Commercializing Amgen's (NASDAQ:AMGN) recently approved cholesterol fighter Repatha across the EU hit a road block this week when cost crunchers in the U.K. determined that the drug didn't deliver the right balance of efficacy and price.
Not good enough
Unlike the U.S., where Medicare is unable to negotiate prices directly with drugmakers, drugs have to pass cost hurdles in the U.K. that demonstrate an acceptable cost per quality-adjusted-life-year, or QALY, before their single-payer system will approve paying for them.
According to the U.K. governmental body in charge of evaluating QALY, the National Institute for Health and Care Exellence, or NICE, the acceptable cost per QALY in this indication would be in the 20,000 to 30,000 pound range.
However, data presented by Amgen in an attempt to convince NICE to give Repatha a thumbs-up reflected costs per QALY that stretched from 22,900 pounds for heterozygous-familial high cholesterol to 78,800 pounds for non-familial high-cholesterol patients without cardiovascular disease.
Amgen's calculations were based on an annual list price of 4,448.60 pounds for twice monthly dosing and 6,123.60 pounds for monthly dosing. Amgen also agreed to an undisclosed price discount from that list price if NICE approved its proposal.
Cutting a better deal
The pushback on price by NICE isn't unexpected given that NICE has a long track record of taking a hard line when it comes to the cost of drugs. In the past, NICE has forced drugmakers across all indications to sharpen their pencils and revise their initial pricing schemes.
For example, in February 2014, NICE balked at Biogen's (NASDAQ:BIIB) oral MS drug Tecfidera, claiming that the drug's cost was too exorbitant for the benefits it offers.
Biogen had priced Tecfidera at $55,000 in the U.S. and had proposed a price of about $26,680 to NICE.
NICE's rejection forced Biogen back to the drawing board and that led to a revised bid that included more favorable pricing via an adjustment to the addressable patient population and an additional price cut. NICE approved that revised proposal a few months later.
Biogen's experience with NICE suggests that this is far from the end to Amgen's chances to obtain approval for use of Repatha in the U.K., and if that's the case, an eventual approval could still prove be profit-friendly to the company.
According to NICE, high cholesterol affects an estimated 1.5 million Brits and stubbornly high cholesterol caused by gene mutations affects about 106,000 people in England.
In clinical trials, using Repatha alongside statins, the current standard of care, lowered LDL cholesterol (also known as "bad" cholesterol) by up to 60% versus statins alone.
That is a dramatic decrease in cholesterol, a naturally occurring fatty substance critical to making hormones and aiding in digestion. When cholesterol levels get too high, cholesterol can clog arteries and lead to cardiac events, including heart attacks or stroke.
Although cardiovascular disease is a major cause of death in the U.K, claiming 150,000 lives in 2012, studies have yet to directly show that Repatha's cholesterol-lowering ability translates into fewer cardiovascular events or deaths.
If studies on cardiovascular outcomes had already been completed (Amgen's outcomes study is slated to wrap up no later than 2017), then its likely that NICE would have had less negotiating power with Amgen to limit patient access to the drug.
Regardless, NICE's decision to pass on Repatha this time around is probably a temporary hiccup. Historically, the medical community has accepted cholesterol-lowering as a proxy for improving cardiovascular outcomes, suggesting that if Amgen returns, then NICE will OK Repatha. For that reason, investors and patients should take the news of NICE's rejection this week with a grain of salt.
Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. The Motley Fool recommends Biogen. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.