Time to get a little nerdy about industrial automation—but you’ll see how this impacts much of the pharma business’ future.

Anyone who has used multiple smartphones has encountered Apple’s IOS, or Google’s Android operating system. They do the same things—sort of—but in different ways; and usually, one is easier off sticking with apps that are compatible with one or the other, than to try to blend or connect the same app with both. This is an example of proprietary industry standards; same as, in an earlier era, Apple’s operating system and Microsoft Windows.

In the industrial automation world—process controllers, robotics and the like, there is an equivalent standardization effort, but in this case, many (not all!) parts of the industry have gravitated to a variety of standards, which are open and which (most of the time) enable Vendor A’s device to communicate with Vendor B’s without additional software coding. The value of this ranges from convenient to essential. On a factory floor, a communication incompatibility could lead to process upsets or outright disasters; automation engineers get very serious about this topic because lives could be at stake. Most of the time, though, the value is in ease of use and substantial cost savings when automation systems are installed.

Now, transfer this line of thought to the massive serialization effort going on in pharma packaging and distribution. As our annual Product Security Report (p. 22) details, the mandates of the US Drug Supply Chain Security Act of 2013 and the Falsified Medicines Directive in the EU (as well as national or regional mandates around the world) are now hitting. Ultimately, each unit package of pharmaceuticals in commercial distribution will have a unique ID number, and that number enables tracking from one trading partner to another—or from the manufacturer to the patient. While many in the industry still look on this as an onerous regulatory burden, others are realizing that this “traceability” could have profound effects on patient outcomes, post-approval clinical studies, biosimilars adoption and other applications. If the ID numbers are there, smart people will find ways to derive value from it.

Although the IT and hardware system for traceability have been in development for years, and although the GS1 organization has been successful in developing a global standard for how the ID information is written, little has been done to standardize the equipment and the IT systems that handle this data. Custom interfaces abound—having those interfaces available is a competitive issue for many vendors.

A handful of vendors are now attempting to develop a standard, tentatively called the Open Serialization Standard working group (Open-SCS).* Some are putting in funds to hire subject matter experts, some are dedicating internal resources to the effort. The current list (which is growing gradually) is these vendors: Advanco, Antares Vision, OCS Checkweighers, Omron, Optel Vision, SAP, Systech and Werum. Serialization customers—pharma companies—include Abbott, Roche, Teva and Pfizer.

According to industry sources, lack of interoperability of the various levels of automation in a serialization project can double its IT costs. Equally important, higher cost is going to slow down the effort in less-developed parts of the world, which happen to be where most of the counterfeit products also show up. The companies that are pushing this effort forward (in the face of conventional vendors’ perspective that a proprietary system is “better”—i.e., more profitable) are to be lauded. Pharma companies making hardware and IT investments in serialization should be asking their vendors about their involvement.

* An existing standards-setting organization, the OPC Foundation, is hosting this work group; more information is available at 

https://opcfoundation.org/open-scs-working-group/

Articles

Serialization’s interface between the plant floor, the enterprise and the world

Although pharma manufacturers and contract packagers are ramping up their capital-equipment purchases to meet the November 2017 deadline for having item-level serialization, many aspects of the Drug Supply Chain Security Act (DSCSA) remain unresolved. Some of these are operational issues to be worked out by the supply chain party (wholesaler, freight forwarder, pharmacy warehouse); some are to be clarified with FDA guidance. (As with the longstanding Good Manufacturing Practices, or GMPs, FDA does not dictate what equipment or what steps to carry out to meet the law, but looks to the end results of whatever practices manufacturers undertake.)

Per instructions to FDA in DSCSA, the agency is to hold a series of workshops to enable it to coordinate its actions with what’s going on in industry. The second of such workshops was held in April at FDA headquarters, drawing over 100 participants, with a goal of appropriately setting up pilots to run for the next few years in anticipation of full DSCSA implementation.*

A daunting list of tasks are to be addressed by the pilot projects. FDA discussion leaders focused the workshop on these objectives:

Product identification—generating the “serial numeric identifier;” preferences for numbering systems

Barcode quality—readability, error rates, identifying correct barcodes

Interoperability—centralized vs. decentralized databases; use of EDI or EPCIS; ability to trace across trading partners; data retrieval time, accuracy and security

Data/database systems—handling master data (product data) and transaction data; aligning data transfers with product transfers; speed of updates

Aggregation/disaggregation—use of inference; accuracy of aggregated data

Verification/notification—investigating suspect or illegitimate product; use of 2D barcode at dispensing level; response time

Exception handling—distinguishing between “honest errors” and suspect product; fixing over/under shipments

‘Special’ scenarios—situations where product and data do not flow together (e.g., drop shipments); repackaging; mixed serialized/unserialized shipments

As noted earlier, the aggregation/inference topic is one that has generated much commentary; the technology to successfully match the items in a case, with a case’s transaction history is available, but ensuring an acceptably high degree of accuracy remains an issue. “We need to use these pilot projects to test ideas and see what works, what doesn’t work, and how to make a fully electronic secure interoperable system for package level tracing. It may take several pilot projects and various iterations to figure this out,” said Ilisa Bernstein, deputy director of the Office of Compliance at FDA, in launching the April workshop.

Privately, pharma companies and wholesalers have been running serialization pilots on and off for years; at the spring HDMA Distribution Management Assn. meeting, a presentation by Johnson & Johnson and AmerisourceBergen detailed one that they have run for the past year. Results showed barcode legibility is an issue (if, for example, a pallet is encased in a plastic wrap, making the barcodes hard to read); and the ability to synchronize the arrival of product at a loading dock, with the electronically transferred transaction information, was touch-and-go.

Under HDMA auspices, another pilot, focused on product returns, is starting up now. As Matt Sample, senior director of secure supply chain at AmerisourceBergen noted, HDMA members receive 2% of units sold in the US as saleable returns; traditionally these go back into forward distribution, but after 2019, those rerouted products will need transaction documentation. And while 2% doesn’t sound like a lot, it represents 58 million units, which works out to thousands of returns daily for the distribution centers of the major wholesalers. Being able to retrieve transaction data to make these returns legally saleable will be a challenge—without electronic transaction data available, these units cannot be shipped to another retail location.

Pilot projects have, and will, occur in Europe with the Falsified Medicines Directive coming into force. There, most of the guidance is being developed by the European Medicines Verification Organization (EMVO), a consortium of the leading European pharmaceutical distribution organizations. In early 2015, that group announced the initiation of a project to develop the “European Hub” that will be a connector for national data depositories of serial data to communicate with each other.

* Presentations and selected videocasts of the workshop are available at FDA’s website: 

http://www.fda.gov/Drugs/NewsEvents/ucm481767.htm

FDA looks to industry for help in DSCSA compliance

Most commercial pharmaceuticals, if they are to be shipped under temperature-controlled conditions, require refrigeration—2–8°C. But the evolving fields of regenerative medicine, in which live cells are being transported, reproductive services, animal husbandry, and, in some research, human tissues and cells, often call for cryogenic temperatures: -60°C or lower. Several vendors are stepping up their product offering for this market.

Cryoport (Irvine, CA) has been offering a liquid nitrogen (-160°C) service for a number of years, employing a dewar (double-walled metal bottle) that maintains cryogenic conditions during shipping with a quantity of liquid nitrogen that continually evaporates during use to keep cells and samples cold. Recently, the company announced a strategic partnership with Worthington Industries, which, through its acquisition of Cryogenic by Taylor-Wharton, is a major player in cryogenic equipment. Besides working more closely on containers and related products, Cryoport says that this partnership will bring Cryoport access to cryogenic storage services (such as in labs) in addition to its logistics offerings.

Meanwhile the company is now adding a consulting service to its offerings, and has hired Tamie Joeckel, a 25-year veteran of the life sciences logistics industry, including time spent at Parexel, a leading contract research organization. As SVP, client services, she will manage the new Temperature Controlled Logistics Consulting Div., as well as Logistics, Client Care and Program Management.

Besides evaluating client quality control processes and systems, trade lanes and the like, Joeckel notes that shipments aren’t a simple matter of dropping samples into Cryoport containers. For one thing, even though the containers can maintain cryogenic conditions for upwards of 10 days, some types of cells only have a limited number of hours of potency after being cryopreserved. For another, the scaling up from trial stages to commercialization—which could happen as soon as 2017 for some of the latest biotherapies—will call for newly adopted volume distribution of products, she tells Pharmaceutical Commerce.

