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According to Express Scripts, more than one-third of all specialty drugs currently in development — and there are nearly 900 of them — target cancer and related conditions, which is by far the most concentrated area of research. But specialty drugs manage many other complex, chronic conditions, including HIV, multiple sclerosis, hepatitis C, and Crohn’s disease.
Specialty medicines are prescription drugs that require special handling, distribution, and/or administration. Many specialty medicines are biologics that are delivered via an injection or an infusion and are used to treat chronic, complex diseases.
With an average cost for a specialty medical therapy hovering around $35,000 to $75,000 per patient per year, specialty pharmaceuticals is an area that is getting the attention of top industry players — from biopharma companies that see the market opportunity to healthcare payers that need to find a way to fund the need for patients around the globe.
U.S. spending on specialty drugs — to treat chronic, complex diseases such as cancer, MS, and RA — is projected to increase 67% by the end of 2015, according to a forecast released by Express Scripts. Furthermore, prescription drug spending on eight of the top 10 specialty therapy classes will continue to increase over the next three years. This is due to both the robust pipeline of new biologics and physicians delaying treatment of patients until the new drugs are on the market. By the end of 2015, Express Scripts expects that cancer, multiple sclerosis, and inflammatory conditions such as rheumatoid arthritis — all specialty conditions — each will command higher drug spending than any other therapy class except diabetes.
“The greatest opportunity for innovation in specialty pharma is linking genetics to pharmaceutical therapies,” says Jeffrey Aronin, chairman and CEO, Marathon Pharmaceuticals. “Genetic advances are the biggest innovation in our lifetime and will impact many industries, especially pharma. For example, advances in genetic testing have made it possible to predict which patients are likely to have a positive response to a particular drug and which are most likely to experience side effects. If physicians have this information in advance, it increases their ability to prescribe the right medication and the right dosage without trial and error. By linking genetics and pharmaceutical therapies, we can give physicians the tools to understand what treatments are best for each individual, and that will create better outcomes for patients.”
Josef von Rickenbach, chairman and CEO of Parexel, notes that as big pharma continues to move away from the blockbuster paradigm, there is greater emphasis across the industry on the specialty or non-blockbuster pharmaceuticals sector.
“Given the unique research and development requirements of specialty pharma, the growth of this sector will likely generate greater portfolio alignment across the industry and present unique regulatory and reimbursement challenges,” he says. “Specialty pharma requires deep therapeutic and disease knowledge in order to be credible. Because these drugs can generally have a much larger impact on patients’ quality of life, specialty drugs require different strategies in terms of formulary uptake and physician acceptance. For example, physicians oftentimes require more data and prefer to be more closely involved in the science behind the drug development.
“Specialty drugs are also designed for more invested patient groups who are interested in proactive involvement in their care, be it through patient activist groups or individual research,” he continues. “Given the proactivity of the patients targeted, traditional sales and marketing strategies will likely become less important and lack effectiveness in specialty pharma. Furthermore, formulary uptake will be largely driven by reimbursements.”
Specialty Drug Positioning
Specialty drugs require special positioning to consumers from a marketing, education, and adherence standpoint.
“Specialty drugs provide more targeted and less toxic treatment options to patients and more opportunities for patient self-administration vs. inpatient treatment,” says Cam Bedford, senior VP, strategy and analytics, Klick Health. “But with the advantages come new challenges for patients to address.”
The high cost and complexity of the conditions and their treatments plus greater patient involvement create the need for a much more holistic approach to the patient treatment experience, Mr. Bedford says, including: expanded reimbursement support to navigate the increasing complexities of copays and coverage; robust patient onboarding to set expectations, training help for patients on self-administration that can give them greater confidence to understand treatment progress and have meaningful conversations with healthcare providers; and high-touch patient support with ongoing education, treatment monitoring and coaching to help patients navigate treatment complexities to drive compliance and persistence.
“As a result, specialty drug manufacturers, specialty pharmacies and reimbursement support organizations, as well as new entrants in the patient management space, are all expanding their roles as service providers delivering patient management and support,” Mr. Bedford says. “As service providers, specialty drug manufacturers are shifting budgets from more traditional marketing and education to new support programs, tools, mobile solutions and apps, call center support, and more. This shift will only continue as more specialty drugs come to market.”
Orphan drugs are a special subset of the specialty market and had been the focus of smaller manufacturers, however, recently even big pharma companies are getting into the orphan drug game. All of this is changing the near future in terms of R&D strategies.
