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Pharmacy Director At Large Insurer Confirms Positive Outlook For AXS-05 & Resolves Key Controversies

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  • Over 10 calls that I did with depression experts pointed to great enthusiasm for using AXS-05 after it gets approved.
  • But all docs said that how the drug gets covered by insurance/PBMs will be very important to how the drug gets perscribed.
  • To complete my research I spoke to 3 different insurance/PBM experts.  Attached are the notes I took from the conversation with the most knowledgeable/convincing source.
  • The conclusions from this call are VERY POSITIVE for AXS-05 and resolve some controversies that come from the fact that the drug is a proprietary combination of two drugs that are available generically.

I have spoken to over 10 experts in depression about the prospects for AXS-05 in depression, and the vast majority of doctor experts are very excited about the outlook for the drug.  The reason they are so excited is that the drug has a very compelling profile: 1) best-in-class efficacy, 2) rapid onset of action, 3) better side effect profile with no effect on weight gain or sexual side effects, 4) a novel method of action, 5) oral delivery, and 6) other potential benefits such as potential positive impact on anxiety and cognitive function.  It is very logical for doctors who have put a patient on one or two SSRIs or SNRIs and not gotten a good response to want to try something different.  Until now, there hasn't been an oral drug that works with a novel MOA for 30 years.  AXS-05 will be the first oral novel MOA depression drug in a long time, and it has a very compelling efficacy and side-effect profile.  So docs will be excited to try it on the very many patients they have who are not responding to 1st or 2nd or 3rd line SSRI/SNRI treatment.  And as they start experimenting more, they are going to get experience using it in some cases as a 1st line therapy (maybe initially in patients who are suicidal where time of response is of the essence) and if they get a good real world experience there, they will do more and more 1st line treatment with AXS-05.  Before you know it, AXS-05 could become the depression treatment of choice for many psychiatrists.

But there is one key thing that will determine how much AXS-05 gets used by the docs who want to use it and the patients who want to get it... and that is how the insurance companies cover the drug and what rules/requirements they establish for prescribing the drug.  No matter how much a doc wants to use a drug, if the insurance company doesn't cover it or makes it hard to prescribe, the drug won't do well.  Docs hate to prescribe drugs that require prior authorizations and other steps that are very time-consuming for them.  Regardless of how much the docs like a particular drug, the way the insurance companies will cover the drug will play a BIG ROLE in how the drug does in the real world.

Given this fact, I decided to complete my research by also getting the perspective of the payers on AXS-05.  This is something that I don't think has been well addressed in the sell-side research that I have read.  As such, I think my work is somewhat trial blazing and I am happy to report that it has come back very positive for AXSM. 

I decided to speak to three experts that worked at Payers/PBMs.  In the case of the three experts that I chose, only one ended up being very well versed in the data and nuances for AXS-05.  The other two had only a basic knowledge of AXS-05 and the data. The other two sources made comments that agreed with the source that knew AXS-05 well in principle, but they didn't have enough knowledge of some of the details to express themselves with the same level of conviction or confidence.  Nonetheless, I would say the commentary was quite consistent that:

1) pricing AXS-05 at anywhere from $3K - $5K per patient per year would be considered very reasonable and would lead to very favorable coverage, and

2) the key to AXS-05 being covered well is the fact that one cannot re-create the required dosage combination of the two drugs that are in AXS-05 on your own easily. 

Below are the raw notes from my conversation with the payer who knew AXS-05 very well.  This payer was very well spoken.  The person worked as PHARMACY DIRECTOR for over 10 years at a LARGE INSURANCE PLAN.  The person really knows his stuff!


Q) General thoughts on AXS-05 for MDD?

A) Has a favorable view on AXS-05.

The drug has a unique MOA that has potential benefits with its fast onset of action.

Traditional antidepressants take weeks to start working… you don’t even know if they are working or not for weeks and side effects start right away. This product appears to be working fast and that’s an advantage. Especially those that have MDD with risk of suicide… time is of the essence there to have treatment prevention and potentially save their life. That is an important benefit.

He looked at safety and tolerability. Overall it looked pretty good. Yeah, there was higher incidence of dizziness and nausea and headache… but he didn’t see anything major there. So the product appears to be relatively safe and well tolerated.

[I mention: apparently it hasn’t shown weight gain, which is a big deal for some people.]

Source replies: yeah, weight gain in depression, can go hand-in-hand, and one can exacerbate the other.

Question: lets say the manufacturer price is at $3K per patient per year… what do you think about that pricing… aggressive or reasonable?

Answer: it would be reasonable… that’s $250 per month. That would be quite reasonable. In line or better than some of the branded antidepressants. And appropriate for large patient populations that might be using the product. At that price, the product would get relatively unrestricted positioning. Probably Tier 3 with no restrictions, that would be my guess.

Question: I’m trying to figure out where this would fall in the treatment paradigm, and how much doctors will be forced to try other SSRIs first. A lot of docs think that insurance companies are going to force them to try generic SSRIs at least once, maybe twice, maybe three times. Are they going to have to try a whole bunch of SSRIs many times and fail, or are docs going to be able to put patients on this drug right away? How will that work out?