Meanwhile, another vendor, Cryoguard (Colmar, PA), which has been providing temperature indicators based on a chemical reaction for a variety of low-temperature conditions, has expanded its product line to include several indicators specific to the deep-frozen regime: -40 to -150°C. The indicators give a simple yes/no response that a shipment has stayed within it specified temperature range. While other vendors offer dataloggers to monitor low temperatures, Dr. Jules Shafer, Cryoguard CEO, says that the simplicity of Cryoguard’s indicators, combined with their specialized temperature ranges, will make the new products popular with researchers.

And in Bothell, WA, BioLife Solutions is plugging away at its cryopreservation media, which protects cells as they are frozen or thawed, with several new formulations. Last year, it formally opened a logistics service, Biologistex, to handle shipments to and from labs. Researchers requiring a cryogenic transportation offering can self-select as to which carrier and delivery route a shipment will follow.

Pharmaceutical Commerce, in its just published 2016 Biopharma Cold Chain Sourcebook, pegs the clinical research logistics market at $3.2 billion worldwide currently, set to rise to $3.4 billion by 2020. While much of these cryogenic vendors’ business is in research, other parts, such as reproduction services, are already commercial.

Demand for cryogenic logistics propels business growth

Clinical cold chain vendors go into a deep freeze

The cliché of building an airplane while in flight might hold with today’s oncology market: new therapies are just on the horizon, while a host of issues around affordability, prescribing practices and reimbursement policies are shifting. Millions of patients are fighting their cancers—some with striking success—while hearing about hundreds of drugs in the development pipeline, and about the growing number of clinical trials that might enroll them. The other aeronautical metaphor that now applies to cancer—energizing the “cancer moonshot” of President Obama, and led by Vice President Joe Biden, heightens the excitement.

The one nagging worry in all this is how American society will be able to afford the therapies entering the market. One bright spot to that issue is the arrival, finally, of at least some biosimilars that promise to reduce the expense of some current therapies. The lower costs expected by the entrance of these drugs will help the affordability question, but the companies introducing these drugs have their own hill to climb to prove that the biosimilars will have the same, if not better, efficacy as the reference products (the originator drugs) they seem to replace.

Chemotherapy, radiation and surgery have been the staples in cancer care for over a century, but for most cancer patients, they have deferred what seems to be inevitable, and many of them bring devastating and costly side effects. In recent years, promising work in immuno-oncology (I-O) is encouraging new optimism.

The main problem with most existing therapies is that they attack healthy cells in the body as well as the cancerous ones; the side effects of gastrointestinal problems, weakened immune systems and the like are well known. These side effects are not only a burden for patients, but are partly to blame for the high cost of cancer care, as they often require additional medications, emergency room visits and hospitalizations.

Better knowledge of how the human body itself can attack cancer cells is leading to a series of new treatments, some already commercial, with many more in the pipeline. These include antibodies that function as checkpoint inhibitors, immune-modulating agents such as adoptive T-cell therapies, and so-called oncolytic viruses. The treatments are showing promise in targeting a variety of solid cancers (including breast, uterine and ovarian, gastrointestinal and colon, kidney and bladder, lung, metastatic melanoma, and more), as well as certain blood cancers, such as different types of leukemia, including chemotherapy-resistant acute lymphoblastic leukemia in children.

“The beauty of immune cells is that they have a high degree of specificity, are able to distinguish minute chemical alterations, have long memory (with immunity lasting for up to several decades after effective antigen priming), and can target the vulnerabilities of the tumor in real time,” says Eric Groves, MD, PhD and VP of the Center for Integrated Drug Development for Quintiles.

“Early work on many immuno-oncology agents have confirmed fewer toxic side effects, greater durability of treatment effect, less susceptibility to development of treatment resistance—improvements not seen with other therapeutic options,” adds Dana Evans, MD, medical affairs payer support for Genentech [

Ed. note: Remarks by Evans reflect his personal view, not necessarily that of Genentech

Today’s I-O efforts are generating so much enthusiasm thanks to a combination of factors, including greater disease stabilization and reduced systemic toxicity and side effects, and greater duration of therapy—with progression-free survival stretched from weeks to months or even years for many patients. As these new therapy options mature in the marketplace, time will tell as to whether the remission or “cure” lasts for the rest of patients’ lives, or attenuates over time.

“2015 was a remarkable year in the development of immuno-oncology as a foundational therapeutic in the cancer arsenal, and stakeholder adoption of I-O is no longer a question of ‘if,’ but ‘when,’” Bruce Feinberg, DO, VP and chief medical officer at Cardinal Health Specialty Solutions.

Important unanswered questions remain, however, as this new treatment paradigm continues to take shape. “Questions related to which patients will be eligible for I-O—in terms of types of cancer, in what stage and how long will treatment be required—and how I-O will further alter treatment paradigms and, as a result of those alterations, impact the global cost of care of the treated patient, will be critical to the value assessment process,” says Feinberg. He notes that traditional clinical research “seems ill-designed to address the many questions surrounding I-O value assessment,” and thus calls for “a rapid expansion of health economics and outcomes research in this nascent field.”

 Fig. 1. Oncology spending (invoice pricing) jumped to $39.1 billion in 2015. Source: IMS Institute[/caption]

Checkpoint inhibitors, also called PD-1 agents, block signals from cancer cells that essentially inhibit the body’s inherent cancer-killing capabilities. Two checkpoint inhibitor PD-1s are already on the market—Opdivo (nivolumab) from Bristol-Myers Squibb and Keytruda (pembrolizumab) from Merck—and both are said to provide many improvements over Yervoy (ipilimumab), an early I-O therapy from Bristol-Myers Squibb that is already FDA-approved for the treatment of metastatic melanoma. Genentech’s atezolizumab  is another new PD-1 checkpoint inhibitor that is working its way toward FDA approval.

“With four or five PD-1s in late-stage development, and three nearing commercialization now, the PD-1s are poised to become a major drug class,” says Ryan Million, partner at consultancy Trinity Partners. “There is huge investment going on, and an arms race underway to get there first, and major companies, such as Bristol-Myers Squibb and Merck are investing heavily in this area.”

“In metastatic melanoma, more than 50% of patients in one trial were put into long-term survival—from this radically lethal disease—so this shows the amazing promise of this new approach,” says Barry Brooks, MD, an oncologist and hematologist at Texas Oncology, and serves as vice chairman of the Pharmacy and Therapeutics Committee for the US Oncology Network. (US Oncology Network comprises independent, community-based oncology centers and is supported by McKesson Specialty Health). However, he notes that checkpoint agents, when used as a single agent, often develop resistance, so to be most successful, the checkpoint inhibitor PD-1s will likely be combined with other checkpoint inhibitors, with chemotherapy, with biologic agents, or with demethylating or hypomethylating agents—to exploit several different mechanisms of action in the fight against cancer. But any combination therapy will increase treatment costs, and add to the administrative and reimbursement complexity of that approach.

Michael Kolodziej, MD, FACP, national medical director for oncology solutions for Aetna, notes that “the possibility that combination therapy might be even more effective is tantalizing. Unfortunately, if you look at how the drugs are being tested and developed, it looks an awful lot like the old chemotherapy paradigm.” For instance, “If you look at the ongoing and proposed clinical trials for these agents, they look just like the development of traditional chemotherapy (i.e. Phase II, Phase III, all possible combinations of one immunotherapeutic with another, with targeted agents and with chemotherapy). This would seem to be a prime opportunity to use biomarkers to choose the right population. But unfortunately that is not what is happening right now.”

I-O technologies are considered to be among the most complicated treatment options that are being developed, so at least at the outset, many of these promising checkpoint inhibitors “could easily cost $300,000 per patient per year, and if the treatment requires two agents to be used together, it could cost upward of a half million dollars per patient per year,” says Brooks of US Oncology Network. “That’s just too much and we clearly have a problem.”

In another I-O approach, white blood cells known as T-cells are harvested from the patient, and re-engineered by exposing them to proteins that are made in abundance by tumor cells. Scientists then isolate and replicate those T-cells that were best able to recognize the tumor proteins, producing billions of enhanced immune system cells. Once infused back into the patient, these adoptive T-cells are able to seek out and destroy the cancerous cells more effectively.

Initial clinical trials using adoptive T-cell therapy have helped patients who had only been given months to live go into remission. “When you see it work, it is so amazing—the bone marrow just goes from being full of leukemia to being in remission, and very large tumors simply melt away,” said Stanley Riddell, immunotherapy researcher and oncologist with the Fred Hutchinson Cancer Research Center (Seattle, WA), in an online interview [1].

However, Riddell notes that T-cells have a fatal flaw in that they die quickly, so if a desired immune response is not sustained, the cancer eventually comes back. Riddell and his team have now focused on harvesting one particularly robust T-cell that has more of a capacity to survive.

