Darzalex Inherits Mantle As The Harvoni Of 2016

| About: Genmab A/S (GMXAY)

Genmab (OTCPK:GMXAY) and Johnson & Johnson (NYSE:JNJ) have delivered a huge advance in multiple myeloma treatment with the launch of Darzalex. They have also presented payers with their next big budgetary test.

The anti-CD38 antibody is likely to move into early-line treatment combinations with Revlimid and Velcade based on two major data presentations over a five-day period. But adding an expensive drug to already costly regimens may have insurers and pharmacy benefit managers bargaining harder for lower prices in all myeloma settings.

The most recent data, presented at the European Hematology Association meeting, show that a combination of Darzalex with Celgene’s (NASDAQ:CELG) Revlimid and dexamethasone reduced the risk of disease progression or death by 63% versus to the last two drugs alone in patients who have progressed on at least one line of therapy.

This followed an Asco presentation showing a Darzalex, Velcade and dexamethasone combination having a similar effect, reducing the risk of progression or death by 61% in previously treated patients compared with the Velcade-dexamethasone regimen (Asco 2016 – Darzalex tries to climb the myeloma ladder, June 6, 2016).

In both studies, median progression-free survival for the Darzalex arms could not yet be calculated because not enough patients had progressed, while the Revlimid survival was 18.4 months and Velcade 7.2 months.

New standard of care

Multiple myeloma experts say the data suggested that these Darzalex combinations should be the standard of care in these frontline settings, a significant advance over Darzalex’s current indication of fourth-line monotherapy. It also opens the door to a first-line combination of Takeda (OTCPK:TKPYY) and Johnson & Johnson’s Velcade, Revlimid and Darzalex.

Treating this haematological cancer has become increasingly complex in the past four years as six new agents have come to market. Revlimid and dexamethasone have remained a backbone for treatment, with Velcade and now Darzalex providing additional benefit in combination.

While it has been difficult for physicians to keep up, it might have been even more so for payers, who must adjust from the costs of an early-line treatment regimen featuring one off-patent and one mature branded drug to a course that could soon see three on-patent agents. Revlimid alone cost more than $116,000 per US patient in 2015, according to EvaluatePharma’s Sales, Volume & Price data.

Against this benchmark, an independent US-based cost-appraisal body called the Institute for Clinical and Economic Review (ICER) assessed the addition of Amgen’s (NASDAQ:AMGN) Kyprolis, Bristol-Myers Squibb (NYSE:BMY) and Abbvie’s (NYSE:ABBV) Empliciti, and Takeda’s Ninlaro to Revlimid, the standard second-line therapy.

At current wholesale acquisition costs (WAC) all three are overpriced given their respective survival benefit, according to ICER, with the most expensive, Ninlaro, needing an 80% price cut in its WAC just to meet a cost-effectiveness threshold of $150,000 per quality-adjusted life year.

Price shock

Having been approved in November, Darzalex is too new to have been incorporated into this analysis or the EvaluatePharma pricing data. However, based on a WAC of $4.50 per gram, a dosage of 16mg/kg and the average weight of a US man at 89kg, a list price of $6,408 per cycle can be calculated.

With the first full year entailing 23 treatments, Darzalex costs more than $147,000, and when added to the Revlimid price this takes the combination to $263,000 a year. With a treat-to-progression protocol for both, and progression-free survival significantly greater than the 18 months of Revlimid and dexamethasone alone, the cost implication for payers is clear: multiple myeloma is about to get more costly.

Even without introducing frontline Darzalex to the analysis, ICER calculates that the introduction of the new Kyprolis, Empliciti and Ninlaro regimens will cost US payers $951m over five years. It is not a stretch to believe that Darzalex could push this over $1bn.

The payer community has dealt with some big price shocks the past couple years, the biggest of which was the introduction of Gilead Sciences’ (NASDAQ:GILD) hepatitis C drugs Sovaldi and Harvoni, which like Darzalex offered a big improvement in patient outcomes.

The difference between these two circumstances is that rival agents were quick to emerge in hep C and bring the price down, while in multiple myeloma there is not likely to be the same rush of competitors. It will be down to closed-door price negotiations – and maybe some clever outcomes-based or bundled payment schemes – to keep Darzalex from breaking the bank.

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