A recent announcement that new biotech start-up, EQRx plans to launch “equivalars,” alternatives to a number of currently patented costly drugs at far lower price points, introduces another disruptive solution trying to address the high cost of prescription drugs. The initial focus of EQRx will be on producing small molecule drugs, biologics and monoclonal antibodies for the treatment of cancers, immune-inflammatory disease, and not-so-rare genetic diseases. The ultimate question is whether or not equivalars can bring down the cost of prescription drugs. The company’s plans to introduce these lower cost drugs in the coming decade requires a deeper understanding about how seriously payers and pharma should consider equivalars’ potential and the possible implications for both industries. The objective of this article is to understand the ways payers may view equivalars and if drug manufacturers will need to consider them in their market access strategy.
Working in the payer world for over 15 years has given me exposure to the delicate balance between providing access to clinically safe and effective therapy, managing drug trends, and administering unique benefit designs. Payers are the gate keepers, trying to manage premium dollars, similar to the average person managing their personal budget. They need to ensure the money that comes in is enough to cover what goes out. Patients need access to affordable therapy, with health care costs as a piece of their finances. Cost should be a part of the conversation but not dominate or risk a patient’s health because the cost of care is out of their reach. Pharmaceutical manufactures need the capital to invest in innovation and research into life-saving therapies. With all of these factors to consider and each stakeholder having a valid point of view, providing good-quality, affordable health care is a complicated task.
The best example of these complexities at play was in 2015 when the number of prescriptions for Sovaldi (sofosbuvir) were creeping up. As a payer looking at data and trends, we saw this steady and rapid growth in the hepatitis C category. Here was a game changer, a chance to potentially cure an incurable disease. The clinicians saw the value in their therapy and understood they had to provide access. But with it came the hefty price tag of about $84,000 a year. No one foresaw the hefty price tag, and each stakeholder had their own concerns. The actuary and finance teams were worried about how to afford and manage this hit to the budget. Employers were worried about what it meant for providing their employee benefits and future sustainability. Patients wanted therapy, but many could not afford it, or it was not covered by insurance. Manufactures saw this as innovation and rewriting what a diagnosis of hepatitis C meant for patients. Payers were worried about mitigating trends while managing appropriate access. The active drug pipeline helped to address many of these worries. With multiple agents on the market, payers did not need to cover all the options. They understood the clinical nuance of each product and could leverage the market basket in their contract negotiations with manufactures. This ultimately allowed net prices to come down and open up the restrictions payers had put in place. It was a very hard lesson to learn and gave payers the leverage to be more aggressive to try and avoid another “tsunami.”
The heightened focus on rising drug costs and subsequent implications to the sustainability of health care in the United States has cultivated creative, nontraditional ways to address removing excess cost from the system and improving patient affordability. It is not just your traditional payer looking to tackle the issues. Something that once was as basic as brand vs generic drugs, simple copays, and easy-to-administer benefits had grown over time to include co-insurance, high-deductible health plans, health savings accounts, and multiple formulary tiers. Even the type of medications has evolved to include specialty medications, biosimilars, and now potentially a brand-new term: equivalars.
What are Equivalars?
Enter EQRx, a recently launched company focused on providing the market with equally good medications at a significantly lower price point,1 with the newly coined term, equivalars. The meaning of an equivalar has not been well defined. EQRx provided descriptions that they are not generics or biosimilars, and they will not infringe on existing patents.2 It sounds like it may be a “me-too” drug, something that acts like an existing drug but is not exactly similar. EQRx plans to roll out 10 drugs over the next 10 years, the first to launch within the next five years. Specific drugs or disease states have not been released; however, the company has said the likely focus will be in areas like oncology, immune-inflammatory, and rare diseases.
So, what does this mean? Good question, and time will tell. These slightly different versions and this new terminology opens up a lot of questions for payers should equivalars launch as expected.
From a clinical perspective, payers will want to understand the science behind the approvals: what are the therapeutic areas of interest, what are the data to support safety and efficacy, what type of clinical trials were performed, and what is the governance policy over these drugs?
Operationally speaking, a new type of drug classification has quite of bit of system implications. Working in the pharmacy benefit management world has given me exposure into the coding and the operational complexities of administering a payer’s benefit. Claims processing systems will need to know how to identify and classify equivalars: will it fit into existing nomenclature or will a new category need to be designated? What type of patient out-of-pocket costs should apply? Payers will need to look at their adjudication systems capabilities and determine if they can manage a new drug classification or if they will need to update their processing logic.
Another consideration is overall implication to their balance sheet. Payers will be thinking about what equivalars may do to their financial model. The ultimate question is “What would an equivalar do to the economics of covering brands and generics, if anything?”
Health systems and payers are a known risk in the model as they control access. In order to ensure long-term viability, EQRx recognizes the need to scale and partner with payers, integrated delivery networks, and government-sponsored programs. What becomes of equivalars is yet to be seen, however, it underscores the continued attention to the cost of prescription drugs. We may see more venture-capital-funded organizations seeking to shake up the status quo.
1. Pagliarulo N. A biotech startup launches with unusual goal: invent new drugs, and sell them for less. Biopharma Dive. January 13, 2020. Accessed March 23, 2020. https://www.biopharmadive.com/news/eqrx-launch-alexis-borisy-drug-price-competition/570266/
2. Forbes T. EQRx aims to develop ‘equivalar medicines to drive down prices. Media Post. January 13, 2020. Accessed March 23, 2020. https://www.mediapost.com/publications/article/345596/eqrx-aims-to-develop-equivalar-medicines-to-driv.html