Alnylam’s bold plan to insure health insurers

A novel pricing mechanism might help payers warm to pricey, ultra-orphan drugs.

Small and mid-sized drug companies like to think they outshine their large pharma brethren when it comes to pharmaceutical innovation. Alnylam Pharmaceuticals, a pioneer in the field of RNA interference (RNAi), has shown it can also out-innovate bigger players in the increasingly challenging reimbursement landscape.

Alnylam announced in November that the US FDA had approved Givlaari (givosiran), its $575,000 treatment for acute hepatic porphyria (AHP), a group of ultra-rare, genetic diseases. On the same day, the company also announced an innovative value-based-agreement (VBA) framework designed to appease payers and expedite patient access to Givlaari, without the long reimbursement-related delays that have plagued other recent orphan drug launches.

There are two components to Alnylam’s new VBA framework. The first will see the company paid the full list price for Givlaari only in cases where AHP patients treated in the real world show similar improvements to those who took part in clinical trials. So far, so on-trend. Making payments contingent on products demonstrating efficacy is increasingly common for expensive meds. In this respect, Alnylam is merely following a path forged by other pharma companies.

But it is in proposing the VBA framework’s second component that Alnylam is laying down entirely new tracks. In negotiations with payers over coverage of Givlaari, the pharma company is also offering to make a prevalence-based adjustment (PBA) that will keep a lid on the payers’ financial risk if the AHP patient population turns out to be substantially larger than currently believed.

The rationale for this approach is uncertainty over how closely Alnylam’s estimates of the target patient population – around 3,000 people in the US and Europe – match reality. AHP is typical of many rare diseases in that its symptoms (including abdominal pain, chest pain, nausea, anxiety, seizures, weak limbs and constipation) are non-specific and easily confused with those of more common conditions. According to Alnylam, only around 20-50% of AHP patients are currently diagnosed, and delays to diagnosis of up to 15 years are possible.

Alnylam is making the prospect of Givlaari coverage more palatable to payers by promising them rebates if there are more AHP members on their plans than current epidemiology models would predict. Alnylam is calling its approach “insurance for insurers”.

There is nothing unusual about prevalence estimates for rare diseases being revised upwards. Conditions that were once poorly-understood may become the focus of more research over time. Thanks to increased awareness among physicians, the availability of genetic tests and other advances, the known prevalence of Huntington’s disease, a rare neurological disorder, has increased by 15-20% per decade over the past 50 years or so across North America, Western Europe and Australia. And data from recent new-born screening studies has led experts in Fabry disease, a lysosomal storage disorder, to believe that commonly-cited prevalence statistics are underestimates.

But the most pertinent driver in Alnylam’s case will be heightened awareness of AHP among healthcare professionals (HCPs) as Givlaari brand teams switch to full-on commercialization mode. The company began priming the pump a few months before it received the FDA’s green light. In August, Alnylam signed a HCP-focused education and promotional agreement with Ironwood Pharmaceuticals, a specialty pharma company focused on gastrointestinal (GI) conditions. Since severe and recurring abdominal pains are the most common symptom of AHP, most patients consult at least one GI specialist, but often to no avail because their condition is mistaken for something else. That makes gastroenterologists a key stakeholder in Givlaari’s future prescriber mix. Ironwood has well-established relationships with gastroenterologists, which it has fostered in the commercialization of its own product: Linzess (linaclotide), a treatment for irritable bowel syndrome with constipation or chronic idiopathic constipation. Ironwood has been educating them about AHP since signing its agreement with Alnylam. And once Givlaari is available for shipment (expected by the end of 2019), the promotional part of the agreement will kick in: Ironwood reps will promote the drug to these same specialists, bolstering Alnylam’s own commercial efforts.

Alnylam’s bold plan to insure health insurers will likely lead to three broad trends. Industry observers are already noting that PBAs may become a future model for ultra-orphan drugs. But it’s worth noting that the mechanism is more appropriate for some conditions than others. A few features of AHP – long timelines to diagnosis, a high degree of uncertainty around its true prevalence and, until now, the lack of an approved treatment – make Givlaari an ideal test case for exploring the PBA approach. But don’t expect to see PBAs featuring in reimbursement deals if the drugs are the second or third to market. In these cases, payers will use the price of an existing drug as a benchmark, and instead base their decisions on the relative efficacy of the new entrants. And HCP-focused promotional campaigns sponsored by the manufacturer of the existing drug may raise physician awareness as far as it can go.

Second, as PBAs become more common, payers will become less wary of reimbursing pricey orphan drugs, ultimately leading to more rapid patient access. Wrapped into Alnylam’s VBA framework announcement was the news that the company had already reached an “agreement in principle” with Harvard Pilgrim, a health insurer mainly serving customers in New England, to cover Givlaari. It might have struck some as premature that Alnylam and Harvard Pilgrim chose to disclose their deal in the works before it was finalized. A simple explanation may be that the two have a high degree of confidence that they will work together, but that they were caught out by the sooner-than-expected FDA approval. The regulator had granted the drug a priority-review designation, but wasn’t due to make its decision until February 2020, so Alnylam and Harvard Pilgrim likely believed they had another few months to get the deal done.

The third outcome will be to shine some much-needed light on the rebates and other discounts drug companies offer off the list prices of their medicines. One reason drug pricing is so controversial in the US is that the system of confidential agreements struck between pharma companies, pharmacy benefit managers and insurers is so opaque. Alnylam has made it known that Givlaari’s net price, following discounts for Medicare and programs for the poor, will be around $442,000. With this figure already in the public domain, even those without degrees in health economics could have a guess at an appropriate rebate for Alnylam to offer payers if, for example, the AHP population turns out not to be 3,000 but closer to 4,000.

For the most part industry media, typically a difficult lot to please, have taken a favorable view of Alnylam’s latest news flow. Bar a few comments about the high rate of serious side effects seen in a Phase III trial of Givlaari and the drug’s price tag (after discounts, it is still one of the world’s most expensive meds), prevailing sentiments have been positive. Media stories have highlighted the innovative nature of the PBA mechanism, the FDA approval coming much earlier than expected and Alnylam’s success at taking its second RNAi drug to market. Fortunes can easily change in the pharmaceutical industry, especially for its smaller players. But for now, Alnylam is in a pretty enviable position.

By Pete Chan, Head of Research & Analysis

Published on December 18, 2019

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