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Why manufacturers want them and how payors could benefit
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:
- Broaden the population of potential users – as with the 2016 approval of Harvoni for use by some liver transplant recipients
- Modify 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
- Approve 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
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, 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 seven-year market exclusivity.
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.
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, where it’s the only FDA-approved option.
2002 rheumatoid arthritis
2005 psoriatic arthritis
2006 ankylosiing spondylitis
2007 Crohn's disease
2008 plaque psoriasis
2009 juvenile idiopathic arthritis
2012 moderate to severe ulcerative colitis in adults
2014 moderate to severe Crohn's disease in children
2015 moderate to severe hidradenitis suppurativa (HS)
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. We believe 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.
Specialty a Top Consideration for PBM clients
We consistently hear from our PBM clients that specialty drugs are one of their primary—if not the top—concerns. These drugs are used to treat complex, chronic conditions and often require special handling and administration. Not surprisingly, management of these costly therapies is challenging. Because our clients have entrusted us with the responsibility to help them manage their spend, we have been very strategic in our approach to these high-cost prescription medications. We work continuously to help our clients respond to potential blockbusters such as PCSK9 inhibitors.
CVS Health, as an enterprise, has also been strategic about expanding our assets to help clients better address specialty spend—embedding care management nurses with our CareTeams, automating medical claims processing to better manage specialty drug costs under the medical benefit, and providing alternative sites of care to manage costs for infused therapies.
We will continue to provide additional updates on the specialty pipeline and on our management approach in future issues.
Specialty Pharmacy Pipeline | Drugs to Watch
Anticipated Launches | Q3-Q4 2016
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This document contains references to brand-name prescription drugs that are trademarks or registered trademarks of pharmaceutical manufacturers not affiliated with CVS Health.