 Fig. 2. Oncology products (in blue) dominate “new active substances” approvals as measured by IMS Institute.[/caption]

Other I-O work is focused on exploiting so-called oncolytic viruses, which can be manipulated to preferentially infect and attack certain cancers, and then induce the patient’s immune system to attack the virus. Today, a variety of native and genetically modified viruses are being investigated for commercial development, with some in advanced trials already [2]. In October 2015, FDA approved its first oncolytic virus therapy, Amgen’s Imlygic (talimogene laherparepvec), for the treatment of patients with melanoma lesions in the skin and lymph nodes. It is based on live, genetically modified herpes simplex I virus that is injected into the melanoma lesions.

Meanwhile, efforts are also underway to develop “cancer vaccines” that would be able to prevent that type of cancer for those who have a high risk for certain cancer types—before the disease develops. For example, a vaccine, currently in early-phase clinical trials, is being developed by the Fred Hutchinson/University of Washington Cancer Consortium, for women who are at risk of breast cancer relapse to prevent breast cancer. [3]

Similarly, Inovio Pharmaceuticals has developed an immunotherapy vaccine to treat cervical dysplasia (VGX-3100). Phase II data, which was published in The Lancet last year [4] that the DNA-based immunotherapy activates killer T-cells that then clear the neoplastic cervical lesions as well as the HPV virus. It is a first-in-class product for treating high-grade cervical neoplasia associated with the human papillomavirus (HPV). Phase III trials will get underway later this year. This development was recognized as the “Best Therapeutic Vaccine” by the World Vaccine Congress in March.

“In every other field of endeavor, when there are more products and more competition—the price goes down, but in oncology drugs, the prices just go up, they never go down, until there is generic competition,” says Brooks of US Oncology Network. “There’s tremendous promise for patients but right now I am very worried that we are going to end up in a place where the government just steps in and puts price controls in all of oncology—you run the risk of not only stifling competition but also innovation—so the entire machine would stop.” Calling it “financial suicide,” Brooks continues, “The drug-development industry needs to act to address the exorbitant prices that reduce access to all of the terrific scientific advances that are improving the capabilities of today’s life-saving medications.”

“Right now, the use of the newest I-O agents are not yet limited by biomarkers or companion diagnostics that aim to define designated sub-populations of patients, so this provides a great opportunity to treat a broad base of patients,” says Evans of Genentech. “However, there is tremendous interest in identifying specific genetic mutations and other biomarkers that will help to identify which patients are most likely to respond to these costly therapies.”

Parallel efforts could have implications for manufacturers pursuing biologic therapies for the same indication. “If two I-O therapies rely on the same MOA, and later, a biomarker is discovered or companion diagnostic test is pioneered by the maker of one, would both therapies be affected? At this point it’s unclear what FDA would do, so this will be an interesting development to watch in the coming years,” says Evans of Genentech.

Researchers who are working to understand which biomarkers are most relevant with I-O therapies and how to use them most effectively. However, researchers are also wary that “small populations make verification difficult,” says Groves of Quintiles. “If researchers cannot secure a large enough group of patients in the target subpopulation due to requirements for a novel screening or limited number of potential candidates, it can be difficult to accumulate enough data to validate results.”

Biologic therapies have become a mainstay in oncology (and other indications) for many years. However, specialty medications tend to be particularly expensive, easily costing tens or hundreds of thousands of dollars per patient per year. Among the top 20 anticancer drugs only five are biologics—Avastin (bevacizumab), Rituxan (rituximab), Herceptin (trastuzumab), Erbitux (cetumixab) and Vectibix (panitumumab).

Just as the many small-molecule blockbuster drugs famously reached the “patent cliff” in the 2010–2014 time frame, the first wave of leading biologics are facing their own patent cliff in the near future. Specifically, by 2020, about 20 of the most widely used innovator biologic therapies will be facing patent expiry (although not all of them in oncology), says Jaclyn Bosco, PhD, MPH, director of epidemiology and outcomes research for Quintiles. “This will help to keep the momentum going over the next few years in terms of many new biosimilars being approved and entering the marketplace,” says US Oncology Network’s Brooks.

Today, there are 89 companies plus partners developing 204 biosimilar drugs in 456 development projects in cancer, according to a February report from ResearchandMarkets.com. The six primary branded monoclonal antibodies currently on the market enjoyed $22 billion/year in US sales alone. Of those, three used in oncology (Avastin, Herceptin and Rituxin) will lose their US patent protection in 2018–19, and this will create the first major patent cliff in biologics, says Ryan Million, partner at the Consultancy, Trinity Partners.

While it is not a direct anticancer agent, the first biosimilar to have received FDA approval in the US is already impacting oncology. Zarxio (filgrastim-sndz) from Sandoz/Novartis was approved in 2015, as a biosimilar version of Neupogen (filgrastim), Amgen’s bone marrow stimulant that is widely used to counter the effects of chemotherapy and radiotherapy for cancer patients.

“Neupogen's market share had already experienced decline, as its long-acting version, Neulasta, has been dominating physician prescribing. It is still too soon to measure the impact Zarxio will have on the market,” says Cardinal Health’s Feinberg.

Meanwhile, the US patents for Neulasta (pegfilgrastim), a PEGylated form of filgrastim that is Amgen’s longer-acting version of Neupogen, ended in October 2015 and the patents will end in Europe in August 2017. Several companies, including Sandoz/Novartis, Apotex and Coherus are already pursuing biosimilar versions of pegfilgrastim. However, these biosimilars are “likely to face patent challenge that could delay their entry into the marketplace for a while,” says Brooks of US Oncology Network, because Amgen recently launched Neulasta Onpro Kit, a novel formulation of Neulasta that is sold with a disposable, auto-injector system, which allows the patient to receive the drug at home the day after chemotherapy.

In April, the second biosimilar drug was approved for use in the US. Celltrion received FDA approval for the monoclonal antibody infliximab, which will be marketed as a biosimilar alternative to Remicade (infliximab) from Johnson & Johnson/Merck; Hospira, Celltrion’s partner in the US, will market infliximab as Inflectra. While infliximab, an immunotherapy for rheumatoid arthritis, is not used during cancer care, many observers say that decisions made related to its commercialization and reimbursement strategy will provide important lessons for others working to bring biosimilars to market in the US.

Just as traditional, small-molecule generic drugs have now been widely accepted—after some initial resistance by many stakeholders—and have been proven to help reduce the cost of care in many therapeutic categories, industry observers are confident that biosimilars will be accepted and prescribed widely over time, following a similar trajectory. However, many observers note the price differentials and thus cost savings associated with biosimilars will not be as dramatic as those experienced with traditional small-molecule generics, due in part to the complex manufacturing processes required to synthesize biosimilars in living organisms. In general, biosimilars are expected to be priced 25–33% below their branded counterparts. While this price differential will certainly increase access for patients, “it won’t open the floodgates or generate quite the same dramatic savings we’ve seen with the small-molecule generics,” says Brooks.

Meanwhile, ongoing innovation is advancing so rapidly throughout oncology that some of the biosimilars—by the time they reach the market—may be viewed by oncologists as obsolete, in the face of newer innovative therapies (both biological and small-molecule) that provide improvements in clinical outcomes, cost, tolerability or administration routes,” says Genentech’s Evans.

The European playbook does not necessarily translate

“The European Medicines Agency pioneered the regulatory guidelines for biosimilars; thus Europe is way ahead of the US in terms of biosimilars—the EU has been approving biosimilars since 2006 and currently has 19–20 on the market, so there are plenty of lessons to be learned from EU experience to date,” notes Bosco of Quintiles. “We are just starting to see more articles being published to showcase the real-world experience with biosimilars there.”

European countries that have a national healthcare system typically have more controlled choices in terms of what drugs are available to be prescribed, so lower-cost biosimilars may be used more widely due to such drivers, she adds. By comparison, in the US, the decisionmaking process for what treatment any cancer patient receives is so highly fragmented, and depends on many different factors—the type of cancer, the stage and severity of the cancer at diagnosis, patient age, co-morbid conditions, treatment options, access (based on both clinical considerations and affordability.)

In addition to the inherent manufacturing complexity, nearly all biosimilars will require at least one head-to-head clinical trial to confirm similarity to the original biologic, and this creates a process that is more complex and costly than that required for standard small-molecule generics.

“While regulators tend to focus mainly on safety issues, physicians and patients are keenly interested in not only safety, but clinical effectiveness, and how the risks and benefits of one treatment compare to another (in terms of comparisons between the biosimilar and the originator product or with other therapy options in the class,” says Nancy Dreyer, PhD, MPH, global chief of scientific affairs, and SVP, real-world and late phase research, for Quintiles. “The onus is on the manufacturer to provide real-world evidence that would substantiate equivalence in a robust enough manner to satisfy physicians, patients and insurance providers.”

