Enzalutamide Pricing Debate Goes to Washington

May 1, 2016
Tony Hagen

Oncology Business News, May 2016, Volume 5, Issue 5

Enzalutamide (Xtandi) pricing heightens the likelihood of pre-authorization requirements and cost-sharing arrangements that may be financially burdensome, ruinous, or simply impossible to meet.

Leonard Saltz, MD

It’s no secret to oncologists that enzalutamide (Xtandi) is not only a potent drug in combating prostate cancer but also an expensive one. With an average US wholesale price of $88 per capsule in 2015, enzalutamide can add up to $129,000 in a year’s time for just one patient. This heightens the likelihood of pre-authorization requirements and cost-sharing arrangements that may be financially burdensome, ruinous, or simply impossible to meet (Figure 1).

In fact, the prices charged for enzalutamide in the United States are more than twice what they are in the next highest country, Germany, where a capsule of the drug cost an average of $36.93 last year. Even in other countries where it is priced a bit lower, enzalutamide is considered expensive; but in the United States, some are rankled that Americans have to pay more for a drug that was developed in this country largely with the use of grants from the National Institutes of Health (NIH) and other federal agencies (Figures 2, 3).

Figure 1: Higher Formulary Tiers Can Mean Higher Co-Pays and Restricted Access for Xtandi

Source: Knowledge Ecology International

Knowledge Ecology International (KEI), a public interest advocacy group, said in a report that enzalutamide pricing is particularly hard on economically disadvantaged African Americans in the United States, as they have statistically higher chances of having prostate cancer and would find it more difficult to afford treatment. For these reasons, KEI and a group of Democratic congressional members believe that they have a compelling argument for the NIH to initiate a first-time exercise of its power to override a drug patent on the grounds of “non-use and unreasonable use of an invention.” Such a right to do so is granted under the 1980 Bayh-Dole Act, which allowed industry to capitalize on and direct the use of innovations while allowing the government to intervene when the health and safety needs of the population are not being met. Such a “march-in” order to appoint a lower-cost provider has never been tried by the NIH.

“We are requesting the federal government take steps to address the discriminatory and unfair pricing of Xtandi/enzalutamide by Astellas Pharma,” KEI said in a report that accompanied a March petition to the US Department of Health and Human Services (HHS) and the NIH. “US residents should not have to pay two to four times as much for a cancer drug as residents of other highincome countries, particularly when the drug was invented with the support of federal research grants and benefited from other federal research subsidies.”

Sens. Elizabeth Warren, Al Franken, Bernard Sanders, and Patrick Leahy, among other elected officials, have joined in signing the petition, which calls for a hearing to investigate the NIH’s reasons for electing not to intervene.

Figure 2: Cost of Xtandi 40mg capsule/tab in US and 13 High Income Countries

Source: Knowledge Ecology International.

aUS dollars

Developed at the University of California at Los Angeles (UCLA), Xtandi is an oral medication that inhibits the androgen receptor, which drives prostate cancer progression. In a phase III clinical study of patients previously treated with chemotherapy, Xtandi reduced the risk of death by 37 percent and increased median survival by 4.8 months, compared to instances where subjects took a placebo. In a separate phase III clinical study of patients not previously treated with chemotherapy, Xtandi reduced the risk of death by 23 percent and increased median survival by 4 months.

In 2012, the FDA approved enzalutamide for use in late-stage prostate cancer. The agency has since expanded approval for use in first-line treatment for metastatic castration resistant prostate cancer (mCRPC). Xtandi, Zytiga (abiraterone acetate), and Taxotere (docetaxel) are the top three prescribed drugs in first line mCRPC treatment. Evidence that the efficacy of Xtandi is lowered by prior use of Zytiga and Taxotere, combined with the low toxicity profile of Xtandi and its convenient oral dosage, leads experts to believe that Xtandi is headed for a dramatic increase in use. The drug is also being tested for use in triple negative and HER2+ breast cancer, hepatocellular carcinoma, bladder cancer, ovarian or fallopian tube cancer, pancreatic cancer, and mantle cell lymphoma.

Recognition of the medical value of the drug has already resulted in dramatically expanding revenues for its owners, licensees, and stockholders. The patents are held by San Francisco-based Medivation, and Japan-based Astellas is a sub-licensee. According to The Centers for Medicare & Medicaid Services (CMS), total Medicare spending on Xtandi grew from under $35 million in 2012 to nearly $447 million in 2014. During that time, the number of patients shot up to 11,800 from 2143. In 2014, the average enzalutamide capsule price for Medicare was $69.41, or $101,000 per year. All combined, the US market was forecast to represent 61% of Xtandi sales in 2015, according to the Astellas 2015 annual report.

US policies that forbid CMS from negotiating drug prices or refusing to purchase drugs are partly responsible for the high prices of drugs like enzalutamide in the United States, said Leonard Saltz, MD, chief of gastrointestinal oncology at Memorial Sloan Kettering Cancer Center (MSKCC). “It’s not in the public interest to have, on the one hand, government money being spent to an extremely large degree on drugs and, on the other hand, to have the government’s largest purchaser—CMS—forbidden from negotiating price or forbidden from walking away from a drug if the price is felt to be unreasonable relative to the amount of benefit that it supplies,” he said.

Much of the early development work on enzalutamide was done at UCLA, which announced in March this year that it had sold its 44% royalty interest in the drug to Royalty Pharma for a cash payment of $520 million plus a potential share of future Xtandi sales. The total value of the deal, which also enriched two doctors at UCLA who led the discovery, was $1.14 billion.

Figure 3: Who Paid for the Development of Xtandi?

