- Scotland health authorities have agreed to reimburse the two newest cystic fibrosis drugs from Vertex Pharmaceuticals, opening the door to therapy for roughly 400 eligible patients.
- The decision is a victory for Vertex, as the company faces trouble securing reimbursement in the broader U.K. market. The agency that recommends whether drugs get covered in the U.K. has taken issue with the price of Vertex's products — and though both parties claim to have revised their proposals to create a more middle-ground resolution, they have yet to come to an agreement.
- Vertex's deal with Scotland provides five years of coverage for Orkambi and Symkevi while also requiring the company to collect real-world data on the drugs, which "will support any future submissions to the Scottish Medicines Consortium," according to a Thursday statement.
With more than 10,000 registered patients, the U.K. has one of the largest cystic fibrosis populations in the world. It's a patient base and market Vertex wants to break into, but reimbursement remains a barrier.
A contentious debate between Vertex and the U.K.'s National Institute for Health and Care Excellence, or NICE, has gone on for more than a year. While mostly focused on Orkambi (lumacaftor/ivacaftor), the back and forth has also extended to Symkevi (tezacaftor/ivacaftor and ivacaftor) and another Vertex drug likely to gain approval next year.
At the heart of the debates is cost. By 2018, the respective list prices for Orkambi and Symkevi, which is marketed as Symdeko in the U.S., were around $273,000 and $292,000.
NICE sees those prices as too high, and it isn't alone. Last May, an influential cost watchdog called ICER concluded the list prices of Orkambi, Symdeko and Vertex's other marketed drug Kalydeco (ivacaftor) would have to come down more than 70% to meet common cost-effectiveness thresholds.
"NICE has been clear that Vertex's pricing is unsupportable," wrote National Health Service, the U.K. health agency that oversees NICE, in a letter last July that followed a meeting with the company. "If Vertex really believe they are offering a reasonable deal they should waive their confidentiality clause and let patients and taxpayers judge whether it is fair."
NHS is the healthcare system for the entire U.K., but agencies in areas like Scotland and Wales can make reimbursement decisions at a regional level. The system allows for deals like the one just inked between Vertex and the Scottish Medicines Consortium.
While Scotland won't bring a "material revenue stream" to Vertex's cystic fibrosis business, it could bode well for the ongoing negotiations with NICE and NHS, according to RBC analyst Brian Abrahams.
"[G]iven the proximity of Scotland, it is possible that this agreement could increase public and political pressures on England to move forward with obtaining access to [Vertex] medicines, which is a more meaningful population in terms of potential revenue contribution," Abrahams wrote in a Sept. 12 note to clients.
Investors might not yet be sold on that line of thinking. Vertex shares were unfazed by the agreement, trading less than 1% down Thursday morning.
Jefferies analyst Michael Yee views the Scotland market as a roughly $100 million revenue opportunity for Vertex, assuming there are 900 cystic fibrosis patients who each come in at a $125,000 price point.