Rhythm’s setmelanotide for rare obesity conditions will have multiple market access schemes

GlobalData Healthcare 15th May 2020 (Last Updated May 15th, 2020 09:18)

Rhythm’s setmelanotide for rare obesity conditions will have multiple market access schemes

by Bernarda Tundzhay in London

Rhythm Pharmaceuticals’ setmelanotide for rare obesity disorders will likely have to undergo risk-sharing, population discounts and value-based agreements with payers for adoption although pharmaceutical mortgages could be an option. Whilst private insurers and Medicare likely won’t push back on drug access, the inherent rare nature of the disease and subsequent high cost make that unlikely.  

The various pricing agreements are steered by the rarity of the conditions for which setmelanotide is aiming for approval, as well as the expected orphan drug price point of USD 300,000 annually. The drug is expected to be placed in the speciality formulary tier, but there are mixed stipulations for prior authorisation (PA).

Setmelanotide is under FDA review for leptin receptor (LEPR) and proopiomelanocortin (POMC) deficiencies. Straightforward approval for setmelanotide is expected considering it showed clinically significant results in reducing weight in the Phase III LEPR (NCT03287960) and POMC (NCT02896192) trials. The company believes these results speak to setmelanotide’s potential to help restore the function of the MC4R pathway in regulating weight and appetite control, said CMO Murray Stewart.

Phase III (NCT03746522) trial results for setmelanotide in Alström and Bardet-Biedl Syndrome (BBS), two other weight disorders, are expected in 4Q or 1Q21, said Stewart. The Phase II (NCT03013543) trial in patients with these indications has reasonable endpoints and showed clinical efficacy, paving the way for a positive Phase III trial.

Setmelanotide’s peak sales are $1bn globally in 2025, according to an analyst report. Rhythm Pharmaceuticals’ market cap is $861.5m. 

Potential for various pricing/drug access schemes

A risk-sharing agreement, which is an agreement between a payer and a pharmaceutical company where the drug price correlates with its future performance in the real-world environment, may be considered by the payers for setmelanotide considering the diseases’ rarities and expected high price, said Mike Tsionas, professor of Economics, Lancaster University, UK and John Hosier, CEO, JHHC & Parallax Life Sciences Consulting, Montclair, New Jersey. In laymen’s terms, if there are 10 people and one of them has a disease, there would be an insurance premium spread out amongst the 10 to cover the therapy costs, added Tsionas and Hay.

The risk-sharing agreement is subject to the commitment that the payer will buy a specific amount of a drug by the end of a certain date, said Tsionas and Joel Hay, PhD, professor of Health Economics and Policy, University of Southern California, Los Angeles.

Population-based discounts may also be offered by Rhythm Pharmaceuticals, said Hosier and Hay. These agreements make sense because the UK’s National Health Service can be a big client, said Tsionas, adding that if the pharmaceutical company sells the drug in large quantities, it will offer some discount. A discount of 15–25% would be quite reasonable based on the market, he noted.

Additionally, a value-based contract, where the pharmaceutical manufacturer and health care payers tie reimbursement and coverage levels to a drug’s effectiveness and use, would be implemented, added Rhonda Simoff, vice president, Strategic Solutions, The American Journal of Managed Care. This contract would offer a rebate back into the health plan if the drug does not show efficacy in patients, she added. Tsionas, Hay and Randy Vogenberg, principal, Institute for Integrated Healthcare and Access Market Intelligence, Greenville, South Carolina, agreed this could be an option, with Vogenberg noting this is especially due to setmelanotide’s once-daily subcutaneous injection that can be self-administered.