Source: Knowledge Ecology International, ClinicalTrials.gov database.

Many trials funded by “other” refer to universities and other nonprofit research organizations that receive NIH or other federal agency research grants.

“Other” also refers to funding from foreign governments and charities.

Any leverage on pricing that UCLA could have exercised with respect to its royalty interest may have been lost with the rights transfer. UCLA explained that the sale allows it to monetize those rights up front, diversify its portfolio, and obtain a significant amount of cash for further investment in new discoveries. “UCLA is a national leader in research that generates realworld benefits such as new treatments and diagnoses of disease, and the sale of royalty rights connected with Xtandi was made in pursuit of that public mission. Proceeds of the sale are being re-invested in both the basic and applied research essential to developing additional medications and other products and services that improve lives, as well as in student fellowships and scholarships that serve society by providing training for the next generation of researchers,” the university said in a statement.

In response to the KEI report and elected officials’ concern about the high price of Xtandi and related problems with access to the medication, Astellas countered in a statement that discount programs are available to bridge the coverage gap that some patients may experience.

“The discussion of Xtandi’s price in the KEI petition fails to reflect what payers or patients actually pay for the medicine,” the company said. “During 2015, 81% of privately insured patients paid $25 or less out of pocket per month for Xtandi, and 79% of Medicare patients paid nothing out of pocket per month for Xtandi. For eligible patients who do not have insurance or are underinsured, and have an annual adjusted household income of $100,000 or less, Astellas provides Xtandi for free under the Astellas Access Program,” the company said, adding that last year 2000 men with prostate cancer received Xtandi for free.

Saltz said that drug discount programs and subsidies do not adequately compensate for shortfalls in insurance coverage and that many patients are left empty-handed. “Most of the drug assistance programs are for very limited numbers of people. One has to be wealthy enough not to be on Medicaid and poor enough to be below certain levels. There are many people, who for one financial reason or another, cannot get drugs or are getting drugs with very substantial copay penalties.” Programs through which drug makers make charitable contributions to organizations that turn around and provide financial assistance to patients actually tend to function as price-supporting mechanisms that keep drugs out of reach, he said.

Companies can earn a fair profit without charging such high prices, Saltz argues. The problem, as he sees it, is that intensive lobbying by the pharmaceutical industry has led to creation of a system that allows these market dynamics to persist despite evidence that it is contrary to the public interest. “There’s a reason that so many Wall Street dollars are rushing into these areas. It’s become highly, highly lucrative. I’m all in favor of capitalism, and I’m all in favor of companies that have true innovations profiting from them to a reasonable degree, but I believe that we have companies and their shareholders who are profiting to an unreasonable degree, and therein lies the problem,” Saltz said.

Businesses Get Hurt by High Prices Too

There is no doubt that people are profiting from enzalutamide. Medivation’s stock price has been on a wild ride since 2011, splitting twice in just the past four years. And, while UCLA has largely divested itself of Xtandi, the two doctors who played a discovery role in the drug have received significant stock ownership interests in the drug’s future, according to the KEI report. One of them is Charles Sawyers, a former UCLA professor and researcher at UCLA’s Jonsson Comprehensive Cancer Center who is now at MSKCC. The other is Dr. Michael Jung, a UCLA distinguished professor of chemistry and biochemistry. They each served on Medivation’s Scientific Advisory Board. In fact, the potential inherent in enzalutamide has led to competing efforts even among the original partners to reap additional gain. Sawyers and Jung went on to found Aragon Pharmaceuticals and sought to develop a drug with similar properties to enzalutamide, leading to a Medivation lawsuit against them and UCLA, according to KEI. Sawyers declined to be interviewed for this article.Cheryl Larsen, vice president of the Midwest Business Health Group, said that one thing that gets overlooked in the debate over soaring drug prices is that even if high-priced drugs are made available to patients, the paying institutions often end up being gouged, which has the consequence of forcing up premiums and ultimately leaving covered populations worse off than before. “Approximately 51% of all healthcare costs in this country are paid for by public and private employers, with the rest of it being covered by the government,” she said. “We are the real payers, not the health plans and not the PBMs (pharmacy benefit managers). We know we can’t do much about the cost of pharmaceutical drugs right now. That may change in the future if the government steps in, but we doubt that will happen,” Larsen said. “If we don’t get control of costs, we risk having employers, especially large employers, and then all employers, exiting the healthcare system. No one wants to see that happen, because employers really, really do care about the health and the wellbeing of their employees.”

The hearing sought by senators and other elected representatives who have petitioned the NIH and HHS to take control of enzalutamide could lead to partial results, even if assignment of distribution rights to a lower-cost supplier is refused. Such a hearing was conducted in 2004 in response to high prices of ritonavir (Norvir), an antiretroviral marketed by Abbott Laboratories. “As a result of the march-in request, the company lowered the price of ritonavir for public payers, including AIDS Drug Assistance Programs (ADAPs) and Medicaid, and expanded its patient assistance programs,” the petition letter stated.

It’s possible that the presidential election and Sanders’ candidacy may be the motives behind the heavy focus on enzalutamide pricing, but Saltz believes that any attention given to the problem of soaring drug prices is helpful. “To whatever degree and to whatever capacity our officials acknowledge and address the problem, I think it’s a good thing. I have certainly heard candidates on both sides of the aisle commenting on the unacceptability of runaway drug prices.”

For its part, UCLA maintains that it has no control over pricing decisions by pharmaceutical companies like Medivation and Astellas. In a statement, the university said that its research programs are fully compliant with the terms of Bayh-Dole and praised the act for helping to convert “numerous government-funded research discoveries into healthcare and other products that serve the public good.”