ROTH $ICPT Takeaways from Our Expert Call on NASH Pricing and Reimbursement
We hosted an expert call on Feb. 19 with Roger Green, M.B.A., President and CEO of
Roger Green and Associates, Inc., a healthcare consultancy with expertise in drug pricing.
Summarized in this report are key takeaways from the discussion, including NASH drug pricing
and reimbursement, comparison of the statin market and NASH market, and his take on Intercept
Pharmaceuticals' (ICPT-Buy) recent REGENERATE interim results for OCA.
Payers recognize the medical burden that comes from fibrosis and this can justify higher
pricing for NASH drugs. Mr. Green stated his belief that a demonstrated anti-fibrotic effect will
demand a higher price. This pricing thesis rests on the fact that fibrosis can lead to cirrhosis, which
has known economic costs, thus payers have incentives to pay for NASH drugs for this patient
group. With REGENERATE results hitting stat. sig. on 1-pt. improvement in fibrosis w/o worsening
of NASH (23.1% vs. 17.6% vs. 11.9% placebo; p=0.0002; p=0.0446) in F2/F3 and OCA's antifibrotic
effect firmly achieved, Mr. Green believes this bodes well for ICPT's high pricing strategy.
Will the NASH drug market follow the same growth pattern as the statin market? Only the
result of outcomes studies and utilization will tell. While Mr. Green thinks that the success
of the statin market could be replicated in NASH, he stressed that the markets will likely prove
more different than similar in the near term. Remember that the success of statins relied on their
ability to translate health outcomes into economic benefit: once it was shown that a 1% reduction
in cholesterol translated to a 2% reduction in coronary events, which meant shorter hospital stays
and less need for CV surgery, an economic benefit was clear. Can NASH drugs provide a similar
economic benefit? Mr. Green said that although current efficacy rates put the NASH market at a
disadvantage compared to statins, an economic benefit can most clearly be established at present
for F4 patients. Because the economic effects of treating F1-F3 NASH patients require a longer
time window to emerge, payers may not be as keen to reimburse drug costs for these patients at
present. He also pointed to utilization as a key driver of success for statins: hyperlipidemia and
hypercholesterolemia came to be treated as primary conditions, and scripts became widespread
among primary care physicians. This was vital for increasing sales for an asymptomatic condition,
and high sales volume made pricing less important. A driver for high physician utilization is what
Mr. Green referred to as the “second set of clinical trials” drugs face: the experiences of the first
4-5 patients doctors put on a new drug has an enormous impact on the trajectory of drug sales.
Although high efficacy is normally demanded here, he thinks the urgent need for a NASH drug
may adjust physician requirements for this.
Payers may put downward pressure on drug prices if drug developers aim too high.
Mr. Green encouraged NASH drug developers to learn from the pricing challenges faced by
manufacturers of anti-PCSK9 monoclonal antibodies: Sanofi/Regeneron (Praluent) and Amgen
(Repatha). He said the “PCSK9 experience should be significantly instructive to people when
it comes to the NASH market.” Considering the number of patients who were uncontrolled on
statins, the PCSK9 inhibitor market was estimated to be between $10B-$20B, and the drugs were
launched with a price tag of roughly $14K per year. However, payers did not react well. Because
those numbers represented a significant increase to their budget, the payers would either need
to raise customers’ rates or take the money from another area, and demand for these drugs was
not clear enough to justify that. Payers were able to limit prescriptions for PCSK9 inhibitors by
placing tremendous restrictions on patients’ ability to qualify for the treatment. Cardiologists, who
were thought of as a natural audience for this new class of cholesterol-lowering therapies, did not
consider the drugs to be worth the hassle of proving their patients met the qualifications. Adoption
slowed to a trickle, and the drug companies were forced to cut prices by 60%. This example
demonstrates the control payers’ can exert over the volume of scripts written for a new drugs class.
Mr. Green reiterated that NASH companies will need to justify prices to payers with an economic
benefit in addition to proving a health benefit to physicians.

It’s never too early to think about drug pricing. Although he says there is no reason to be overly precise
in pricing a drug before future market conditions are known, Mr. Green recommends companies think about
pricing early in drug development. This signals to investors that a company is well-managed, has a clear
business strategy, and knows the market it wants to enter, especially the value of its targets. This also
allows companies to identify the highest-value patients; for example, this is important if patients tend to
have comorbidities in common. This can be particularly useful when it comes to selection of an ideal target
patient group for later-stage clinical trials. According to Mr. Green, the companies that do the best tend to
be those that have modeled both their probability of technical success as well as the probability of market
success early on; the latter requires an understanding of pricing.
Mr. Green conveyed his view that NASH drug pricing needs to start in a reasonable range that
reflects underlying realities. Mr. Green stated his view that insurers won’t be willing to pay as much for
NASH drugs as they do for primary biliary cholangitis (PBC) because: 1) The immediate patient burden is
lower; and 2) The NASH patient population is much larger. Looking back at payers’ reaction to highpriced
PCSK9 inhibitors, in which manufacturers were ultimately forced to lower their prices, he cautioned
manufacturers against initially charging greater than $10K per year without evidence of superior health and
economic benefit. Mr. Green advised that companies should identify a price range payers are willing to
work with, but not one they love: if they love it, he emphasized, you’re underpricing. When asked about the
potential for value-based agreements with payers, again the lack of clarity on economic benefits from
NASH drugs popped up: Mr. Green views value-based agreements as unlikely at present since these
strategies are best-suited to cases of high efficacy and often the manufacturer pays a penalty when the
drug does not achieve a specified result. Mr. Green had two comments about the relation of safety to drug
pricing: first, he doesn't consider safety as an economic issue for the first drug to market; and second, only
high rates of particularly expensive side effects will affect drug pricing.

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