All Eyes Are on Novel New Therapies, Impact of IRA, AI

2024 Outlook

The FDA approved the highest number of novel therapies in years in 2023, and multiple potential blockbusters are slated for decisions in 2024. In addition, the Inflation Reduction Act looms large over the pharma industry as HHS negotiates the prices of the initial 10 Medicare Part D agents and lawsuits over the legality of the IRA play out. And while life sciences dealmaking was down a bit in 2023, the new year already looks to be more promising. AIS Health, a division of MMIT, spoke with some industry experts about their outlook for 2024.

AIS Health: What are some pharma issues to keep an eye on in 2024, and why?

Dinesh Kabaleeswaran, senior vice president of consulting and advisory services for MMIT: While there are many pharma issues to keep an eye on in 2024, I’m particularly interested about what I feel is an understated topic in media — PBM reform. PBM reform is a great example of positive intentions, and I’m confident that over the course of time, the legislation will be of great benefit to smaller pharmacies based on execution. However, I’ve shared this before and will share again — a point of concern remains with respect to the impact on independent pharmacies in the first quarter and second quarter of 2024 because these organizations will be charged for retroactive direct and indirect renumeration fees from 2023 and will be impacted by point-of-sale DIR fees in 2024.

Jeff Stoll, Ph.D., U.S. national leader of strategy for the life science practice at KPMG LLP: There are several really important trends to look out for across the pharmaceutical industry:

• One of the bigger events will be how HHS announces where the price negotiation landed for the first 10 drugs that were mandated to be negotiated. We’ll all learn more about how HHS did its evaluation and the degree it was receptive to feedback from the drug sponsors. It will also provide insight on what type of price decrease we should expect to see coming from HHS under the IRA policy.
• Relatedly, we will see how the various pharmaceutical lawsuits on the IRA will play out. Merck filed the first lawsuit, promptly followed by the U.S. Chamber of Commerce, Bristol Myers Squibb, the National Infusion Center Association, Janssen Pharmaceuticals, Boehringer Ingelheim and AstraZeneca. Then later Novartis filed a suit on Sept. 1. So the big question is will the IRA legislation be found constitutional? How will the IRA be shaped by these lawsuits?
• The FTC [Federal Trade Commission] had a couple interesting wins in 2023 that will likely have ramifications on future deals. One notable deal, Sanofi–Maze, the FTC’s premise for challenging this deal was highly assumptive. The lawsuit by the FTC for blocking the deal claimed Sanofi would have a monopoly if it retained the rights to Maze’s Phase I Pompe disease [therapy]. The implications for the industry are the FTC will be looking at early-stage deals, and if a company happens to have a significant commercial footprint in that area, the FTC may challenge it. As such, the pro-patient value of a company having the commercial operations for enabling access to drugs that require similar commercial channels does not seem to be valued by the FTC.
• Several large pharma companies need to start preparing their portfolio strategies for the patent expirations coming in 2029 and 2030. As such, we should see a higher level of deal activity in 2024 than we saw in 2023, especially if interest rates decline.
• The first CRISPR gene editing medicine was approved for sickle cell disease [Casgevy (exagamglogene autotemcel)] and will be commercialized by Vertex and CRISPR Therapeutics. Lots of big questions should start having answers in 2024 for this therapy. How well will this therapy be adopted? Can Vertex and CRISPR demonstrate an effective commercial model for this innovative therapy? What will the health care provider and patient response be to the first gene editing medicine? Will we learn any new side effects or AEs [adverse events]? If it is successful, it will provide a lot of renewed momentum behind this class of therapies.

AIS Health: What do you expect to see within the biosimilars industry?

Kabaleeswaran: Well, CVS, Optum and ESI have already announced their 2024 Humira biosimilar exclusions. Sandoz remained unaffected by the exclusions for a large part, but not all biosimilar manufacturers can say the same. We expect regional Blues plans and smaller independent plans to follow some of the decisions made by these large PBMs with respect to biosimilar exclusions in 2024 although adoption will dictate and impact the decision making.

Stefani Papazaharias, trade relations executive for Reliance Rx, the specialty drug company affiliated with the not-for-profit health plan Independent Health: Some of the most significant biosimilar launches for 2024 are Xgeva, Actemra, Eylea, Neulasta Onpro and additional biosimilars for Humira. Looking forward to biosimilars for Stelara and Prolia for 2025.

Nationally, slow-paced adoption as PBM-owned specialty pharmacies are still incentivized to dispense brand (i.e., due to rebates), and 340B entities will prefer brand over biosimilar.

Regional and independent plans will outpace nationals on biosimilar adoption if integrated well enough with a specialty pharmacy partner.

Providers and patients are becoming more comfortable with biosimilars clinically, especially when the path to prescribing is easy and transparent.

Stoll: Biosimilars will continue to grow and become a bigger portion of the types of drugs prescribed and used by health care providers globally. Certain key biosimilar drugs are just starting to gain market share, most notably biosimilar Humira. As these large commercial opportunity biosimilars get traction, it will further enable the top biosimilar players to future fund the R&D and commercialization initiatives.

