Pricing of expensive anticancer drugs combinations:: a new price

regulation mechanism in France

Concerned by rapidly increasing costs of new expensive drugs combinations,s, the French government issued last
summer a guidance for implementation of a new price regulation mechanism for expensive medications used in
association of one or more products. The guidance particularly targets new drugs in Oncology.
The recent prices decisions regarding COTELLIC (cobimetinib, ROCHE) and ZELBORAF
ELBORAF (vemurafenib, ROCHE)
or MEKINIST (trametinib, NOVARTIS)) and TAFINLAR (dabrafenib, GSK) are good examples of the new price
regulation mechanism's being underway.

The main feature of the French health care system is the quasi-universal
universal coverage (99% of the population) of the
health care by the National Health
lth Insurance, a branch of the national Social SSecurity
ecurity system. Following the principle
of equal access to the health care, p patients with chronic severe conditions including cancer benefit from full
coverage of their health care by the National Health Insurance
Insurance. Therefore, in the particular
cular case of anticancer
anti drugs,
the National Insurance is the unique payer and the only price decision
decision-maker
maker in France for all anticancer drugs
consumed in outpatient setting or reimbursed in hospital on top of DRG tariff1.

Reimbursement price setting and regulation is under responsibility of a inter ministerial committee
commit called
Economic Committee of Health Products; this authority fixes prices of reimbursed drugs on the basis of opinion
regarding medical benefit and added value issued by the HAS2, and after the negotiations with the
manufacturer responsible for the marketing of product in France (in general, the French affiliate of the
manufacturing company). Conditional pricing strategies have seen a substantial development in France over the
last decade. Most of the price contracts between
tween the manufacturers and Economic Committee include specific
clauses such as non-transparent
transparent rebates, price
price-volume
volume agreements, revenue caps, discounts, planned
reimbursement price cuts etc. Only the
he face price agreed during the negotiations is made public;
publ all specific clauses
of the price contracts remain confidential.

The MEK-inhibitor COTELLIC (cobimetinib

cobimetinib)) got the marketing authorization in Europe in November 2015 in the
indication for use in combination with vemurafenib for the treatment of adult patients with unresectable or
metastatic melanoma with a BRAF V600 mutation3. The combination of COTELLIC with ZELBORAF (vemurafenib),
both products manufactured and marketed by ROCHE, has obtained in France an added value of level III (moderate)
thanks to the 4.9 months overall survival benefit demonstrated in the clinical trial4. The same added value has been
granted by the HAS earlier to the combination of MEKINIST (trametinib, NOVARTIS)) with TAFINLAR (dabrafenib,
GSK), after the clinical demonstration of 7.6 months gain in terms of median overall survival in the same indication5.

The new price regulation doctrine addressed by the French government to the Pricing Committee of Health Products
last summer stipulates that the latter should control cumulative cost of expensive drugs combinations by regulating
prices of both products used in each combi
combination. In other words, registration and pricing of a new expensive drug
to be used in combination with another expensive drug already marketed in Franc Francee triggers an immediate price
review of the old one.

The new mechanism seems relatively easy to implement for the French payer when there is only one industrial
company sit at the negotiations table: the
he parties reach an agreement on the respective prices
price of both drugs used in
combination within the allowed expenditure envelope, the size and the eventual growth of which depending on the
level of added clinical value, the target population and the relevant economic environment.
environment We can see how this

new pricing
ing approach worked in the case of COTELLIC /ZELBORAF combination where both products are
manufactured and marketed by ROCHE.
COTELLIC manufacturer price published in the French Official Journal on February 16th, 2017 has been fixed at
5,400 per pack of 63 tablets, i.e. 85.71 per unit. A week earlier, the manufacturer price of ZELBORAF was cut
down by 7%, from 1,609 to 1,497 per pack of 56 tablets.

In terms of daily cost of treatment, COTELLIC price has been fixed at the same level than MEKINIST's one in
November 2016: the product manufactured by NOVARTIS got the price of 5,400 per pack of
30 2-mg-tablets covering one month of treatment.

If COTELLIC and MEKINIST, both recompensed by the HAS with a level III added value, apparently benefit from the
similar price conditions, the price outcome for the TAFINLAR manufactured by GSK and used in combination with
MEKINIST was somewhat different from that of ZELBORAF: in January 2017, the manufacturer price of TAFINLAR
was cut down by 19.8% for both 50 mg and 75 mg capsules formulations.

However, this price decision for TAFINLAR may have been driven not only by the registration of MEKINIST but also
by a particular clauses of the price contract between the manufacturer and the Economic Committee. It was indeed
the first TAFINLAR price decrease since its commercialization in France in July 2014. For ZELBORAF marketed in
France since 2013, the price cut applied at the time of COTELLIC registration has been a second one. First time, the
price ZELBORAF was cut down by 22.5% in January 2015, most likely in application of a price-volume agreement
within the initial price contract. Furthermore, ZELBORAF got itself a level III added value at its initial assessment in
France, whereas TAFINLAR was registered with a 'no added value' opinion of the HAS.

In 2015, NOVARTIS and GSK completed a swap of their vaccine and cancer drugs businesses; NOVARTIS got control
of several GSK's anticancer products including TAFINLAR.

Therefore, the recent negotiations regarding TAFINLAR and MEKINIST prices in France have been held with
NOVARTIS.

So far, it remains unclear how the French payer will manage prices of drug combinations including two or more
products marketed by different companies.

1
Most pharmaceutical products are funded in hospital within DRG tariffs. By way of exception from this rule, some innovative
and particularly expensive products registered on the special list ('Liste en sus') are reimbursed on top of DRG tariff. The list has
been created in order to allow and facilitate the access to new innovative and costly technologies. It is reviewed every year:
some products are withdrawn from the list and subsequently integrated into DRGs, in order to make place for new innovative
health technologies.
2
HAS, French National Authority of Health is the French health technology assessment (HTA) body.
3
European Medicinal Agency, summary of the CHMP opinion
http://www.ema.europa.eu/docs/en_GB/document_library/Summary_of_opinion_-
_Initial_authorisation/human/003960/WC500194163.pdf
4
Summary of the HAS opinion, March 2016: http://www.has-sante.fr/portail/upload/docs/application/pdf/2016-
10/cotellic_summary_ct14929.pdf
5
Summary of the HAS opinion, January 2016: http://www.has-sante.fr/portail/upload/docs/application/pdf/2016-
10/mekinist_summary_ct14705.pdf