Takeda Pharmaceutical recently announced it will apply value-based pricing for expensive therapies in Europe.

This decision is expected to impact Alofisel (darvadstrocel), a stem cell therapy for Crohn’s disease which was approved by the European regulatory agency in March 2018 but is yet to be marketed in any European Union (EU) country.

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GlobalData expects the new pricing scheme will provide Takeda greater clout to negotiate with the cost-conscious authorities of this region and enable faster market access for this niche therapy.

Crohn’s disease drug

Alofisel is the first allogenic stem cell therapy approved for the treatment of Crohn’s disease with complex perianal fistulas in the EU, while it is also undergoing a Phase III trial in the US. Currently available treatments such as biologics do not serve this patient population effectively, and Alofisel is expected to fill a niche unmet need by offering an alternative to surgery.

GlobalData expects Alofisel to have a market potential of around $480,000 across the US and 5EU by 2026. However, despite the significant market opportunity for Takeda, it is expected that the uptake of the drug will initially be limited by market access and reimbursement issues, given the high price of the drug reaching up to $70,000 for one course of treatment.

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In fact, in August 2018 UK’s pricing watchdog NICE provided a negative recommendation for Alofisel, citing a modest clinical benefit and uncertainty in its cost-effectiveness parameter. Since then, Alofisel has also been facing difficulties in obtaining national-level payer coverage in other EU countries.

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Under Takeda’s new value-based pricing scheme, the company will reimburse partially or fully, patients who do not benefit from the cell-based therapy. Value-based pricing based on treatment outcomes has historically had higher precedence in Europe than in the US, especially for expensive, innovative treatments in oncology, cardiology, immunology and rare diseases.

In fact, the EU encourages the use of non-traditional payment models for high-cost innovative medicines in order to ensure the financial sustainability of healthcare systems. Therefore, with its value-based pricing stance, it is highly likely that Takeda will be able to reach a mutually acceptable agreement with the pricing watchdogs of these countries and get Alofisel to market soon.

Cell & Gene Therapy Coverage on Pharmaceutical Technology supported by Cytiva.

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