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The Paradigm of Pricing

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    lightbulb Created with Sketch. 2811
    https://hotcopper.com.au/data/attachments/2976/2976408-6fc3a8a506e68b2d251e165328e02555.jpghen I was at Uni we had a book in one of the subjects on computing, written by Tanenbaum. He was quite famous and I did appreciate this guy knew a lot and did try his best to simplify the material...in hindsight I should have pursued Business Finance...and then worked for a Broker...would have loved it....though it can be stressful at times when dealing with other people's money. I invested for some close friends for one month a number of years ago inviting three friends at the time, I made around 12% profit for them in a month, they were happy but I was stressed! I politely declined the following month when they were keen to re-invest!


    https://hotcopper.com.au/data/attachments/2976/2976413-6a00189b09702b7259d59cf801394829.jpg
    The Tanenbaum book...



    It's funny how focused we can be when we are suitably motivated!Mate, I'm motivated when it comes to PAR...go on, throw any science at me...I will struggle through it but I will pick at it till I know it. Ok so what's the above story got to do with pricing? Ooh that's an easy connection...Tanenbaum the author, sounds somewhat like Tanzeuamab the drug...and it is this base case I will use tonight to discuss pricing and where and how we fit in. (Here is how you pronounce it ---> HELP! )


    BACKGROUND

    Tanezumab is essentially one of the so called competitors. We can learn a lot from them as a comparative to us. What is it? Classed as a monoclonal antibody it's a non-opioid chronic pain medication that targets NGF. At higher doses it is actually quite efficacious. It provides pain relief and increased function, the two main criteria (primary end points) our P3 trial is all about.

    That's not the problem for them, it's the associated side effects that limits them, they need to dial the dose down for them to be regarded as potentially passable-safe, but of course so the effectiveness dials down for their drug at these lower levels.In 2.2% of the fixed dose groups, rapid progressive OA was observed. While 2.2% may not sound like much in percentage terms, it gets large when multiplied by the potential numbers of OA patients. Eg Perhaps 5 million patients x 2.2% is 110,000 of them for example.

    It was found that some 4.5% of patients needed a total joint replacement compared to just 1.7% in placebo. That's more than double. This is a fairly high risk. There is evidence that some patients in the earlier trials of Tanzeuamab also developed osteonecrosis. 6 The FDA had them on clinical hold in 2010 and 2012, it's being reviewed now at the lower dose perhaps for targeted patients.

    Another study found "... the incidence of abnormal peripheral sensation was 6.2% in the 2.5 mg tanezumab group, 9% in the 5 mg group, and 4.6% among those who received NSAIDs". 0 Examples of the AE's included hypoesthesia, paresthesia and carpal tunnel syndrome.

    Now just imagine, we have no AE's to date and very little side effects.


    RESULTS COMPARISON

    Their 2.5 ml dose reduced WOMAC from a mean of 7.1 to 3.6, that's a 49.3% reduction. Their 2.5 - 5 ml does (initially the lower and then progressively increased to 5 ml) reduced WOMAC from 7.3 to 3.6, that's a 50.68% reduction.

    Our 2 mg dose resulted in a mean 49.6% reduction, so what I'm alluding to is that from a purely efficacy point of view, they were very similar to us...Of course I'm reiterating that our safety profile is much much better with no evidence to date of further joint degradation or increase in progressive OA which they had specially in their higher doses. “The question that emerges from these studies is whether the analgesic benefits of tanezumab merit the potential damage to the joint and attendant risk of rapidly progressive OA and total joint replacement.” 1

    Indeed this is the paradox and it is fueled by an acute OA related demand...Tanezumab only shows moderate efficacy at it's lower dose but it's only this dose that's comparatively safer.. "And while the 2.5-mg dose was safer, it was disappointingly no more effective in terms of improvement in pain and function scores than diclofenac at 75 mg twice daily" according to a Dr. Ruderman in 2020. 7

    I also learnt from the above reference that PRP isn't covered by insurance in the US, again discounting this particular treatment as a viable solution, indeed the runway is getting cleared for us, we just need that read out and we are off.


    https://hotcopper.com.au/data/attachments/2976/2976611-6c441a18c76031bb58dee53f7b2c86d5.jpg
    Runway11 is getting cleared...P3 IND any day now....maybe any week now....I'm off to the pub to celebrate on OA IND filing!


    However, there is plenty of misinformation out there when it comes to so called other alternatives to us, the average being charged for just one injection of PRP is $714..."Out of 84 centers that were willing to share their claimed efficacy, 10 quoted 90% - 100% rates of good results or symptomatic improvement, 27 claimed 80% - 90% efficacy, and 29 quoted figures of 70% - 80%, all of which are well above the success rates achieved in the flawed clinical trials." 7




    https://hotcopper.com.au/data/attachments/2976/2976670-cfb02d651f6c6bbb1fceeb9580674f13.jpg
    Viable alternatives to iPPS?



