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Insights
Executive Briefing
Issue 12, 2016
Supplemental Indications:
Why Manufacturers Want Them and How Payors Could Benefit
Why Manufacturers Invest in Supplemental Indications
The U.S. Food and Drug Administration (FDA) approves
drugs for specific indications, or uses. The indication
identifies the condition(s) a drug is approved to treat, and it
may also identify which patients can be treated with it. For
instance, some drugs may be second-line therapies meant
for patients who have had an inadequate response to other
therapies. The indication may also specify how the drug is
to be used — by itself (monotherapy) or in combination with
other drugs.
Every year, in addition to new drugs, the FDA reviews
dozens of applications for supplemental indications for
previously approved drugs. While new drug approvals tend
to get the lion’s share of attention, supplemental indications
can affect utilization and therefore, spend. In fact, in some
instances, the rate of prescribing for a drug’s supplemental
indications can exceed that for its original indication(s).
If approved, supplemental indications can expand utilization
of the drug in several ways. A supplemental indication could:
• B
roaden the population of potential users – as with
the 2016 approval of Harvoni® for use by some liver
transplant recipients
• M
odify approved uses of the drug – a drug that had
originally been approved as an adjunctive therapy in a
certain condition could be approved as a monotherapy
• A
pprove additional uses – a drug may receive an
indication to treat a condition entirely different from
its original indication. For instance, a drug originally
approved for schizophrenia may gain supplemental
approval for bipolar mania
Between 2005 and 2014, the FDA approved 295
supplemental indications for 164 unique drugs, according
to one study. Fifty-eight of the drugs had two or more new
uses approved during the study period.
Over 10 years, the FDA:
• Approved 295 supplemental indications
for 164 unique drugs
• 58 drugs gained two or more new indications
• Nearly 30 percent of the new indications went
to biologic drugs
New Indications for Specialty Drugs
Nearly 30 percent of the supplemental indications – 85 of
the 295 – approved in those 10 years were for specialty
biologic drugs. Multiple indications are common among
specialty drugs, especially in oncology and autoimmune
categories. IMS Health estimates that by 2020, less than a
quarter of cancer therapies will be single indication. In fact,
from 2005 to 2014, cancer therapies accounted for 80 of
the supplemental indications approved.
CVS Health analysts anticipate as many as 116 new
indications could be approved for specialty drugs
between 2016 and 2018. One example of a drug receiving
supplemental indications post-market is Ocaliva™. Ocaliva
was recently approved for a relatively rare liver condition
— primary biliary cholangitis (PBC). Approval for a
supplemental indication – nonalcoholic steatohepatitis
(NASH) – is expected in 2018. Some analysts think the
NASH indication will push Ocaliva to blockbuster status –
over two billion dollars in sales by 2020.
Others believe uptake will be more muted. Our current
utilization management guidelines limit the drug’s utilization
to the approved indication for PBC.
Drugs with potential near-term supplemental
indications pending FDA review
Autoimmune
Enbrel
Humira (2)
Xeljanz
Oncology
Keytruda
Immunology/Central
Nervous System
Soliris (2)
Economic Implications
The economics of additional indications can be enticing
for manufacturers. Despite the costs associated with the
application and the necessary additional research, new
indications can expand the market and provide a boost to
revenue that compensates for those costs.
Humira: 9 Indications
Approved over 13 Years
Humira®, the world’s top-selling drug, received FDA
approval for nine indications over 13 years. Most recently,
in 2015, Humira was approved to treat a rare inflammatory
skin condition affecting fewer than 200,000 people in the
United States — hidradenitis suppurativa (HS). Due to the
small population affected, Humira qualified for orphan drug
status for this indication, giving the manufacturer sevenyear market exclusivity.
2005 psoriatic arthritis
2002 rheumatoid arthritis
2006 ankylosing spondylitis
2007 Crohn’s disease
2008 plaque psoriasis
The drug also received approval for this indication in the
European Union. In news reports, the manufacturer’s
spokesperson projected peak-year sales potential of $1
billion globally for this indication alone – sufficient reason to
pursue supplemental indications.
2009 juvenile idiopathic arthritis
The benefit to expanded indications for manufacturers
is clear. But can they also benefit payors? In the current
U.S. system, a drug is priced the same for every indication
regardless of variation in efficacy and competitive
landscape. Whether a cancer drug extends life by five
months on average for a lung cancer patient or only two
weeks for a patient with pancreatic cancer, its per-unit
price tag is the same. Humira’s cost is the same whether
it’s used for rheumatoid arthritis, where it competes with 13
other drugs, for Crohn’s disease, where it competes with
four drugs, or for HS, the new indication where it’s the only
FDA-approved option.
2015 moderate to severe hidradenitis suppurativa
2012 moderate to severe ulcerative colitis in adults
2014 moderate to severe Crohn’s disease in children
In the current U.S. system,
a drug is priced the same
for every indication regardless
of variation in efficacy and
competitive landscape
How to Better Align Clinical Value and Net Cost
There are various indication-based approaches to better
align value and cost under discussion in the marketplace.
CVS Health believes that increasing competitiveness by
contracting with manufacturers at the indication level will
create the greatest value for the plans we serve. We will
continue to investigate changing the reimbursement based
on the known variability in efficacy across disease states.
By using reported clinical trial data we eliminate the need
for complex prospective analyses that are fraught with
challenges. These include the time it takes to generate
a positive outcome, and the difficulty in tracking patients
across payors in the fragmented U.S. health care system.
Aligning Pricing and Performance
Pricing models in European countries have been evolving in a value-based
direction for some years, but the process is never simple. Factors taken into
account may include a drug’s effect on the duration of a disease, survival rates,
side-effect profile, quality of life improvement, and size of the potential patient
population. Models differ across the continent, but the more centralized health
care systems in European countries do reduce some of the inherent challenges.
A report from the Institute for Clinical and Economic Review provides perspective
on challenges with indication-specific pricing in the United States. Factors cited in
the report include:
• Complex drug purchasing and
delivery systems
• Unintended pricing effects related
to Medicaid best-price provisions
• Limitations of tier-based formularies
and patient cost-sharing structures
• Restrictions on negotiations related
to off-label indications
• Insufficient data systems and
analytic capabilities
• Legal concerns related to
anti-kickback laws
• Potential misalignment with Medicare
provider reimbursement
These challenges may be daunting, but the European experience, the importance
of the U.S. market to the pharmaceutical industry, and payor focus on cost
management make it a certainty that aligning drug pricing with measures of
performance is a matter of when and how, not if. CVS Health will be a leader in
this process, rolling out indication-based rebates in 2017 and continuing to
evaluate other options that will serve the needs of clients, providers and patients.
If you have questions or would like to learn more about supplemental indications,
please contact us at [email protected].
Sincerely,
Alan Lotvin, MD
Executive Vice President,
CVS Specialty Pharmacy
This document contains references to brand-name prescription drugs that are trademarks or registered trademarks of
pharmaceutical manufacturers not affiliated with CVS Health.
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