Catapult is an Innovate UK programme.

Insights into the Big5EU pricing & reimbursement potential of a novel cell therapy currently in early clinical development

November 2014

Case study overview

This case study is on a novel cell therapy which is in the early stages of clinical development:

It is an allogeneic therapy

It is a hospital-only therapy

The size of its target population across the Big5EU is ~10,000

The Health Economics and Market Access team of the Cell Therapy Catapult undertook an assessment into the pricing and reimbursement potential of this therapy in order to:

Assess commercial opportunity across the Big5EU

Guide evidence generation activities during clinical development so that data requirements for market access can be met at launch

Build a value proposition encompassing the most impactful clinical and economic drivers so that price and market access opportunity is maximised

2

For the purpose of confidentiality the product and the target indication have been anonymised

Developing a robust pricing strategy involves leveraging multiple frameworks

PRICE

QUAL/QUANT

PRICING

METHODOLOGIES

ANALOGUE

ANALYSIS

HEALTH

ECONOMICS

The role of health

economics varies by

geography

Methodology Triangulation

3

We employed a combination of health economics, analogue analysis and pricing research frameworks to assess reimbursed price potential

•Phase 2• Key Market Access

Stakeholder Engagement

Phase 1Health Economics (HE) & Analogue

Analyses

Phase 3Market Access

Strategy Development

First, we identified a health-economically justified price based on:

The clinical and economic burden of the target population

The Target Product Profile (TPP) of the novel cell therapy

The cost-utility methodology applied by NICE (England)

Based on the HE analysis and market access insights from analogues, we developed hypotheses on the interrelationship between therapeutic positioning, pricing and reimbursement

We consolidated the findings from previous phases, and proceeded with the analysis and the development of conclusions and recommendations including:

Interrelationship between positioning, pricing and reimbursement

Revenue-maximising price

Data generation activities for market access optimisation

Through discussions with key market access stakeholders, we tested our hypotheses and generated further insights into:

The key value drivers of the novel cell therapy

Willingness to pay

Supporting data requirements for market access optimisation

4

We followed the principles of value-based assessments and linked price potential to the magnitude of the novel therapy’s added-value over the standard of care

Reference value (SOC)

Positive differentiation

value

Negative differentiation

value (NDV)

V

RV

PDV

V = RV + PDV - NDV

NDV

Reference Value of Standard of Care (SOC)

Comparative data against the SOC is required:

Comparative, head-to-head (H2H) data demonstrating superiority or non-inferiority of Product X against the SOC is preferred

Indirect comparisons of high methodological standards usually sufficient for non-inferiority claims

Differentiating Value e.g.

Clinical effectiveness

Economic impact: budget impact, cost-minimisation, cost-effectiveness, cost-utility

Value (V)

For a given indication, “V” varies depending on the intervention’s positioning in the treatment algorithm and the target patient profile

PRINCIPLES OF VALUE-BASED ASSESSMENTS

5

QALYs gained (B vs A)

Qo

L(u

tili

ty s

co

re

)

Treatment B

Life Years1 2

1.0

0.5

Treatment A

0

The novel cell therapy meets the selection criteria for NICE’s Technology Appraisal (TA), and we therefore used incremental cost-effectiveness as the measure of value

Cost B – Cost A QALY B – QALY A

ICER=

NICE ICER thresholds:

As the novel cell therapy does not meet the end-of-life criteria, the £20-£30K/QALY applies; exact figure depends on:

The degree of certainty around the ICER

How adequately the change in HRQoL is captured

How innovative the technology is

QALYs = Life expectancy (life years) x Quality of life (utility)

Utility determined by EQ5D in TPP

Costs

Only direct healthcare costs were accounted for; wider societal impact was not included

6

B = novel cell therapyA = standard of care

Given the size of the target population, the anticipated incremental benefit and the cost of the novel cell therapy, it is expected to meet the selection criteria for a NICE TA

Based on the NICE TA framework, and the incremental benefits of the novel cell therapy, we identified the price ceiling that meets the ICER threshold