“Marketing efforts (to characterize one biosimilar versus another), distribution challenges, mechanisms for returns and adjustments, and sufficient real-world evidence to demonstrate efficacy, safety and interchangeability level will have to be reconciled,” says Brooks of US Oncology Network.

Meanwhile, non-harmonized naming conventions for biosimilars, and policies around interchangeability and automatic substitution among biosimilars, vary by country and by jurisdiction, adding further complexity that will impact the commercialization strategy for any company entering the space, adds Dreyer. “Such rules have implications for drug makers, too, by impacting pharmacovigilance reporting and the ability to track exactly which medication a patient has received during actual clinical practice.”

With all of these challenges facing any manufacturer, “there is a much higher barrier to entry for biosimilars,” says Million of Trinity Partners. “Ultimately, the need for higher capitalization and the ability to handle more risk will reduce the number of players in the biosimilars arena.” Established makers of innovator biologic therapies, such as Amgen, Sandoz and others, are expected to play a big role in biosimilars, thanks to their established footprint and experience in manufacturing and commercialization. Similarly, partnerships, acquisitions and strategic alliances between smaller biosimilars producers and major pharma companies (such as Pfizer and others), will be essential to support the biosimilars market, as it evolves in the US, he adds.

An abbreviated pathway, without head-to-head comparative studies for every indication (only the “most sensitive” ones), is available to biosimilars in the US and EU. While this may cut the time to market, it also generates questions for some stakeholders about how the therapy will perform when used under real-world conditions, says Bosco of Quintiles. “If there is scientific justification, such as a similar mechanism of action (MOA), a biosimilar company may receive approval through extrapolation for all indications that the originator product is approved for. However, some physicians believe that this raises concern with regard to safety and efficacy in those extrapolated indications.”

“In both clinical trials and in actual practice, there is still some hesitancy among prescribers, who may not want to prescribe them, and we’ve been working to explore their angst and hesitation,” says Brooks. “For instance, uptake of Sandoz’s Zarxio is strong now, but it did not happen without a lot of conversation with oncologists, many of whom have a strong, unstated hesitation to embracing biosimilars.”

“Payers themselves may also experiment with, and implement, various mechanisms to promote greater use of biosimilars,” adds James H. Jackson, PharmD, MPH, and VP, global health economics and outcomes research, at Xcenda. “These include differential physician payments based on biosimilar-utilization targets, reliance on pathways that promote less expensive options, and potentially, episode-based contracting structures that will ultimately promote increased use of less expensive therapies.”

Meanwhile, Jackson notes that to receive the most favorable coverage from payers, “manufacturers of biosimilars must work to educate all stakeholders—including payers, physicians, pharmacists, hospital employees, coding/billing staff and patients—on the value of biosimilars, emphasizing both clinical safety and efficacy, and financial impact on patients and overall healthcare costs.”

“As manufacturers explore how to successfully bring biosimilars on to the market, certain strategies will be critical for supporting providers and patients,” says Ana Stojanovska, VP, reimbursement and policy insights, Xcenda. Of particular importance for biosimilars in oncology—where oncology practices so often use a buy-and-bill mode to purchase and stockpile drug inventories onsite—will be a strong focus on strategy and support programs to help practitioners work through the complex insurance verification, billing, coding and prior authorization issues that will only become more complicated as more biosimilars come to market. This will require increased deployment of highly trained, reimbursement-support specialists in the field. “Providers may be unwilling to prescribe biosimilars if they have concerns around payer coverage, and further confusion may arise if future biosimilars may be approved for only some but not all of the reference product’s indications,” she says.

“Current CMS coding policy for physician-administered products places all biosimilars for a reference product into a single billing code, while the innovator or reference product retains its own individual billing code,” explains Stojanovska. “From a payment standpoint, this means that as more biosimilars come to the marketplace, they will be reimbursed based on a shared average sales price (ASP) for all biosimilars (plus 6% ASP of the reference product).”

Some are concerned that this shared ASP could result in an unpredictable and volatile drug pricing environment for biosimilars, which could heavily impact the economics of the oncology practice. “In such an environment, some providers could perceive the reference product as being more predictable and less cumbersome from an administrative and logistical perspective, and choose to utilize reference products despite the availability of lower-priced biosimilars,” Stojanovska continues. Today, she says there are a number of advocacy efforts underway that are targeted at improving the current CMS coding policy for biosimilars.

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Trimble, C., et al, Safety, efficacy, and immunogenicity of VGX-3100, The Lancet, Vol. 386, No. 10008, pp. 2078–2088, November 21, 2015; accessed at: 

http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(15)00239-1/abstract

A raft of new therapies is generating renewed optimism for cancer care, but even as lower-cost biosimilars enter the market, cost is a crippling factor

Oncology: a new era in therapies; same cost concerns

Unit-dose packaging—blister cards or strips, pouches, sticks, or certain types of vials and prefilled syringes—is taking on a new emphasis in an era where drug packages are going to be traced from place of manufacture to place of dispensing in the US, and in much of the rest of the world. Traditionally, most oral solids (pills, capsules) are packaged in bottles of 30- or 90-counts, especially for chronic care. But in Europe and elsewhere, unit-dose packaging takes priority. There are technological reasons to prefer unit-dose packaging in Europe; there are business reasons to prefer bottles in the US.

With passage of the Drug Supply Chain Security Act in 2013—and with the deadline for manufacturers having a unique serial code on each package (whether in bottle or unit-dose form) by November 2017, the scale tips somewhat more in the direction of unit-dose packaging, according to Walter Berghahn, executive director of the Healthcare Compliance Packaging Council (Bon Air, VA). “The problem with serialization in the US is that, for many bulk oral-solid deliveries, you lose the serialization information at the pharmacy, where the drug gets dispensed into generic yellow pill bottles. So, in the context of extending supply chain security all the way to the patient—which was supposed to be the goal of that law—drug identification can be lost.”

To a degree, this depends on how methodical local pharmacies are in storing data on their drug inventories—something that the US retail pharmacy business is required to do, but which is coming into force slowly—but Berghahn’s point is that supply chain security all the way into the patient’s home medicine cabinet has an extra hurdle to overcome. In a related context, he points out that the crisis over the distribution of opioid-based drugs, which are prone to excessive abuse and have become a subject of national concern, could partially be addressed by having those drugs dispensed in unit-dose form. “Serialized unit doses of these drugs would provide law enforcement more opportunities to trace their origin, and could address the issue of counterfeit versions of the pills currently showing up on the street,” he says.

HCPC’s historic emphasis (the organization is celebrating its 25th anniversary this year) has been on the benefits of unit-dose packaging to improve patient adherence and compliance with therapeutic regimens (hence the term “compliance packaging”), and here, too, there are developments that are tipping the scales more in unit-dose packaging’s favor. Insurers and their pharmacy benefit managers (PBMs) want better adherence in order to minimize the cost of healthcare; when patients take their medications as prescribed, there should be fewer hospital visits or reduced disease progression, especially with the high cost of specialized therapeutics today (to cite one obvious example: if a hepatitis C patient does not stick to the 12-week regiment for the latest treatments, the $50—$100-thousand cost of the regimen goes for naught).

Healthcare providers have always wanted patients to stick to their therapies; now they have incentives, under HHS guidelines, to record adherence rates and to reduce return visits to hospitals. Manufacturers, of course, have always encouraged better adherence at least as a policy stance; now some of them are investing in compliance packaging to improve overall adherence rates, and using that investment to justify better formulary placement with PBMs.

“Unit-dose packaging is well positioned to address a part of this concern by providing a package that dispenses one tablet at a time and in some cases shows an indication of when a medication should be consumed,” says Anna Frolova-Levi, VP & director of sales and marketing at Bilcare Research. “While the pharmaceutical industry has been experiencing many changes in the last decade, it is entering a period where more attention is paid to the final patient outcome.” Bilcare, with manufacturing and service units around the globe, provides films and foils for unit-dose packaging, as well as manufacturing of clinical trial materials including packaging.

“As a general rule, there’s a market trend toward specialized drugs of high value for rare diseases, oncology and the like,” notes Justin Schroeder, communications manager at PCI (Packaging Coordinators Inc., Philadelphia, PA). “This trend, combined with the select patient populations for these drugs, reinforces the demand for better and more effective packaging that improves adherence.” PCI, now with operations in both the US and Europe, provides contract packaging and contract manufacturing of oral solids; a relatively new clinical trial services unit is building capacity.

PCI has a chance to demonstrate these principles with its work on the Freeze (inhaled insulin) product—although the long-term outcome of that is in doubt. Afrezza was approved, for MannKind Corp. (Valencia, CA) in 2014, which then entered into a commercialization agreement with Sanofi-Aventis, but at the beginning of this year, based on poor sales, Sanofi backed out of the agreement. As of presstime, MannKind remains committed to keeping the product on the market, citing the enthusiasm of some patients for a non-injectable form of insulin for diabetes care.

