The Ghost of Martin Shkreli?
Or 'why Amylyx's pricing & commercialization strategy for ALS drug RELYVRIO pushes key life science industry tensions into the spotlight'
tl;dr-
On September 29, 2022, biotechnology company Amylyx received FDA approval for its Amyotrophic Lateral Sclerosis (ALS) product, RELYVRIO
RELYVRIO is a fixed-dose combination (FDC) of 3g generically-available sodium phenylbutyrate and 1g of supplement tauroursodeoxycholic acid (TUDCA) in a satchel (FDC ratios sourced from Canada drug label)
The FDA decision mirrored ADUHELM’s controversial path to FDA approval, starting with the FDA recommending Amylyx not submit approval until completion of Phase III, a negative opinion on the product’s efficacy in March based on Phase II data, and an abrupt reversal followed by lobbying from patient advocacy groups & physician associations
Ultimately, the FDA approved the product on condition of the high unmet need in ALS and assurances by Amylyx co-CEO Justin Klee that the company would pull the product voluntarily if Phase III data was negative
On September 30, 2022, Amylyx announced RELYVRIO will be priced in the US at ~$158,000 per annual course of therapy ($12,500 per 28-day course of therapy) (WAC price)
This price point is likely benchmarked off of RADICAVA (edaravone), an oral suspension for ALS approved by the FDA in March 2022; RADICAVA’s estimated price per annual course of therapy is reported to be $170,000
This is notably much higher than generic sourcing for each compound independently, estimated at around $3,300 per 28-day mo.1
Concerns surrounding the pricing have begun to emerge, both from US stakeholders as well as from the product’s market access experience in Canada
RELYVRIO is available commercially in Canada as ALBRIOZA & priced close to parity with US WAC; based on this pricing, the Canadian health technology association CADTH noted that the price would need to be reduced by 98% to reach similar cost effectiveness to existing ALS product riluzole, with reimbursement only recommended if patients match RELYVRIO’s Phase II trial patient selection criteria
ICER has also raised concerns surrounding the price based on its cost-effectiveness analysis
Ultimately, RELYVRIO’s pricing strategy reveals many of the key tensions life science companies face in bringing products from lab to life;
‘Damned if you do’ - perception of monetizing high unmet medical need without robust evidence of efficacy - & ‘damned if you don’t’ - not investing in innovation that may have widespread benefits
Recouping drug development costs vs generic or widely available pricing comparators; difficulty in recouping millions in trial costs via generic-level prices (even for rare disease populations)
‘Hairy math problem’ in balancing spend needed to support access (e.g. investment in patient support programs, provider outreach, buying down patient cost-share for low-access populations, WAC-to-net discounts, etc.) with meeting revenue expectations & incurred cost for operations
Power dynamics, from the necessary regulations from the FDA to patient support organizations to physician associations - and their influence on a company’s ability to support & defend different commercialization decisions
To ensure sustainability, the question should be asked - was Martin Shkreli right to raise prices all along?
***
Disclaimer 1: I don’t know anyone involved in RELYVRIO; I don’t know anyone at Amylyx, I’ve actually done zero work in ALS (although I’ve worked in rare diseases - what life science consultant hasn’t?!), and I definitely don’t know Martin Shkreli.
Disclaimer 2: All things considered & speaking as a strategist, the answer the Amylyx leadership team reached regarding their pricing is actually a pretty typical calculus. It isn’t excessively greedy but certainly, the decision to be ‘ok’ with a full commercial launch vs. a conditional approval (‘the Phase III trial is not a formal commitment,’ notes Amylyx co-CEO) shows a big focus on short-term recoupment of costs (or, at least, short-term keep the share price near its ATH mentality). Basically, its par for the course that I would expect from any leadership team in the life sciences today when faced with a similar set of dynamics.
Disclaimer 3: None of this is a moral judgment on my part. When I have my strategist hat on, there is no ‘good’ or ‘bad’ (ethics & morality, like all things, are fundamentally choices we make as individuals and leaders); only the consequence of what companies decide. Does being unethical have a cost? Yes. Does it have a return? Yes. Do companies sometimes sacrifice one for the other? All the time. It’s not my place to pass judgment on that, especially here.
With that being said, I don’t think I would have reached the same pricing & commercialization decision if I was on the leadership team.
