Growth in global spending on oncology therapeutics and supportive care drugs increased 11.5% on a constant-dollar basis in 2015 to reach $107 billion, according to a recent study by the IMS Institute for Healthcare Informatics. Collectively, there are more than 500 companies pursuing oncology drug development on a global basis with nearly 600 new molecules in late-stage clinical development. DCAT Value Chain Insights (VCI) looks behind the numbers.
IMS projects that annual global growth in the oncology drug market is expected to between 7.5% and 10.5% through 2020, when the market is expected to reach $150 billion. The top 10 oncology companies, measured by their current sales of existing cancer drugs, collectively have 130 molecules in their late-stage pipeline, representing from 20% to 60% of total research activity. So what can the market expect?
Inside the market
The IMS study, Global Oncology Trend Report: A Review of 2015 and Outlook to 2020, offers promising numbers for the global oncology market with some caveats. On the plus side, more than 20 tumor types are being treated with one or more of the 70 new cancer treatments that have been launched in the past five years, with the sustained surge in innovative therapies driving the global oncology market to $107 billion in 2015. However, many of these drugs are not yet available to patients in most countries, and even when registered, they may not be reimbursed under public insurance programs, according to the study.
Wider utilization of new products—especially immunotherapies—will drive much of growth in the global oncology market, offset by reduced use of some existing treatments. Payers also are expected to tighten their negotiation stance with manufacturers and adopt new payment models in an effort to drive greater value from their expenditures on these drugs. In 2015, growth in global spending on oncology therapeutics and supportive care drugs increased 11.5% on a constant-dollar basis. Growth is measured using ex-manufacturer prices and does not reflect off-invoice discounts, rebates or patient access programs. Annual global growth in the oncology drug market is expected to reach between 7.5% to 10.5% through 2020, when the market is expected to be $150 billion. Reflecting future growth prospects, the pipeline of oncology drugs in clinical development has expanded by more than 60% during the past decade, with almost 90% of the focus on targeted agents.
“The new science redefining cancer as a large number of narrowly defined diseases and yielding therapeutic options for an expanding number of patients is rapidly transforming the oncology treatment landscape,” said Murray Aitken, IMS Health senior vice president and executive director of the IMS Institute for Healthcare Informatics, in commenting on the report “Most health systems are struggling to adapt and embrace this evolution—including the regulatory systems, skilled professionals, diagnostic and treatment infrastructures, and financing mechanisms that are required to serve the needs of cancer patients around the world. These challenges demand urgent attention in light of the strong near-term pipeline of clinically distinctive therapies, and new programs such as the US government’s ‘cancer moon shot’ that are galvanizing research efforts to change the trajectory of cancer.”
Oncology research and development activity remains concentrated on targeted therapies, which make up approximately 87% of the late-phase oncology pipeline, according to the IMS study. Targeted therapies include small-molecule protein kinase inhibitors, biologic monoclonal antibodies, and a range of new mechanism that can identify or block the cell processes that cause cancer cells to multiply, according to the IMS report. The late-phase oncology pipeline includes 270 biologic therapies, including 16 gene therapies, 86 new monoclonal antibodies and 15 biosimilars of existing monoclonal antibodies. The late phase pipeline also includes 74 potential vaccines for various tumor types. Immunotherapies are a fast-growing area and are projected to make up a larger portion of the pipeline in 2020, according to the IMS report.
On a current market basis, targeted therapies accounted for $27.8 billion in 2015 with a compound annual growth rate (CAGR) of 18% between 2011 and 2015, according to the IMS study. Hormonal therapies accounted for $3.4 billion with a CAGR between 2011 and 2015 of 6%. Cytotoxics accounted for $6.1 billion and declined by an average of 3% over the past five years. Within these market segments, oral therapies are becoming more common and make up a larger portion of market share than five years ago, according to the IMS study. In 2015, the market for oral targeted therapies was $10.8 billion, accounting for about 39% of the overall market for targeted therapies. Growth in oral targeted therapies was 28% between 2011 and 2015, outpacing overall growth in this segment, which was 18%. Oral formulations accounted for about 65% of the hormonal therapy market in 2015 with CAGR of 6% for oral formulations, which was on par with overall segment growth. Hormonal therapies historically are more focused more on oral formulations, such as in the area of breast cancer treatments. Oral formulations accounted for a lesser share of the market for cytotoxics, accounting for only $1.1 billion in spending or about 18% of the cytotoxic drug market.