    As I mentioned, Tanezumab for OA is still being considered, despite the AE's so desperate are they for a solution, setting up a perfect storm for us...in a good way...

    https://hotcopper.com.au/data/attachments/2976/2976620-14baddbabab9d6d5a4e97c29dfbf7234.jpg

    AE's we do not want to see...

    Edema Peripheral = Swelling of lower legs/hands
    Arthralgia = Pain in joint
    Paresthesias = Abnormal sensation in nerve caused by damage to nerves.



    WHAT CAN WE LEARN? HOW DOES THE PRICING MODEL FIT IN WITH THIS?

    Well we know Tanezumab is efficacious, this makes them a good comparison with us. But we also know that from a safety point of view, we are superior and of course this needs to be again proven in a larger sample in a Phase three, about to take place. I recently came across an entire model of pricing and they used Tanezumab as a basis.

    Ok well Tanezumab is generally dosed at one injection every 8 weeks. A self administered pen type SubQ injection will cost around $400 per injection, totally, some $2600 per year. The model looked at a measure called Quality Adjusted Life Years (QALY), a lifetime risk of total knee replacement surgery and the cumulative discounted medical costs.

    Paradigmers, these are the models we also will go through to determine what we should be priced at and what is that cost/benefit mix.



    THE QALYS

    Let's explore this concept a bit more. Resource allocation is indeed changing over time, we have seen more emphasis on concepts known as the PGIC. Are you new to Mozz? Are you new to PAR? ....New guys ...read this ---- > PGIC

    No longer is it purely about just the clinical trial results, Docs, Medical Associations, Payers and the Govt all want to see more emphasis on "measuring the change in health related quality of life with time". 8 They want to ask questions and raise issues such as:

    1) Assessment of cost effectiveness of the drug

    2) Rehabilitation

    3) What is the cost effectiveness comparison between TKA when implanted compared with a non operated arthritic knee?


    The below graphic displays the considerations of adopting the pricing per dose, yellow indicating a cost effectiveness while darker reds indicated less benefit at higher dosing costs. The 35, 45 and 67 correspond to WOMAC bands , low, medium and 67 being high pain severity.


    https://hotcopper.com.au/data/attachments/2976/2976694-766c920022df760d73b0af794036efbf.jpg

    ICER = Incremental Cost Effectiveness Ratio, Mozz speak? The difference between two drug's costs divided by their difference in effectiveness.


    The columns across the top represent the route to administration, either subQ on the left through to Hospital administered IV (drip) which has added administration/supervisional costs and thus becomes less effective in terms of pricing at the given dosing cost levels as you move to the right of the table.

    My point here is that there is a lot involved in the pricing. The Tanezumab drug is a good rough indicator for us as it is in the same field, it is recently developed and it has roughly a comparative efficacy. The big difference is that there are safety problems AND there is no DMOAD effect, it's an ongoing pain management drug.

    A New Zealand study in 2017 sought to qualify the quality of life loss in terms of OA. Utilising computer models it looked at New Zealanders aged 40-84 from a base year of 2006 until death. The research showed that "...mean health losses due to knee OA over people's lifetimes in NZ are 3.44 QALYs per person, corresponding to 467,240 QALYs across the adult population". 9 The report stated that at least 8% of people aged 45-55 suffer from OA and some 30% aged over 75 have the condition.



    PRICING MODELS

    So what then are the general considerations when pricing up a drug?

    https://hotcopper.com.au/data/attachments/2976/2976698-14fc838b197f01c7f92e905f985d64e8.jpg Competition from other drugs

    You aren't going to have much pricing power if there are 10 other alternatives and some of those are viable. Currently there isn't any real alternative and even if something comes to fruition tomorrow, it will be years away before it becomes commercial.


    https://hotcopper.com.au/data/attachments/2976/2976709-14fc838b197f01c7f92e905f985d64e8.jpgThe drug's uniqueness

    Not only is competition lacking, the current standard of care does not offer anything safe and effective. On top of this now add features like the ability to store at room temperature and durability of our drug. A further accelerant of course will be any evidence later this year and early next year in terms of being able to slow the progression of OA.


    https://hotcopper.com.au/data/attachments/2976/2976710-14fc838b197f01c7f92e905f985d64e8.jpgThe drugs effectiveness

    Again we aren't going to get a good price for our drug if the effectiveness isn't great, we know Opioids gives around 20 to 30% efficacy, but it comes at a high cost namely addictiveness in a lot of cases not to mention all the other side effects. With some 75% of our iPPS recipients experiencing 25% or great pain relief, we have some good data so far.


    https://hotcopper.com.au/data/attachments/2976/2976715-14fc838b197f01c7f92e905f985d64e8.jpgThe amount of time and effort and the process to make the drug.

    The raw inputs and the processing. Well we know that this process is involved. So difficult that others have given up trying to copy it...so sensitive are the steps that it has been refined over decades. The expense and effort is clearly there, couple this with the above points and we can see there is real pricing power for Paradigm.