£0

£5,000

£10,000

£15,000

£20,000

£25,000

£30,000

£35,000

£40,000

£45,000

£50,000

Price potential of novel cell therapy(split by its value components)

Value of QALY gain

Outpatient/primary care savings

Savings in hospitalisations

Through systematic evidence review we identified the clinical and economic burden associated with the target patient population; we accounted for:

Current therapeutic approaches and probability-based clinical, Quality of Life (QoL) and economic outcomes

We then applied the outcomes described in the Target Product Profile (TPP) to assess the impact the novel cell therapy has on the above parameters

Using the ICER threshold of £30K we calculated a health economically justified price ceiling

Through sensitivity analysis, we assessed the impact changes in certain TPP parameters have on the price potential

7

To calculate the ICER of the novel therapy we developed a cost-utility model that captures key health states, time-dependent transitions, outcomes and uncertainty

In developing the model we accounted for:

Target population/position in Tx algorithm

Comparators (alternative strategies)

Perspective (NHS)

Time horizon (based on survival data)

Health States

Outcomes: cost, utility and life years

Model Type: State transition Markov model

Analysis: Cohort simulation, Microsimulation

Sensitivity analysis:

Deterministic: univariate / multivariate

Probabilistic (parametric)

Structural

8

Given a certain level of uncertainty in model variables, the health economically justified price results in the majority of ICER values falling below the WTP* threshold

9

ICER scatterplot generated through a Monte Carlo

simulationSoftware: TreeAge Pro 2014

* WTP: Willingness-to-Pay

We then accounted for variations in pricing frameworks across countries and adjusted the health economic argument accordingly

HTA value drivers by market

Country A B C D E

Clinical Effectiveness

QoL

Cost utility

Cost consequence

Budget impact

Cross country price

referencing

illustrative

10

Subsequently, we explored how the HE argument resonates with key market access stakeholders across the Big5EU, as well as willingness-to-pay, therapeutic positioning and supporting data requirements

Main Objectives of Market Access Stakeholder Engagement

1. Identify clinical and economic considerations for assessments at national, regional and local level for a hospital-only cell therapy

2. Explore perceptions of key market access stakeholders of the differential value of the novel cell therapy over existing treatments

3. Explore impact of clinical and HE arguments on willingness to pay and use the novelcell therapy

4. Explore interrelationship between supporting data, price potential and likelihood ofrestrictions being imposed

5. Generate insights into the data inputs for the economic models and their country-specific adaptation

6. Explore funding mechanisms outside the DRG/HRG tariffs

7. Shape future evidence generation activities and value story

France UKGermany Italy SpainScope:

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Understanding the relevant national, regional and local market access processes for a given cell therapy is key in formulating an effective key stakeholder engagement strategy

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CT CEESP

Clinical evaluation Economic evaluation

ASMRSMR Cost-effectiveness

CEPSUNCAM

Reimbursement rate Price negotiation

Council of hospitalization (Ministry of Health)

Inclusion on Hors T2A list (outside DRG)

COMEDIMS

ASMR I, II, III

ASMR IV, V

Market Authorization EMA ANSM

Inclusion in hospital formulary

Local Level

National level

INEK

Hospital P&T Committees Local Level

Market Authorization EMA PEI

Inclusion in Hosp formulary

Process for obtaining additional funding

Hospital P&T Committee

HICs

MDS

Literature review

Arbitration Board

-

NUB funding for 1 year

+

+

No additional funding -

Assessment of eligibility for NUB status

NUB funding negotiation

AIFA - CTS AIFA - CPR

Clinical evaluation Price negotiation

Innovation level and reimbursement status

Budget impact

Regional authorities

HTA / Budget impact analysis/ Funding pathway

DRG

ASLsLocal Level

Market Authorization EMA

Na

tio

na

l le

ve

l

Inclusion in hospital formulary

Re

gio

na

l le

ve

l

Specialized Hospitals

File F

AIFA

Regional authorities

GCPT CIPM

Clinical evaluation Price & reimbursement

Therapeutic positioning report

Budget impact

HTA / Budget impact analysis (for retail drugs)