The Afrezza kit comprises a pair of inhalers (each meant to be used for 15 days) and four boxes of blister-carded “pods” that contain the powdered, inhalable insulin. The blister cards not only enable patients to keep track of usage, but, because they contain different amounts of insulin, can be combined to give a variety of dosages depending on patients’ need. All of this is color-coded for ease of use.

“It’s a coordinated approach,” notes Schroeder. “PCI didn’t make the inhaler or pods, but we’ve been responsible for the overall packaging and kit assembly.” PCI has submitted this product as a contender for HCPC’s Annual Compliance Package of the Year, set to be announced just after presstime.

It has been a fairly conventional practice to use compliance packaging with therapy regimens that involve a strict schedule of administration for effectiveness (such as birth-control pills) and with regimens that involve a variation from day to day or week to week of dosage strengths (also a feature of birth control as well as other therapies). Those applications, as well as the starter or sample kits offered at launch by manufacturers, have been the bread-and-butter applications of unit-dose packaging in the US in recent years.

The enhanced attention being paid to adherence for chronic therapies is attracting manufacturers to “calendarized” packaging, which gives patients an easy-to-observe pattern of pill counts over the course of a month. Blister cards color-coded by week of the month or with simple day-by-day counts (pill 1, pill 2, etc.) can do the trick. WestRock (the merger of MeadWestvaco and RockTenn, finalized in mid-2015) announced its latest calendarization package in February, the PerfPak, which features a multi-day calendarization layout, along with child-resistant security features for each pill cavity (as opposed to alternative designs that provide security for the entire blister card within a “wallet” container).

One of the more hospitable situations for unit-dose packaging is in clinical trials, where, typically, limited production runs of a product being developed are used, and where careful control of environmental conditions are maintained. PCI’s Schroeder, whose company has invested substantially recently in clinical trial packaging, says that unit-dose packaging is more popular than in commercial packaging, in part because the patient experience of the drug is more controllable. “Drug developers go through amazing gyrations to mask the trial drug’s identity from the comparator drug,” citing the example that if pills in a bottle don’t have the same shaking sound, it can create a problem for the trial. Additional features to be matched are the color and smell of the pills, the paperboard used for cartons, and, in the case of vials, ensuring that the liquid appears the same under refrigerated and room-temperature conditions. “All this is even more important in crossover trials, when the same patient starts on, say, the comparator drug but then switches over to the trial drug. All sensory characteristics need to be the same.”

PCI, like a few other leading contract manufacturers, is positioning itself to be a one-stop shop, from drug development to commercial manufacturing. Still, he notes in a unit-dose context, the frustration of seeing “a drug in unit-dose packaging during trials, and then bulk packaging when it’s commercialized.”

Berghahn’s HCPC has another rabbit to pull out of its hat for drawing attention to unit-dose packaging: shelf stability of oral solids. It has long been known, although only loosely attended to by FDA, that pills in bottles in patients’ homes can degrade over time; for this reason, some pill bottles include a desiccant module to reduce humidity (as one several countermeasures available). Last year, HCPC published a study* evaluating the physical properties of three common drugs (simvastatin, lisinopril and metformin) when subjected to elevated relative humidity and/or elevated temperature. While cautioning that the results were not definitive on the long-term efficacy of the drugs, Berghahn said that “We feel additional research should be conducted to determine whether current packaging formats are effectively protecting the wide variety of drug products on the market, each with unique environmental sensitivities, as they relate to moisture and oxygen ingress and exposure during ‘in-use’ conditions.”

The study looked at three packaging materials: polypropylene (typically used in amber bottles at pharmacies); high-density polyethylene (typical for white pill bottles) and polyvinyl chloride film (typical for the basic blister packaging in long-term care settings). By contrast, packaging suppliers such as Bilcare, Klöckner Pentaplast, Honeywell and others have been offering high-barrier films that resist the intrusion of water vapor or oxygen; and foil film providers like Constantia Hueck offer aluminum film or aluminum-containing multilayer films not only for ease of opening the pill cavity but also to provide a water vapor barrier.

These barrier films aren’t new by any means; Honeywell has been offering what is arguably the best known film, Aclar (chemically, polychlorotrifluoroethylene, or PCTFE) for years to the pharma industry; what the HCPC study does is draw attention to an apparent gap in drug stability—what happens after it has been dispensed by the pharmacy, and sits in the patients’ homes for upwards of three months. Berghahn says that an updated version of the 2015 study is about to be published by the US Pharmacopeia organization, to draw further attention to the issue among pharmaceutical scientists.

Packaging developers are moving the debate yet one step deeper into packaging science with the development of computer programs to analyze and predict barrier films’ performance, and to provide meaningful design information even while drugs are in the clinical research stage. Bilcare has been offering the BilcareOptima service for several years now, providing what it says is the first instance of packaging design via FDA’s Quality by Design standards (QbD generally is intended to predict performance before manufacturing machinery and processes are specified in FDA approval documents).

“Tests that determine the optimum blister film barrier properties for packaging certain pharmaceutical products can take as little as 15 business days,” says Bilcare’s Frolova-Levi. “This sort of expedited drug stability testing helps packaging engineers and formulators at pharmaceutical companies overcome the time and resource crunch they face when attempting to achieve successful stability studies.” And it not only predicts needed packaging requirements ahead of time; it can also preclude expensive “over-packaging” or use of unnecessarily expensive materials, she adds.

Klöckner Pentaplast, meanwhile, opened what it calls the “kp i.center” in Charlottesville, VA, a year ago, to provide a pilot and testing facility for packaging clients to work with Klöckner experts on packaging prototypes. The research center makes use of software and expertise developed by the company, called the BlisterPro XCEL Suite of design services. And that system, in turn, incorporates technology acquired by the company a couple years ago from FreeThink Technologies, called ASAPrime shelf life modeling software and ASAP laboratory studies.

Glass vials with a crimped aluminum cap are the standard for delivering injectable drugs, or at least those that have not been lyophilized (freeze-dried, which then necessitates a reconstitution step before administration) or supplied as prefilled syringes. Frequently, they represent the most expensive drugs available, containing biologic substances that must be carefully handled.

Much attention has been paid in recent years to prefilled syringes, which typically can be used by patients themselves and therefore represent a savings to healthcare systems and, for some patients, a desirable degree of self-reliance. Visiongain, a UK market research firm, published a recent study estimating the 2020 market size for prefilled syringe packaging at just under $7 billion in 2020, and predicts “strong growth” through 2026.

Even so, conventional vial packaging has seen its fair share of continuing development. Rondo-Pak (Camden, NJ) announced a “Quick-to-Market” carton assembly service at this year’s Interphex meeting (New York, NY, April 26—28) to enable manufacturers to provide sample packages, short or extended production runs, or backup packaging services with a quick turnaround. “Our Quick-to-Market carton assembly services are a reassuring security blanket for customers who find themselves challenged to fulfill a sudden need or unforeseen opportunity,” said Victor Dixon, president of Rondo-Pak, in a statement.

Meanwhile, there was considerable buzz in the business press about a study issued from Memorial Sloan Kettering earlier this year, highlighting the potential waste of expensive biologics that are provided in a limited number of vial sizes, even when those biologics are carefully calibrated for dosage by patient weight and other considerations. The study, “Overspending driven by oversized single dose vials of cancer drugs,” published in the British Medical Journal* made the point that somewhat arbitrary choices by manufacturers in the vial sizes can cause wastage of those drugs, since by usual pharmacy standards leftover medicine cannot be saved indefinitely for later administration. By some rough calculations of drug use, patient profiles and Medicare reimbursement data, the authors concluded that some $1.8 billion of 20 key injectable cancer drugs will be wasted this year. “Regulators could require manufacturers to provide drugs in a reasonable set of size options to ensure the amount of wasted drug is low, say 3%,” suggest the authors, or to “leave manufacturers free to select their vial sizes but also require them to refund the cost of leftover drug.”

This study presupposes that there is minimal or no additional cost to supplying and then distributing certain drugs in multiple vial sizes, let alone the complexity of stocking them at hospitals and pharmacies; and it was also a little vague on the practices of specialty pharmacies, where patient-specific dosages of drugs are usually compounded. But, in an era where closer and closer attention is being paid to both drug costs and pharmacy practices, it highlights the importance of better packaging decisions by manufacturers.