Overall, 511 companies have late-phase active oncology pipelines, according to the IMS study, with 53 companies in the pre-registration/registration phase, 195 companies with Phase III candidates, and 379 companies with Phase II drug candidates. One-third of the companies with late-phase oncology pipelines have more than one-late phase cancer drug in development. Overall, 34 companies have five or more molecules in late-stage development, and three quarters of the companies with a late-stage drug candidate today have no presence currently in the global oncology market. Among the large pharmaceutical companies, 19 of the top 20 companies have an active late-phase oncology pipeline (defined as molecules that have reached at least Phase II development), according to IMS, The 130 cancer therapies being developed by the ten largest oncology companies represent between 19% and 59% of their respective late-phase pipelines. Other large companies are developing an average of six cancer medicines and 55% to 92% of their late-phase therapies target other diseases.
Market access and reimbursement/payer trends>
Market access, however, is one potential limitation to growth. Of the 49 oncology new active substances analyzed that were initially launched between 2010 and 2014, fewer than half were available to patients by the end of 2015 in all but six countries: the US, Germany, UK, Italy, France, and Canada. This reflects manufacturers’ efforts to file for registration in each country, as well as the regulatory process and timing. Targeted immunotherapies are available in most developed countries, but none of the emerging markets outside of the European Union has yet registered these treatments. Even when available through the regulatory review process, not all cancer drugs are accessible to patients due to lack of reimbursement under public insurance programs. Of the drugs approved in 2014 and 2015 by a set of developed countries analyzed, only the US, France and Scotland have more than half included on reimbursement lists at the end of 2015. In some cases, reimbursement may be provided in the future for specific indications, depending on health technology assessments or other processes used by the country, according to the IMS study.
Costs are a limiting factor on market access. The annual growth rate in cancer drug costs has risen from 3.8% in 2011 to 11.5% in 2015, at constant exchange rates, according to the IMS study. Growth in the US market increased from 2.0% to 13.9% in the same period. The US now accounts for about 45% of the global total market for therapeutics, up from 39% in 2011, due in part to the strengthening of the US dollar and more rapid adoption of newer therapies. In the US, cancer drugs now make up 11.5% of total drug costs, up from 10.5% in 2011. Pricing concessions by manufacturers—including mandatory and negotiated rebates, discounts and patient cost offsets—are reducing manufacturer-realized net sales across many markets. Net price growth in the US on existing branded oncology drugs have averaged an estimated 4.8% in 2015, compared with 6.4% invoice price growth. In Europe, a wide range of discounts and other mechanisms also exist, resulting in lower realized prices by manufacturers.
The IMS study points out that on an end-market level, the mix of oncology drugs distributed through hospitals/clinics and retail channels varies widely across countries and reflects differences in healthcare practice, reimbursement, and mix of formulations. In European markets including Italy, Spain and the UK, costs have shifted to hospital channels during the past five years while in Canada, France, and the US, costs have increased more rapidly in retail channels. In the US, cancer drugs dispensed through retail channels now account for more than one-third of total costs, up from 25% 10 years ago and typically covered by pharmacy benefits. This reflects a shift in the mix of new therapies toward oral medicines, eliminating the need for injection or infusion in a physician’s office or outpatient facility. Nearly 40% of the total costs of targeted therapies in the US are now for oral formulations, up from 26% in 2010.
Other key trends within the US oncology market include a shift toward integrated delivery systems, rising treatment costs and higher patient out-of-pocket expenses. Only 17% of US oncologists are in independent practices, unaffiliated with some type of integrated delivery network or corporate parent, down from 28% in 2010. State-level variation is wide, with 14 states having fewer than 10% of oncologists in independent practices, and six states having more than 30%. Average total treatment costs for patients in commercial insurance plans with a cancer diagnosis who are receiving active treatment reached $58,000 in 2014, up 19% from 2013. Patients with commercial insurance who were treated in 2014 with cancer drugs received by injection or infusion were responsible for more than $7,000 of costs on average, compared to $3,000 for those patients receiving only oral medicines. Some type of coupon or patient cost offset was used for more than a quarter of cancer drug retail prescriptions filled by patients with commercial insurance in 2015, up from 5% in 2011 and reflecting efforts by manufacturers to reduce patient out-of-pocket costs. The average cost offset has averaged about $750 per prescription over the past five years, according to the IMS study.