A Promising Fish-Oil Heart Capsule Also Looks Cheap

(Bloomberg Opinion) -- Amarin Corp., the maker of a promising heart-disease capsule derived from purified fish oil, has been one of the biggest biopharma surprises of the past decade. Last year, the company’s American depositary receipts more than tripled after a clinical trial found that the pill, Vascepa, significantly cuts the risk of heart attack and stroke. 

Vascepa is already available for a subset of patients, and Amarin is waiting on approval from the Food and Drug Administration to market the drug – which costs about $300 per month before discounts – to a much larger population. In the meantime, a draft report released Wednesday by the Institute for Clinical and Economic Review (ICER), an independent group that assesses the value of medicines, revealed another way in which Vascepa is unique: it just might be underpriced relative to its potential benefit as an effective treatment for staving off America’s leading cause of death.

The ICER findings are a rather unusual occurrence, given that the group’s studies generally come to the conclusion that a drug’s price could and should be lower. It uses a complicated process to evaluate cost-effectiveness that looks at the impact of medicines relative to existing alternatives, as well as the personal and economic effects of illness. 

Vascepa’s value proposition comes from its potential ability to protect against illnesses such as heart attacks and strokes. The value doesn’t just come from preventing early deaths – obviously a plus – but from the fact that such events, when they happen, result in hugely expensive medical interventions and increased spending over time. Cardiovascular events also reduce the ability to contribute to the workforce and hurt quality of life. 

ICER uses a metric called a quality-adjusted year of life to assess the value of medicines. The measure values a healthy and productive year more highly than one spent in and out of the hospital. If a drug has a cost-effectiveness ratio of $100,000 per quality-adjusted year of life – a common value benchmark – that’s how much you have to spend on the drug to add a quality year of life to the targeted patient group.

The organization estimates that Vascepa costs $21,000 per quality-adjusted year of life, which says a great deal about the cost and potential impact of the medicine. It thinks that the drug would be a good value (using the $100,000 threshold) if it cost as much as $5,223 a year. That’s above the drug’s actual $3,699 annual list price (according to ICER) and quite a bit higher than its $1,625 average cost after discounts. The company has previously said it doesn’t plan a significant price hike. 

That’s a big contrast with other findings from ICER reports. The institute routinely finds cost-effectiveness ratios above $200,000 for cancer and rare-disease drugs in particular, including prices that wouldn't be cost-effective if drugmakers halved them. 

This report doesn’t mean that Amarin has a guaranteed blockbuster on its hands if it gets that FDA nod, which is due by the end of September. No one is exactly sure why the drug had such a significant impact, and previous studies of different fish oils have flopped. Some have questioned the use of mineral oil in the placebo arm of its trial. Also, the fact that cheaper (if less pure) supplements are available may make insurers less thrilled about paying up to give this drug to tens of thousands of patients. 

All that said, value for money is the best argument Amarin has. The company’s burgeoning sales force just got a powerful boost.

To contact the editor responsible for this story: Beth Williams at bewilliams@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Max Nisen is a Bloomberg Opinion columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

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