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Eli Lilly promises 40% discount for Innovent’s PD-1 in last-ditch bid to shift FDA review to drug pricing

Eli Lilly has been talking up a “disruptive” pricing strategy for its Innovent Biologics-partnered PD-1 inhibitor Tyvyt in the U.S. Now, we have an idea of what the company means. But whether it’s actually “disruptive?” That’s less clear.

Should the drug be approved, Lilly plans to offer an approximate 40% discount for Tyvyt’s wholesale acquisition cost compared with PD-1s already available on the U.S. market, a company spokesperson told Fierce Pharma. Existing PD-1s, led by Merck & Co.’s Keytruda, bear annual list prices above $150,000.

“There is an unmet need for quality innovation that provides more competition in this market and we believe that our pricing strategy could save the U.S. healthcare system billions of dollars over time,” Lilly said in a statement.

Lilly’s disclosure seems to serve as a last-ditch attempt to shift the discussion from clinical data to drug pricing and add political pressure on the FDA. It comes right after the FDA strongly signaled that it doesn’t intend to approve the drug as part of a combination to treat newly diagnosed nonsquamous non-small cell lung cancer based on China-only phase 3 clinical trial data that pitted the drug against a former standard of care.

The FDA is seeking advice from an independent expert panel in a meeting Thursday on whether another clinical trial reflecting the U.S. population and medical practice should be required before a go-ahead. Pricing won’t be part of that discussion as the FDA has no legal authority over drug costs.

Still, the FDA’s refusal to talk about pricing and the harsh attitude toward single-country ex-U.S. data mark a reversal from the agency’s prior stance. At an American Association for Cancer Research meeting in 2019, Richard Pazdur, M.D., head of the FDA’s Oncology Center of Excellence, publicly encouraged Chinese PD-1/L1 developers to run China trials based off clinical trial examples by Western pharmas for their U.S. applications. At that time, the FDA oncology czar lamented the lack of PD-1 pricing competition in the U.S.

Then, Chinese drugmakers thought they got more assurance of the viability of that China data strategy after BeiGene later that year won an accelerated approval for BTK inhibitor Brukinsa in previously treated mantle cell lymphoma mainly based on tumor shrinkage biomarker data from a China-only phase 2 trial dubbed BGB-3111-206. That application also included a small group of patients from a phase 1/2 trial with sites in the U.S.

The data debate aside, there remains a question about whether a pricing discount could indeed shake up the U.S. PD-1 market.

Lilly said the 40% comes “in line with some of the deeper discounts we’ve seen for biosimilars relative to their branded comparators.” Biosimilars have indeed been able to disrupt their markets. Just consider Roche’s blockbuster cancer troika Rituxan, Herceptin and Avastin, which suffered significant sales declines after biosimilar entry.

But the U.S. drug pricing landscape is far more complicated than list sticker. Large players could build what’s known as the “rebate wall,” in which several indications are bundled together in contracting negotiations, SVB Leerink analyst Daina Graybosch previously told Fierce Pharma in an interview.

That strategy, viewed by some as anti-competitive, means a dominant drug with a higher price could attract more users by offering higher rebates to large prescribers. Some healthcare practices could therefore even prefer drugs with higher prices.

On the flip side, though, the sentiment around PD-1 drug pricing is gradually changing as doctors see only minor clinical differentiation among existing products, Bernstein analyst Ronny Gal wrote in an open letter last year to Regeneron CEO Len Schleifer, petitioning the company to lower the price of its Sanofi-partnered PD-1 Libtayo.

Some of the absolute price buyers like the Department of Veterans Affairs, community oncology practices and institutions in the federal government’s 340B drug discount program could turn to products with low list costs, Gal said at that time. But as he noted, that sector only represents a small portion of the oncology market.