EQRx Seeks To Establish A More Competitive Market For Oncology Drugs In The U.S. – Forbes
CAMBRIDGE, MA: EQRxs Alexis Borisy and Melanie Nallicheri pose for a portrait inside their office in … [+]
In 2017, every new cancer drug approved in the U.S. had a launch price over $100,000. And since then, for drugs with these initial prices, price hikes well above inflation have been commonplace. Moreover, the pricing of these drugs doesn’t correlate to comparative clinical effectiveness, changes in market size, or even the entrance of competitors into various sub-classes of oncology therapeutics.
By definition, oligopolistic pricing isn’t competitive. And when you essentially have the same prices of drugs in a crowded therapeutic class, such as non-small cell lung cancer, that amounts to oligopolistic pricing of products that are supposed to compete.
The biotechnology company, EQRx, wants to change this. The firm aims to bring new medicines to market at what it states will be “radically lower” prices. This includes the investigational lung cancer drug, sugemalimab, which it co-owns with the Chinese biotechnology company called CStone Pharmaceuticals. Recently released data show that sugemalimab extends patients’ lives in a late-stage clinical trial. The Phase 3 study compared a combination of chemotherapy and the drug against chemotherapy alone.
EQRx is hoping to disrupt the cancer immunotherapy market and take on blockbuster drugs, such as Keytruda (pembrolizumab), which had sales of over $14 billion in 2020. Like Keytruda, EQRx’s sugemalimab is part of the checkpoint inhibitor class, which also includes Tecentriq (atezolizumab) and Opdivo (nivolumab).
What may give EQRx a competitive advantage is the fact that EQRx plans to run a head-to-head study comparing sugemalimab with approved treatments at multiple sites including some in the U.S. The FDA has expressed concerns about granting authorization to drugs developed and exclusively tested in China.
Historically, as new checkpoint inhibitors, anti-PD-1 and PD-L1 agents, have gained approval – such as Jemperli (dostarlimab) in April of 2021 – price competition has not been a factor. This is extraordinarily odd, given how relatively crowded the various oncology indications targeted by checkpoint inhibitors have become; from breast, renal, and colorectal cancer, to melanoma and non-small cell lung cancer.
Price competition is just not (yet) happening in the immuno-oncology field.
This raises the question, how can follow-on products like Regeneron and Sanofi’s Libtayo (cemiplimab-rwic) differentiate themselves?
In March of last year, Ronny Gal, a senior research analyst covering biopharmaceuticals at Bernstein, suggested companies like Regeneron and Sanofi try discounting, in a preemptive strike of sorts, to fend off the potential of future price controls established by the government. But, thus far the companies haven’t really done so.
On the other hand, should its products be approved, EQRx does intend to shake up the marketplace, both in the U.S. and overseas. EQRx recently signed Memorandum of Understandings with CVS Health in the U.S. and the British National Health Service to enter into long-term, strategic partnerships to improve access to innovative, lower-cost medicines.
How much of an impact EQRx can make remains to be seen, however, as the problems of a sub-optimal market in cancer drugs run deeper than just the lack of disruptors in the space. In fact, drug manufacturers aren’t the only ones to blame for the dearth of price competition. The issue of why there is so little discounting relates in part to blanket government mandates at the state and federal levels that require coverage of “all or substantially all” cancer drugs.
For example, oncology is one of six Medicare Part D protected classes. In the context of this provision, Part D plans are required to cover “all or substantially all” cancer outpatient drugs. Similarly, Medicare Part B regional contractors are obligated to cover all physician-administered cancer drugs.
Such mandates prevent payers from being able to negotiate cancer drug prices or have leverage to do so.
Then, further compounding problems in the U.S. is the pernicious issue of rebates. In the outpatient space, pharmacy benefit managers also share culpability in that they sometimes give preference to higher-priced drugs in order to extract greater rebates.
Outside the U.S., oncology drug pricing is heavily regulated. And, we observe that certain drugs may not be reimbursed by government (monopsonist) purchasers if there isn’t sufficient clinical benefit to justify the price. Moreover, in international markets, outcome- or value-based pricing strategies for cancer drugs are commonplace, which they aren’t yet in the U.S.
Even in the absence of monopsonist purchasing and widespread value-based pricing arrangements in the U.S., however, EQRx could make a dent in the checkpoint inhibitor space by launching drugs with disruptive price tags.