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  • 17 Oct 2013

    Manufacturers and Payers Faced with Tough Choices as the Diabetes Market Heats Up

    James Convery, Director, Strategy & Analytics, Zitter Health Insights

    Diabetes is a disease that is estimated to affect at least 25 million adults in the United States. For context, this represents a little over 8% of the entire population. Furthermore, there are disease state experts who believe that there are approximately three times as many people living with pre-diabetes. That being the case, the number of patients who are diagnosed with type 2 diabetes mellitus (represents about 90% of diabetes cases) could easily increase three-to-four fold in the coming years. This is a scary prospect for health plans. By 2050, the CDC estimates the prevalence of type 2 diabetes mellitus may be as high as one in three adults. Diabetes is already one of the most expensive medical conditions in the country and costs have been steadily rising. To complicate matters, there are commonly observed co-morbidities associated with diabetes mellitus like hypertension, hyperlipidemia, cardiovascular diseases, congestive heart failure, renal disorders, retinopathy, neurologic disorders, and any cardiac or non-cardiac co-morbidity combinations. Some of the largest treatment cost drivers for patients correlate with the presence of neurologic disorders, renal disorders, co-morbidity combinations, episodes of hospitalization, dialysis services, hemoglobin A1c testing, and, of course, antidiabetic medication use.

    As demonstrated in Figure 1, there are an array of choices for treating type 2 diabetes.

    Figure 1: FDA Approved Agents for Type 2 Diabetes (click to enlarge)

    FDA Approved Agents for Type 2

    Metformin is often the first prescribed drug. It is the preferred initial agent for monotherapy and is a standard part of combination treatments. If patients do not respond to metformin therapy, there are dizzying options to navigate through (Figure 2), and, adding to the challenge, treatment guidelines are generally left to the discretion of physicians and patients.

    Figure 2: Profiles of Type 2 Diabetes Dual-Drug Medications (click to enlarge)

    Profiles of Antidiabetic Medications

    Increasing Payer Management to Limit Access
    High cost, high prevalence categories remain a management priority for payers, and type 2 diabetes is clearly at the top of this list. Payers have the added challenge of trying to decipher management implications for a very dynamic landscape. Janssen’s Invokana, the first of a new class of diabetes drugs known as sodium-glucose co-transporter 2 (SGLT2) inhibitors, was approved by the U.S. Food and Drug Administration earlier this year and is expected to make a major market impact given its novel mechanism of action. Several other companies are also planning to enter agents in this new class. For example, Pfizer and Merck are co-developing Pfizer’s experimental type 2 diabetes drug ertugliflozin, both as a standalone product and in combination with other drugs, including Merck’s dominant, well-entrenched blockbuster Januvia. There are more GLP-1 analogs in the pipeline. The entire DPP-4 inhibitor class, along with the related GLP-1 class of injectable diabetes products, is currently being scrutinized by the FDA for potential pancreatic safety problems including pancreatitis and possibly rare cases of pancreatic cancer. Eli Lilly & Co’s experimental once-weekly drug dulaglutide proved as good as insulin in controlling blood sugar in two late-stage studies. Takeda has started marketing three of its diabetes therapies in the U.S., entering a crowded market while offering new fixed dose options for physicians. Biosimilar treatment options are also being explored. So, what does all this mean? What will market access look like when all the dust settles? Who will be the beneficiaries? The treatment pathway will clearly evolve and presents opportunities for a number of manufacturers and new agents.

    We were curious so we orchestrated a simulated health plan P&T committee meeting (Pharmacy & Therapeutics (P&T) Perspective) in August to get a pulse on health plan intentions. Advisors had a lot to say. The diabetes market is clearly top-of-mind and a key focal area for scrutiny. Payers are not enamored with the associated outlays and commented on the rapid escalation of costs for this class. Manufacturers can expect payers to escalate efforts to limit access by employing prior authorizations, step edits, and tiering to manage costs in this increasingly crowded space. A growing perception of limited product differentiation is also leading plans to put more pressure on manufacturers for more attractive contracts. Blockbuster combination therapies and novel agents, such as Invokana, are expected to continue to drive growth, but payers are applying a “wait-and-see” approach to account for all the new product activity and secure a greater degree of comfort with clinical data comparatives.

    The diabetes market is changing significantly and will definitely result in manufacturers and payers having to make some tough choices. The stakes are higher than ever for manufacturers and market access is an increasingly critical lever in determining the commercial success or failure of their diabetes franchise. It is critical to stay a step ahead and understand how payers will manage this category.