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J.P. Morgan Healthcare Conference in San Francisco in 2014, and payers began grumbling. Washington weighed in, with longtime drug-industry watchdog Henry Waxman (D-CA) blasting Gilead in an open letter. Express Scripts, the U.S.’s most powerful drug purchasing agent, called the price “unsustainable” and vowed to take action.
The opportunity for action came when AbbVie (NYSE: ABBV) and partner Enanta Pharmaceuticals (NASDAQ: ENTA), of Cambridge, MA, won FDA approval of Viekira Pak. Cure rates for the regimen were comparable to Gilead, but with a convenience difference—namely, more pills per day.
Express Scripts seized the opportunity to pit two comparable drugs against each other. AbbVie priced Viekira Pak at $83,319 but immediately cut a deal with Express Scripts on Dec. 22 to become the PBM’s exclusive hepatitis C treatment for the millions of patients on its formulary—at a discount.
Gilead has since fired back with deals with CVS/Caremark, Humana, Aetna, and others, but the price war has had an effect. Gilead’s 2014 earnings were buoyed by Sovaldi, the best drug launch ever, with $10.3 billion in 2014, while Harvoni reeled in $2.1 billion after its October debut.
But 2015 projections, announced last week, came with a sobering statistic (at least from investors’ point of view): this year’s discounts are expected to be about 46 percent, compared to 22 percent in 2014.
Shares dropped 9 percent last week as investors wondered how long Gilead’s revenues, which doubled from 2013 to 2014, would hold up.
Express Scripts, which has been the prime instigator of hepatitis C cuts, could move on other disease categories soon. Chief medical officer Steve Miller said on CNBC last week that drugs for diabetes and asthma are on his cost-cutting radar. Previously he has also mentioned the PCSK9-blocking cholesterol-lowering drugs, two of which could be approved later this year (one from Regeneron Pharmaceuticals and Sanofi, the other from Amgen). Others, like certain autoimmune diseases—and cancer, as Bloomberg reported a few weeks ago—could follow.
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