Answer: to be honest, in the worst case scenario, it will probably be a single generic step edit. The way it works now, for branded SSRIs/SNRIs, we have a double step edit. Require a trial of generic SSRI and have one preferred SSRI which is Trintellix… before we allow going to a different brand. In the current case, the MOA is all similar. In the case of AXS-05, there is a different MOA, so there might only be one generic MOA at least at the price you are discussing.

As the price goes higher, there might be double step edit… generic SSRI then Trintellix.

But who knows, there might not even be a step edit at all at the price you are talking about… it’s a pretty low price.

Question: Do you think there’s a chance that if doctors start to really like this drug that they can go to it directly? In the old way of thinking, all drugs are SSRIs, so start with generic. In the new way, this is a new drug/MOA, will insurance allow going directly to the new MOA? Could it make sense to go directly to the new branded MOA vs. going to the old SSRIs and wait 6 weeks to see if it works? Could they see the pharma economics?

Answer: In terms of playing the game and waiting 6 weeks…. That’s not what payers are looking at. Those are indirect expenses and not what payers are looking at. But payers are looking at extra doctor visits and the costs of changing prescriptions and more visits. The additional doc visits cost money. This product looks attractive in that regard. I would think that payers don’t want to play the ineffective switch game for long… that’s why I am thinking they might allow after one generic trial… and the majority of patients have already tried one generic… and the way electronic step edits work is they look for having tried another drug in the last 3 or 6 months prior to the new product to see that there is a claim for a generic antidepressant… and would probably allow the product. That seems like the most likely scenario at this price.

Question: This product would be marketed to the psychs… and the psychs get their patients from the GPs who have patients who did not respond to 1st line SSRI… so the patient would already be ready to get put on AXS-05 by the time they get to psych?

Answer: Yeah, that seems reasonable…. Longer term, I could imagine with more aggressive DTC advertising patients becoming aware of faster onset of action and patients demanding the drug from GPs.

Question: But from your perspective… the payer… you imagine having a pretty friendly/favorable approach to this drug?

Answer: Yes… $250/month is sometimes tier 2 or tier 3 pricing. So that would be reasonable. So if the product works as well as advertised, what’s not to like?

Question: What if the drug were priced more like $5K per patient per year. Would that change your view? Or still attractive?

Answer: That’s not crazy pricing. Obviously higher. Would be tier 3. Would probably make it a double step edit vs. single step edit (do generic and Trintellix or two generic vs. just 1 generic before approving).

Question: Does the fact that this is a combination product in any way impact how you think about the coverage?

Answer: I don’t think it would impact it very much.

Sometimes, if you take two products in doses which are available separately we will say use the two generic components separately… we would make that a requirement... In this case, we understand that the DM comes in doses that are very different than are what are available separately.

Question: That’s what I understand… I’m been told by docs that if they tried to compound this, it would be very difficult, a big headache, and still very expensive. Nobody would want to do it.

Answer: Yeah, yeah. Compounded products, by the way, are a tier 3 placement.

Taken separately at these doses is not practical.

So the fact that is a combination of two well known ingredients will play a role here just because you can’t substitute them separately.

Question: This is the first novel oral MOA drug for depression in years….

Answer: Yeah… there is a very large demand. Antidepressants is a top 10 category despite being genericized 80-90%. It’s a very significant patient population that is depressed. Who in the real world is trying to figure out MDD or simple depression or just feeling blues? They put on drug and that’s it… the volume on drug is very high… many products available, but not effective enough and not tolerated that well. Patients suffer side effects… sometimes you feel like a hamster in a treadmill.

Question: Did you see the STRIDE data in TRD? It had mixed results… hit all secondary endpoints, but missed the primary endpoint. How do you think that plays into the enthusiasm or lack there of with payers or docs?

Answer: I saw the data. Honestly, I am not surprised. TRD is notoriously difficult to treat. I don’t think the data will matter that much.

If the product does get FDA approval and will be available to try outside of clinical trials, as long as the product works well and is well tolerated, the market will dictate the future use provided payers don’t put on too many restrictions and make it too difficult. The product is good. Priced reasonably, payers won’t put on too many restrictions, and the product will take off.

Question: There were a couple things that were interesting in the STRIDE trial. One was that it should an effect on Anxiety and Cognitive function… are those important things to show a signal on?

Answer: Yeah, Anxiety is important too. Some depressed patients are anxious and require treatment too.. typically benzodiazepines can exacerbate depression. That would be additional benefit.

Question: Thoughts on AD Agitation—have you seen the data?

Answer: I’ve heard about the data and that there are trials. I don’t know the details. All I can say is that this is an area where we really need a product. These patients are very anxious and they have a lot of psychiatric issues which compounds Alzheimer’s disease. If this compound can show a benefit there, it would be a big and important area to explore. These patients do need an “designer” drug. Because of Alzheimer’s, everything is compounded, so to get something that would work in a more targeted way and faster would be helpful. I don’t know much about the trials themselves, though.

Q) Are you a doctor?

A) I am not a physician… I am a doctor of pharmacy.

Analyst's Disclosure: I am/we are long AXSM.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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