According to EvaluatePharma’s 2013 report, of the 43 new drugs approved by the FDA in 2012, 15 were orphan drugs, representing 35% of the industry’s new drug output and the worldwide orphan drug market will grow to $127 billion by 2018, double that of the overall prescription drug market.
According to the National Institutes of Health, 25 million to 30 million people are impacted by orphan diseases, covering 6,800 rare conditions. Most of these conditions are life threatening.
“This unmet need, accompanied by governmental financial incentives, will continue the trend toward more orphan drug R&D,” says Edmundo Muniz, M.D., Ph.D., CEO of Certara. “But the challenges around patient recruitment and small, heterogeneous populations; the lack of appropriate endpoints to predict outcomes; the need for expedited clinical trial timelines; and the ability to navigate safety issues with regulators point to the need for alternative R&D approaches. Model-based drug development has played an outsized role in supporting the majority of orphan drugs’ regulatory approval in the past few years, a trend we expect to continue. The goal is to extract the most specific knowledge from the least information. This successful methodology drives both bottom-up mechanistic simulations based on in vitro data as well as PK and PD data from animals, along with top- down empirical modeling/simulation based on PK and PD data in adults to optimize study design and increase the chance of success of orphan drug programs.”
Wendy White, CEO and founder of Siren Interactive, believes that in addition to simulation-based R&D models, highly active rare disease patients and caregivers will drive innovation in orphan drug development that will set the pace for the rest of the industry.
“Not content to wait 10 years for new therapies to go through the current R&D process, rare disease patients are pushing the envelope at every turn, from organizing symposia to connect with researchers globally, to de-risking and funding start-up biotechs’ preclinical studies, to accelerating recruitment to clinical trials, to advocating to the FDA for faster approvals,” she says.
Ms. White says while there have been dire predictions around the generally high price of orphan drugs being unsustainable from the payer perspective, yet most orphan drugs coming to market are being reimbursed in the United States because the patient populations are so small and there is such a high unmet need — 95% of rare diseases do not have one single FDA approved drug treatment — and many demonstrate endpoints that significantly improve patients’ length and quality of life.
“As long as this is the case, the industry will continue to invest in orphan drug R&D,” she says.
Experts across the industry agree that R&D strategies will continue to focus on rare diseases due to several important factors.
“First, rare diseases generally involve very high unmet medical needs, risk-benefit analyses supporting flexible regulatory pathways, connected and empowered patient communities, and limited competition,” says Sudhir Agrawal, D.Phil., president and CEO of Idera Pharmaceuticals. “Second, small innovative companies can translate their novel technologies into therapies for rare diseases without a large R&D or commercial infrastructure, a business model that enables access to capital markets due to potentially rapid value creation. This model in turn also allows larger companies to manage R&D risk through targeted business development and M&A. Third, and perhaps most important, the growing trend toward personalized medicine, particularly with recent advances in genetic analysis and biomarker development, will result in an increased R&D focus on smaller subgroups of patients that are most likely to respond to treatment.”
R&D strategies also are changing based on 2012’s Safety and Innovation Act, which states that a drug company with a “breakthrough therapy” for a serious disorder is eligible for accelerated review and approval from the FDA.
“In addition to more interactive dialogue with FDA evaluators during trials, the act also permits smaller studies and less efficacy proof than is generally required for therapies developed to treat more common ailments,” says Glen de Vries, president, Medidata Solutions. “To speed up the development of new therapies for rare diseases, life-sciences companies are focusing on new clinical trial processes and patients’ engagement in them. The emphasis is on using innovative technologies to increase patient enrollment and improve adherence, thereby reducing the cost and length of studies. In the near future, wireless data collection and in-home monitoring will be further leveraged to avoid excessive trips to clinics, reducing the burden on trial participants.”
Mr. de Vries adds that the model of small population and sub-population studies is also adaptable to the growing field of targeted medicines. With genomic and other biomarkers factoring smaller and smaller cohorts, clinical study sample sizes are shrinking in certain indications. The lessons learned in orphan disease research can help these studies progress to better outcomes.
Orphan drugs also provide a unique opportunity for new drug/device combinations where new technologies such as microneedles enable delivery of difficult-to-deliver drugs.
“For example, microneedles are capable of delivering formulations at higher volumes and/or viscosities, which address the needs of biologics,” says Ingrid Blair, business director, 3M Drug Delivery Systems. “Microneedles can also open new doors for drugs that have traditionally been delivered via IV. Developers often have the classic constraints in their minds regarding volume/viscosity combinations for these drugs, but by adapting them for microneedle delivery, the drug can be self-administered by the patient, instead of requiring administration from a healthcare professional.”