    Paradigmers...our drug at least in some percentage of the OA patient cohort can delay and even in some circumstances avoid totally, knee/hip replacement surgery...you tell me what this will do to the pricing models? What will this eventually do to awareness of our drug? What will the demand be? We have seen evidence and numbers so far, queues forming without much advertising...all without the patients realising any possible DMOAD effects at the earlier stages of a few years ago...they were just after a safe pain relief and function enhancing drug....this demand, at least in my forecasts will be acute once this is properly tested.Tanezumab only addresses pain and function and not unlike opioids and other pain relief...it only works as long as you keep taking it. The longer you take it, well the stats are that you have a higher chance of developing other problems.


    WHAT DO THE INSURERS LOOK FOR?

    Well all of the above, finally they will be more than happy to cover something new IF the new drug helps THEM save money. A reduction in TKA and THA procedures is going to save them some pennies...well actually Billions of dollars....even if the % is of patients it applies to (avoidance of surgery) is smaller..It's not just about avoidance of surgery, it's avoidance of addiction to the current std of care, it's the other comorbidities that develop as a result of ongoing OA, the result of people not being active any more....just imagine:



    https://hotcopper.com.au/data/attachments/2976/2976728-f06cfd0cb3ab90a86dd1456040cfa8d0.jpg REDUCING the reliance and terrible impact of Opioids


    https://hotcopper.com.au/data/attachments/2976/2976730-f06cfd0cb3ab90a86dd1456040cfa8d0.jpg REDUCING the impact of Rehab due to Opioids, NSAIDS and the nasty Corticosteroids


    https://hotcopper.com.au/data/attachments/2976/2976733-f06cfd0cb3ab90a86dd1456040cfa8d0.jpg REDUCING pain in the OA patient population and potentially other pain related indications


    https://hotcopper.com.au/data/attachments/2976/2976734-f06cfd0cb3ab90a86dd1456040cfa8d0.jpg REDUCING surgery and procedures potentially avoiding them totally in some cases.




    The insurers are just going to love it (my views).


    This is where 008 will come into its own. Paradigm's 008 study as we know will look at the DMOAD effects, what percentage of patients are experiencing a HALTING of the progression of the underlying Physiopathology...what % are experiencing a reversal of the course of the disease. Yes this is just a small study initially to form a link and determine consistency in what we already found in the serum in phase 2B, in my view it will be a prelude into something much much bigger.

    The intention of 008 is NOT to necessarily glean this percentage, it is a precursor to demonstrate at this level of study that there is more to be explored, this in just my humble opinion, will be amazing to not only us....but to a potential Big Pharma partner.

    Who will strike a large deal with us first?

    Indeed there is much to consider in the pricing of our drug, some high powered stats and a whole heap of factors come into play. I can clearly see that potential DMOAD data will only add to our conviction and may indeed give us more leverage in the near future and beyond.



    DYOR





    REFERENCES

    0] https://www.healio.com/news/rheumatology/20201006/higher-doses-of-tanezumab-linked-to-abnormal-peripheral-sensation-vs-nsaids-in-oa
    1] https://rheumatology.medicinematters.com/osteoarthritis-/analgesics/tanezumab-shows-analgesic-benefits-in-oa-but-at-a-cost/16878424
    2] https://rheumatology.medicinematters.com/osteoarthritis-/analgesics/tanezumab-shows-analgesic-benefits-in-oa-but-at-a-cost/16878424
    3] https://jamanetwork.com/journals/jama/fullarticle/2737173
    4] https://pubmed.ncbi.nlm.nih.gov/26746146/
    5] https://www.pfizer.com/news/press-release/press-release-detail/u_s_fda_accepts_regulatory_submission_for_tanezumab_a_potential_first_in_class_treatment_for_patients_with_chronic_pain_due_to_moderate_to_severe_osteoarthritis#:~:text=Tanezumab%20is%20a%20monoclonal%20antibody,growth%20factor%20(NGF)%20inhibitors.
    6] https://www.medpagetoday.com/rheumatology/arthritis/85781
    7] https://login.medscape.com/login/sso/getlogin?wcode=102&client=213312&urlCache=aHR0cHM6Ly93d3cubWRlZGdlLmNvbS9yaGV1bWF0b2xvZ3kvYXJ0aWNsZS8yMTg1NzAvb3N0ZW9hcnRocml0aXMvZWZmZWN0aXZlLW9zdGVvYXJ0aHJpdGlzLXRoZXJhcHktcmVtYWlucy1lbHVzaXZlL3BhZ2UvMC8xP3Nzbz10cnVl
    8] https://pubmed.ncbi.nlm.nih.gov/26305202/
    9] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6613301/#!po=44.1176
    10] https://www.investopedia.com/articles/investing/020316/how-pharmaceutical-companies-price-their-drugs.asp#:~:text=When%20pricing%20their%20drugs%2C%20pharmaceutical,high%20prices%20for%20new%20drugs.
    11] New Runway In Brisbane, Australia, opened June 2020. Total cost $1 Billion AUD, 8 year project.
    Last edited by Mozzarc: 07/03/21
 
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