Packaging designers continue the uphill battle for converting the US pharma industry to unit-dose, compliance-improving packaging

Brand enhancement and safety with unit-dose packaging

For many years, the problems inherent in managing biopharma supply chains have been attacked by IT tools. Today’s systems do a good job of gathering and storing data; producing reports; and executing purchasing, production and disposition orders. “Plan, Source, Make and Deliver” are the commanding goals. But this capability has come at a cost. Installing and operating a supply chain management (SCM) system is expensive, time-consuming and relatively inflexible to change. Especially in the life sciences industry, where regulation of validated systems is the norm, the tendency is to install a system and live with it, for better or for worse.

Meanwhile, new IT tools and resources, driven in part by the “Big Data” transformation of IT systems, is giving a new perspective on SCM. The first and most readily accessed change is employing a cloud-based system, with the controlling software existing on a remote server. In general, cloud-based systems offer vastly improved flexibility; the systems can be upgraded on a continual basis, and separating the IT system from its hardware platform significantly reduces the capital cost of the IT infrastructure. Another benefit of cloud-based SCM is a more open and flexible approach to data management. Rather than building and maintaining on-site data warehouses, which have their own complex IT needs, cloud-based data storage generally allows for rapid compilation of data and faster reporting of results.

Cloud-based IT systems also provide a platform for today’s driver in SCM: collaboration. More and more, manufacturers are seeking to coordinate data reporting between themselves and their business partners; the relationship between a pharma manufacturer and its contract manufacturing organizations (CMOs) is an obvious example; a similar driver is coordination between the manufacturer, with finished goods, and downstream trading partners.

It is probable that for as long as pharma SCM has existed, it has been compared—unfavorably—to other industries, where the time from raw materials to finished goods can be measured in days or weeks (as compared to months or years for pharma), and where holdups in the flow of production can subtract valuable time from the shelf life of the finished goods. The reality is pharmaceutical supply chains deal with dynamics and complexities that in combination make them unique and more challenging than many other industries. Consider for a moment the circumstances that surround pharma supply chain management:

Traditionally, pharmaceutical supply chains have been focused on maintaining high customer service levels in order to maximize the revenue of high margin products, since gross profit dwarfs any carrying cost penalties. Because of this, inventory levels have tended to be excessive to ensure achievement of these targets. This focus is changing as generics grow and margins drop. Most companies in the industry now have significant efforts around cycle time and inventory reduction, but it will take time to catch up to other industries that have been investing in “lean” for decades. In fact, there is a recognition that segmented supply chain strategies are necessary to 1) protect growing, patented product revenue while 2) driving cost reductions for products with declining margins and market share.

The pharmaceutical industry is highly regulated by government agencies to ensure patient safety, product efficacy and product availability. As a result, there are quality testing and quality assurance steps throughout the supply chain that inherently take more time and cause supply variability. Two examples are the mycoplasma testing in Biotech, with an incubation period of 28 days, and sterility testing for injectables, with an incubation period of 14 days. That is a month and a half of waiting before testing can even begin. When you add steps like this to manufacturing and transportation lead-times you can explain around 15% of the two years for my tablets.

Most pharma companies are the result of at least some level of M&A and there has been a tremendous consolidation in the industry over the last two decades. The result of this is that many companies are sitting on a hodgepodge of ERP platforms and data sources that make End-to-End visibility nearly impossible. This results in internal bullwhip effects and inefficiencies leading to excess cycle times and inventory. Many of these companies have a long-term goal of consolidating onto one platform, however, M&A doesn’t seem as if it will slow down anytime soon and the light at the end of the tunnel seems to be getting further away.

The handoffs in pharmaceutical supply chains are significant, typically from manufacturer to distributor to pharmacy to patient. If you have access to Barry Blake’s article on the End-to-End Value Chain, this will help give you a full appreciation of how formidable these handoffs are. There is little, if any, visibility or collaboration among these entities with each focused on optimizing their piece of the puzzle.

Despite these challenges, the good news is that technology and supply chain techniques have continued to advance, and there are fewer and fewer obstacles in the way thanks to supply chain-specific cloud solutions like those offered by FusionOps.

 Fig. 1. Snapshot of a hypothetical pharma supply chain. Credit: FusionOps[/caption]

The goal for most SCM managers is to have a view of overall operations that looks like Fig. 1. For a stable, completely internalized supply chain of one organization, views like this are possible, after expending much effort to compile and normalize the data. For the more common scenario today—of merged or acquired organizations with different ERP systems, and for relationships between CMOs and pharma companies—achieving this dashboard is a challenge.

With the latest IT tools, however, the task becomes much easier. Algorithms to translate or normalize data from diverse sources are available, and companies like FusionOps have prebuilt libraries of these interfaces. An important value of a dashboard like this is that it opens up a view of a company to others besides the SCM manager: the purchasing department, finance, marketing and others. This, too, is a hallmark of modern organization’s drive toward collaborative efforts, and away from the traditional siloed view of an organization.

 Fig. 2. A detailed dashboard gives a color-coded view of the status of production steps.[/caption]

For the SCM manager specifically, though, it is now possible to have a view of operations like that of Fig. 2. Here, simple color codes indicate high- or low-performing links in the supply chain, and enable the SCM manager to drill down to see what it going on at a granular level. Statistical techniques can be applied to understand the variability of these functions. Root cause analysis of the data presented in this fashion can lead to improvements in overall operations.

Two critical functions of a well-run supply chain are minimum cycle time (the time between initiation and completion of a supply chain step) and inventory metrics. Traditionally, the pharma industry has operated with excessive safety stock, resulting in excessive overstock and expired-product problems, and tying up working capital to the detriment of overall financial performance. Safety stock cannot be reduced to zero—the manufacturer needs to ensure an adequate supply of product reaching the market regardless of process upsets—but better analytical tools enable safety stock to be calculated in a more rational manner.

Some examples of the benefits of this cloud-based, multisourced view of supply chain data:

One manufacturer who had been trying to reconcile two completely separate SCM systems realized that production in one site was unnecessary because of inventory in another site; only by having a harmonized visualization across the enterprise could this problem be revealed.

One client was surprised to find that implementation of a FusionOps system was up and running in a matter of days; moreover, reports that used to be available only after being batched for the month or quarter could now be delivered daily.

Another client, using the safety stock calculation capability, was able to build a system that could recalculate this measurement on a routine basis; previously, a burdensome data-collection effort had to be undertaken, resulting in sporadic calculations of safety stock that would, in time, become inaccurate.

Achieving results like these is not a matter of simply dropping in a cloud-based system; it is desirable for the organization to approach its data resources differently. By tapping into and unleashing the transactional detail of their ERP platform, they can quickly build dashboards that visualize high-level supply chain performance across Plan, Source, Make and Deliver. This high-level “health check” quickly identifies areas of concern and our root cause functionality enables efficient drill down to the performance drivers. This will allow companies to quickly identify areas for improvement and a way to monitor performance going forward. Cycle time and inventory metrics are a key part of these analytics.

Second, pharma companies should consider opening up—with the right security measures in place—their internal data to supply chain partners. They will always need to have absolute control over what data both internal and external users are able to see, to the extent that core ERP data can be shared with external parties, including pharmacies. They also need powerful analytics that allow users to quickly drill down from high-level indicators to the root causes driving performance and supply. Information such as order status, delivery dates, inventory and future demand signals can be made transparent across the supply chain network. Imagine a world where all key stakeholders (manufacturers, distributors, pharmacies and regulatory bodies) have visibility into the supply chain. Not only would the pharmaceutical industry get past its reputation of supply chain inefficiency, but much more importantly, it would create efficient processes to improve drug supply and reduce the drug shortages that most of the world has been dealing with over the last decade. A solution like FusionOps can enable this kind of visibility through robust role profiling and data API’s.

And lastly, let’s not forget global serialization. This may be a key reason for pharma to consider its move to the cloud and analytics. Our industry is on the cusp of implementing a capability far beyond leading edge: the ability to follow and authenticate a product through every step of the supply chain all the way to the end user. With the on-demand and real-time systems that cloud can enable, pharma companies gain timely visibility across the entire operations, as well as the capabilities to zero in the minute details that this systematic change will require.

Allen Jacques, VP of pharma supply chain, recently joined FusionOps from Pfizer, Inc., where he was VP of network supply planning. Prior work includes Wyeth and Baxter Bioscience.

New IT data-science and visualization tools advance supply chain management

Managing supply chains from the cloud

Oncology stands out in the debate over how drugs are priced and paid for in the US, although oncolytics are certainly not the only drugs getting this attention. Nevertheless, the cancer care community—oncologists and health administrators—have issued reports and recommendations to address the reimbursement issue. The latest is the American Assn. for Cancer Research (AACR), which sponsored (along with the Personalized Medicine Coalition and Feinstein Kean Healthcare) a study, “The impact of alternative payment models on oncology innovation and patient care,” presented at this spring’s AACR meeting (April 17–21; New Orleans, LA). The three organizations constitute AACR’s “Turning the Tide Against Cancer” initiative.

