Global Oncology Challenges

22nd Annual 22nd Annual
Cancer Progress Conference Cancer Progress Conference

Oncology Market Overview: Barriers, Challenges and
Value
Bill Bagwell, RPh, Senior Vice President, Clinical and Scientific
Assessment, Kantar Health
Rhoda Dunn, Account Director, Market Access, Kantar Health
1
ONCOLOGY MARKET OVERVIEW:
BARRIERS, CHALLENGES AND VALUE
Cancer Progress
March 9, 2011
Copyright 2011 Kantar Health
KRAS
3
EML4-ALK
MAGE-3A
PARP
PI3
B-RAF
CD20
IGF-1R
ALK / c-Met
CYP17A1
CMS
4
CER
NICE
CT
AHRQ
PCORI
ICER
HEOR
HTA
QALY
Agenda
Increasing prevalence in cancer offset by economic challenges
and increasing competition
R&Ds contribution to commercial success: Safety, efficacy and
pharmacoeconomics
Nothing in life is freeespecially not pricing
5
INCREASING PREVALENCE IN CANCER
OFFSET BY ECONOMIC CHALLENGES
AND INCREASING COMPETITION
6
GLOBAL SALES OF TOP 100 DRUGS: Over the last decade,
cancer drugs have become a major therapeutic category
7
$93 billion, of which 8.9 billion
came from ten cancer drugs
$282 billion, of which $51 billion
came from 20 cancer drugs
Source: Med Ad News
1998 2009
REVENUE PER CANCER PATIENT FUELS INNOVATION:
But how sustainable is this growth?
8
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R
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0
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s
)
A
v
e
.

R
x

P
r
i
c
e

(
$

p
e
r

R
x
)
Note: Total Rx data in $ thousands, average price data $, for Top 10 branded products: Femara, Aromasin, Xeloda,
Gleevec, Tarceva, Temodar, Sutent, Sprycel, Tykerb and Avastin
Source: Wolters Kluwer Source Pharmaceutical Audit, Retail channel,
CANCER PREVALENCE ON THE RISE: Demand for treatment increases due
to aging population and serial incremental improvements in treatment outcomes
9
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Source: CancerMPact, Kantar Health. Accessed 10 Feb 2011
*Includes hematologic malignancies any stage and Stage IV solid tumors
First- and Second-line Actively Treated Cancer Patients, 20052025 (projected)*
2009 Estimates of Population in the EU Big 5 and the U.S.
France Germany Italy Spain UK EU
Average
United
States
Population
(millions)
62.6 82.8 58.1 45.8 61.9 EU 15:
392,518
EU 27:
497,444
307,212
(July 2009
est)
% Population >65
years of age
16.40% 20.30% 20.20% 18.10% 16.20% 17.34% 12.80%*
Life expectancy 80.98 79.26 80.20 80.05 79.01 78.67 78.11
Mortality
rate/1000
population
8.56 10.90 10.72 9.99 10.02 10.28 8.38
% Mortality due
to cancer
28.9%
(2006)
25.7%
(2006)
28.8%
(2006)
25%
(2005)
29.2%
(2007)
N/A 24%
(2005)
*28% of the U.S. population falls in the Baby Boomer population.
Sources: 1. OECD Health Data 2009, with an EU average referencing the EU 15.
2. CIA, The 2009 World Factbook, with an EU average referencing the EU 27. https://www.cia.gov/library/
publications/the-world-factbook/geos/US.html. Accessed August 24, 2009.
3. OECD Factbook 2009. OECD Web site. http://puck.sourceoecd.org/vl=10780095/cl=11/nw=1/rpsv/
factbook/02/01/01/index.htm. Accessed August 13, 2009.
10
CANCER IS LARGELY A DISEASE OF AGE, making cost of care
a public issue even in the U.S.
11
Commercial
Uninsured
Military
Medicare
Medicaid
Cancer Coverage for All Tumors in 2011
All Stages: 5 year prevalence
Source: KantarHealth, Oncology Marketing Strategies U.S., Jan 2011
THOUSANDS OF PATIENTS
IMPACT OF EXPANDED ACCESS TO COVERAGE:
A substantial increase in covered lives by 2014
12
Source: Centers for Medicare and Medicaid Services (September 2010).
PHI: Private Health Insurance, Other Public includes Military and Indian Health Services (IHS)
46 47
48
52
61
52
60 62
85
82 12
13
12
13
15
167
162 161
168
165
27
27 26
14
11
16
31
44
50 52
26
24
0
50
100
150
200
250
300
350
400
2009 2010 2011 2014 2019
Uninsured
Exchanges
Other PHI
Employer PHI
Other Public
Medicaid/CHIP
Medicare
Health Insurance Enrollment (Projected)
By Source of Funds, Selected Years 20092019
M
i
l
l
i
o
n
s
BOTTOM LINE FOR CANCER: Increase in covered lives translates
to an additional 68,000 cancer patients in 2014
13
2014 Insurance Mix Stage III and IV Cancer Without and With Potential Reform
59,944
59,944
1,378,204 1,378,204
90,868 98,893
727,274
787,252
178,544
110,542
Without Reform With Reform
Military
Medicare
Medicaid
Commercial
Uninsured
+9%
-38%
+8%
Source: Kantar Health Coverage Estimator (2010 based on 2014 population) for Stage III and IV Cancer Population; CBO,
Estimated Effects of the Insurance Coverage Provisions of the Reconciliation Proposal Combined with H.R. 3590 as
Passed by the Senate, 3/20/2010
THE COST PROBLEM PREVAILS:
Absolute and relative health expenditures will continue to rise
14
2011 marks the first year that U.S. public health expenditures outpace private health expenditures
The increase in percentage of GDP growth is exacerbated by the recessions constriction of GDP
Slowing the rate at which healthcare costs rise will be an enduring Congressional challenge
13.60%
15.60% 16.20%
17.90%
19.20%
20.00% 20.37%
596
840
1,107
1,446
1,919
2,184 2,340
756
1,015
1,232
1,406
1,877
2,114
2,232
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$0
$500
$1,000
$1,500
$2,000
$2,500
2000 2004 2008 2012
Projected
2016
Projected
2018
Projected
2019
Projected
% of GDP Public Private
Source: Congressional Budget Office (August 2010), Centers For Medicare and Medicaid Services (September 2010).
E
x
p
e
n
d
i
t
u
r
e
s