The Impact of Biomarkers
About 70% of current pipeline drugs have biomarkers associated with them, which is also impacting pharma drug development strategies.
Advances in biomarker development offer opportunities to rationalize the development, delivery, and use of new medicines, thereby reducing R&D risk, improving outcomes for patients and containing healthcare spending.
According to Todd Sherer, Ph.D., CEO of The Michael J. Fox Foundation for Parkinson’s Research, biomarkers are a definite advantage in attracting drug developers and in impacting payer decisions.
“These valuable tools assist in subject stratification for clinical trials, disease diagnosis and monitoring, and testing of disease-modifying therapies,” he says. “For diseases with no validated biomarker, such as Parkinson’s, much investment, including our Parkinson’s Progression Markers Initiative, goes toward this pursuit. Neurological disorders are characteristically difficult to measure, but these are some of the conditions most affecting our aging population. Even without biomarkers, brain diseases should be a priority for companies and payer reimbursement due to their vast impact.”
Jason McDonough, Ph.D., senior VP, medical strategy, Cello Health Communications, says the vast majority of biomarkers associated with pipeline drugs are markers of susceptibility to treatment not response. They indicate if a patient has the requisite profile for the drug to work, but not necessarily that the patient will respond to treatment, let alone have a complete response. To date, there are precious few of these predictors of response, which will be crucial to justifying ever increasing costs of care.
During the development of a new drug, a biomarker may be used to measure early biochemical signs of activity and potentially enable accelerated R&D decisions.
“As a result, the existence of a validated biomarker is increasingly important as sponsors evaluate therapeutic areas where they may apply their technology,” Dr. Agrawal says. “In addition, there is value in incorporating biomarker development and validation in early-stage research programs. Later on, once the drug is approved, healthcare providers may use the biomarker to identify eligible patients, assess their response to therapy, and inform treatment decisions. In addition, payers may use the biomarker to limit over-utilization of the treatment in patients who are not likely to benefit.”
Patrick Flochel, EY’s global pharmaceutical leader, agrees that biomarkers provide critical intelligence, which helps in identifying patient subgroups that are most likely to benefit from therapy. They could simplify the complexity of drug development and speed discussions with regulators and payers.
“By recruiting patients most likely to benefit from therapy from the get-go, companies can shorten trial times and lower costs,” he says. “Ultimately, these biomarkers help in mitigating drug development risks. From payer’s and provider’s perspective, these biomarkers allow them to authorize drug usage in relevant patients. This would also help them to predict a drug’s impact on healthcare budgets.”
Partnering for Success
This growing specialty sector is expected to significantly impact the overall industry in terms of M&A, strategic partnerships, and collaborations as big pharmaceutical companies look to augment their pipelines.
According to Matt Johnson, chief operating officer, ASD Healthcare, AmerisourceBergen, strategic partnership is key for specialty pharmaceutical manufacturers, especially given the trends toward personalized medicine.
“Specialty pharmaceutical manufacturers will seek partners that recognize elements intrinsic to orphan drug designation, partners who will offer consolidated inventory services across the board and for all classes of trade,” he says. “Upsurges in oral oncology therapeutics in the specialty pipeline illustrate how strategic partnerships will directly impact patient outcomes. Oral therapeutics drive costs down while providing treatment options that cater to patients’ preferences — specifically, the oncology patients who prefer self-administration in the comfort of their homes versus clinical settings, who seek effective and affordable treatment, and are weary of reimbursement conflicts. Yet these patients are susceptible to adherence issues and require targeted education, support, and outreach at critical times. Healthcare partners that prioritize patients first, who ensure specialty therapeutics are handled and stored appropriately, and further offer ancillary services that address patient, provider, payer, and additional stakeholder concerns will prove invaluable to specialty drug manufacturers.”
While big pharma goes forth with its portfolio rationalization strategy, the specialty pharma sector has been in the thick of M&A activity. According to Mr. Flochel, it has dominated with the largest share (40%) in 2013 and has been one of the drivers of the record M&A value seen in 2014 so far.
“Further, we believe the specialty pharma story will continue, primarily since many of these companies have now bulked up to go after even larger targets that could not have been possible a few years earlier,” he says.
Although new specialty treatments are making a real difference in the lives of patients, the very high cost of these drugs creates difficult decisions for plan sponsors on which medicines to cover.