I’ve always been wary of any innovative products that compare against generic options - especially if the data isn’t an absolute slam dunk from a comparative benefit perspective. It’s just too much of a risk from a reputational perspective in my view, and even if you will (more than likely) get payers begrudgingly opening their pocket books for a high WAC price at the end of the day, I don’t think this era will continue much longer. With so much public attention paid to drug costs, each pricing strategy like this - whether it’s from Amylyx or Biogen or Pfizer, whether it’s high unmet need or commoditized - just pushes the limit a little more for payers to grow emboldened enough to say ‘uh uh, we need *this* level of additional benefit or no dice.’
One aspect that would worry me about this is the fact that riluzole, the generic standard of care from 1995, has not (to my knowledge) been studied with the same primary outcome measure (ALSFRS-R). This, along with the (presumed) differences in patient populations between riluzole real-world use & inclusion criteria for RELYVRIO (and, to be honest, RADICAVA) is a fantastic angle for any payer to pushback on high pricing for new ALS products. Of course, you can handwave these considerations with a well-thought out BIM / CEM, but at the end of the day, a closer-to-definitive answer would simply do a direct comparator. Yeah, it’s more expensive - yes, it’s a rare population so recruitment may be challenged, but if you were really maximizing for defensibility & proven value, do that. At the very least, with that data, you may not have to take a price decrease vs. RADICAVA even if your clinical data via indirect comparison shows less benefit - and you give payers potentially the confidence to say, I’m not here to gauge your patient population for more dollars but actually work with you to figure out the best option for your beneficiaries.
Another concern is just the public backlash. If ADUHELM hadn’t happened, perhaps I wouldn’t be as risk-adverse but let’s be honest - we’re just not in the same economic environment as five, or even ten years ago. Patient healthcare costs, combined with wealth inequality and other factors, make it so that securing access is increasingly harder - and buying down copays can only go so far before your CFO starts screaming that you have no money. The cost of bad press - bad perception, potential political action (the IRA *just* empowered HHS to do price negotiations!) has never been higher for the life sciences industry so … taking this risk to squeeze dollars (relatively speaking) from a high unmet need population using a FDC made of two *low cost / widely available* products seems entirely unnecessary. I mean, even if you’re not going to make the same margin you would want (or your investors may want), isn’t it more sustainable to just out-license the patent or something to Mark Cuban and skim off the top via a licensing fee? Yeah, it won’t get you 5 digit monthly 28-day fees, but it may be actually the right move in the long run.
Of course, the biggest risk is the Phase III. If the Phase III shows no benefit vs. placebo (hedged by the ‘the Phase III trial is not a formal commitment’ comment), literally everyone looks bad except for patients & physicians. Remember that the life science industry that is built fundamentally on reducing risk - risk of ‘not knowing’ if a drug works, risk of not doing more harm from an intervention, etc. - so is this gamble to get to market quicker really worth it? Maybe in the short term - but again, I wonder why Amylyx didn’t just proactively do what CMS ended up forcing Biogen to do.
The subtext in my comments is clear; I’m not sure based on what I know that aggressively pursuing commercialization with an FDC of two generic products off of easily challenged data - and using ‘lower price than RADICAVA’ as a PR / market access shield - is worth it, either for Amylyx or for the industry as a whole. For Amylyx, this seems like a strategy optimized for yesterday’s life science & healthcare industry, not today’s environment that is incredibly sensitive to pricing with increasingly embolded payer stakeholders. For the industry, producing yet another potential ADUHELM is just damning as a whole and risks broader political action as healthcare remains this blaring, red flashpoint that everyone from red to blue can agree on is broken.
This is why I picked Martin Shkreli (again) as the visual theme today. The strategy of dramatically raising prices - pushing to see how much the entire healthcare space can bear economically - does work today but is increasingly risky. At some point, as the ruthless calculus towards sustainability in healthcare reaches its destination, aggressive pricing to recoup costs without all-star clinical data will likely be just a ghost we remember. Perhaps the question we ask shouldn’t be ‘is Martin Shkreli right,’ but the more forward-looking ‘when will he be wrong.’
Maybe it’s time to prepare for that future. Who knows.
-WY
Assumes two satchels a day (6g sodium phenylbutyrate, 2g TUDCA) based on the Canadian prescribing information
Generic price for sodium phenylbuytrate based on oral powder for reconstitution
Ursodoxicoltaurine is the INN for TUDCA; $ / g based on Amazon listing for powder formulation ($37.95 price / 25g)
Represents ad-hoc pricing based on selected public information only