Fentanyl is causing an increasing number of deaths in the US opioid epidemic
The opioid problem in the US is on an epidemic level. In 2019 the use of synthetic opioids such as fentanyl caused an increasing number of deaths, while the overall number of overdose deaths declined slightly. There is still a huge need for treatment and in 2019 the dynamic buprenorphine/naloxone market grew by over 14 percent.1
A global problem and an American health crisis
According to the World Drug Report 2019 an increasing number of people are using opioids and collectively the number amounts to approximately 53 million people worldwide. Opioids continue to cause the most harm, accounting for two-thirds of the deaths attributed to drug use disorders.2 The problem exists in both developed countries and in less developed countries but is by far the greatest in the US, where a fifth of those dependent on opioids live.3 The problem in the US has reached epidemic proportions, where more than 67,300 died of an overdose in 2018, a slight decrease comparing to 2017 when the corresponding number was about 70,200.4 Approximately 70 percent of these deaths were caused by opioid abuse and the number who are dying from stronger synthetic opioids, such as fentanyl, continues to increase.5 In 2017 the opioid crisis in the US was classified as a Public Health Emergency, which means that resources should be allocated to avert or avoid public health crises. In Europe, with an estimated 1.3 million6 high-risk opioid users, opioid addiction is not as great problem as in the US. However, there are signals that synthetic opioids now also play a bigger role in Europe. One in every five of those entering drug treatment for an opioid-related problem now reports a synthetic opioid, rather than heroin, as their main problem drug.7
Opioid abuse costs societies substantial resources
From an economic point of view opioid addiction is a considerable problem. In addition to loss of life and lower quality of life, large costs are associated with lower productivity and a lack of resources, and there are also increased healthcare and correctional treatment costs. In the US, costs related to opioid addiction are enormous and considerably higher than previously calculated. The White House Council of Economic Advisors, which is an advisory committee to the American President, estimates that the opioid epidemic cost the US society USD 696 billion in 2018 and more than USD 2.5 trillion, between 2015–2018. This amount is much higher than what some other studies found, which can be explained by growing death toll in recent years and as it includes a broader societal cost of premature death.
Great need for treatment driving strong market growth
A sharp increase in prescription of opioid painkillers over a little more than two decades is the primary reason that today there are an estimated 12 million people abusing opioids in the US.8 Approximately 4 million are considered to be in need of treatment.9 Of these, approximately 1.4 million receive so-called Medication Assisted Treatment, MAT, where the most common form of treatment is buprenorphine/naloxone, which is given to approximately 1 million.8 The market for buprenorphine/naloxone products has grown substantially in recent years with an annual growth of approximately 14 percent.9 Considerable political and media focus has increased knowledge and awareness of opioid dependence and its risks, which has led to more people seeking help. The launch of the Affordable Care Act (ACA) healthcare reform, also known as Obamacare, has also resulted in more people gaining access to subsidized care.
Market consists of three payer segments
The market for the treatment of opioid addiction using buprenorphine/naloxone can be divided into three different payer segments, the public segment, where care is financed by public sector payers such as Managed Medicaid, FFS Medicaid and Medicare Part D. Other segments are the commercial segment, which comprises private insurance companies and the cash segment, where patients themselves finance their care. The public segment differs from the others in that it is to a great extent stringently controlled by insurance companies with regard to what drugs may be prescribed and which physician a patient can choose. Pharmacy Benefit Managers (PBM) play an important role, as they are responsible for assessing, on behalf of the insurance companies and employers, which drugs are to be covered by insurances.
Looking at the market from a competitive perspective based on payers decision to make a product exclusive reimbursed or not, it can be divided in two segments, preferred formulary businesses or open formulary businesses (read more in the last paragraphs on this page).
Publicly financed care growing fastest
The public segment has grown the fastest in recent years and represents today 53 percent of the market. The development is driven by the fact that more and more people have gained access to publicly financed healthcare through the Affordable Care Act, and due to the fact that employers have become more restrictive in offering private healthcare insurances. The commercial segment, representing 35 percent of the market is growing, but not in the same pace as the public segment. The cash segment (12 percent of the market) has displayed a flat development.
In beginning of 2020 Zubsolv® will increase its best-in-class coverage in the commercial segment from 97 to 98 percent. Zubsolv’s coverage in the public segment amounts to 36 percent.
Increased generic presence
The market has historically constituted of multiple generics of Subutex® and Suboxone® tablets. In comparison with other pharmaceutical markets, generics have not had a significant price pressure effect. However, generics are favoured by the fact that many insurance companies in the public segment automatically give generics priority and thus indirectly put pressure on companies with new products to lower the price if insurance companies are to deviate from this principle. In beginning of 2019 the generic part of the market increased when four generics on the market leading drug Suboxone film entered the market. The launch of generics were launches at risk, as the patent disputes are still unresolved. The entrance of film generics has primarily impacted Suboxone film which saw its market share decline significantly. Zubsolv has been impacted by payers open up for more treatment alternatives. Despite the increased presence of generics the list price of generics has been on a par with or a little higher than that of the drugs sold under patent-protected brand names, but recently there have been campaigns from individual generic companies that have offered discounts to pharmacies which have then reduced the price in the cash segment.
Suboxone film market share amounts to 29.9 percent, a decrease from 65.0 percent by end of 2018. Orexo’s market share for Zubsolv amounts to just over 4.2 percent (5.0) and the corresponding number for BioScience Delivery and their drug, Bunavail®, is approximately 0.2 percent (0.5).10 The remainder of the market is constituted by generic companies.8
Payers open up for more treatment alternatives offering opportunities for Zubsolv
The trend in the market is to open up for more treatment options, which is negative for Orexo in the short term but has potential to be positive in the long term. During the first half of 2019, generics were added to the preferred formulary lists by insurance companies previously only offering Zubsolv as a preferred alternative. The development has had a negative impact on the volume in 2019 but there have been a positive impact on the earnings as the rebates are much lower.
The number of exclusive positions for Zubsolv has reduced and only a few minor exclusive positions are left, making Zubsolv less dependent on exclusive positions.
When the payers open up for more treatments Zubsolv can be added to formulary lists which earlier have been blocked, by e.g. Indivior or generics. Positive signs in this direction have already been visible as Medicaid in Florida, Ohio, Alabama and Texas have added Zubsolv on their list and on these open formulary lists Zubsolv is growing faster than the market average.
1 IQVIA Data
2 World Drug Report, 2019
3 UNODC World Drug Report 2014
4 Center of Disease Control
5 Center of Disease Control
6 European Drug Report, 2019
7 European Drug Report, 2019
8 Clarion Healthcare
9 IQVIA Data
10 IQVIA Data as of year-end 2019/2020