Mr. Johnson says the massive role orphan drugs will continue to play in research and development, with future expectations extending beyond rare disease therapeutics and toward preventive medicines, it’s imperative for specialty pharmaceutical manufacturers to align with those capable of addressing these and subsequent issues unique to orphan drug designations.
“We are entering a very exciting time in drug discovery, specifically as it relates to new treatments that address fatal or severely debilitating diseases,” says Michael Parisi, managing partner, Ogilvy CommonHealth Worldwide. “To accelerate the discovery process, we are going to see new, unique collaborations and partnerships that combine the world’s best technology, basic science, and financial resources. Partnerships between academic centers, and public and private sector, focused on accelerating the discovery process, are becoming more and more a part of biotech and pharmaceutical companies’ overall strategic approach, and we’re really starting to see progress from these partnerships.”
Michael Griffith, executive VP, inVentiv Health, and president, inVentiv Health Commercial, predicts that there will be more M&A as large companies seek a foothold in important new therapeutic categories, whether they’re orphan diseases or specialized areas of oncology.
“But swallowing a smaller company to acquire an asset often results in runaway financial overhead, unwelcome media attention, disruption and inefficiency,” he says. “In place of M&A — or running in parallel — we will start to see novel and far-reaching partnerships between companies seeking entry into a specialty niche and integrated contract organizations. Because of the demands placed on them, the contract organizations will tend to be large, well-known, and financially secure. They will be global in scale and they’ll combine traditional CRO capabilities with commercial expertise, including sales, marketing and consulting. For pharma companies in any size bracket, the new partnership options mean they can start with a bite-size investment to commercialize an asset. As they have success, they can turn the dial and apply more experienced resources to the challenge.”
Jonathan Wilson, president of Spectrum, adds that as big pharma companies cut expenses, they are spending the cash on M&A to fill pipelines and drive efficiencies.
“Specialty pharma products are particularly attractive, as they typically address unmet medical needs and allow for a smoother regulatory pathway,” he says. “M&As in this category give big pharma access to innovation and new capabilities that drive future internal R&D. Unlike products intended for a larger population, specialty pharma therapies with companion biomarkers demonstrate better outcomes for the target patient group and deliver significant value to the payer and the patient.”
The Value Equation
Experts say marketers must expand their reach beyond traditional target stakeholders (eg, HCPs) to include broader multidisciplinary team members as they communicate the overall value — clinical and economic — of their specialty drugs.
“Specialty drug development is expensive,” Mr. von Rickenbach says. “As such, budgets must be offset to continue to offer effective and affordable services to patients within the context of escalating healthcare costs.
Medication adherence, increased management of specialty drug expenditures, and the need to demonstrate clinical and economic value will likely require pharmaceutical companies to conduct more extensive comparative studies, and commit to programs that continue to demonstrate value in a dynamic environment postlaunch. This marks a positive shift for healthcare more broadly, helping to drive innovation and promote creative destruction in the industry.”
As the cost for specialty products continues to escalate, communicating a compelling value story has become an essential element of overarching brand benefit.
“For brands launching with a biomarker or companion diagnostic, the value of these prognostics tools cannot be understated and must be established as early as possible, from initial clinical development through its entire life cycle,” says Michael Zilligen, president of Ogilvy CommonHealth Specialty Marketing, part of Ogilvy CommonHealth Worldwide. “Leveraging the science to validate the value proposition is critical, and will require reallocation of resources to demonstrate real-world value and meaningful outcomes. While applying technology solutions to improve medication compliance, for example sensor-enabled pills, GlowCaps, etc. will provide appropriate patient identification that can help optimize treatment success and negate some cost concerns on the economic side of the equation.”
Many new products are launching with companion diagnostics, established biomarkers, or a highly selective mechanism of action, and a broader educational plan is necessary to optimize awareness and appropriate use of these products, he says.
“Marketers need to reevaluate their segmentation plans and invest resources where they have the greatest return on investment — resulting in formulary coverage,” Mr. Zilligen continues. “An added dynamic today is the growing need to adapt messaging to the evolving financial landscape. It’s not only the payers and employers who are assessing and talking about cost, it’s the physicians and the patients too. The dialogue between physician and patient on cost is complex, and an opportunity exists for manufacturers to help inform and manage these discussions. Understanding how physicians are communicating value and what role the patient has in decision-making, along with the formulary coverage, are essential components in any specialty drugs utilization.”
With the changing role of the patient in healthcare, marketers of specialty drugs, including those to treat rare diseases, need to engage patients with practical knowledge and actionable insights in order to capitalize on the value of these drugs.
