchenne need to be at the table in any discussion concerning criteria around reimbursement decisions."

PPMD can provide data from patient preference studies to help determine which outcomes to measure.

"For us, the cost matters to the extent that these products are yielding the benefit that patients really value, and our preference studies have shown that families value the slow of the decline of muscle function over everything else right now," Kennedy said.

Founding President and CEO Pat Furlong noted that the North Star Ambulatory Assessment is a better test of function in ambulatory boys than the six-minute walk test (6MWT) measured in Sarepta's and other DMD trials.

"It is much better than the six-minute walk test. It is a crystal clear evaluation: can they walk, not, or need help -- 0, 1 or 2," she told BioCentury.

PPMD also can help collect response data. The group has expanded its Duchenne Connect patient registry to track outcomes that might be useful for payers.

"We've added data points to that registry that will enable longitudinal tracking and allow payers to pool data, and will help to inform, over time, how patients who have gone onto approved products have impacted things like the cost of care, care utilization and how ultimately the drug has impacted clinical outcomes," Kennedy said.

Weighty matters

Another risk to payers, and therefore to patient access, is that treatment costs could go up if the approved dose of Exondys 51 is significantly too low, as is the consensus belief within FDA (see "Digging into Dosing," page 9).

Ellis Unger, director of the Office of Drug Evaluation I at FDA, hypothesized the dose may need to be increased from 30 mg/kg/week to 30 mg/kg/day. At seven times the weight-based dose Sarepta used to calculate its net cost estimate, the annual charge would rocket to $2.1 million.

A cap or ceiling on annual drug costs per patient could allow patients to receive the optimal dose without breaking healthcare budgets.

"Plans are already aware of this risk and they are already looking at things like putting a per-patient per-year cost ceiling into any sort of contract for this," Dan Mendelson, president of the Avalere Health consulting business of Inovalon Holdings Inc., told BioCentury.

The caps would be similar to those negotiated by payers this year for hyperlipidemia agent Repatha evolocumab from Amgen Inc. in which the biotech agreed to rebate any costs for prescriptions that exceed the cap.

All this means children with DMD will continue to face uncertainty about access to a potential treatment. The reward of FDA's approval will mean little unless it is coupled to access, and Sarepta has a special responsibility to ensure that it is. The approval of Exondys 51 was borne on the back of tremendous sacrifice from and commitment by DMD patients and their families, and they deserve no less.

Companies and Institutions Mentioned

Amgen Inc. (NASDAQ:AMGN), Thousand Oaks, Calif.

Gilead Sciences Inc. (NASDAQ:GILD), Foster City, Calif.

Harvard Pilgrim Health Care Inc., Boston, Mass.

Inovalon Holdings Inc. (NASDAQ:INOV), Bowie, Md.

Molina Healthcare Inc., Long Beach, Calif.

Parent Project Muscular Dystrophy (PPMD), Hackensack, N.J.

Sarepta Therapeutics Inc. (NASDAQ:SRPT), Cambridge, Mass.

U.S. Food and Drug Administration (FDA), Silver Spring, Md.

Vertex Pharmaceuticals Inc. (NASDAQ:VRTX), Boston, Mass.

References

Cukier-Meisner, E. "Just to confirm." BioCentury (2016)

McCallister, E. "Results may vary." BioCentury (2016)

Usdin, S. and Schaeffer, S. "Don't skip DMD patients." BioCentury (2016)