Andy Szczotka, Pharm.D., chief pharmacy officer at AscellaHealth: While this year does not have the punch of the initial introduction of adalimumab biosimilars, there will be some products that will further drive use and savings. Less expensive biosimilars will likely play a key role in controlling drug spend, as biologics continue to be a leading driver of increasing health care costs, with a recent survey identifying that 65% of health plans ranked biosimilars coming to market among their top cost deflator options.

The availability of biosimilars is decreasing the average sales prices (ASPs) of both reference products and the corresponding biosimilar products. Certain reference products have experienced dramatic decreases in ASPs, including Herceptin (25%), Neulasta Onpro (66%) and Remicade (60%). These decreases should assist in helping drive continued biosimilar adoption.

It is expected that biosimilar manufacturers will continue to offer various pricing strategies and approaches for their products. Some manufacturers have launched high- and low-WAC [wholesale acquisition cost] versions of their biosimilars while other manufacturers have opted to launch their high- and low-cost products using a branded and unbranded biosimilar approach. Some manufacturers opted to launch high-WAC biosimilar products only while others launched with a low-WAC-only strategy. The numerous strategies taken by various manufacturers will undoubtedly influence the tactics biosimilar manufacturers select in the future as $200 billion of biologic exclusivity is set to expire by 2028. Biosimilars are now regularly included on various payers’ medication formularies, with manufacturers jockeying for preferred formulary placement. The various cost scenarios and available discounts will continue to motivate payers to increase use of prior authorization, step therapy requirements and formulary tiering in order to optimize the savings available with the multiple biosimilar options.

Mesfin Tegenu, CEO and chairman of RxParadigm, Inc.: The biosimilar landscape is expected to continue growing this year. Last year, the FDA approved five biosimilars, including three of which were the first for their reference products. Moreover, there are several biosimilars currently in the pipeline, with approvals expected within the year. The growing number of biosimilar approvals and launches will increase biosimilar utilization and contribute to savings. Payers will likely increase utilization management strategies, such as prior authorization and step therapy, and employ formulary tiering or switching to maximize savings. Given that biologics are a leading driver of prescription drug spending, biosimilars hold significant potential to reduce health care costs.

AIS Health: Are there any expected competitors to particular drugs or within a therapeutic class that you are anticipating will have a big impact?

Kabaleeswaran: Alzheimer's has been a highly spoken-about market the last couple of years. If donanemab launches, we should keep an eye out for the tussle against Leqembi where the efficacy and safety profile will turn out to be key factors when it comes to deciding market share and adoption.

Stoll: Eli Lilly’s drug donanemab for Alzheimer’s disease is certainly one of the top new anticipated competitors for this market. If approved, it would have higher efficacy on key disease progression measures compared to Eisai and Biogen’s Leqembi.

Merck’s sotatercept for PAH [pulmonary arterial hypertension] if approved would be a first-in-class activin receptor type IIA therapy that claims to more directly impact the underlying protein problems associated with PAH. If successful, it will impact what’s already a highly competitive market in PAH.

AstraZeneca and Daiichi Sankyo’s datopotamab deruxtecan, a next-gen antibody-drug conjugate (ADC), if it launches in 2024, given the promising data, could have significant impact on the breast cancer and lung cancer markets over the next decade.

AIS Health: Are there any results expected this year from clinical trials that you’re keeping an eye on?

Kabaleeswaran: More than expected results from clinical trials, I’m interested in understanding the adoption of AI [artificial intelligence] and ML [machine learning] in clinical trials — undoubtedly, there has been a ton spoken about this topic in 2023, and I’m keen to understand implementation when it comes to study selection, site design and patient recruitment.

Stoll: One of the more important trials to keep an eye on because of the implications is Amylyx Pharmaceuticals’ PHOENIX trial. The drug being studied, Relyvrio, received FDA approval for ALS [amyotrophic lateral sclerosis] based upon a relatively small study result. Given the lack of successful treatments for ALS, the FDA thought it was important to approve this drug. But if the PHOENIX trial is unsuccessful, the FDA has requested Relyvrio [be pulled] from the market, and Amylyx has agreed. So hopefully for all the ALS patients who need treatment options, this trial is successful.

AIS Health: What do you think we may see in terms of merger-and-acquisition (M&A) activity this year?

Kabaleeswaran: As this article gets published, Novartis may have acquired MorphoSys, a highly strategic move for Novartis’ oncology portfolio. MorphoSys’ pipeline includes treatments for solid tumors and lymphomas, while the sale of Monjuvi to Incyte only makes the landscape more interesting for oncology.

Stoll: The sentiment coming out of the J.P. Morgan conference was extremely positive, and there were several deals completed just before and during J.P. Morgan. In addition, there are several market trends that are likely to fuel the 2024 M&A market to be more active than 2023. For example, several companies are facing patent expirations in the coming years and will need to complete deals now to have more portfolio options to fill future revenue gaps. Several pharmaceutical companies also have very strong firepower and the desire to become leaders in top therapeutic categories like oncology, immunology and neurology.

Contact Kabaleeswaran at dkabaleeswaran@mmitnetwork.com, Papazaharias via Frank Sava at Frank.Sava@independenthealth.com, Stoll through Marissa Ross at marissaross@KPMG.com, Szczotka via Caroline Chambers at cchambers@cpronline.com and Tegenu at Mesfin.Tegenu@rxparadigm.com.