“With increased financial responsibility and information availability, the patient has a bigger impact on treatment decisions than ever before,” Mr. Zilligen says. “And we must simplify and clarify the information across all audiences to help overcome the deluge and confusion of data available.
Marketers of products for rare disease must recognize that a unique opportunity exists to reach patients, and do so using a universal patient language. For many of these patients, advocacy groups are limited, educational tools are unavailable, and they are actively seeking other ‘patients like me,’ who are on a similar journey through virtual communities like HealthTalker or Healtheo360. By seeking these patients out and providing the information and tools they need, we can help to create brand loyalists within the patient community who often share experiences and seek advice from each other.”
From a marketing and education perspective, specialty products need to be positioned to the consumer in much the same way that traditional pharmaceutical products are positioned today, but with an increased emphasis on value.
“Consumers need to clearly see the incremental benefits because they are being asked to pay significantly more out of pocket,” says Rob Blazek, R.Ph., VP of network strategies, Rx EDGE Pharmacy Networks, a business unit of LeveragePoint Media.
“Adherence to proper treatment will be imperative to obtain positive outcomes, which in turn will be crucial in demonstrating value to the patient and to the payer community,” he says. “Since nonadherence is typically a behavior issue rather than a product problem, any adherence efforts need to be focused on generating patients’ buy-in with their treatment.”
Pharma companies are under pressure to produce demonstrated value not just for specialty drugs, but for all products. And the accelerating trend toward value-based healthcare demands evidence at all levels.
“I don’t think we will see scenarios again where pharma will gain broad-based market access without a clearly differentiated value proposition for any new therapy/product,” says Christian Nimsch, chief strategist, SAS Center for Health Analytics and Insights. “The difference is that specialty products garner a bit more attention due to their often steep price tags.
The reality is that payers are now evaluating evidence broadly across treatment alternatives. This is a very good trend as it really puts the focus on measurable and predictable outcomes. In other words, patients benefits from products with clearly demonstrated value.”
Physician acceptance levels of new specialty drugs are measurably influenced by, among other things, safety and efficacy, the breadth and depth of management barriers payers introduce to acquire them, and those levels of acceptance vary specialty by specialty.
“In the end, different physician specialties not only consider varying factors when prescribing specialty agents, they react differently to management interventions controlling specialty product access and use,” says Robert Shewbrooks, principal and practice leader, Syndicated Research HealthStrategies Group. “This situation demands that biopharmaceutical companies consider specialty-specific strategies and tactics such as management education addressing business practices for effective and efficient reduction of the impact of key payer interventions, while improving patient compliance and persistency on prescribed drugs.”
“Specialty drugs provide more targeted and less toxic treatment options to patients and more opportunities for patient
self-administration vs. in-patient treatment. ”
Cam Bedford / Klick Health
“We are entering a very exciting time in drug discovery,
specifically as it relates to discovering new treatments to address fatal or severely debilitating disease. ”
Ogilvy CommonHealth Worldwide
“Marketers must expand reach beyond traditional target stakeholders to include broader multidisciplinary team members as they communicate the overall value — clinical and economic — of their specialty drugs. ”
Ogilvy CommonHealth Specialty Marketing
“The unmet need, accompanied by governmental financial incentives, will continue the trend toward more orphan drug R&D. ”
Dr. Edmundo Muniz / Certara
“Strategic partnership is key for specialty pharmaceutical manufacturers, especially given trends toward personalized medicine. ”
Matt Johnson / AmerisourceBergen
“Highly active rare disease patients and caregivers will drive innovation in orphan drug development that will set the pace for the rest of the industry.”
Wendy White / Siren Interactive
“Biomarkers are a definite advantage in attracting drug developers and in impacting payer decisions. ”
dr. Todd Sherer
The Michael J. Fox Foundation
“As big pharma continues to move away from the blockbuster paradigm, we are observing a greater emphasis across the industry on the specialty
or non-blockbuster pharmaceuticals sector. ”
Josef von Rickenbach / Parexel
“Pharma is under pressure to produce demonstrated value not just for specialty drugs, but for
all products. ”
SAS Center for Health Analytics and Insights
“Orphan drugs provide a unique opportunity for new drug/device combinations ”
3M Drug Delivery Systems
“From a marketing and education perspective, specialty products need to be positioned to the consumer in much the same way that traditional pharmaceutical products are positioned today, but with an increased emphasis on value. ”
Dr. Rob Blazek / Rx Edge Pharmacy Networks