The fallout from a UK parliamentary hearing over the price that Vertex Pharmaceuticals is charging the NHS for its cystic fibrosis (CF) medicine could upset other EU drug reimbursement discussions, experts say.

A UK parliamentary select committee hearing on 7 March regarding the reimbursement of Vertex’s CF drug Orkambi (lumacaftor/ivacaftor) may be required to reveal confidential pricing negotiations, which could impact Vertex’s other European payer (pricing) agreements and subsequent rare disease drug reimbursement negotiations.

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Vertex has kept payer discussions confidential to allow for a competitive environment, but parliamentary powers of a select committee hearing could require it to divulge details of negotiations with the UK’s National Health Service (NHS).

The select meeting was announced on 24 January to “explore the current impasse between Vertex, NHS England and the National Institute for Health and Care Excellence (NICE) concerning negotiations on the availability of Orkambi and other CF drugs to NHS patients in England.”

The NICE provides national guidance and advice to the NHS, including recommendations for drug coverage.

Unprecedented hearings

Reimbursement consultants described the organisation of such a select committee hearing as wholly unprecedented. One consultant said he knows of payer authorities from other countries who are closely following the proceedings, while others also anticipated countries may want to re-evaluate their own agreements with Vertex, based on evidence given at the hearing. Other experts anticipated an impact on negotiations with other companies in the rare disease space.

A successful reimbursement policy in the UK is considered vital since it is said to house the second highest number (10,4000) of CF patients in the world, consultants said, noting incentives to pursue the fight for access.

Orkambi is the second CF drug from Vertex’s portfolio to be approved, with net 2017 revenues of $1.32 billion, of which $167.6 million were from ex-US markets. Vertex’s efforts to get Orkambi reimbursed have been long-protracted since its EMA approval in November 2015 – for heterozygous CF patients with a single copy of the delF508 gene – but have remained unsuccessful.

Application of crown use license

One analyst noted pressure on Vertex’s shares around UK reimbursement issues, particularly noting the possible idea that the British government could invoke the “Crown use license” to invalidate Orkambi’s patent after Vertex rejected the UK’s final reimbursement offer.

Crown use licensing allows the government to effectively use a patent without the owner’s authorisation. In July 2018, the NHS offered £500 million ($641.5 million) over the next five years, which took into account Orkambi and other Vertex drugs.

A Vertex spokesperson confirmed the company would participate in the hearing but declined to provide further details.

Select committee expectations

There are people with legal powers in the health services of different countries who are closely following the Vertex proceedings, said one UK consultant familiar with such discussions.

Select committees have the power to require documents and summon people to give oral evidence and the findings are public, according to the UK parliament website.

In the past, members of parliament (MPs) have been able to access evidence covered by non-disclosure agreements citing parliamentary privilege, without legal recourse, the expert said.

The documents provided by Vertex to the committee may include the price the company offered to the NHS and the subsequent counteroffers, he added. Making these offers public will have a significant impact on the reimbursement process of other countries, said the consultant.

In general, due to the cost pressures for rare diseases, smaller European countries are banding together to negotiate costs and they will be watching how the situation unfolds in the UK, the consultant said.

Leela Barham, an independent health economist and policy expert, offered a different perspective, saying that while other countries will have an interest in the proceedings, each tends to have their own pricing approach.

While discounts made public are unlikely to trigger automatic price changes in other markets – as reference price systems are generally designed around approved list prices – it may arm respective payers with additional price-lowering arguments during negotiations, said Timothy Fitzgerald, Managing Director of Market Access for Ipsos MORI, London.

How this issue has escalated in the UK is unusual, according to Barham and Anthony Walker, Managing Partner of Alacrita, London.

The CF network is very effective in lobbying their MPs to put pressure on the select committee, said the consultant.

The NHS is in a tight spot, because if it is seen to bow to Vertex’s price demands, the entire process of value assessment and confidential negotiations may rupture, and other companies may attempt to follow the same path, said Walker.

Nonetheless, other companies may want to avoid any scrutiny that comes with a select committee hearing, said Barham, who recently advised the Department of Health and Social Care on medicines pricing policy in the UK. Price negotiations are held in confidence and no one wants to set the precedent of having these in public, said Walker.

If a high negotiated price is maintained for Orkambi, then it will likely remain high for the upcoming combinations as well, said the consultant.

Invoking crown use

The possibility of crown use licensing came to the forefront when MP Bill Wiggin raised its potential on 31 January, arguing that a generic Orkambi could be produced for £5,000 ($6,400).

The UK consultant said the push for crown use is legitimate because Wiggin presented it formally in parliament. Crown use license was previously only used in the 1960s to make a tetracycline antibiotic, manufactured by Pfizer, available to the NHS, experts said.

Vertex will likely be given one last opportunity to offer a counter deal during the hearing, or the committee could invoke crown use, said the expert.

Analysts have noted that MP Steven Brine, the Public Health Minister, may be reticent to use of the crown license, while not entirely dismissive of it.

Analysts also noted that crown license may violate international patent treaties, which could exacerbate legal complexities for the license to be upheld.

Vertex will also likely weigh the impact on investments in other countries while making the decision to continue to pursue a pricing deal over Orkambi, he added.

Data exclusivity

However, other experts were less convinced on the possibility of the government invoking crown use.

Even if the patent protections are removed, that does not automatically mean another company would manufacture the generic version, said Walker. It is not clear if the other company could use the data from the original approval filing for its own since apart from the patents, Vertex would also have data exclusivity, he added.

Data exclusivity prevents generic manufacturers from using the originator company’s trial data in their own applications. If the company would have to conduct the clinical development by itself, the economic advantage would not be as clear or straightforward for a generic manufacturer, said Walker.

It is highly unlikely that the government would seek to use the crown use license provision in this case, said Fitzgerald. While compulsory licenses have been deployed in other countries in other therapy areas, this would be seen as an inappropriate use of powers in the UK and would send the wrong message to the pharma sector, he added.

Vertex’s market capitalisation is $47.39 billion.

by Manasi Vaidya in New York
Manasi Vaidya is a Senior Reporter for Pharmaceutical Technology 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.