 Fig. 1. Released in February, the Harris Poll measure of positive “relationship quotient” shows pharma as one of the few industry sectors on a steady decline. Credit: Harris[/caption]

“Cancer care has featured prominently in the national conversation about value-based healthcare, which is not surprising given the health and economic burdens of cancer in the United States, as well as the unique needs of cancer patients,” the authors wrote in the study. The alternative payment models (APMs) within the scope of the study include accountable care organizations, episode-based payment models and oncology-centered medical homes.

The initiative sponsors held a roundtable involving physicians, researchers, advocates, representatives of insurers and pharmaceutical companies, and policymakers, and out of those discussions, five policy recommendations arose:

APMs should keep pace with rapidly emerging science by incentivizing the adoption of innovative medicines and technologies that have the potential to improve patient outcomes and make healthcare more efficient.

APMs should include mechanisms to encourage patient participation as appropriate in clinical trials, as well as ongoing post-market clinical research.

Clinical pathways should be transparent and evidence-based, and updated regularly to reflect current scientific evidence and clinical advances within the overall continuum of care.

When providers and patients are making treatment decisions, patients should be given a clear, comprehensive picture of their treatment options, including cost information that is tailored to the specific patient's insurance coverage and treatment plan.

APMs should require that clinical data be aggregated and integrated into providers' workflows via electronic health records in order to support learning healthcare systems. Providers should have access to data that will support their shared decisionmaking with patients. Similarly, patients should have access to research results collected through a learning healthcare system.

The Centers for Medicare and Medicaid Services (CMS) is getting into the alternative-payment mode itself. In March, it issued a draft proposal to set up an experimental program within Medicare Part B to address the higher cost of newer, branded pharmaceuticals. Six methods are proposed:

Improving incentives for best clinical care. Physicians often can choose among several drugs to treat a patient, and the current Medicare Part B drug payment methodology can penalize doctors for selecting lower-cost drugs, even when these drugs are as good or better for patients based on the evidence. Today, Medicare Part B generally pays physicians and hospital outpatient departments the average sales price of a drug, plus a 6% add-on. The proposed model would test whether changing the add-on payment to 2.5% plus a flat fee payment of $16.80 per drug per day changes prescribing incentives and leads to improved quality and value. The proposed change to the add-on payment is budget neutral.

Discounting or eliminating patient cost-sharing. Patients are often required to pay for a portion of their care through cost-sharing. This proposed test would decrease or eliminate cost-sharing to improve beneficiaries’ access and appropriate use of effective drugs.

Feedback on prescribing patterns and online decision support tools. This proposed test would create evidence-based clinical decision support tools as a resource for providers and suppliers focused on safe and appropriate use for selected drugs and indications. Examples could include best practices in prescribing or information on a clinician’s prescribing patterns relative to geographic and national trends.

Indications-based pricing. This proposed test would vary the payment for a drug based on its clinical effectiveness for different indications. For example, a medication might be used to treat one condition with high levels of success but an unrelated condition with less effectiveness, or for a longer duration of time. The goal is to pay for what works for patients.

Reference pricing. This proposed model would test the practice of setting a standard payment rate—a benchmark—for a group of therapeutically similar drug products.

Risk-sharing agreements based on outcomes. This proposed test would allow CMS to enter into voluntary agreements with drug manufacturers to link patient outcomes with price adjustments.

One of the primary problems the changes would address is the negative incentive doctors have today for prescribing lower-cost drugs: because the current reimbursement is tied to ASP+6%, a higher-cost drug will generate more income to the physicians than a lower-cost one. Other proposals would bundle higher-cost and lower-cost drugs of the same therapeutic class, potentially making the higher-cost purchase less attractive. The risk-sharing agreement approach picks up on a practice that is more common in the EU, but which has been tried selectively in the US. And, as CMS notes, “Commercial health plans, pharmacy benefit managers, hospitals, and other entities that manage health benefits and drug utilization successfully employ an array of tools including value-based pricing and feedback on prescribing patterns to improve the value of drug payments.” CMS would like to try some of these reimbursement mechanisms itself.

Reaction was swift in Washington: “[U]pon initial review, we are gravely concerned that the model threatens to disrupt the successful reimbursement framework for drugs covered under the Medicare Part B program,” said BIO. “Proposing sweeping changes to Medicare Part B drug reimbursement without thoughtful consideration and stakeholder input is not the right approach and puts Medicare patients who rely on these medicines at risk,” said PhRMA. A joint statement from Republican leaders of House and Senate committees involved with healthcare oversight asserted that “Yesterday's announcement marks another troubling example of unelected bureaucrats making decisions behind closed doors that impact the American people and their healthcare. This decision was made with a complete lack of transparency and clear disregard for the people and stakeholders who will be impacted the most."

The Community Oncology Alliance (COA), a public interest group representing those practitioners, was flat-out oppositional: “COA notes that it is actively pursuing every legal, legislative and related option on behalf of members to stop the CMS Medicare Part B experiment,” it asserted. COA also stated directly what other critics have implied: that throttling specialty pharmaceutical prices will harm the practice of community oncology—generally, nonaffiliated oncologists treating individual patients—which it maintains can provide cancer care at a lower cost than oncology centers affiliated with hospital systems. (It’s not clear whether the proposed changes would affect community oncologists better or worse than the oncologists affiliated with health systems, yet that is what COA foresees.)

If CMS goes forward after the 60-day comment period ends, it expects to set up the test programs in the fall, and to have value-based purchasing begin testing no sooner than next January, and for the program to be “fully operational” around late 2018. Gearing all this up in the middle of an election year is sure to be another factor that CMS will have to overcome.

Alternative payment models and the like involve the insurance industry, health systems and providers as well as the pharma industry itself. But the intensifying debate over drug pricing (which wasn’t helped at all by the Congressional hearings involving Valeant and Turing Pharma last fall) shine an uncomfortable spotlight on the pharma industry and its pricing practices.

In this context, it’s worth paying attention to public-sentiment surveys, such as those run by the Harris polling organization. Earlier this year, it released its “Relationship Quotient” survey, which polls general-public impressions of various companies and industries (Fig. 1). Unlike every other industry sector surveyed, the pharma industry’s “positive mentions” have declined continuously since 2014. In this survey, financial services companies nosed ahead of pharma in public approval; at this point, the only sectors with less appeal than pharma are government and the tobacco industry.

The pharma industry has gone through tough times before, and until 2014, its reputation was on something of an upward slope. And it’s true that drug prices are not the sole reason for this industry’s reputation, good or bad. Nevertheless, the pointers are all going in the wrong direction for the pharma industry to keep its position regarding pricing, import exclusivity and public investment going forward.

Policymakers look at alternative payment models in oncology

Changing the payment paradigm

As the specialty pharmaceutical marketplace grows, so does the specialty pharmacy provider (SPP) market. And with the former growing at double-digit rates, while traditional retail pharmacy is growing in low single digits, the attraction is obvious.

“In 2015, the FDA tied the record for the most novel new drug approvals since the creation of the Prescription Drug User Fee Act in 1992,” notes Philip Hagerman, RPh, CEO of Diplomat Pharmacy (Flint, MI). “The exceptional growth in new treatment options keeps arriving, bringing hope for patient populations who’ve never had it. These robust pipeline demands call for the very foundation we are built upon—dedication to our patients and a flexible and nimble infrastructure that optimizes therapy management.”

Diplomat is the largest independent SP in the US, competing against the SPs operated by the bigger pharmacy benefit managers (PBMs) and the chain pharmacies, such as Express Scripts, CVS Health and Walgreens. AmerisourceBergen, through the AmerisourceBergen Specialty Group, has several business units that provide SP and specialty distribution services; Cardinal Health, McKesson and H.D. Smith, rounding out the top four US wholesalers, each has its own specialty unit with SP services included. But hundreds of other pharmacies, or pharmacy operations of larger companies, have entered the fray; URAC, one of the organizations that provides accreditation for SPs, says that it will have accredited nearly 400 companies by the end of this year—a near tripling from just 2013.

Additionally, there is considerable realigning of SP organizations, who are being snapped up by larger companies or merged; a couple of the recent, bigger acquisitions were Salveo Pharmacy, now part of UnitedHealth, an insurer that also now owns Catamaran, a major PBM; McKesson Specialty Solutions’ acquisition of Biologics, an oncology SP; part of Diplomat’s recent growth has been fueled by the acquisition of Burmans Pharmacy, a regional firm in the Middle Atlantic. Even food stores are getting into the act: Giant Eagle acquired Rx21 Specialty Pharmacy for an undisclosed price, with the intention of participating more broadly in the hepatitis C therapy area.