(
$

B
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l
l
i
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n
s
)
T
o
t
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l

H
e
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l
t
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e

S
p
e
n
d
i
n
g

a
s

S
h
a
r
e

o
f

G
D
P
Public Versus Private Spending, 20002019 (Projected)
ENTITLEMENT PROGRAMS FUEL MANDATORY SPENDING: Solutions
that threaten entitlement programs or increase taxes are unpalatable
15
Source: Congressional Budget Office, The Budget and Economic Outlook: An Update (August 2010).
Cumulative Public Debt and Budget
Deficits, 20092020
Shares of Federal Spending Projected
in 2020
Mandatory
Defense
Net
interest
Other
spending
Medicare
Medicaid
Social Security
Exchanges
Other health: 1%
14%
10%
21%
2%
R&DS CONTRIBUTION TO COMMERCIAL
SUCCESS: SAFETY, EFFICACY AND
PHARMACOECONOMICS
16
MEGA BRANDS AND ONCOLOGY: They exist, but are not
commonplace despite the success of Genentech/Roche
Source: Delphi Pharma, Market Forecasts
MEGA BRAND OUTLOOK: Market pressures, segmentation and
increased competition limit prospects
The Future of the Mega Brand in Oncology
Source: Kantar Health, Inc., September, 2010
Driver Impact on Net Sales
PRICE
Life cycle challenges:
Patent cliffs
Biosimilars

Direct competition
/
Budget Limitations: More patients drawing on the
public dollar

Formulary considerations:
Comparative effectiveness analysis (U.S.)
Health technology assessments (ex-U.S.)