Hospital P&T committees Local Level

Market Authorization EMA

Na

tio

na

l le

ve

l

Inclusion in hospital formulary

GENESIS Group

Clinical and economic assessment

AEMPS

NICE* (formal assessment)

Local Level

National level

NHS commissioning (Specialized

Services)

Regional Level

NHS hospitals

Horizon Scanning Center

DoH/NICE/NHS Topic selection EMA /

MHRA

Clinical Reference

Groups

Stakeholder engagement strategies need to take into account the specific features of a given cell therapy

Market access routes, decision-makers, evaluation methodologies and funding options can vary depending on:

Regulatory status

E.g. ATMP, non-medicinal cell therapies, cell therapies not intended for licensing, Early Access Schemes

Size of target population

Setting of care

E.g. centre of excellence; inpatient vs outpatient

Unmet need, magnitude of incremental benefit claims and costs

We applied the Value Curve* methodology to identify the most impactful clinical and economic drivers of the TPP

1 2 3 4 5

Key Value: 1 = no 5 = highest

Presentation“Off-the-shelf” allogeneic cells

IndicationTreatment of Disease X

Efficacy Primary endpoint: Induction of remission by day 28

X% of patients on active vs Y% of patients on comparator

Secondary endpoint: Complete response by day 28

X% of patients on active vs Y% of patients on comparator

Additional endpoints: Overall survival at day 180

X% of patients on active vs Y% of patients on comparator

Additional endpoints: Progression-free survival at day 180

X% of patients on active vs Y% of patients on comparator

Additional endpoints: % patients with remission at day 28 who survive to day 90 without rescue therapy

X% of patients on active vs Y% of patients on comparator

Safety and Tolerability No cell related adverse events

No treatment limiting immunogenic effects

Low procedure related AEs: <X% (patients fully recover with no long-term

consequences and no prolonged hospital stay)

Significant Reduction in Outpatient visits X% RR

Significant reduction in length of in-hospital stay X% RR

EQ-5D questionnaire : X% change from baseline LS Mean (95% CI) vs comparator

Dosing

Administration

2 million cells/kg twice over 1 week

Infusion

Overall Value

Pharmaeconomic

and QoL outcomes

* Evaluated by utilising a value curve methodology to derive relative value of product attributes (Kim WC andMauborgne R [1997] Value Innovation: the strategic logic of high growth.Harvard Business Review [January-February]: 103-112)

VALUE CURVE METHODOLOGY*

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Key

ma

rket

acc

ess

sta

keh

old

er e

ng

ag

emen

t

The most impactful clinical and economic drivers formed the basis for the value story and the planning of data generation activities, while accounting for individual market HTA requirements

14

The pyramid structure depicts the transition from the target value proposition, to a series

of value claims and the corresponding supporting data requirements

Value

Proposition

ValueClaims

Supporting Evidence

Summary of incremental value of novel cell therapy over existing treatments

Series of value claims related to: unmet need; clinical

benefits; patient benefits; economic benefits

Clinical and economic supporting evidence

We assessed reaction to the health economically justified price and willingness-to-pay by applying a “van Westendorp” pricing methodology

0

10

20

30

40

50

60

70

80

90

100

0 10 20 30 40 50 60 70

Price per course (Euros)

% o

f re

sp

on

de

nts

Too cheap

Too expensive

Not cheap

Not expensive

Range of target prices for a

breakthrough therapy

Point of marginal expensiveness

Price (£ 000s)

Point of indifference

Fully Justified

Too Expensive

Expensive

Justified

Key

ma

rket

acc

ess

sta

keh

old

er e

ng

ag

emen

t

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Simultaneously we explored the interrelationship between willingness-to-pay, reimbursement restrictions and supporting data requirements

Pri

ce

Marginally Expensive£48,000

Used and reimbursed for

majority of eligible patients, limited

restrictions

Price indifference

£32,000

Widely used with full reimbursement

Expensive≥£50,000

Limited use or reimbursement,

significant restrictions

To

o h

igh

Op

tim

al

To

o L

ow

Potential consequencesRequirements for favourable

access

• Substantial concerns over budget impact

• Delays in getting reimbursement/risk of no coverage

• Severe subpopulation restrictionso For those who would benefit the

most as determined by subpopulation analysis e.g.