The biggest recent deal is CVS Health’s acquisition of Omnicare a year ago, which has both SP and distribution businesses, for $12.7 billion. While the bulk of that price (and the bulk of Omnicare’s business) is in serving the long-term care market, it included the Omnicare Specialty Care Group, which itself had multiple SPs. Of particular interest to pharma marketers is the RxCrossroads unit, which combines an SP, a third-party logistics service, patient support hub services, and field services for patient and healthcare-provider support.

CVS Health, as noted, is already a large player in the SP field; for now, the RxCrossroads part of the acquisition is being managed as a separate entity. “CVS Health's acquisition this past August of the Omnicare businesses, both the Long Term Care and RxCrossroads, provides some unique opportunities,” Rocky Kraft, SVP at Omnicare, tells Pharmaceutical Commerce. “We are in the midst of an analysis across the CVS Health enterprises to enhance current operations and grow innovative solutions for connecting patients to their therapies, furthering CVS's mission helping people on their path to better health.”

Meanwhile Denise Von Dohren, VP of access solutions at RxCrossroads, says that the company has been busier than ever with managing patient support programs for manufacturers. “Our emphasis is on customizing solutions for a wide variety of therapy programs, ranging from a ‘specialty lite’ service for handling prior authorizations for patients, to highly specialized program for, for example, the disabled or elderly.” She cites the utility of the organization’s network of 450 field nurses to help patients with administering self-injectable drugs, and the resources to provide education for HCPs.

National SPs and national distributors have a simple proposition for manufacturers: national coverage is guaranteed. But the hundreds of local or regional pharmacies, plus, to a growing degree, hospital systems want their share of the specialty pharmaceutical market. (For hospitals, some of the distribution arrangements can be handled by the group purchasing organizations of which they are members, but generally speaking, GPOs don’t provide dedicated patient-support services).

 Fig. 1. Accenture’s analysis of current and future industry-sponsored patient services. Credit: Accenture[/caption]

A not-very-straightforward process is entailed in payments to SPs and reimbursements to manufacturers, in specialty pharmaceutical distribution. Manufacturers can choose conventional distribution; distribution through a specialty distributor; direct distribution to major SPs; and exclusive, limited or expansive networks of SPs selected for a drug. Layered into this is the practice of “buy and bill,” common to oncology and other specialties, which enable physicians (or their employers) to be reimbursed for dispensing a drug, often under a medical benefit rather than the typical pharmaceutical benefit of insurers. “White bagging,” covered later in this article, further clouds the distribution process.

Once pricing has been established, however, another layer of competition around patient services ensues. Manufacturers want to ensure the success of a drug’s commercialization, and with many specialty drugs, that can involve coordinating care between pharmacies and healthcare providers or outpatient clinics; assisting patients through the benefits verification process and a growing number of additional services (see Fig. 1). Manufacturers need to weigh the costs of the distribution channel against the quality of patient service provided. Hub service providers—generally, third parties reimbursed by manufacturers to provide much of this coordination—represent 

Accenture, the IT consultancy, has been conducting a survey within healthcare for the past three years on the topic of patient-industry interaction; the latest, just-released study* was a poll of pharma marketing executives in the US and Europe of their patient-services investments. More than 85% of pharmaceutical executives plan to ramp-up their investment in patient services over the next 18 months. And 91% expect to offer six or more types of patient services in the next two years, focusing on key areas like medication delivery, treatment adherence and remote monitoring (Fig. 1).

At the same time, though, Accenture found in a 2015 study of 10,000 patients in various countries in the US, Europe and South America, that only around one in five patients was aware of the services currently available, pointing to a lack of communication between healthcare systems generally and the public. Anthony Romito, one of the study authors, notes that this interactivity can include “pretreatment” information—educating the public, for example, on the warning signs for certain disease conditions, through nonpromotional information.

How to communicate? The Accenture study respondents rely most heavily on healthcare professionals (doctors, nurses) or the institutions they belong to (hospitals, clinics) (Fig. 2). Pharmacies and pharmacists figure in this process as well, representing 29% of the channels used.  Sales rep visits with pharmacists, marketing programs to pharmacists and external patient services organizations (such as hub providers) are three of the most common communication channels.

The survey is not specific to specialty pharmaceuticals (rather it is based on several general therapeutic areas), but specialty products clearly are within the scope of the study. Overall, says Romito, the pharma industry needs to approach the patient communications task more directly, recommending:

Patient services will become a competitive driver and no longer optional for pharma companies

Investment should be led by what patients value, but measuring business value is critical to sustainability

Clear organizational and operational strategy must be in place to ensure companies are structured for success

Articulating the patient and economic value of services needs to be central to healthcare professional interactions

Into this vacuum, several organizations have arisen to fill the gap. The longest-operating one is arguably Armada Health Solutions, which recently changed its name to Asembia. Calling itself “a specialty group contracting and service organization,” it manages purchasing agreements for SPs, prescription data management services and patient-support programs. “Under the new Asembia name, we will continue to expand on our company's tradition of providing our partners with valuable solutions ranging from high-touch patient support hub services, innovative technology platforms and collaborative contracting strategies for specialty pharmaceutical products,” said Lawrence Irene, RPh, CEO, in a statement. While Asembia is coy about just how many SPs or other providers are in its network, it also runs a wildly popular specialty pharmacy summit every year in Las Vegas, NV; the meeting (at presstime) was scheduled for May 2–6, and more than 2,000 attendees were expected.

Another organization has been in business for several years serving the hospital pharmacy sector: ExceleraRx Corp., based in Minneapolis, MN. It currently has 17 member health systems and academic medical centers. For members, it offers a means to retain more revenue, which it calculates is lost to the tune of $15 million per million lives served by the health system.

For manufacturers, it suggests that “while individual health systems provide the point-of-care advantage, pooling their expertise is a more efficient way to improve outcomes,” according to a company statement. “Through its combination of centralized management and localized patient care, the sophisticated Excelera organization meets and exceeds manufacturers’ specifications and expectations.”

Diplomat Pharmacy, for one, is not letting the hospital market fall away as a source of clients. “Diplomat partners with retail and hospital pharmacies across the country in our Retail Specialty Network and our Hospital Specialty Program,” says Atheer Kaddis, PharmD, EVP at the company. “We provide all of the administrative support for the dispensing of specialty medications in the retail and hospital outpatient settings.” The goal, he says, is to “to provide a patient-centric program whereby they have the ability to purchase a product, maintain critical services to their patients and become more relevant in the specialty space, with Diplomat partnering to provide the necessary back-end services.”

The newest entry into this networking field is KloudScript (Oakbrook Terrace, IL), founded by Rinku Patel, PharmD. Its goal is to bring local and mostly independent pharmacies into the specialty fold, banking on the close relationships that local pharmacists have with their clientele to provide SP-level services.

She says that the organization has a membership (who pay fees to KloudScript) of 400, covering 40 states, with a goal of reaching all 50 by year-end. And it is working with the Center for Pharmacy Practice Accreditation (CPPA), one of the national accrediting bodies, to develop an accreditation process for its member pharmacies.

Traditionally, oncologists and other specialists have purchased directly from specialty distributors (SD) and GPOs. Once the drugs are administered to patients, the physicians bill the patient’s insurance plan (typically under the patient’s medical benefit, since the medications are infused in the clinical setting) and accept the reimbursement for the drug itself, plus administration fees, and associated laboratory work and office visits, as payment. Thus, the “buy and bill” model. Now, however, the relentless pressure to control costs is leading to the growth of “white bagging.” Some stakeholders welcome this change, others do not.

The SP channel continues to grow, with manufacturers looking for more control over access

Pharmaceutical Commerce - May/June 2016

Serialization’s interface between the plant floor, the enterprise and the world

FDA looks to industry for help in DSCSA compliance

Clinical cold chain vendors go into a deep freeze

Oncology: a new era in therapies; same cost concerns

Brand enhancement and safety with unit-dose packaging

Managing supply chains from the cloud

Changing the payment paradigm

Specialty pharmacy dynamics

Laying the foundation for a national system for evidence generation

Strengthening healthcare and pharmaceutical supply chains is critical for healthcare resiliency

A Conversation with Mark Merritt, Pharmaceutical Care Management Association

2016 Product Security Report

Copay assistance data on the iPad: TrialCard’s new app

Vertex’ Orkambi medication package is Compliance Package of the Year

Prescription-drug abuse legislation signed into law

Prepaid cash cards motivate clinical trial patients

IMS 2015 Use of Medicines report: US sales reach $424.8 billion

More injectables capacity in the US, Germany

FDA proposes guidance for biosimilar product labels

Biosimilars represent a $56-110-billion savings potential in 2016-2020, says IMS Institute

ZS Associates sharpens focus on pharma-physician interaction