Whilst Hosier and Hay said pharmaceutical mortgages may be an option offered by Rhythm for setmelanotide access, Tsionas disagreed. These mortgages are usually offered by bigger pharmaceutical companies in the industry, but the small market for setmelanotide, considering the diseases’ rarities, means such a financial arrangement would not allow the insurer to see a profit, he added. There are 100–500 POMC and 500–2,000 LEPR deficiency obesity patients in the US, according to Rhythm’s website, which doesn’t provide any dates for the calculations. Between 1,500–2,500 cases were reported in BBS in the US and 500–1,000 Alström patients worldwide.

While three experts agreed that the demonstration of pharmacoeconomic evidence to insurers on drug value is not needed due to a small patient population, Tsionas said it would be beneficial for better reimbursement potential to analyse whether the compelling results reported in Phase II and Phase III studies match the existing positive statistical evidence from similar studies.

Setmelanotide insurance and pricing dynamics

While Hosier and Hay said there are no expected access barriers for most private insurance, as they would cover people with a genetic predisposition, Tsionas said certain insurance plans will definitely not cover setmelanotide. This is because genetic predispositions can be costly, particularly over a long interval of time, said Tsionas.

Although Hosier, Hay and Tsionas said there are no unforeseen barriers on why setmelanotide would not be covered by Medicare or Medicaid, Vogenberg noted that its coverage under Medicare or Medicaid will be difficult as the disorder itself is not life-threatening, and setmelanotide is not a curative gene therapy but only a symptom-relieving drug.  

Drug pricing will likely be USD 300k annually in alignment with other orphan drugs, the four experts agreed. Setmelanotide is likely to fall into the speciality tier due to a high price and small population due, said Hay, Hosier and Tsionas.

In terms of prior authorisation, it will apply considering the small population, said Simoff, Tsionas and Vogenberg. But because of that rare group of patients, Hosier and Hay argued PA, step edits and quantity limits would actually not apply.

FDA approval expected for LEPR, POMC

An FDA approval is expected for the LEPR and POMC indications, two physicians said, based on efficacy and safety shown in the two Phase III trials showing that setmelanotide resulted in weight loss.

The Phase III trial for LEPR deficiency showed that five out of 11 participants (45%) achieved at least 10% weight loss from baseline to one year, the primary endpoint, and the mean percent change from baseline in body weight at one year, the secondary endpoint was -12.5% (n=7; p<0.0001), according to a 7 August 2019 company press release. The Phase III trial for POMC deficiency obesity showed that 8 of 10 participants (80%) achieved ≥10% weight loss from baseline to one year (p<0.0001).

Any result that shows weight loss is an efficacious outcome and clinically significant, said Dr Anthony Heagerty, professor of Medicine, The University of Manchester, UK and Dr Timothy Barrett, professor of Paediatrics, Birmingham Women’s and Children’s Hospital, UK. Standard guidelines for weight loss suggest that anything above 10% reduction of body weight signifies weight reduction, Barrett explained. For example, in the LEPR study, the mean percent change from baseline in body weight at -12.5%, is a clinically significant result, he said. They also had no overriding concerns on the safety profile. Side effects included mild injection site reactions and increased hyperpigmentation (darkening of the skin), according to the abovementioned press release.

The Phase II trial in patients with BBS and Alström Syndrome also showed clinically significant results and met their primary and secondary endpoints, said Barrett and Heagerty. The primary endpoint measured the percentage change in body weight after 12 weeks at the therapeutic dose, according to a company presentation. Study results indicate weight loss and success, agreed Heagerty and Barrett. Updated data from the BBS cohort show a reduction in body weight and decreased appetite as shown by lower hunger scores consistent with a previous study of a rare genetic disorder of obesity, according to a company poster dated 27–29 September 2018.

Both experts agreed that the Phase III trial also has reasonable inclusion/exclusion criteria and due to a similar endpoint with the Phase II study, similarly significant results are expected.

Bernarda Tundzhay is a Reporter for Clinical Trials Arena parent company GlobalData’s investigative journalism team. A version of this article originally appeared on the Insights module of GlobalData’s Pharmaceutical Intelligence Center. To access more articles like this, visit GlobalData.