QUANTITY
Prevalence: on the rise in many tumor types

Demographics: More cancer patients covered

18
BIOSIMILARS: All three oncology mega brands are at risk for
generic competition in the next few years
EPO Neupogen Herceptin Rituxan Avastin
Market launch 1990 1991 1998 1997 2004
Patent expiry 2013 2013 2015 2015 2017
Data exclusive
expiry
2002 2003 2010 2009 2016
Market open to
biosimilar entrant
2013 2013 2015 2015 2017
19
Source: The Lewin Group and i3 Innovus for Department of Health and Human Services, Office of the Assistant Secretary for
Planning and Evaluation (July 2009), Economic Analysis of Availability of Follow-On Protein Products, retrieved from
http://aspe.hhs.gov/sp/reports/2009/fopps/index.shtml
COMPETITION IS FIERCE:
Manufacturers seek to turn unmet need into good business
20
* Some medicines are listed in more than one category
Source: 2009 Report, Medicines in Development for Cancer, PhRMA, www.phrma.org, downloaded July 20, 2009
Medicines in Development for Cancer*
74
55
27
67
27
103
54
63
52
99
122
35
129
44
34
70
13
106
61
23
Unspecified cancers
Other cancers
Stomach cancer
Skin cancer
Sarcoma
Prostate cancer
Pancreatic cancer
Ovarian cancer
Multiple myeloma
Lymphoma
Lung cancer
Liver cancer
Leukemia
Kidney cancer
Head/neck cancer
Colorectal cancer
Cervical cancer
Breast cancer
Brain cancer
Bladder cancer
SOME TUMOR TYPES WILL SEE WINNERS AND LOSERS:
When differentiation fails, therapies must jockey for position
21
7,181
7,607
10,854
10,632
10,795
11,534
11,982
12,414
12,844
2004 2005 2006 2007 2008 2009 2010 2011 2012
Interleukin-
2 Interferon
Nexavar
Interleukin-
2 Interferon
Sutent
Nexavar
Interleukin-
2 Interferon
Torisel
Sutent
Nexavar
Interleukin-
2 Interferon
Torisel
Sutent
Nexavar
Interleukin-
2 Interferon
Votrient
Avastin
Afinitor
Torisel
Sutent
Nexavar
Interleukin-
2 Interferon
Votrient
Avastin
Afinitor
Torisel
Sutent
Nexavar
Interleukin-
2 Interferon
Votrient
Avastin
Afinitor
Torisel
Sutent
Nexavar
Interleukin-
2 Interferon
Anyara
AV-951
Axitinib
Rencarex
Votrient
Avastin
Afinitor
Torisel
Sutent
Nexavar
Interleukin-2
Interferon
# products, advanced 5 5 8 8 8 10
# lines of therapy, advanced 3 3 4 4 4 4
# products, high-risk Stage III 1 3
Increase in new products 1 0 3 0 1 2
Adjuvant
therapy for
Stage III
represents an
additional
3,000-5,000
patient
opportunity
Source: CancerMPact Kantar Health. Accessed 10 Feb 2011
RCC Drug-treated Patients and Potential Drug Therapy Options by Year
(Actual through 2009 and Projected through 2012) RCC patients receiving drug therapy
OTHER TUMOR TYPES WELCOME NICHE POPULATIONS: Smaller
more defensible market segments reduce the value of plan interventions
22
86%
14%
37%
14%
20%
24%
1%
4%
14%
20%
24%
20%
16%
2%
1%
18%
4%
2000 2006 2009
Non-small
cell
Small cell
Adenocarcinoma
Other and non-
specified
Large cell
Small cell
Squamous
Other non-
small cell
Other and non-specified 1%
Large cell
Small cell
Squamous
Other non-
small cell
KRAS
EGFR
BRAF
1%
PIK3CA
1%
EML4-ALK
HER2
Pending
Source: CancerMpact Patient Metrics, October 2008; SEER
THE CURRENT SITUATION: Budget constraints introduce the
importance of value, which must be cultivated in the development phase
23
HTA /
economic
evaluation
Budgeting
Quality
Policy level
Regulatory considerations National and regional payer
considerations
National / regional / local
1 1 3 3 4 4 5 5 2 2
Safety
Efficacy
HTA: Health technology assessment
MACROECONOMIC FORCES PRECIPITATE TOUGH CHOICES:
Balancing clinical and cost effectiveness in the face of limited funds
Drug A costs 10,000 and results
in 5 QALYs
Cost/QALY = 10,000/5 = 2,000
2,000,000 = 1,000 QALYs
Drug B costs 100,000 and results
in 10 QALYs
Cost/QALY = 100,000/10 = 10,000
2,000,000 = 200 QALYs
Conclusion
Drug B is more clinically effective and Drug A is more cost effective.
If the policy goal is to maximize population health gains, then Drug A
must be used.
Maynard A. Rational Pharmacology and Health
Economics.
24
PILLARS OF VALUE: Consider your audience
Safety
Efficacy
Tolerability
Quality of life
Disinvestment (i.e., decreased
utilization of healthcare goods
