McKesson : The Business of Health Care January 2018

Eight new industry reports, surveys and research articles demonstrate that collaboration among and between drug manufacturers, health insurers and regulators can create more value for customers, enrollees and patients.

Clinical Trials

Manufacturers are developing nearly 10,000 new prescription drugs

That's according to a report from The Analysis Group commissioned by the Pharmaceutical Research and Manufacturers of America (PhRMA). The report said 9,526 drugs are in Phase 1, Phase 2 or Phase 3 clinical trials or have been approved by the FDA but are not yet available. The report also said 74 percent of the drugs are 'potential first-in-class medicines,' or drugs that work differently from others on the market for the same medical conditions. Most potential first-in-class medications target six therapeutic areas: Alzheimer's disease, cancer, psychiatric diseases, neurological diseases, cardiovascular disease and diabetes. More than 800 of the drugs are orphan drug projects, the report said. Orphan drugs are designed to treat rare diseases or rare forms of a disease. Of the 822 orphan drugs in development, almost half-401-target cancer.

Drugs that the FDA approves quickly for patient use improve health faster than other medications

A study in the journal Health Affairs suggests that the potential first-in-class medicines identified in the PhRMA report can help more people faster if their clinical effectiveness warrants a quick OK from the FDA. Researchers from Tufts University analyzed the effectiveness of 135 drug-indication pairs approved by the FDA from 1999 to 2012. Drug-indication pairs are medications approved for more than one medical condition. The researchers defined effectiveness as additional quality-adjusted life-years (QALYs) resulting from use of the drug. The FDA approved 76 of the drug pairs through one of three expedited review processes. The FDA approved the remaining 59 through its conventional review process. The median QALY gain for patients using the 59 drug pairs was 0.003. The median QALY gain for patients using the 76 drug pairs was significantly higher at 0.182. 'Expedited review programs offer the FDA greater discretion for hastening the delivery of highly promising and much-needed treatments to patients and for providing incentives for pharmaceutical innovation,' the researchers said.

Drug Packaging

The medication adherence packaging market will top $900 million by 2022

The global medication adherence packaging market will grow at an annual rate of 6.2 percent over the next five years and reach $917.7 million by 2022. That's according to a new market research report from MarketsandMarkets. The report attributed the overall growth to several factors, including high patient nonadherence rates, the need to reduce medication waste, and new technologies such as remote drug dispensing systems. The report cited multi-dose adherence packaging as a specific area of growth because of its ability to help patients adhere to complicated or multi-drug regimens and to improve medication safety.

The market for pill bottles will reach nearly $700 million by 2023

Not far behind the medication adherence packaging market is the global market for pharmaceutical bottles. The market for pill bottles will grow at an annual rate of 5.9 percent over the next six years and hit $662.6 million by 2023. That's according to a new market research report from Stratistics MRC. Among the growth factors cited by the report is the rise in previously injectable prescription medications now available in pill form. The report also cited the increasing availability of low-cost raw materials to make pharmaceutical bottles. Looking ahead, the report said the future demand for plastic pill bottles may be tempered by growing consumer interest in 'eco-friendly, biomaterials-based' prescription medication containers.

Oncology Drugs

The median cost of developing a new cancer drug is almost $650 million

It takes 7.3 years and a median cost of $648 million to develop a new oncology medication, according to a study in JAMA Internal Medicine. The figures are based on an analysis of 10 new cancer drugs, each from a different drug manufacturer and approved by the FDA. The researchers counted spending from the initiation of drug development to the date of approval. Five of the drugs received expedited approval from the FDA, with the other five undergoing the conventional review process. The median revenue per drug after approval was nearly $1.7 billion over its first four years on the market, the study found. 'These results provide a transparent estimate of research and development spending on cancer drugs and show that the revenue since approval is substantially higher than the pre-approval research and development spending,' the researchers concluded.

Fewer cancer patients cite cost as the reason for not accessing oncology drugs

Oncology drugs are expensive and getting more so each year. But a new study said fewer people are blaming their high price for lack of use. The study, which appeared in the Journal of the National Cancer Institute, is based on a survey of 153,372 adults age 18 to 64, and 42,108 adults age 65 or older. The researchers asked the patients whether they didn't get a prescription filled at any point over the past year because they couldn't afford it. Of the 18- to 64-year-olds, the percentage of patients with a previous cancer diagnosis who said yes dropped to 8.6 percent in 2015 from 13.8 percent in 2010. For those with no previous cancer diagnosis, the percentage dropped to 6.8 percent from 11 percent. Of the 65-or-older respondents, there was little change for patients with and without a history of cancer. That led the researchers to surmise that more generous prescription drug benefits in commercial health plans made the oncology medications more affordable. 'Our findings suggest that expansion in health insurance coverage mitigated the effects of growing prescription drug costs to some extent,' they said.

Pharmaceutical Value

25% of drug manufacturers have entered into at least one value-based drug contract with a payer

That's according to a survey of 101 pharmaceutical executives from 97 biopharma companies surveyed by the PwC Health Research Institute. It also surveyed 101 insurance executives from a variety of private- and public-sector health plans. Of the 24 drug makers engaged in value-based contracts with payers, 35 percent did so within the past five years and 15 percent within the past year. Eighty percent of the manufacturers with contracts described them as 'very' or 'somewhat' successful, with 86 percent saying they were 'very' or 'somewhat' likely to enter into new contracts based on their experience. Most drug performance-based deals were in three therapeutic areas: oncology, rheumatoid arthritis and cardiovascular disease, with 34 percent of contracts entered into during the pre-commercial phase of drug development and before FDA approval. The survey suggested trust between drug companies and health insurers is a variable that may determine the growth in value-based drug contracts.

Eight principles should provide the framework for an outcomes-based drug reimbursement system

Paying drug makers according to, at least in part, how well their prescription medications work on patients is not just a U.S. trend. It's also catching the attention of health care policymakers and advocacy groups in the United Kingdom. In a report sponsored by Swiss drug maker Novartis International, the London-based Social Market Foundation identified eight principles that should form the foundation of any outcomes-based drug reimbursement scheme. One is the definition of value and specifically whether a manufacturer can produce evidence that a medication provides 'wider benefits' not always reflected in QALYs. Another is agreement on how the financial risk should be apportioned between manufacturer and payer. 'Under an outcomes-based scheme, the amount that the drug company receives in the long run would be dependent on the treatment conferring a predetermined level of benefit,' the report said.

Related: Learn more about McKesson's pharmaceutical distribution services for drug manufacturers