• Resistance in usage e.g.o Head of department prior-

authorisation

• Subpopulation specific data demonstrating incremental benefito Product will be restricted in the

subpopulations of highest unmet need and who benefit the most

• Discounts

• Over 2 years safety and efficacy data

• Robust plans for manufacturer sponsored real-world data generation / registries

• Risk-sharing agreements

• Advocacy group support

• Reimbursed for majority of eligible patients

• Some risk of restricted usage e.g.o In subpopulations of greater unmet

needo Specialist-center only (decreased

access to patients in some regions)

• There will be a tendency for payers seeking longer-term data;

• Risk-sharing schemes can help bridge any data gaps

• Registries/real-world data generation

• Use according to label • Registries/real-world data generation

16

At higher prices, the risk of restrictions increases as well as the requirements for subpopulation analysis, long-term

data generation and risk-sharing agreements

Key

ma

rket

acc

ess

sta

keh

old

er e

ng

ag

emen

t

By accounting for the correlation between price, reimbursement restrictions and uptake, the price-volume trade off curve was generated and the revenue-maximising price identified

The price and volume interrelationship is used to inform forecasting and therapy valuation

The impact of supporting data on pricing and reimbursement help inform the magnitude of investment required in data generation activities and the likely return-on-investment

The development of the individual country pricing strategy, the exploration of the impact of cross-country price-referencing and the identification of the optimal launch sequence are reserved for the later stages of the therapy’s clinical development

17

0

20

40

60

80

100

60504030 70Treatment cost (£, 000)

% o

f p

ati

ents

; R

even

ue

Ind

ex

Gabor Granger Methodology

• Derives a relationship between price and market share and identifies a revenue-optimal price

Key

ma

rket

acc

ess

sta

keh

old

er e

ng

ag

emen

t

Pricing and reimbursement decisions are not always fully aligned with funding; the criteria and processes for the latter were identified to provide a cohesive market access strategy

Funding mechanisms

by country

Applicability of decision

Relevantbudget

Eligibility criteria for additional funding

Hors T2A list Country level National budget

• ASMR score of I, II or III (moderate to major improvement over SOC)

• Existing DRG funding is insufficient

NUB/ ZE Hospital level

Health Insurance

Companies budgets

• Therapy is <3 years on the market

• Existing DRG funding is insufficient

File F Regional levelRegionalbudgets

• At regions’ discretion (no formal criteria)

Regional list of expensive therapies

Regional levelRegionalbudgets

• At regions’ discretion (no formal criteria)

Ex-PBR National NHS England

• Positive NICE and/or Specialised Services (under NHS England) opinion

• Existing PBR funding is insufficient

18

Funding mechanisms for high-cost innovative hospital products (outside tariffs)

We formulated recommendations on trial design and further data collection based on the consolidated findings from the HE analysis and the market access stakeholder engagement

The key recommendations on optimisation of supporting data covered:

Clinical Trial design

Inclusion criteria

Trial duration and size

Comparators

Clinical endpoints

PRO/QoL endpoints

Economic endpoints

Clinically significant differences (Minimally Important Differences)

Subpopulation analysis (A priori vs. Post-hoc)

HE model inputs

Feasibility of indirect comparisons

Post-launch data generation activities

19

Important therapeutic improvement

Moderate therapeutic improvement

Minor therapeutic improvement

No therapeutic improvement

Su

pp

ort

ing

Da

ta R

equ

irem

ents

Major therapeutic improvement

Data requirements are proportionate to the magnitude of incremental benefit claimed

Cell Therapy Catapult12th Floor Tower Wing Guy’s HospitalGreat Maze Pond London SE1 9RT

+44(0)20 3728 9500

Catapult is an Innovate UK programme.