and services)
Practice economics
DEFINING VALUE: Comparative effectiveness vs. cost effectiveness
Concept Definition
Comparative effectiveness
analysis
Comparison of the health outcomes of the
drug/technology with available alternatives
Cost effectiveness
analysis
Analysis as to whether improvements in health
outcomes are commensurate with the additional
costs of the technology
Quality-adjusted life years (QALYs) is the most
common, but not exclusive, metric used
26
THE PURSUIT OF COMPARATIVE EFFECTIVENESS IN THE US:
Changing names and steering committees, but charter consistent
27
CER FUNDING GROWS: General revenues and contributions from the
Medicare trust fund and private health plans fuel comparative effectiveness
28
Note: Medicare Beneficiary Transfer Fee and Private Beneficiary Fees estimated based on Aug 2010 HHS estimates of
beneficiary enrollments.
CER Funding American Recovery and Reinvestment Act
of 2009 and Affordable Care Act of 2010
$ Millions
FRAGMENTATION CHALLENGES CER EFFORTS:
But does not stymie them
Confounding factors include:
Presence of target
Primacy of target
Existing and developing genetic mutations
Relative contribution of multiple lines of therapies
Size of eventual population and ability to accrue trial patients
29
THERE IS NO SUCH THING AS FREE
ESPECIALLY NOT PRICING
30
31
E.U.
Up front
+ Reference pricing
+ Price-volume agreements
+ HTA-driven formulary decisions
Back end
+ Claw-backs, rebates and/or
discounts
PRICE CONTROLS: Well established in the E.U.
PRICE CONTROLS: Well established in the E.U. and not new to the U.S.
E.U.
Up front
+ Reference pricing
+ Price-volume agreements
+ HTA-driven formulary decisions
Back end
+ Claw-backs, rebates and/or
discounts
U.S.
Up front
+ Medicaid rebate formula/
340B discount
+ VA pricing
+ Medicaid Federal Upper
Limit (FUL) pricing
Back end
+ Rebates and discounts
32
<65,
no SSI
>65, SSI
3,081
4,220
MEDICARE DOMINATES CANCER COVERAGE:
Medicare covers approximately 58% of cancer patients
33
Medicare FFS only
Dual (Medi-Medi)
VA
Medicare Advantage
Medigap
Retiree
Source: Kantar Health, Oncology Market Access U.S., 2011
Cancer Coverage for All Tumors in 2011
All stages: 5-year prevalence,
thousands of patients
Medicare Coverage Segments
All stages: 5-year prevalence,
thousands of patients
Uninsured <65, treated
Uninsured <65, not treated
8
1,226
896
1,016
562
44
32
435
34
393 Vintage Park Dr., Suite 250
Foster City, California 94404, U.S.A.
Tel: (650) 403-7012
Fax: (650) 403-7062
E-mail: info@kantarhealth.com
URL: www.kantarhealth.com
Please contact us if you have any questions.
US:
Rhoda Dunn
rhoda.dunn@kantarhealth.com
Bill Bagwell
bill.bagwell@kantarhealth.com
35
PHARMACOECONOMIC CONSIDERATIONS IN THE EU: Existence of
institutionalized cost-effectiveness analyses drives reimbursement price
European Comparison of Cancer Drug Prices, May 2010 ()
Source: Kantar Health Oncology Market Access, 2010
Country Specific Information
France: A new Public Health
Benefit and Post-Launch Studies
Group (ISP-EP) is expected to
provide ex ante and ex post
opinions on drugs based on post-
launch study data, including cost
effectiveness data.
Germany: As of 2011, free
pricing will be limited by the on the
outcome of an early benefit
evaluation (f-NB) to be
implemented in 2011
Italy: HTAs operate at the national
and regional levels, although
regional efforts are limited beyond
Emilia Romagna and Veneto.
Spain: Use of cost-effectiveness
analyses is expected to grow with
recent legislation establishing an
expert body to conduct economic
evaluations.
UK: NICEs pursuit of value for
money and cost-effectiveness
drive all aspects of pricing and
reimbursement.
22nd Annual 22nd Annual
Cancer Progress Conference Cancer Progress Conference
Oncology Market Overview: Barriers, Challenges and
Value
Bill Bagwell, RPh, Senior Vice President, Clinical and Scientific
Assessment, Kantar Health
Rhoda Dunn, Account Director, Market Access, Kantar Health
36

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22nd Annual 22nd Annual

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